Ukraine: Notes from a European construction site

Adepts of realism were, and many still are, sceptical about the prospects of, as they say, a weakened country which passed through a revolution, overburdened with a legacy of corrupt governance, and facing the aggression of a much stronger neighbour.

But reality is proving the opposite and today (Monday 7 December), in the run up to the second meeting of the EU-Ukraine Association Council, designed to take stock of the implementation of the Association Agreement, it is time to tell another story: about a country of brave and creative people who are pushing for modernisation, while rebuffing aggression.

It is worth putting rhetoric aside and letting the economic figures speak for themselves.

To put a country back on the path of economic growth, a credible program of structural reforms is needed. In the Ukrainian case, credibility could be most accurately measured by a $17.5 billlion International Monetary Fund (IMF) loan. The IMF lent its shoulder to our reforms but also enabled us to receive support from other international partners, including the European Union.

By applying tailor-made measures, the government also managed to reduce the country’s financial deficit, increase debt sustainability and stabilise its currency. It also improved public spending by stopping huge subsidies to inefficient branches and state-owned enterprises.

Ukraine’s foreign reserves have grown from $5 billion to $13 billion. This quarter, compared to the previous one, the Ukrainian economy finally demonstrated growth, of 0.7 percent.

Many positive changes are also due from the preparation for provisional application of the the EU free-trade pact, the DCFTA, from 1 January 2016.

Conclusion of an agreement on restructuring of Ukraine’s external debt of $ 18 billion, including writing off $3 billion of the debt burden, proves investors’ belief in the economic recovery of Ukraine and gives us confidence in the path chosen.

This confidence is also embodied in a recent decision of three leading credit agencies to upgrade Ukraine’s sovereign rating to a stable one.

Corruption

Overcoming of rampant corruption, which is rightly believed to define the renaissance of Ukraine’s economy, by paving the way for competitiveness of business actors and for the well-being of the Ukrainian people, is also high on the agenda.

There is a long list of anti-corruption bodies already established in Ukraine, including ones which are completely new and revolutionary for our society. While some time is needed to prove their efficiency, the energy sector and public procurement are good edxamples to get a feeling of changes already achieved.

To root out corruption from public procurement, this year Ukraine has started introducing an e-system, ProZorro (better understandable in English as “transparent”), as a first phase of reform in this sector. Responsible for more than 26 thousands tenders worth $253 million, ProZorro has already saved about $18.6 million of public funds.

In the energy sector, important legislation was passed which introduces the norms of the EU’s third energy package, aimed at breaking up gas corruption and lessening the burden on the budget.

A good illustration is improved efficiency in the biggest Ukrainian energy company, Naftogas. In the first nine months of 2015, the company made a profit of $8.7 million, a significant step forward compared to te $1.8 billion of losses for the same period last year.

However, without rule of law any good intentions are doomed to fail. A detailed strategy has been put in place to strengthen public trust in the judiciary and the relevant constitutional amendments have already received a green light from the Venice Commission.

Newly trained police officers are on Ukrainian streets.

A competitive selection process for renewal of local prosecution offices is also underway. Together, with ups and downs, we are moving to a completely new system of justice.

Construction site

Today Ukraine looks like a giant construction site. The picture is very sketchy, and many of the results are behind the scenes, ranging from deregulation and improvement of the business climate, to strengthening of the national security system, purification of the bank system, and decentralisation.

A lot remains to be done. It can’t be achieved overnight.

But there is one thing that makes me optimistic about the future of my country: the Ukrainian people, whose devoted belief in the ideals of dignity, freedom, and democracy are shaping a new European Ukraine.

It is also the reason why I am confident that it is worthwhile for the European Union to support Ukraine both in restoring its territorial integrity and in its endeavours to reform the country.

Liubov Nepop is Ukraine's acting ambassador to the EU