Ukraine "still on reform path": Herbst

09:00, 21 June 2016
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It is too early to draw firm conclusions, but Prime Minister Volodymyr Groisman’s and Prosecutor General Yuriy Lutsenko’s early moves indicate that Ukraine is still on the reform path, reads an article at atlanticcouncil.org by John E. Herbst, former U.S. Ambassador to Ukraine titled “Why the West Was Wrong about Ukraine’s New Government.”

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“There was understandable pessimism when Groysman assumed office in April with a new government that did not include the previous cabinet’s strongest reformers,” says Herbst, who is now director of the Dinu Patriciu Eurasia Center at the Atlantic Council.

Critics also cast doubt on Yuriy Lutsenko’s appointment as prosecutor general, pointing out that his absence of a legal background was unusual and required the passage of special legislation in Ukraine’s parliament. In this they saw the possibility for discreet deals between the incoming top prosecutor and entrenched interests. Both are seen as close allies of President Petro Poroshenko.

Yet both have come out of the gate strong. Groysman made good on his promise to raise the gas tariffs to meet IMF requirements within two weeks of taking office. Despite strong populist opposition in the Rada, he raised the tariffs to market prices in May. Populists like Batkivshchyna Party leader Yulia Tymoshenko are now trying to use this to their advantage, but it is not clear that they will succeed.

The prime minister’s team has also overseen steps to root out corruption in state enterprises, establishing an independent supervisory board for Naftogaz, the state gas company, and putting into place a transparent process for choosing new chief executive officers for state-owned companies.

There’s even been progress on reforming the country’s notoriously corrupt courts. Here President Poroshenko has taken the lead. In early June, the Rada passed constitutional changes to reform the courts as laid out by the Venice Commission of the Council of Europe.

When Lutsenko initially announced that he wouldn’t make any staff reshuffles within his first 100 days in office, reformers were disappointed. So his early June decision to remove Shokin’s three deputies was a pleasant surprise. So too were his appointments to deputy positions of reformers Dmitry Stvorozhuk, Yevgeniy Yenin, and Valentina Telychenko. Telychenko represented the wife of murdered Ukrainian journalist Georgiy Gongadze. If the Prosecutor General’s office reverts to politicized prosecutions, deputies like Telychenko will not hesitate to leave.

This month has also witnessed perhaps the most prominent action yet by Ukraine’s National Anti-Corruption Bureau. The bureau named MP and businessman Oleksandr Onyshchenko in a corruption investigation involving Ukrgazdobycha, a state gas production company. In order to pursue the case, Lutsenko had to ask the Rada to remove Onyshchenko’s immunity. Lutsenko did this, despite the fact that Onyshchenko had voted for Lutsenko’s appointment as prosecutor general. All of this is breaking new ground in Ukraine’s long and inadequate fight against corruption.

Ukraine’s recent progress has partially satisfied the IMF. An IMF team visited the country in May to see if the new government was meeting its requirements for the second tranche of the IMF loan that was originally scheduled for disbursement in September 2015. The IMF mission recommended that the loan be made in July, if the Rada adopts all the new laws required by the IMF.

Read alsoUkraine counts on additional $1 bln from World Bank in 2017Recognizing the need to maintain incentives for further reform, the IMF recommended disbursement of only $1 billion of the loan (the original loan amount had been $1.7 billion). Holding back the $700 million is designed to discourage Ukraine from backsliding.

It may be that political competition is spurring both the president and the prime minister toward reform. Decisive reform leadership may prove good not just for Ukraine, but for the political fortunes of the reformers.

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