15.12.22 Review

Post-War Reforms In Ukraine Will Be Aimed At Broad Integration With The EU And Non-Cooperation With Russia

To build a successful democratic society, post-war Ukraine will need to implement a wide range of reforms, which must be thought through by the time the war is over. According to the experts from the Center for Economic Policy Research, the success of all reforms will depend on the implementation of the two most important ones, the anti-corruption reform, and the governmental reform. The first reform implies a number of measures aimed at eradicating corruption, which has been hampering the development of Ukrainian society. The second reform should be directed at establishing a balance between the three branches of Ukrainian power and involves the institution of the Agency for Reconstruction of Ukraine and European Integration, under the auspices of the EU, which will work together with the Ukrainian government and include the experts from the Baltic countries, Eastern and Northern Europe. The general principle of all Ukrainian reforms, according to experts, should be the reduction of economic, trade, and cultural ties with Russia.

A new report by the Center for European Research (CEPR) discusses in detail the challenges that Ukraine will face in rebuilding its economy and the principles that should underlie the government's strategy of building an open society with developed infrastructure and competitive markets. No matter when or how the war ends, the main reforms must be developed and thought through in advance, the CEPA experts believe. 

Many formal and informal institutions and practices were significantly hindering post-Soviet Ukraine from developing, building a successful democratic society, and moving closer to EU membership. For all its drama and destructiveness, the war has opened a window of opportunity for reformation and for overcoming the resistance of those opposing the reforms, primarily the oligarchs, the authors of the report write. In addition, the central principle of all reforms should be a reduction of dependence on Russia by cutting economic, trade, and cultural ties with Moscow. No matter how the war ends, a regime hostile to Kyiv will remain in the Kremlin. 

Obviously, Ukraine does not have sufficient resources to carry out all the reforms and infrastructure rehabilitation which, means the Western countries and the aggressor country will have to finance it. At the moment, it is difficult to estimate the required amount of funding, but according to the authors, we are talking about hundreds of billions of dollars.

The report puts anti-corruption and governance reforms at the top of the list; without their successful implementation, all other reforms are doomed to failure. Before the war, corruption permeated all sectors of Ukrainian society: health care, education, social welfare, sports, and politics, largely blocking the inflow of international investment and economic development, the authors of the report write. After 2014, one of the conditions for the country's accession to the EU was the victory over corruption. According to Transparency International, there has been a positive trend in this area in recent years (including due to the establishment of the Supreme Anti-Corruption Court and the restart of the National Agency for the Prevention of Corruption): in the Corruption Perception Index, Ukraine has risen from 126th place to 117th (out of 180). The amount of future financial support will be directly dependent on the progress in this area; in its absence, Ukraine will quite quickly lose the trust of its Western partners (the Republicans in the United States Congress are already pointing to the necessity of strict control over the assistance provided to Ukraine).

Other important elements of reforms should include the digitalisation of taxes, duties, and fines to eliminate everyday corruption, privatisation of corrupt state-owned companies and banks, creation of an electronic platform, and implementation of EU standards in public procurement. Finally, national legislation should be audited for possible corruption risks.

As part of the second key reform, the reform of the government system, experts recommend establishing a balance between the three branches of power and not introducing any innovations that would expand the president's powers at the expense of parliament, as well as decentralising government functions. Also, it is necessary to strive to strengthen an independent judiciary, which will be able to prevent Ukraine from slipping into authoritarianism in the first years after the conflict and support the development of democratic practices. 

The creation of the Ukraine Recovery and European Integration Agency (UREIA) should also help to maintain a balance of power among the branches of government by reforming state institutions in accordance with the European legal framework. The authors of the report believe that the agency should be subordinated to Brussels, but located in Kyiv. It will work in close cooperation with the Ukrainian government and will be accountable to it, but at the same time, it should have enough autonomy not to fall under the influence of political interest groups. The management of the agency, according to the authors of the report, should primarily represent the interests of international organisations, major donors, the EU, and the Ukrainian government and will be closed after Ukraine joins the EU. UREIA should be led by experts from emerging economies, the Baltic States, Eastern Europe, and Northern Europe who better understand the possible threats to Ukraine posed by Russia and the problems of reforming former communist societies. 

UREIA's organisational structure should form a multi-sectoral organisation where each division is tasked with implementing a different reform, whether it will be health care, energy, education, transportation, or the institutional sector. Each division should be centralised at the national level and have branches in the regions.

The most important principle of state agencies, according to the authors, should be a reduction of contact with Russia, and a focus on integration with the EU and the international community. For example, in the transport sector, it is planned to switch to a European-sized railway gauge, develop trade corridors with Western neighbours, and reduce transport traffic with Russia. In the energy sector, the plan is to synchronise with the European power grid, stop using fuel from Russia, and develop "independent" renewable energy sources. In the field of education, it is important to integrate Ukrainian universities into pan-European and global educational space.