Implementation of the European Neighborhood Policy: Progress Report for Ukraine for 2007

A. Main Hypotheses of Relevance to PDT

Democracy and the Rule of Law

• Elections
  • Overall, “Ukraine’s positive record in the conduct of democratic elections in 2006 was confirmed.”
  • However, shortcomings of the 2006 elections include: poor quality of voter lists, possible disenfranchisement of voters who crossed the borders, lack of possibilities for absentee voting
  • Recommendations
    • Adopt a unified election code
• Balance of Power:
  • Concerns are expressed about the January 2007 law on the Cabinet of Ministers that the Venice Commission believes endangered the separation of powers and amounted to a constitutional change through an ordinary law
  • Venice Commission believes that the constitution lacks an efficient system of checks and balances. As a result, there are “two centers of power currently competing in the executive,” impeding implementation of sustainable policy reforms.
  • The Constitutional Court, which “barely functioned during most of the year and saw its independence compromised during the political crisis of 2007, has often failed to address issues of constitutional relevance.”
  • Recommendations
    • Increased inclusiveness and transparency of the National Constitutional Council that was established in December 2007
    • Constitutional amendments to limit the excessive powers of the prosecution service, as recommended by the Venice Commission
    • Parliament should adopt the draft law on prosecution reform
• Anti-Corruption
  • In general, Ukraine needs to close loopholes by which allegedly corrupt people escape conviction, strengthen prosecution, and address the problem of immunity of senior officials
  • Recommendations
    • Ratify the Council of Europe Criminal Law Convention on Corruption
    • Ratify the UN Convention on Anti-Corruption
    • Conform the anti-corruption action plan created in August 2007 to GRECO standards
    • Pass the draft law currently under consideration by Parliament to create a professional, politically impartial civil service

Human Rights and Fundamental Freedoms

• Freedom of the Media
  • Ukraine, in general, has a “wide-ranging pluralism in both electronic and print media”
  • Recommendations
    • Introduction of a public service broadcaster
    • Increase development of pluralism in local and regional media
• Torture and Ill-treatment
  • Despite positive steps, cases of ill-treatment continue to be reported, especially in pre-trial detention and prison facilities
  • Recommendations
    • Establish the National Preventive Mechanism that is required by the Council of Europe’s Committee for the Prevention of Torture
    • In April 2007, the Ministry of Internal Affairs requested that all detainees be informed of their rights; however, the police have not received instructions on how to carry this out
    • Ratify the Rome Statute of the International Criminal Court; this will require constitutional amendments
• Rights of Persons Belonging to National Minorities
  • Recommendations
    • In order to comply with Council of Europe standards, Ukraine needs to strengthen criminal legislation against hate speech and racially-motivated crimes
    • Improve anti-discrimination legislation
• Women
  • Recommendations
    • Awareness raising of domestic violence
    • Improvements in women’s shelter capacities
    • Better implementation of the criminal code at the judicial level
• Civil Society
  • Ukraine has taken “considerable steps toward improving the development of civil society”
  • In January 2007, the fee for NGO registration was significantly lowered and trade unions are now exempt from any fee
  • In November 2007, Cabinet of Ministers endorsed a concept paper on government support for the development of civil society

Regional and International Cooperation Issues

• Cooperation on Foreign and Security Policy
  • Ukraine made excellent progress, aligning itself with all open EU CFSP declarations
  • Informal policy planning talks took place between Council Secretariat Policy Unit and the Ukrainian Ministry of Foreign Affairs
  • Good progress on cooperation for the settlement of the Transnistria conflict
  • Recommendations
    • Ratify the Agreement Establishing a Framework for Participation in EU Crisis Management Operations

Economic and Social Reform

• 2007 economic growth was “robust” at 7.3% in real terms, supported by strong domestic demand
• Inflation accelerated to 16.6% by December 2007
• International survey on business in Ukraine did not show tangible improvements and raised questions on the prospects for growth in the longer term
• Ukraine is lagging behind regional peers in paying taxes, dealing with licenses and protecting investors
• Perceptions of central bank independence were hurt by the participation of the Bank’s Governor in the September parliamentary elections
• Recommendations
  • Fully implement the 2006 law on the business permit system
  • Fully implement the 2007 law on inspections, address divergences in interpretation between different state bodies
  • Address the problems of tax inspections and an overly intricate tax system with comprehensive tax reform
  • Improve prudential supervision and move towards risk-based supervision in the financial services sector
  • Adopt a new modern labor code with discussion and input from social partners

Trade Related Issues, Market and Regulatory Reform

• Trade with the EU increased in 2007
  • EU imports from Ukraine grew by 25.2%
  • EU exports to Ukraine grew by 22.4%
  • Trade is still “very limited in value terms but increases steadily”
• Concerns are expressed over the restrictions on grain exports that have occurred several times since 2006
  • Overall, as Ukraine prepares to accede to the WTO it has made significant progress on trade
  • Regarding the future of EU-Ukraine trade, “the draft negotiating directives for the EU-Ukraine Enhanced Agreement include an FTA component providing for deep yet gradual convergence with the EU on non-tariff and regulatory areas.”
• Recommendations
  • Stop the government practice of using export restrictions to control prices on the domestic market
  • Ensure that old standards and economic regulations are automatically repealed when new standards are adopted
  • Decrease significantly the number of permit and licenses that are required of companies in most economic sectors
  • Adopt disclosure rules regarding the real ownership of banks and non-bank financial institutions to increase transparency
  • Government-wide commitment to fully implement the European Charter for Small Enterprises, which will require action from several different parts of the Finance Ministry
  • Improve transparency and independence of the competition agency, the Anti-Monopoly Committee of Ukraine
    • Address the staffing problems of this organization
    • Narrow its wide range of responsibilities that is limiting its effectiveness  

Cooperation on Justice, Freedom and Security

• Refugees and Asylum
• Recommendations
  • Create provisions in refugee law for non-discrimination of refugees on grounds of race, religion, or country of origin
  • Provide access for specialists from NGO’s and UNCHR to refugees’ individual files
  • Allow specialists from NGO’s and UNCHR to serve as legal representation during interviews with Migration Services
  • Establish a timeframe in refugee law within with asylum applications must be referred to the Migration Services’ bodies

Transport, Energy, Environment, the Information Society, Research and Development

• Transport and Energy
  • Restructuring of the state owned port sector is progressing too slowly, though Ukraine was taken off the black list of the Paris Memorandum of Understanding of port state control
  • Ukraine has made good progress of implementing European energy policies and the EU and Ukraine have stepped up their dialogue concerning the energy sector, which is especially important as Ukraine is a key energy transit country for the EU
  • The Boyarka Natural Gas Metrology Center, established with European Commission assistance, was inaugurated and will help to increase transparency and reliability of gas supplies to the region and EU
  • Recommendations
    • Continue to invest in pipeline infrastructure
    • Preliminary audits of the gas transit network identified investment needs of about 2.5 billion euros
• Information Society and Research
  • Recommendations
    • Strengthen the independence and capacities of the National Commission for Communications Regulation
    • Ratify the UNESCO Convention on the Protection and Promotion of Diversity of Cultural Expressions
    • Ratify the Council of Europe Convention on Transfrontier Television
    • Increase the low level investment in research
    • Fully implement and participate in the bilateral country cooperation between EU and Ukraine in the FP7 for Research

People-to-People Contacts, Education and Health

• Higher Education
  • There was good progress on convergence in higher education through the European Credit Transfer System (ECTS) and the Bologna Process
  • More students had access to the Erasmus Mundus exchange program
  • The Tempus program made good progress by promoting voluntary convergence with EU developments; Tempus created new courses and curricula that respond to labor market needs and contributed to international research partnerships
  • Recommendations
    • “Closer cooperation between all stakeholders at all levels and, in particular, with social partners, is required to ensure the sustainability of education and training sector reform and to benchmark the Ukrainian system with the EU member states”
• Youth and Culture
  • Participation rose and good progress was made in the Youth in Action program
  • Recommendations
    • “Further efforts aimed at promoting intercultural dialogue through youth exchanges and informal education would be welcome”

Budget Figures for 2007

• For the period 2007-2010 the indicative financial envelope for Ukraine under the National Indicative Program is 494 million euros
• The program’s priorities:
  • Democratic development and good governance
  • Regulatory reform and administrative capacity building
  • Infrastructure development
• The 2007 ENPI Annual Action Program for Ukraine has an allocation of 142 million euros
  • This was increased from 120 million euros with an additional allocation of 22 million euros from the Governance Facility to reward Ukraine’s good performance in governance