TCUP Conference: Day 4

The TCUP Conference continued on Thursday, February 4, 2021, with a panel on Institutions and Reform. Moderator Adrian Karatnycky contextualized the panel at its outset, stating that, despite an active war, foreign aggression, corruption, and politics that promote ethno-cultural difference, Ukraine continues to maintain competitiveness and democratic participation. In this context, we can begin to assess how well Ukraine’s key state institutions function, based on how they reflect public will and to what degree corruption and dysfunction are present. 

Cover image for panel 3


The Context of Reform

Margarita Balmaceda began by establishing context for the discussion, arguing that we must look at the process by which issues of corruption and reform have played out since independence. The patterns and trends established in the past continue to matter, not because they repeat themselves, but because they create the frameworks in which actors make choices today. When we think about institutions, we have to move beyond “brick and mortar” institutions such as Parliament and the judiciary; instead, Balmaceda noted, we need additional focus on corporate governance, particularly in terms of formerly state-owned enterprises, and on regulatory institutions. She discussed how de facto private control over state-owned companies—such as oligarch Ihor Kolomoisky’s control over Ukrnafta—has led to massive stealing of funds from the state. Similarly, oligarchic control over regulatory institutions has allowed oligarchs to change the rules of the game, ultimately stifling state-based reforms. 
Olga Aivazovska argued that the electoral system has become more transparent over the past few years since Euromaidan, though a lack of trust between society and its elected officials prevails. Further, current parties’ ideological flexibility complicates predictions of the future of Ukraine’s politics; for instance, despite having a majority in Parliament, Servant of the People still must create coalitions with other parties to pass legislation, as there is not concensus within the party itself. 

Jessica Pisano turned to the economic context behind this discussion of reforms. For instance, perhaps the electoral system has become more transparent and is indeed more competitive, but as long as the economic system remains static—as a system in which the state cannot guarantee a strong welfare support program—then there will continue to be pressure within elections. She argued that electoral manipulation has moved to the local level, but this is enough to threaten democratic institutions. 

The Role of Civil Society 

Rostyslav Pavlenko argued that Ukraine faces a test, particularly since President Zelensky’s rise to power in 2019. Zelensky’s election was a response to people’s desire for quick and resolute change in lifestyle. People entrusted power to a person outside of the system, who claimed that he was not corrupt and that he understood and would meet the needs of society. Ukraine may still pass the test, and Pavlenko is optimistic that the active part of civil society will hold Zelensky accountable. Here, he pointed to how the government refers to public opinion as a guideline for their policy, such as in establishing the “red lines” that should not be crossed in Zelensky’s negotiations with the Normandy Format group. Zelensky and his administration are anxious not to cross the red lines drawn by civil society. 
Civil society plays an important role in holding institutions accountable. Pisano called Ukraine’s civil society “one to which the rest of the world can aspire.” Aivazovska stated that civil society organizations promote new ideas and can even draft laws, but these are met with mixed reactions. For instance, the pro-Russian Opposition Platform - For Life has established its agenda in response to a fear of Western influence on the Ukrainian government, and this opposition still views civil society as an agent of Western influence. Balmaceda concurred that civil society was a key actor in pushing for transparency in the energy sector, especially journalists who have been active in publishing contracts which are typically not publicly available. 

Political Pluralism in the Time of Oligarchs

Karatnycky asked the panelists to discuss political pluralism and Ukraine’s ethno-national diversity as it relates to reform. Aivazovska focused her answer on decentralization reforms, which allow local governments to shape their own agendas. She argued that these reforms are viewed favorably by both civil society and foreign partners (echoing the conclusions of Tuesday’s panelists). Balmaceda drew from the example of the coal sector to show how actors with their own agenda can manipulate regional interests. Oligarchs with interests in the coal sector instrumentalized people’s fears by developing an energy-political system that would increase the powers of specific regional oligarchic actors. They used their own power in the regions to bargain with other political actors, including the president. Pisano continued on the common refrain of a “divided” Ukraine split into east and west. She argued that the Donbas political machines brought people in the region to vote for Kuchma and Yanukovych, which was translated into Western scholarship (and Russian propaganda) as evidence of an east-west divide in mentality and behavior. In reality, she claimed, the more salient division was what we might term a generational one: people who think you should follow bureaucratic processes no matter how corrupt they are versus people who think you should come into the streets to overthrow a corrupt regime. Since 2014, these dividing lines have become less clear. 
Karatnycky’s final question addressed the role of oligarchs and their commitment to Ukraine’s independence. Balmaceda put it succinctly: Oligarchs will support Ukrainian sovereignty only if they can find a way to profit from it. It is never guaranteed that these economic actors will take a Ukraine-based view of their interests. Aivazovska framed her answer around differing ideas of sovereignty. She said there is no consensus on what Ukraine looks like as a geopolitical identity; some see its future as a European state while, for instance, the Opposition Platform - For Life pushes back against these Western aspirations and sees Ukraine’s territorial integrity in a different light. Pavlenko added the example of Kolomoisky, who defended the Dnipro region in 2014 during Euromaidan. But this support quickly became part of his business interests, and ultimately, part of his search for a change in political power. Nonetheless, Pavlenko added, foreign justice continues to get closer to Kolomoisky, as news broke during the panel that Ukraine won a $6 million case against Kolomoisky in Stockholm Arbitration Court. Pisano made the argument that threats to Ukraine’s sovereignty coming from outside of Ukraine may not go further than we have seen so far. Ukraine as a sovereign country is useful to its neighbors as an instrument of political mobilization internally, especially for authoritarian leaders in weak states such as Russia and Hungary. While they may mobilize discourses about the rights of minority populations in Ukraine, they have no interest in actually taking charge of those populations. They need Ukrainian sovereignty to continue if they wish to keep making such claims. 

Top Reform Priorities

Panelists agreed that judicial reform is a top policy priority. Pavlenko discussed earlier reforms under President Poroshenko, who began judicial reforms in 2014. Poroshenko focused on change from the top, establishing the High Anti-Corruption Court and reforming the Supreme Court. Pavlenko advocated for further reforms to be taken in lower-level courts, such as appellate courts, but he also stated that the current administration continues to focus on the already reformed courts at the top, undoing the progress of the Poroshenko administration. Aivazovska stated that judicial reform is essential: it is a mistake to talk about anti-corruption reforms and institutions, because they cannot work if problems at the judicial level remain. 
Pisano and Balmaceda agreed that independent regulatory institutions are a key reform Ukraine needs to make. Balmaceda also advocated that Ukraine should send clear signals that it is serious about joining the European Union and about its intentions to become more transparent. Pisano further suggested moving beyond a discussion of increasing the minimum wage and instead bringing up the idea of a universal basic income. She argued that without addressing the economic context of reforms, we may create more challenges instead of preventing them.
Panelists set the stage for tomorrow’s final panel, which will discuss the issues of displacement and reintegration in Crimea and the Donbas. See summaries of panels one and two, and watch Dr. Francis Fukuyama’s keynote lecture.