November 10, 2017

Verkhovna Rada passes more laws to meet IMF and Maidan demands


KYIV – Ukraine’s reformist yet occasionally obdurate legislature, the Verkhovna Rada, moved ahead this week with more bills to further enhance a constantly overdue pro-European agenda on the back of promises of the 2014 Revolution of Dignity.

A more representative electoral bill was approved in the first of two readings on November 7. It foresees replacing half of the nation’s 225 voting districts, in which single candidates got elected based only on who receives the most votes, with regional political party lists, whereby candidates get elected based on the proportion of votes their party receives.

According to the Ukrainian election watchdog Opora, the practice for electing half of the legislature’s so-called single-mandate deputies leads to three negative outcomes. First, there are “wasted votes” in the single-mandate districts when the majority of voters usually have no “representation” since most of the deputies elected this way do not garner a majority of votes.

According to an analysis of the bill that Opora published in June, those constituencies were also “vulnerable to vote buying,” and the elected deputies were often “prone to switch to factions and parliamentary groups” after getting elected.

Among other changes, the new bill lowers the election threshold from 5 percent to 4, and makes party lists open in the nationwide proportional voting system. Previously, only the first five candidates’ names were disclosed. In Ukraine, seats are proportionately divided among parties based on the percentage of votes they get.

“First and foremost, closed party lists facilitate business lobbying in politics,” the watchdog said in the report. “In the past, oligarchs were able to utilize closed party lists to place their own ‘cronies’ and, therefore, to maximize their political influence. Oligarchic proxies in mid-range positions on party lists were especially unlikely to be covered by the media or scrutinized by the voters.”

The European Union’s Venice Commission, an expert advisory body on constitutional and other legislative matters, has approved the bill.

Another bill that was approved in its first reading dealt with selling off a portion of the state’s nearly 3,500 companies, the vast majority of which stand idle or are not profitable. Kyiv’s main lender, the International Monetary Fund (IMF), has called on the government to sell whatever assets are still viable, like the chemical producer Odesa Portside Plant, as a prerequisite for additional funding.

In addition, the Verkhovna Rada on November 9 passed in its final reading a law that should improve public utilities and communal services for residents living in the nation’s high-rise buildings. It was the last of four key “energy efficiency bills” that the Ministry for Regional Development, Building and Housing had advanced.

The bill “delineates the responsibilities and rights of consumers and service providers,” Regional Development Minister Hennadiy Zubko said in Parliament. “It’s the first step that gives residents of the high-rise sector the chance to impact the quality of services at a fair price.”

Whereas earlier, residents had trouble getting explanations of what publicly owned city works agencies provided to the buildings where they live, now they can match the number of services to what is done at what price and how often, and can refuse to pay for certain items, he added.

Ukraine’s business community received a preliminary respite when the Cabinet of Ministers approved a “Business Pressure Relief Law” designed to soften pressure from fiscal and law enforcement authorities.

On November 9, the nation’s Business Ombudsman, Algirdas Semeta, and Daniel Bilak, the director of UkraineInvest, a government-run foreign business promotion agency, jointly announced that the bill will strengthen the “protection of the rights of businesses, prevent abusive practices on the part of law enforcement bodies during the course of investigations, and introduce liability for any unlawful behavior on the part of investigating officers.”

They stated that the bill will be adopted “hopefully in the current session.”

Meanwhile, as the evening session got under way on November 9, the Rada voted to accept a bill designed to improve the nation’s much-vaunted electronic public procurement system, known as ProZorro, in the first of two readings. The bill would create a National Audit Service to monitor abuses of the system and catch red flags of fraud or anti-trust violations like collusion between bidders during tender processes.

A step backward

Also on November 9, the Verkhovna Rada cancelled the competitive process of appointing oblast governors – the vetting of candidates by special committees – and handed the power of naming governors and their deputy heads back to the president, as in the times of Leonid Kuchma, Viktor Yushchenko and Viktor Yanukovych. Critics say this is another attempt by Mr. Poroshenko to reverse or stall reforms and strengthen what they call his “vertical of power.”

Another IMF demand, a bill that establishes a separate court to adjudicate graft cases, was put on hold on November 8. President Petro Poroshenko withdrew a bill for the judicial body’s creation and ordered a parliamentary committee to form a separate working group to rework the submitted bill so that it falls into line with “recommendations of the Venice Commission.”

“The creation of a Higher Anti-Corruption Court should become a significant element of the anti-graft system and to delay its establishment I consider to be inadmissible,” he said in a statement on the presidential office website.

Advocacy groups like the Anti-Corruption Center subsequently said this was a stalling tactic on the part of the president. Berlin-based graft watchdog Transparency International, in a statement published on the website of its Ukrainian branch on November 7, also called on the president to move ahead with establishment of the court.

Pace of reforms accelerates

Still, the pace of legislative changes for improving governance and public life were the “most reformist” in the July-September period over the previous five quarters, stated VoxUkraine, a non-profit policy center associated with the Ukrainian Think Tanks Liaison Office in Brussels.

In its report published on November 1, the group noted that seven laws – “20 percent of reformation documents” – were signed and that “33 normative acts that promote reforms were passed in the third quarter of this year.”

“In this quarter, fundamental laws on energy efficiency were signed, and the regular stages of the reform of the civil service and education were launched,” VoxUkraine stated. “The president also signed the law on pension reform, and deputies adopted one of the laws that triggered the long-awaited changes in the medical system. Now the establishment of the anti-corruption court and [agricultural] land reform are on the agenda.”