UARU
One Year Of Groysman's Government in Ukraine, Examined
17 April, 2017

It has been one year since the new government came into office. On April 14th, Volodymyr Groysman, a member of the presidential “Petro Poroshenko Bloc” was elected by 257 votes  to 50. Giving his first speech in the role of PM, he promised to show people “how to rule the country”.

People put their faith in the former successful mayor of one of Ukraine’s central cities. He promised to raise the minimum-wage, decentralisation, improve healthcare and to escalate prices on gas that will comply with its market price. Hromadske along with Oleksandr Sushko, Research Director At Institute For Euro-Atlantic Сooperation and Taras Shevchenko, Director At Centre For Democracy And Rule Of Law, has analysed the progress of the new Cabinet; which reforms were successful, which were failures and has this government realised the hopes of the Ukrainian citizens.

INFORMATION:

At the age of 16, Volodymyr Groysman was a commercial director in his father’s company. At 24 he became the mayor of Vinnytsia, a town in central Ukraine. He chaired the city administration for 8 years. During his time in office, Vinnytsia became an example of effective city management, and one of the most progressive and developed cities in Ukraine. After that, he became Minister of Regional Development, Construction and Communal Living, and later the 11th Chairman of the Verkhovna Rada, a position which he held for two years. Finally, he became Prime Minister.

He has close business ties to the Ukrainian President, Petro Poroshenko, who is also from Vinnytsia. Poroshenko donated 80 million UAH (around $280,000) for the construction of the well-known fountains in the city whilst Groysman was mayor there. Poroshenko also bought land in Vinnytsia for relatively low prices.  He is often seen as President Poroshenko's protégé.

In your opinion, what has prevailed regarding government activity: successes or failures? In general, what is your assessment? How do you explain this? Are we disappointed? Is this normal?

Taras Shevchenko: I would say there is an equal number of successes and failures. Why? Probably because I did not expect too much from that year. I’m not the person with expectations that are too high. And always, when we speak about changes, it’s important to think about the baseline for comparison. Are we comparing it to the ideal situation, and ideal reforms? Or are we comparing it to a baseline from the situation 2 or 3 years ago? If we compare with 2 or 3 years ago, then the progress is visible. If we compare with our ideal picture of ideal reforms in all fields, then it looks like nothing has been achieved.

Oleksandr Sushko: The output for the first year is quite comparable to my personal expectations, because a year ago we did not have any illusions that they would be the perfect government. When the government was created a year ago, it was clear that it was a hybrid government, in which some reformers and also a lot of old-style people coexist, and that was the basis for this government in terms of our prognosis. We probably would have some achievements, however, there will also be a lot of inertia of the past, as there isn’t a critical mass of reformers in the government. The maximum we have expected is achievements in some particular areas, where the critical mass of reform is realistically available. We have what we have, and it is quite clear, that this government reflects the political reality of Ukraine – where we have the old and new forces combined, working together, mixed, and there is no essential advantage for the reformist forces. So, the Groysman government is a kind of picture of the current political spectrum of Ukraine.

The devil is in the detail, so of course we have to look at where we can find success. What would your assessment be? What are the successes and failures in your opinion?

Oleksandr Sushko: I can’t say 100% that some areas are total failures or total successes. Even in the areas where the experts have indicated mostly failures there are also some achievements. For example, if you look at the energy sector policy during the last year, we have had some accomplishments, which is reflected in the annual report from 'Naftogaz' Ukraine [the national oil and gas company of Ukraine], which for the first time in its history became a profitable company. And, there is much more transparency in the governance of 'Naftogaz', which at least reduced the scope of corruption in this area. However, certainly there are things that have not been accomplished, and now there is some turbulence within 'Naftogaz', there are lots of rumours that the supervisory board may collapse in someway. It’s the same when it comes to civil service reform. I also can’t say that this was a total failure, because all these things just started this year, and we have some processes that are totally new for Ukrainian political culture. For example, these competitions for high-level public officials – yes, we are not satisfied with all the output, these are really new practices that are being  introduced, and they bring some sort of new culture. It does not bring immediate results when it comes to the full efficiency of the new officials, there are a lot of suspects, corrupt people. But, this is progress anyway.

Unfortunately, this is not progress that can be easily identified by external observers, including the millions of people, which in most cases, just can’t see this. Here we will come to the issue of communication, which is poor on the government’s side; here we come to the failure of parliamentary coalition, to proceed with the next phases of legislation in some areas. Also, we have the phenomenon of our lobbyist groups who are not interested in the continuation of reforms, and then we have continuous fighting between those who are in favour of reform, and taking the next steps, and those who try to keep the status-quo.

 

So what are things to point out as the success, and the things that could have been done much better?

Taras Shevchenko: I think the most interesting is the raise in minimum wage, because it’s probably one unique reform that is equally considered as a plus and as a failure. I would like to mark out also, we are still failing in reform of the Prosecutor's Office and the judiciary. With judiciary we’ve done a lot on the level of legislation. There is ongoing competition for the Supreme Court, but we cannot say that this is a success because there are quite a lot of warning statements now about the fact that the competition is quite closed, with a lot of information that is confidential, and there is a lot of suspicion that it will not be real competition, but just the relocation of judges from one court to another. I think the biggest influence in a long time, especially in the political field, will be the electronic declarations. Even though generally, the public think this is negative reform – it’s negative for them because they had negative emotions after they learned all this information about cash and about assets of public officials – but in the long-term, it’s really, again, about change in culture. This is because for future politicians, for future governors, they have a clear signal that if, in anytime in the future, they want to be a minister, or the head of the administration, or even mid-level civil servant, their assets will be clear, they will need to report what they own, where they live, how big their house is, and can he/she explain why they have a 600 meter-squared house. This will affect the practice and behaviour of these people for a long-term period.

What are the good and bad things? We keep on hearing about this ‘Ukrainian fatigue’. People speak out when they think something has been successful, but there are a lot of criticisms as well. What are the things to watch, for instance, what will you be watching?

Oleksandr Sushko: What is important to me is that, this government has introduced some really new practices, which is – kind of– the public policy tradition, which never existed in Ukraine at all. Groysman’s government started with very correct steps - to elaborate its  program in close cooperation with civil society publicly, through the normal process of public policy-making. Yes, this practice is far from perfect now, but, this is a step in the correct direction. It affects the whole policy, it is not about one particular policy area. Here, we need to learn and move forward these new traditions which they tried to introduce, and then, to help – if there is good political will on the side of at least part of the government, and particularly with Groysman himself – and to engage, not just to have some people to listen to him, but also to talk. I hope that this is sincere on the side of the Prime Minister.

Taras Shevchenko: I think it’s quite important that, even though we don’t see any final solutions already, like just recently, a few days ago, starting the process of selecting 600 new judges for the lower courts . And, that’s really something that we need to follow, because we only had judges leaving the judiciary, but we didn’t have anyone new entering the judiciary in three years. For example, in local courts in Kyiv, some quoted that 25% of judges are missing. If we talk about what society is unhappy with most of all, it’s the judiciary. And it’s not about bad PR, it’s about actual change. I really hope that real change in the judiciary will happen, that’s what I suggest most of all.

We can see that oligarchs, bureaucracy, law enforcement bodies are the main barriers for reform, whereas civil society, western countries, the government and the population are the reform-pushers. The president is both a barrier and pusher of reform. Would you agree with that? Could this last for while, if we see outside forces, like civil society and the west, as the ones who are pushing reform?

Oleksandr Sushko: It’s true that it’s not about western countries as such, but it is about Ukraine’s international commitments, so this is not something that western countries may impose if Ukraine does not subscribe. So in many cases, it was a conditionality. For example, in order to get visa-free travel to Europe, Ukraine was obliged to implement certain reforms. So this is not so much direct influence of the western countries, but the influence of the obligations for what Ukraine wants, and  for some achievements Ukraine wants to [make]. First of all, it is about the IMF, European Union, but also United States, so this works. However, now it is not as strong as it was a couple of years ago. For example, the involvement of the United States now is not as clear as it was under the Obama administration, so there is no more Biden, so there is a weakening of this leverage. I work in civil society, so I may tell you frankly that I would not put 99%. Yes, we know that civil society is also heterogenous, it is not one single actor that acts as one. There are not a lot of groups of interest, and I see that in civil society we also have growing tensions and debates, many groupings, so again, it is not as easy as it was immediately after Maidan, when there was a quite consolidated civil society, now it is not so clear. There is more diversity in civil society.

But also, how resilient is the civil society? Because there was also a lot of questions that were raised after the new amendments to the law which meant that anti-corruption NGOs were obligated to declare their assets as well. We sometimes see or hear that there are some issues between some of the groups. Their resilience can’t last forever, and some of the creative forces could be the forces that do something wrong. So how much more progressive, and constructive can civil society be, and what are the risks?

Taras Shevchenko: After Maidan we were united as RPR reforms coalition, and I would say that the first year after Maidan was the year of [great] energy, consolidation, remembering our previous experience, and it was also a year when we had many prepared decisions that were prepared long ago, when there was no window of opportunity to actually implement them, or to put them through parliament. Currently, we are in the situation where we don’t have those resources that were prepared in the past anymore. We need to develop new policies, new decisions, new draft legislation, and the process of developing this is quite hard, and that’s where more debates are happening. For example, by 2013, we had already decided how we see the reform on public service budgets  - everything was decided, there a draft law prepared, and it just needed to be voted on in parliament. But now, if we start debates about land reform or the language issue (the draft law on state language), then this is the process of developing the decision, of finding consensus, and yes, this is harder, it creates more disputes, but that’s not all process. It’s more normal for developed countries to take time to come to a decision, and not to do it immediately.

In this political context, when there is always some play to win over voters. How ready is the government to do things that might be unpopular but necessary? Or are they still playing for votes?

Oleksandr Sushko: Usually, when elections are approaching, the readiness to do unpopular things goes down. Uncertainty over the future of the coalition produces these risks. In fact, we have a very fragile coalition, and formally, the elections are to happen in just 2 years, but the atmosphere in society feels like we are to have elections next autumn, and the politicians are very sensitive to that. That is why the chances of unpopular steps being taken is not very high. However, it is just a wrong perception that reforms are necessarily unpopular. There are some reforms which are unpopular for many people, but the biggest risks are the reforms that are unpopular for the ‘big guys’, when they start to block [things] using their leverage, because they do not want to lose the comfortable status-quo. Here, there is a risk, a combination of the total distrust that is visible in society, even irritation, and the lack of certainty within the population. At the same time, there are interest groups, those who just feel good with the existing system, and they are resisting. Now, we are seeing this growing resistance in many many areas, which causes some trouble. There is an identification of priorities, however, the problem is that the government just has certain priorities, but this is not the overall picture of the coherence of changes. Sometimes, we see that some particular reformers move their things forward, but, without harmonisation of specific policy areas, it’s hard to achieve.

COMBATTING CORRUPTION: HOW SUCCESSFUL HAVE THE NEW INSTITUTIONS BEEN

The new government managed to successfully finish establishing anti-corruption institutions in Ukraine. In particular, the National Anti-Corruption Bureau of Ukraine (NABU) began its work in 2015. It’s main aim is to “clean the government of corruption, in order to enable the formation and development of a successful society and efficient state”. According to NABU’s website, 91 people have been accused, and 57 cases have been passed to the court. The case of the head of the State Fiscal Service, Roman Nasirov, who was accused of causing damage to the state to the amount of around $74 million, was the last well-known case handled by NABU.

The National Agency of Corruption Prevention is the executive body responsible for the development and implementation of anti-corruption policy. This institution examines the e-declarations, which Ukrainian official must submit according to the law.

The Special Anti-Corruption Prosecutor’s Office was created in order to control adherence to the law during the pretrial investigations, which are led by NABU. It is an autonomous unit of the Prosecutor General’s Office.

Some people would say there is no such thing as anti-corruption reform, because it tries to encapsulates everything. But still, there were a number of institutions created to fight corruption, such as the National Anti-corruption Bureau or the National Agency for the Prevention of Corruption. This year has been all about anti-corruption, but there has still been a lot cases of corruption, including the Roman Nasirov case. So how would you assess this particular direction? As I wouldn’t see this as one single reform.

Oleksandr Sushko: I would say that at least the new institutions are working better than the old institutions. So it was a good solution, that at a certain point, the decision was taken to create a new institution and try and implement some new policies in them. Certainly there is no illusion that, from the very beginning the institution would work properly, this almost never happens. For example, there are many debates on the Romanian experience, which has had huge progress in anti-corruption policy, including the imprisonment of hundreds of corrupt officials, but, we sometimes forget, that in Romania, these institutions were established 10 or more years ago, and for many years they were not so efficient. It took time for these institutions to collect enough institutional capacity, and then the leadership was appointed with a certain political will. So we probably also need some time to let them consolidate their capacity.

And of course, this year in Romania there was a big debate that that particular Anti-corruption bureau, that it would be chosen to punish those with clear political affiliations. Experts say that there is always the risk that the successful work of the independent institutions could be stopped by the Prosecutor General’s Office, or that the other state institutions could somehow hinder the process. The question with the Groysman government has always been: how independent is he from the president? How independent are all the institutions from President Poroshenko? What is your assessment?

Taras Shevchenko: I think we should really differentiate those institutions that are independent, where the president will have no influence, and where no political parties will have no influence, like the Prosecutor’s Office, or the judiciary. With the government, with Groysman, where it is absolutely logical that there is influence and connections with the president - they are from the same party - there is also a kind of political party program, and it is absolutely normal that they work in line [with each other]. Moreover, when the government, the head of the government and the president are from the same party, they can cooperate, and not compete or fight. So in this regard, this may provide for more effective managerial work, and better possibilities for [making] decisions, to [make] decisions in parliament, to [get] legislation passed as well, but also to not get into fights about who will be appointed to positions where both the president and prime minister have some authority.

PUBLIC BROADCASTING REFORM: WHAT INDEPENDENT TV AND RADIO MEANS FOR UKRAINE

The law on "Public Television and Radio Broadcasting of Ukraine” was adopted in 2014. According to this law, all old structures of National TV would be transformed into a big independent broadcaster. Recently, on April 10th 2017, the new head of the broadcasting company was chosen. Zurab Alasania, who took this position previously but resigned, became the CEO of the UA:PBC once again. You can read more on this reform here.

Taras, there was the election this week for the new head of Public Broadcasting. There were a lot of concerns about if the election would take place, and the independent candidate, Zurab Alasania, was chosen by the independent board. So how difficult was this? Were there a lot of concerns, and what does it all mean?

Taras Shevchenko: Indeed, we are now at a very important stage. After the creation of the Public Broadcasting Company in January this year, for the first time ever, the supervisory board made a competition, and we made a decision this week that, after the competition, Zurab Alasania – who, I myself consider a real independent candidate – was elected for this position. It was quite traumatic because another candidate who, in the first round also had 8 votes in favour when 9 votes were needed to get the position. He is an existing public servant, he works for the government, and he was dealing with that reform as well, but, for the independent TV channels, and radio channels, and all the information that broadcasts  that information as well. My own consideration is that the result of this election is good for society and for this institution, because independence and core reform is not about having a TV channel and radio channel that are belonging to the state and report to the state, but looks at society and works for society.

UKRAINE'S ENERGY SECTOR REFORM: SHOULD IT BE PRAISED OR DOUBTED

At the beginning of his term in office as PM, Groysman promised to set up one price for gas according to the market price. Reforming the national oil and gas company of Ukraine, 'Naftogaz Ukraine', was one of the most crucial steps, and in 2016, it even received a net income for the first time in five years. Also, Ukraine stopped buying gas from Russia, the country which invaded Donbas and annexed Crimea.

The ambitious plans are set to be completed by 2020, and they aim to attract investment to the industry, obtain permission from local authorities for gas exploration and drilling, and to produce gas independently, without any involvement from oligarchs.

Watch Hromadske's special project "Re:Form" that has investigated how gas-production sector in Ukraine works and how to make Ukraine a major gas exporter again.

HEALTHCARE REFORM: CAN AN EXPAT SUCCEED?

After Groysman was appointed chair of the cabinet, he had a chance to appoint his ministers. Some of them were from abroad, for example, the Minister of Health Care, Uliana Suprun, who has US citizenship. She is the director of Humanitarian Initiatives of the Ukrainian World Congress and founder of Patriot Defence. According to information from Reanimation Package of Reforms, a coordination center for the development and implementation of key reforms in the country, she is one of the most successful ministers in this Cabinet.

The main aspects of  Ukrainian healthcare reform are the transformation of the its financing system and the creation of a public system for medical care. It also requires the modernisation of the system as a whole, so that it is equipped to provide affordable, high-quality services and to ensure financial protection for everyone.