Nations in Transit 2009 - Ukraine

by Oleksandr Sushko and Olena Prystayko

Capital: Kyiv
Population: 46.5 million
GNI/capita: US$6,810

The data above was provided by The World Bank, World Bank Indicators 2009.

Nations in Transit Ratings and Averaged Scores

* Starting with the 2005 edition, Freedom House introduced separate analysis and ratings for national democratic governance and local democratic governance to provide readers with more detailed and nuanced analysis of these two important subjects.

NOTE: The ratings reflect the consensus of Freedom House, its academic advisers, and the author(s) of this report. The opinions expressed in this report are those of the author(s). The ratings are based on a scale of 1 to 7, with 1 representing the highest level of democratic progress and 7 the lowest. The Democracy Score is an average of ratings for the categories tracked in a given year.

Executive Summary

During its post-Soviet transition, Ukraine has developed a pluralistic and competitive political order, relatively free media, and basically secure human rights. Yet the country's system of governance is fragile and inefficient, demonstrating an evident deficit of rule of law. Since independence in 1991, Ukraine has held four presidential (1991, 1994, 1999, 2004) and five parliamentary (1994, 1998, 2002, 2006, 2007) elections. The Constitution, adopted in 1996 and amended in 2004, stipulates a de facto "dual executive" that is dependent on both the president and the parliamentary majority. Victor Yushchenko, the third president of Ukraine, has been in power since January 2005. The current Parliament was elected in September 2007 by proportional vote with closed party lists and a 3 percent electoral threshold. The government led by Prime Minister Yulia Tymoshenko was appointed in December 2007. It remained stable during 2008 but was consistently challenged by a fragile parliamentary coalition, which finally collapsed in September and then reestablished in a new format in December.

The global economic crisis has severely affected Ukraine. The rapid economic growth of 2000-2007 was replaced by a recession that started in the fourth quarter of 2008. The country's gross domestic product (GDP) in January-September grew about 6.5 percent (as in 2007), but annual outcome reached only 2.1 percent of growth owing to the severe decline that happened in the last three months of the year. Nominal wages, which had been on the rise through September 2008, were substantially challenged by inflation and deep devaluation of the national currency at the end of the year. Ukraine's 22.3 percent inflation rate in 2008 was the highest in Europe.

Ukrainian media have proved to be sufficiently free, with no direct censorship or open governmental pressure detected in 2008 at the national level. However, most media were dependent on owners and informal payments from interest groups for survival, indicating that the media sector still needs strengthening, restructuring, and systemic reforms. The influence of political and economic groups in the media sphere remains strong, and public television has not yet been introduced.

National Democratic Governance. Ukraine's constitutional model, introduced in 2006, empowers the Verkhovna Rada (Parliament) to appoint a Cabinet of Ministers (government) after forming a majority coalition. However, the president remains a strong political figure, deriving power from leadership in the National Security and Defense Council and the capacity to appoint and dismiss regional executive chiefs ("governors") based on formal submissions by the government, which are often de facto ignored. The existing governance model has proved basically plural and democratic but is consistently challenged with a number of institutional gaps, deficits, and an inefficient system of checks and balances. The de facto "dual executive" model has led to evident institutional competition undermining the capacity of state power. Instead of sustainable policy and reforms in 2008, political actors were preoccupied with fighting for power and pushing legislative reforms in their favor (such as the Law on the Cabinet of Ministers, which was changed three times during the year). Stable and mature institutions ensuring the rule of law and the permanence of democratic changes have not yet been built, and the national economy is not free of governmental domination. The slim majority in the current Parliament (227 members out of 450) collapsed in September; a new coalition consisting of Our Ukraine, Bloc of Yulia Tymoshenko (BYT), and Lytvyn Bloc was established on December 9, but the government remained the same. Owing to the detrimental effects of political competition among top officials and the "war of decrees" waged by the president and Parliament in 2008, Ukraine's rating for national democratic governance worsens from 4.75 to 5.00.

Electoral Process. In 2008, there was neither a national election nor changes in the electoral legislation in Ukraine. The most noteworthy electoral campaign took place in the capital city of Kyiv after Parliament's decision to hold pre-term mayoral and city council elections on May 25. Both governmental parties (Our Ukraine and BYT) strongly criticized Kyiv mayor Leonid Chernovetsky, accusing him of corruption. However, with the failure of initiators to nominate a consolidated candidate, Chernovetsky was reelected with 37.7 percent of votes (greater than his first victory in 2006). Chernovetsky's party also strengthened its positions on the city council and gained almost full control over the majority. The results of the Kyiv elections demonstrated a substantial loss of public confidence in the country's largest political parties among the capital city voters. According to the Committee of Voters of Ukraine, the Kyiv City Council and mayoral elections were transparent and competitive, although poorly organized. Owing to irregularities detected in the Kyiv local elections in May 2008, Ukraine's rating for electoral process worsens from 3.00 to 3.50.

Civil Society. The civic sector remains an important actor in Ukraine, though it continues to suffer from outdated legislation and dependence on foreign funding. The new government made efforts to involve nongovernmental organizations (NGOs) more intensively in advisory activities and provided a role in state public relations programs related to European and Euro-Atlantic integration. A permanent NGO Expert Council was established for Ukraine on the European Union-Ukraine Cooperation Committee. The country boasts a sizable number of registered NGOs (52,693), with 1,791 maintaining national status; however, not all registered NGOs actually operate. Most are trade unions, charitable and religious organizations, and groups involved in ethnic, cultural, youth, professional, and human rights activities. The current authorities do not interfere by levying permanent taxes or creating additional obstacles to NGO activity. Access to public funds is still rather limited, despite some improvements over previous years. Ukrainian civil society remains heterogeneous, with the most influential NGOs based in Kyiv. Too few organizations have well-trained professional staff capable of ensuring efficient management and fund-raising. The Parliament failed again to provide essential improvements to outdated NGO legislation, and the definition of "nonprofit activity" remains restrictive. Ukrainian NGOs are still prohibited from generating income, even to support legitimate organizational aims. Ukraine's rating for civil society remains at 2.75.

Independent Media. Heterogeneous overall, Ukraine's media sector is mostly free at the national level, but local and regional sectors still lack restructuring and real independence. Citizens currently enjoy wide-ranging pluralism in both electronic and print media. Governmental censorship is not detected, although there is evidence of attempts to influence TV coverage on some sensitive events. At the regional and local levels, state administrations own newspapers and TV channels and affect their editorial policy, which was clearly evident in the Kyiv media during the pre-term municipal electoral campaign. Nationwide television channels in most cases provided balanced news coverage; representatives of the ruling parties as well as the opposition had equal access to the media. Most nationwide media are privately owned by leading financial and industrial groups, which allows conditions for biased content and subjective preferences in media coverage. A lack of political will continues to prevent the creation of public television. The advertising market, which developed at a fast pace in recent years, is expected to suffer from the economic crisis, posing a threat to the financial independence of media. Only a few quality media projects appeared in the national/regional markets in 2008. Ukraine's rating for independent media remains at 3.50.

Local Democratic Governance. There were no changes in the administrative and territorial formation of Ukraine in 2008. Local governance is represented by a dual system of authorities: state administration and a self-governance council. The president appoints the heads of the executive in oblasts and raions, based on formal submissions by the government that are de facto ignored. Citizens elect top city (village) officials, but their participation in local government decision making remains mostly formal. Regional and local authorities are less transparent than the central government. In its official program, adopted in January 2008, the Cabinet of Ministers of Prime Minister Yulia Tymoshenko indicated that one of its goals is the reform of local administration and administrative and territorial governance of Ukraine. The draft laws "On Changes to the Law on Local State Administrations" and "On Changes to the Law on Local Self-Governance" were on the list of laws to be adopted by the Parliament with the creation of the Coalition of Democratic Forces. Both drafts passed the first reading in the Parliament and were approved as basis in March 2008, but the respective laws were finally not adopted. Confrontations between the president and the Cabinet of Ministers in 2008 negatively impacted local governance stability. Although the extreme fragility of local governance is of concern in light of the upcoming presidential campaign in 2009, the existing local system managed to survive the intense confrontations among political elites in 2008; therefore, Ukraine's local democratic governance rating remains unchanged at 5.25.

Judicial Framework and Independence. Ukraine has ratified all major international instruments protecting human rights at the global (UN) and European levels. Constitutional provisions defend fundamental political, civil, and human rights, including freedom of expression, freedom of conscience and religion, freedom of association, and business and property rights. The main shortcomings of the Ukrainian judiciary, including lack of public respect for court decisions and the judicial system as a whole, insufficient financing of the court system, and an inefficient and nontransparent process for appointing judges, remained untouched during 2008. No serious discussions on criminal justice reform, such as replacing the Soviet-era criminal procedure code, took place in 2008. There is still no modern law on the Defense Bar, suggesting that legal reform is a far distant priority for political elites. The unprecedented efforts by the president to misuse the courts to push a decision on holding early parliamentary elections reflect a negative trend of politicizing the judicial system. Throughout the year, there was evidence of growing pressure on judicial independence from the executive and legislative branches, which has the potential to degrade state power, the economy, and public administration in Ukraine. Misuse of the judiciary for political purposes took an unprecedented wide character in Ukraine in 2008; therefore, the rating for judicial framework and independence worsens from 4.75 to 5.00.

Corruption. Apart from some successes in fighting corruption in education, particularly in admissions to institutions of higher learning, 2008 did not feature a significant campaign to fight overall corruption in Ukraine. The intense months-long confrontation between the president and the Cabinet of Ministers put anticorruption measures on the political back burner, along with improvements to local governance, the judiciary, and economic policy. There were no examples in 2008 of authorities limiting media investigations into corruption and bribery. At the same time, nontransparent decision making at the local and regional levels remained a significant problem and made investigations difficult. There was also a notable lack of initiative concerning the division of state power and business during 2008. Despite the years-long fight, corruption remains an intractable feature of Ukrainian society. Although 2008 witnessed some legislative initiative to fight corruption, confrontations among political elites prevented its implementation; therefore, the corruption rating for Ukraine remains high at 5.75.

Outlook for 2009. The global economic crisis is likely to be the strongest national factor in Ukraine in 2009, even more so than in other states of the region (the International Monetary Fund predicts a GDP decrease of 8-10 percent for Ukraine).

The country's growing unemployment, inflation, and decrease of household incomes will threaten its social security and overall stability, posing additional challenges for national democratic development. Despite the obvious fragility of the parliamentary coalition, it is unlikely that pre-term elections will be held in 2009; with little reasonable chance to improve their positions in the new Parliament, most powerful political players are unlikely to fight for elections. Political forces are more likely to concentrate their efforts on the presidential campaign beginning in 2009 (with elections expected in January 2010). Current president Victor Yushchenko has hypothetical chances to be re-elected. Yulia Tymoshenko and Victor Yanukovych are the most likely to become major contenders, although the crisis may unexpectedly impact the results of the presidential race. The crisis destroys social support of today's main leaders. Therefore, the possibility that a new leader will win the elections should not be excluded. The presidential campaign will be a test for the sustainability and independence of Ukrainian local governance in 2009. 2008 witnessed obvious misuse of judiciary in political interests. If continued, it may lead to serious negative consequences for the Ukrainian statehood in 2009. As there was little success to tackle corruption in recent years, there is not much hope of this happening in the year of the presidential campaign. Introduction of legislation on electronic data reporting of businesses proposed in 2008 deserves special attention, as it could create openings for new government corruption schemes within the Ukrainian economy.