KRUK REPORT: 2018 will be tough for Ukraine

KRUK REPORT: 2018 will be tough for Ukraine
It is highly improbable Poroshenko will agree to fulfil any of the highly unpopular steps detailed in the Minsk II protocols a year before his possible re-election.
By Kateryna Kruk January 22, 2018

There are several trends in international and Ukrainian politics that lead to a not very optimistic conclusion: 2018 will be a challenging year.

When it comes to the relations between Ukraine and its leading foreign partners the agenda of the most important issues looks like this: bringing peace to the Donbas, delivering on more reforms, and continuing the fight against corruption. Currently, there is a tension when it comes to fulfilment of each of those provisions.

Let's start with a fight against corruption. In the last months of 2017 Ukrainian authorities did almost everything to deserve a title of saboteurs of the fight against corruption.

Many still remember the accusations of Prosecutor General Yuriy Lutsenko against the National Anti Corruption Bureau of Ukraine, the leading national anti-corruption institution. He claimed NABU was abusing its power, breaking the law, and conducts illegal investigations. The GPO went as far as detaining NABU agents during a sting operation at the national migration service and publicly called NABU "an illegal clique".

Together with the obvious lack of progress in creating a specialized anti-corruption court and the investigations against anti-corruption activists, the attack on NABU looked like a deliberate step back in the fight against corruption.

The events in Kyiv drew a harsh critique from civil society and the country’s foreign partners who reminded the government, in diplomatic but pointed tones, that progress in the fight against corruption is one of the preconditions of the continuation of foreign support to Ukraine.

Under pressure President Petro Poroshenko has submitted a long-awaited law on the specialized anti-corruption court to the parliament. Yet the president's draft proposal was received by a civil society with a great deal of scepticism.

The tension was resolved over the Christmas holidays and the beginning of the long holiday period, but now with the Verkhovna Rada back to work, the anti-corruption agenda will inevitably return. Last-year's attack on NABU showed the determination of the civil sector and its constant "combat readiness". Whatever was the reason for GPO and SBU to start the attack, let's hope they learned the lesson that no-one will tolerate sabotage of the fight against corruption. It is obvious it will remain among the top topics of 2018.

Yet it is important to remember that the attack on anti-corruption institutions wasn't the only reason for people to take to the streets during the cold winter months in Kyiv. That became a trigger to gather for people who have already felt connected to something else: a feeling of frustration.

There is a general feeling that the tempo of changes in Ukraine has slowed significantly and the stabilization that has been achieved, compared to the economic collapse in 2014, has led to a relaxation of the pressure to pursue change.

What happens when authorities don't feel the urge to demand change? They stop trying and return to playing their power games. Frustration over the lack of progress with Ukrainian reforms and economic development is felt not only in Kyiv. Ukrainians have been showing their disappointment on social media, local protests, or much more often, by simply leaving the country.

Foreign donors are also sending signals something is going very wrong. The European Union cancelled its last tranche of €600mn after Ukraine failed to fulfil four of its preconditions for support. The International Monetary Fund (IMF) was supposed to give Ukraine credits of $4bn in 2017 but the country received only $1bn, while it had to pay back $1.3bn. Even Ukrainian Finance Minister Oleksandr Danylyuk shared his fear Ukraine will not receive the 2018 tranche, which, according to him, is the last chance to receive financing as part of the current IMF programme that expires in the first quarter of 2019.

Unfortunately, it looks like this sad scenario is very real. According to IMF requirements, Ukraine should establish an independent anti-corruption court, legalize private sales of agricultural land, adopt a privatization law, improve pension reform, and adjust gas prices to market prices.

The good news is that during its first session in 2018, the Verkhovna Rada of Ukraine has adopted a long-awaited privatization law. Also, with an apparent lack of enthusiasm from the side of the presidential administration, talks on the establishment of the anti-corruption court are at least taking place. Nota bene, it is worth mentioning that, according to the Reanimation Package of Reforms (RPR) expert Mykhailo Zhernakov, the main source of the discord between the authorities and civil society is the mechanism of appointment of judges. Zhernakov says that there is a willingness to have a dialogue about the jurisdiction of the court and the professional requirements of the judges, but not about how they will be selected. The position of the presidential administration is it will only agree to an institution that it can control and influence; i.e. in Poroshenko’s version of the law on the anti-corruption court, judges will be chosen and appointed by the government, not by independent international advisors, which is one of the points the IMF was insisting on.

The complexity of the situation in Ukraine comes with the understanding that 2018 will be nothing more than a year of presidential and parliamentary campaigns; Ukraine will hold presidential elections in 2019. In such periods before the possible big power swaps, politicians are reluctant to bring shocking changes and are rather keen on the status quo. It will be especially true in the context of the IMF’s requirement to open the land market in Ukraine.

The issue of land reform is a hot topic for Ukrainian populists who are already on the rise in the last few years. I just can't imagine a situation when opposition leader, former prime minister and head of Batkivshchyna (Fatherland) party Yulia Tymoshenko and Radical Party leader Oleh Lyashko, for whom keeping the status quo is one of the programme bases, could change their minds and support land reform.

Moreover, little is done to explain the essence of the problem to the people. On the one hand, there are populists repeating loud but meaningless slogans; on the other the absence of an articulate explanation of the basics of the reform and how the market is supposed to function afterwards. Sadly, it seems much more likely there will be progress with the anti-corruption court before there will be progress with creating an open market for land sales.

In the context of the upcoming elections, there is another law that is as important and listed by IMF: electoral reform that would establish a proportional representation system with open party lists instead of a current mixed system. Electoral reform is seen in Ukraine as a necessary step to ensure the next parliamentary elections will not mark a decisive rollback from the reform and Western integration agenda. There are real grounds to fear that. Not only because of the strong support of populists parties in the polls, but also thanks to the current composition of the parliament where most of the "old system guys" became deputies thanks to the majoritarian system.

2018 may bring some changes to the Donbas peace process. However, most of Ukraine’s partners are distracted with their own agendas. Germany is preoccupied with the formation of its own government. France is focused on internal reform of the European Union. So the only parties still actively engaged in the dialogue over Donbas are Ukraine, the US, and Russia.

Russia and the US have a bad habit of meeting to discuss possible future scenarios without Ukraine’s participation. Of course, Ukraine highly values and praises the position and the commitment of the US special representative for Ukraine Kurt Volker, but there are already some voices in Ukraine alarmed that talks about Ukraine take place without Ukraine.

One could only guess why Ukraine has only now adopted a long overdue law recognizing Russian aggression and emphasizing its responsibility for territorial occupation. Maybe one of the many reasons for doing it now is to try to prevent the Donbas conflict turning into a matter that can be decided by the US and Russia without Ukraine.

Recent polls in Ukraine show that people support peaceful resolution but they decisively reject key provisions of Minsk agreement. As long as the mantra "there is no alternative to the diplomatic solution for Donbas and a diplomatic solution is Minsk" is being repeated and alternative solutions are rejected, Donbas is in a deadlock. It is highly improbable Poroshenko will agree to fulfil any of the highly unpopular steps detailed in the Minsk II protocols a year before his possible re-election.

I have never been overly pessimistic about developments in Ukraine but 2018 really gives no grounds to expect big moves and bold decisions. This will be a year of hard but important fights to ensure Ukraine doesn't stray from the right path. By no means it will be a year to relax. But if we will win those key battles in 2018 we can be more calm whatever elections bring in 2019.

An activist, journalist and co-founder of Global Ukrainians, an international network of Ukrainians worldwide, Kateryna Kruk was awarded the Atlantic Council Freedom Award for her work communicating the Euromaidan revolution to the world. She predicted a frozen conflict in July 2014, which has largely come to pass, and now comments on the progress of crucial reforms in Ukraine.