Nations in Transit - Ukraine (2006)

Capital: Kyiv
Population: 47,100,000
Status: Free
PPP: $970
Private Sector as % of GNI: na
Life Expectancy: 68
Religious Groups: Ukrainian Orthodox [Kyiv Patriarchate (19 percent), Moscow Patriarchate (9 percent)], Ukrainian Greek Catholic (6 percent), Ukrainian Autocephalous Orthodox (1.7 percent), Protestant, Jewish
Ethnic Groups: Ukrainian (78 percent), Russian (17 percent), other (5 percent)

Executive Summary

The famous events known as the Orange Revolution changed the profile of Ukraine in late 2004-early 2005. They opened a way to positive changes in the country's political and social life, primarily in the spheres of democracy, transparency of government power, and media freedom. Since independence in 1991, Ukraine has witnessed four presidential (1991,1994,1999,2004) and three parliamentary (1994,1999,2002) elections. Now, the third president and the fourth Parliament (until May 2006) are in power. The Constitution, adopted in 1996, introduced a presidential model of government in which the president appoints and dismisses state officials and regional governors.

Viktor Yushchenko, the third president of Ukraine, was inaugurated on January 23,2005. The new Parliament is to be elected in March 2006 by proportional vote, which replaces the mixed 50/50 majoritarian/proportional electoral system previously used. A December 2004 constitutional reform, which put in force in January 2006, establishes a new government model with a substantially stronger role for the Parliament and government.

Ukraine's economy is growing gradually, but the speed of gross domestic product (GDP) growth decreased from 12 percent in 2004 to 2.4 percent in 2005. Real wages are increasing more rapidly than GDP (the average monthly salary has grown from US$120 as of late 2004 to approximately US$180 as of late 2005). Media freedom has been a major benefit of the regime change: No censorship or government pressure on the media was detected in 2005. However, the Ukrainian media sector still needs strengthening, restructuring, and systemic reforms. The influence of political and economic groups in the media sphere remains strong, and public TV has not yet been introduced. The current status of the Ukraine government can be described as "transitional."The parliamentary elections scheduled for March 26,2006, followed by the formation of a government are either to confirm the democratic trend established by the Orange Revolution or slow down and restrict the move toward democracy. Still, a return to Kuchma-like semi-authoritarianism is unlikely in present Ukraine.

National Democratic Governance. Ukraine, on its move from a post-Soviet presidential government, is preparing to embrace a new model closer to other Central and Eastern European countries. Constitutional reforms adopted in December 2004 stipulate a substantially stronger role for the Parliament and government and limitations on the president's powers. At the same time, a new model provides risks for government stability and sustainability owing to a drastic shift of checks and balances within the political machinery and evident weaknesses in Ukraine's party system. The new regime led by President Yushchenko has proved to be substantially more transparent and democratic than the previous one. However, stable and mature institutions ensuring the rule of law and the irreversibility of democratic changes have not yet been built. The first "Orange"government (Cabinet of Ministers), chaired by Yulia Tymoshenko until September, was replaced by Yury Yechanurov's government, which is considered to be more technocratic and pragmatic in comparison with its predecessor. A governmental crisis disclosed deep personal and even ideological tensions within the Orange coalition. During 2005, the president and government never enjoyed stable parliamentary support. The military and police (Ministry of the Interior) became more transparent and accountable thanks to new leadership efforts. Ukraine's rating for national democratic governance improves from 5.00 to 4.50 owing to evident democratization of political life after the Orange Revolution, increasing the transparency of state power to some extent.

Electoral Process. There were no national or local elections in Ukraine in 2005. New wording of the Law on the Elections of People's Deputies, adopted in July 2005, significantly enhanced election procedures and integrated recommendations by international observers issued after the last presidential elections. These changes include the right of nongovernmental organization (NGO) observers to be present at polling stations. At the same time, this law limited freedom of the press during election campaigns by prohibiting journalists from making comments on the programs and activities of contenders. Owing to protests by the media and NGOs, these discriminatory provisions were excluded from the law in November. Elections to the Parliament, regional and local councils, and mayors of cities and villages are scheduled for March 26,2006. For the first time, national, regional, and local elections are being held according to a proportional voting system, which replaces the mixed 50/50 majoritarian/proportional vote (for the Parliament) and majoritarian vote (for local and regional councils) previously used. The precampaign period provides hope that the government will not interfere in the process: Parties enjoy equal access to media, and no administrative barriers to political activity are detected Ukraine's rating for electoral process improves from 3.50 to 3.25, as the beginning of the parliamentary campaign demonstrates no substantial obstacles to political activity and there is equal access to the media among various political forces.

Civil Society. Ukraine civil society, which played a crucial role in the Orange Revolution, continues to strengthen. Unlike the government under Leonid Kuchma, the current authorities do not interfere in the third sector by levying permanent taxes and other checks, accusing NGOs of serving foreign powers, or creating additional barriers and obstacles to NGO activity. Public participation is growing on different levels: From state politics to local communities, the wave of civic activism born in revolution is still not exhausted. A number of civic councils were established by joint initiatives of the government and civic activists to promote regular links between power and society. The most active NGO participants created informal coalitions to lobby necessary changes to legislation and develop a "doctrine for the civic sector."According to a presidential decree signed on September 15, new mechanisms for cooperation between state and civil society were introduced, including annual presidential hearings (the first took place on November 28) and a president's Strategic Council. At the same time, the Parliament failed to provide essential improvements to outdated NGO legislation. Ukraine's rating for civil society improves from 3.00 to 2.75 owing to the state's increased protection for the independence and growing vibrancy of the civil sector.

Independent Media. Substantial progress in the area of media freedom may be considered the most evident achievement of Ukraine's Orange Revolution and regime change. Citizens currently enjoy wide-ranging pluralism in both electronic and print media. Governmental censorship, known in the past as temniki (government instructions designed to control the content of media broadcasts), was canceled even before the new government took power as an immediate outcome of the Orange Revolution. Nationwide TV channels in most cases provide balanced news coverage; representatives of ruling parties as well as the opposition have equal access to the media. Most nationwide media are private, and none of them was reprivatized in favor of people close to Yushchenko after the regime change, despite the fact that most still belong to the former Kuchma entourage. At the same time, the Ukrainian media sphere lacks substantial reforms and restructuring. Most media are still owned by leading financial and industrial groups, which means they can be used as a tool of political and economic "wars"within the country, especially during election campaigns. Many regional and local TV, radio, and newspapers remain in the hands of state bodies and administrations. Despite numerous declarations and promises, public TV has not yet been established. The advertising market is growing slowly, which restricts the development of an independent media sector separate from "big business."Some new independent media projects emerged as a result of growing Western investment in Ukrainian media. Ukraine's rating for independent media improves from 4.75 to 3.50 owing to the evident progress toward genuine media pluralism and freedom.

Local Democratic Governance. In 2005, a number of administration and territorial reforms were initiated, including local government reforms. A political consensus has been achieved on the need to decentralize government by providing more power to local and regional authorities, but the concrete shape of reform remains undecided. Local self-government councils are still limited in their real powers and financial resources. A comprehensive administration and territorial reform was presented by Vice Prime Minister Roman Bezsmertny in April 2005. This reform featured a revised division of powers between state administration and self-governance bodies, shifting powers to the lower bodies; changes in budget constitutions and spending; and redistribution of taxes according to new territorial designations. Along with the new territorial and administrative order, a new system of state governance for taxes, budgets, and municipalities is being developed. Owing to the electoral campaign, further debates on local governance reform were postponed until after the 2006 parliamentary and local elections. Ukraine's rating for local democratic governance remains unchanged at 5.25, as numerous 2005 initiatives did not yet result in real improvements in this sphere and theoretical policy debate prevailed over practical actions.

Judicial Framework and Independence. In 2005, the new leadership declared important improvements in the judiciary and began creating preconditions for their implementation, though most steps were not implemented. At the same time, the judicial system gained more independence from the executive, whose total control over the judicial decision-making process has disappeared. The principle of equality before the law, however, is still disregarded. Violations by the highest officials involved in the 2004 elections have not been prosecuted. Despite discussions about a comprehensive reform of the judiciary, criminal law, human rights protections, and related spheres, such reforms were not fully and systematically introduced in 2005. Until commendable initial steps made in 2005 yield the planned systematic changes, Ukraine's rating for judicial framework and independence remains at 4.25.

Corruption. The fight against corruption and the establishment of fair government power was a prominent aim of the new authorities in 2005. Former high-ranking officials accused of corruption were removed from power; however, none of these top-level corruption cases passed through the courts. There were also corruption scandals within the new team of high-ranking officials. Corruption allegations had an ambiguous impact on Ukraine's political environment. On the one hand, the scandals have demonstrated significant improvements in state transparency in Ukraine. Such a situation could not have existed in Kuchma's era of "mutual solidarity"among high officials. On the other hand, the scandals have ultimately unbalanced the emerging political system of new Ukraine. Finally, the various existing anticorruption regulations and initiatives do not take a systematic approach or articulate an overall long-term strategy but are chaotic and face strong internal resistance, thus undermining their intended effect on society. Despite the increased prominence and airing of corruption scandals, which is commendable, Ukraine's rating for corruption remains at 5.75, as anticorruption initiatives have not yet produced systematic improvements.

Outlook for 2006. The March 26,2006, parliamentary elections and their outcomes pose a challenge for Ukraine. The overall campaign is considered to be mostly fair and free. The newly established parliamentary model needs to prove its sustainability and efficiency. The new constitutional system is more democratic and pluralistic than the previous presidential system, but because of the weakness of the party system and domination by oligarchic groups over most of the political spectrum, this model will not necessarily lead to a strengthening of democratic institutions and rule of law. Since no political party can form a government on its own, the core challenge is to build consensus and grow capacity within a governmental majority, whoever composes it. Serious administrative and local governance reforms are unlikely in Ukraine in 2006. It is unclear whether the new government will be ready to ensure the irreversibility of media freedom, including the establishment of public TV and broadcasting. Corruption will remain a key challenge given the lack of efficient anticorruption programs and continuing connections between business and government power.

Electoral Process (Score: 3.25)

Ukraine's political atmosphere in 2005 was very different from that of the previous year, which significantly affected the electoral process. All political parties could enjoy freedom and media pluralism to deliver any message to society.

There were no national or local elections in Ukraine in 2005. The official campaign for the 2006 elections started on November 26; however, an informal portion of the campaign was launched immediately after President Yushchenko's inauguration on January 23. The entire political agenda in Ukraine in 2005 was determined by the forthcoming 2006 parliamentary elections, as constitutional reforms substantially increased the "price"of this election.

Prosecution of officials involved in the 2004 election falsifications served as a warning and significant deterrent to other potential transgressors. The new authorities promised that election violations would be thoroughly investigated and prosecuted. As of September 2005, the Office of the Prosecutor General had opened 1,218 criminal cases and brought 790 of them to the courts, including over 200 cases against chairmen and members of election commissions. The Ministry of the Interior had more than 700 cases opened at the end of June 2005, including over 110 cases submitted to the courts. As of late 2005, more than 100 persons were found guilty.

Elections to the Parliament, regional and local councils, and mayors of cities and villages are scheduled for March 26,2006. For the first time, national, regional, and local elections will be held according to a proportional voting system with a 3 percent threshold, which replaces the system of a mixed 50/50 majoritarian/proportional vote (for the Parliament) and a majoritarian vote (for local and regional councils). The introduction of a party-based model of election at the local level may be considered premature: The local party system remains undeveloped (party branches do not exist in many towns and districts), which has led to a large number of artificial parties and blocs pretending to be political players; local lists from large parties are stocked with names of individuals who have not previously been associated with these parties.

New wording of the Law on the Elections of People's Deputies, adopted in July 2005, has significantly enhanced election procedures and takes into account recommendations by international observers issued after the last presidential elections.

Among the major improvements adopted in July 2005 are the following: Better rules now exist for compiling and verifying voter lists; domestic nonpartisan NGOs have the right to observe elections; the enhanced rules for election commissions provide a guaranteed number of poll workers proportional to the number of registered voters; judicial review procedures have been strengthened for complaints in all phases of the electoral process; the role of the police in the transportation of electoral material and rules for their presence at polling stations were clarified; and improved procedures have been implemented for absentee and home voting. In particular, the law provides for full inventory and de facto registration of all absentee ballot certificates and absentee voting will be possible only at a limited number of polling stations.

At the same time, this law provides limited freedom of the press during the campaign by prohibiting journalists from making comments on the programs and activities of contenders. The Central Election Commission and district election commissions were authorized to suspend, without a court order, media licenses and publications for disseminating unconstitutional materials or spreading knowingly false or slanderous statements about a party (bloc) or a candidate. Following protests by media and NGOs, these discriminatory and nondemocratic provisions were excluded from the law in November.

On August 24,2005, in his Independence Day speech, President Yushchenko called on the Parliament to raise the election threshold. Immediately, different MPs submitted to the Parliament several draft laws proposing to set the election threshold from 4 to 7 percent. All proposals failed, however, because of the disagreement of most political parties and groups in the Parliament.

The precampaign period has indicated that the government has not interfered in the process: Parties enjoyed equal access to the media, and no administrative barriers to political activity were detected.

By the registration deadline on December 26, a total of 45 political parties and blocs had successfully submitted registration documents and were qualified to participate in the elections.

Civil Society (Score: 2.75)

Civil society in Ukraine played a crucial role in the Orange Revolution and continues to strengthen. Unlike the Kuchma government, current authorities do not interfere in the third sector by levying permanent taxes, accusing NGOs of serving foreign powers, or creating additional barriers and obstacles to NGO activity. At the same time, little effective policy has been implemented to support civil society and encourage NGO activity in Ukraine.

The Parliament has thus far failed to provide essential improvements to the outdated NGO legislation, especially the basic Law on Associations of Citizens, adopted in 1992. Existing legislation does not provide a clear definition of "NGO"or "nonprofit activity."All income, excluding grants and member fees, is considered business activity and subject to the same taxes levied against other business enterprises. NGOs cannot provide paid services in order to sustain their capacity. Bureaucratic regulations still require numerous and inefficient procedures, such as reregistration. All Ukrainian NGOs must submit new registration materials up to the end of 2006 to keep their legal status (this deadline has since been extended, but the reregistration requirement is still in place).

In summer 2005, a group of NGOs led by the Democratic Initiatives Foundation issued an initiative calling for the authorities to provide "Orange wings for NGOs, "meaning essential improvements to legislation. The most active NGO representatives created an informal coalition to lobby changes to legislation and develop a "doctrine for the civic sector."

Public participation in civil society grew significantly during and immediately after the Orange Revolution. Though that wave of civic activism has not been exhausted, it was not as evident in 2005. In one example of NGOs widening activities on the local level, in Kyiv a number of local committees were established to protect the historic environment of downtown from uncontrolled construction activity.

A number of civic councils (collegiums) were established as joint initiatives between the government and civic activists to promote regular links between the state and society. The most active are those on foreign policy (at the Foreign Ministry), media liberty and freedom of speech, and small business and entrepreneurship. In regional centers, some administrations invited NGOs to join civic councils.

According to a presidential decree signed on September 15, new mechanisms of cooperation between the state and civil society were introduced, including annual presidential hearings (the first took place on November 28) and the president's Strategic Council. However, during preparations for the presidential hearings, the presidential secretariat failed to offer an attractive role for NGOs in designing the agenda; in response to this dominating bureaucratic approach, a number of leading NGOs refused to take part. Ivan Vasyunyk, deputy head of the secretariat and responsible for government-civil society connections, has provided selective and inconsistent policy vis-à-vis NGOs.

Growing political competition has led to an increase in politicking in NGOs. Many of them are blurring the line between government and civil society, and their independence from political and business interests is often questionable. Some parties/political organizations and business groups have established their own NGOs with goals that are different from the objectives of "natural"NGOs. Some NGOs, such as the civic campaign Pora, which was well-known during the Orange Revolution, have been divided into "political"and "civic"branches with sometime non-friendly relations between them.

The massive explosion of civic activity has its "dark side."Some newly established radical organizations with revanchist pro-Soviet ideological backgrounds conducted actions threatening the peaceful development and even territorial integrity of Ukraine. This indicates that the civil sector remains vibrant and sensitive to the negative political trends that still appear as part of the incomplete nation-building process in Ukraine.

Ukrainian NGOs lack sustainable funding, which makes them dependent on grants from foreign foundations. However, the number of viable NGOs is growing thanks to the increasing interest of national businesses in public initiatives as a means to promote both their image and business interests.

Independent Media (Score: 3.75)

Substantial progress in the area of media freedom may be considered the most evident achievement of Ukraine since the change of regime. Citizens are currently enjoy wide-ranging pluralism in both electronic and print media. Governmental censorship, known in the past as temniki (governmental instructions designed to control the content of media broadcasts), was canceled even before the new government took power. In fact, media freedom appeared as an immediate and natural outcome of the Orange Revolution itself, rather than the product of government policy. Considering the policies of Ukraine's new leadership, not enough has been done to make these positive changes irreversible.

On March 3,2005, the Parliament adopted a new Law on the National Council on TV and Radio Broadcasting, prepared by the parliamentary Committee on Freedom of Speech and Information. The main features of the law are reduced grounds for the dismissal of council members to guarantee their independence; abolishment of the rotating membership procedure; election of the council chairman by its members, along with curtailing the chairman's powers; and new means to impose sanctions on TV and radio outlets for noncompliance with legislation.

The new civil code, adopted in January 2003, includes a number of provisions relating to freedom of expression and information. However, some of the new rules were poorly drafted. Among the most problematic aspects of the new civil code is Article 277, section 3, which states that "negative information published about a person is considered untrue.""Negative information"is to be understood as any form of criticism or description of a person in a negative light. This provision was not in active use in the courts in 2005, but it could be applied in the future to limit media freedom.

Many regional and local TV and radio stations and newspapers remain in the hands of state bodies and administrations. Public TV, despite numerous declarations and promises, has not yet been established. Despite efforts of NGOs, a Law on Public TV and Broadcasting failed to pass in the Parliament in the second reading in November. A majority of the president's party faction, Our Ukraine, as well as smaller pro-Yushchenko factions did not vote for it. According to leading media expert Natalia Ligachova, the president doesn't have enough political will to facilitate the creation of public TV, at least before the 2006 elections, which was proved by the appointment of conservative Vitaly Dokalenko as chief of the National TV Company of Ukraine. Some representatives of the new leadership continue to view media as the authorities' "resource" and advocate preservation of state control over media outlets.

Liquidation of the administration publication Presydentsky Visnyk, established by Kuchma, was the only example of the state leaving the media market. State ownership of media is nonetheless supported by the State Committee (a different body from the National Council mentioned earlier) on TV and Radio Broadcasting, still chaired by Kuchma appointee Ivan Chyzh.

Nationwide TV channels in most cases provide balanced news coverage, and representatives of ruling parties as well as the opposition have equal access to media. According to available monitoring data, opposition leaders are frequent guests on TV. Ratings of positive and negative information on TV detect that more criticism is addressed to the president and other officials than to opposition leaders. There were no known cases of punishment or pressure on journalists for their investigative activities.

Most nationwide media are private, and none has been reprivatized in favor of people close to Yushchenko after the regime change, despite the fact that most belong to the former Kuchma entourage. At the same time, the Ukrainian media sphere still lacks substantial reforms and restructuring. Most media are owned by leading financial and industrial groups, which means those outlets can be used as a tool of political and economic "wars"within the country, especially during election campaigns. As noted in the Parliamentary Assembly of the Council of Europe report, "An implicit monopoly of the broadcast media market might jeopardize the independence and political impartiality of TV channels on the eve of the parliamentary elections."

The media advertising market is growing slowly, which restricts the development of an independent media sector separate from "big business."Some new independent media projects emerged as a result of growing Western investment in Ukrainian media.

Thanks to the Internet, traditional media have lost their "privileged"role as the only promoters and purveyors of free information (such as during Kuchma regime). The Ukrainian audience has expanded for the numerous Internet newspapers and portals. In 2005, the Ukrainian Internet audience increased by 18 percent, with a total of 7 million users (both regular and infrequent), which is about 15 percent of the population. Internet media proved to be efficient mediators between politics and society. At the same time, a number of "dirty"Internet projects were launched to operate black PR campaigns – web sites used in order to spread disinformation, false rumors and evident misperceptions about political opponents without any possibilities for their organizers to be punished – especially in the run-up to the March 2006 elections.

Judicial Framework and Independence (Score: 4.25)

The Constitution of Ukraine, adopted in 1996, protects freedom of expression, freedom of conscience and religion, freedom of association, and business and property rights. Constitutional reforms in 2004 did not touch that basic part of the law. However, proper and sufficient implementation by state bodies, including law enforcement bodies, is obviously lacking. Law enforcement bodies and police selectively respect fundamental political, civil, and human rights, and equality before the law remains doubtful.

Since October 2005, the Constitutional Court of Ukraine has lacked a quorum and, therefore, has had no authority to consider cases. The judges' congress and the president have appointed new judges according to their quotas, but the Parliament has not; the Constitutional Court was still sidelined at the end of 2005. The Parliament's position is rooted in the fear that once the Court restores a quorum, political forces will find that the constitutional changes of December 2004 are unconstitutional. A lack of a quorum in 2005 was the reason the Court could not consider the motion on the constitutionality of the presidential decree on the extended powers of the National Council for Security and Defense, as well as the president's pleading on the immunity of local council deputies.

The principle of equality before the law is still flouted in Ukraine. The prosecution of 2004 election violations is a prominent example in this respect. Among 1,218 criminal cases opened by the Office of the Prosecutor General as of August 2005,526 cases are considered high-profile and involve directors of large state enterprises or public officials, starting from the heads of raion state administrations. However, the potential violations by the highest officials involved in the elections are not being prosecuted.

Generally, the judiciary is considered one of the most corrupt bodies of the state. This is attributed to a score of legal, management, financial, and political reasons, including lack of full independence from the executive (be it financial, technical, or staffing), appointment of judges by the president, prejudiced activities of the High Judicial Council of Ukraine, and wide bribery among judges caused by low wages. Unfortunately, not much occurred in 2005 to change this state of affairs. In May 2005, the Commission on Reform of the Judicial System, led by Petro Poroshenko, was created under the auspices of the National Council for Security and Defense. After Poroshenko's dismissal in September amid a corruption scandal, discussion of the commission's activities in 2005 was slated for the beginning of 2006 under new council head Anatoliy Kinakh.

Currently, the president of any court (except the Supreme Court and Constitutional Court) is appointed by the president of Ukraine. The possibility of indirect influence on judicial decisions by the president prompted a draft amendment to the Law on the Judicial System of Ukraine, submitted to the Parliament in January 2005. It stipulated provisions to transfer the authority to appoint/dismiss presidents of courts (and their deputies) to gatherings of judges of the court upon recommendation of the bodies of judicial self-government and following approval by the Parliament. Although the proposed draft is far from perfect, it would generally provide judges with more independence.

Ukrainian criminal law has inherited the so-called repressive Soviet system. Human rights violations are still occurring in the areas of investigation, access to the judiciary, freedom and rights of advocates, and the conditions of prisons. In 2005, NGOs active in the human rights arena as well as independent experts and legal practitioners declared the need for reforms in this sphere. Unfortunately, there were no substantial breakthroughs in reforming criminal law or criminal procedure in 2005.

Weak procedural safeguards and security before and during detention, including torture, continue to be crucial failings in the Ukrainian penitentiary system. In her June 1,2005, intermediate report on human rights to the Parliament, Ukrainian ombudsman Nina Karpachova indicated a lack of improvement in this sphere.

The investigation of the murder of Georgy Gongadze (a journalist killed in September 2000) remained a sensitive challenge for Ukraine authorities. On March 1,2005, President Yushchenko announced that three officers of the Ministry of the Interior who allegedly perpetrated the murder had been detained and interrogated. "I can declare here that Gongadze's murder has been solved. The murderers have been detained and are now giving evidence," Yushchenko said. As was reported later, police arrested three alleged direct suspects in the murder (Colonel Mykola Protasov, Colonel Valery Kostenko, and Oleksandr Popovych) who, according to Prosecutor General Svyatoslav Piskun, have confessed to premeditated murder. However, those who masterminded the crime have not yet been charged. Owing to the premature and as yet unfulfilled promise of President Yushchenko, as well as an inefficient prosecution, the public is gradually losing hope that justice will prevail in the Gongadze case.

Corruption (Score: 5.75)

Corruption has deep historical roots in Ukrainian society. The fight against corruption and the establishment of a fair government was a prominent theme in the 2004 platform of Maidan. This topic overshadowed Ukraine's political life in 2005, a year marked by corruption despite some efforts to address it.

Yulia Tymoshenko's government program Toward People, adopted by the Parliament in mid-January 2005, stipulated several provisions on fighting corruption. The program called for the dismissal of corrupt state officials, public control on budget spending, adoption of an honor code for officials, and so forth. The government also elaborated a special program on preventing corruption and bribery called Clean Hands and started to develop a new National Anticorruption Strategy and Action Plan. On April 1, the Cabinet of Ministers adopted a state program for 2005-2006 called "Contraband-Stop!". During the first months of its implementation, budget revenue from the levy of import duties had grown substantially. On November 18, the president signed a decree on high-priority measures for making the economy more transparent and fighting corruption. The plan stipulates civil monitoring of corruption in state authorities at all levels and the publication of results. Despite a substantial number of anticorruption regulations, these programs have not taken a systematic approach or articulated an overall long-term strategy but, rather, have operated in chaotic fashion with strong internal resistance.

During the so-called oil, meat, and sugar crises of spring and summer 2005, the government relied on an administrative, rather than a market, regulation of the country's economy. It imposed a price ceiling on goods, which contrary to expectations caused further price hikes and fed corruption in these spheres.

On July 1, a new Law on State Registration of Juridical Persons and Individuals came into force. With its "one window"registration plan for new businesses and individual entrepreneurs, this rather difficult process was substantially simplified and sped up. It also significantly narrowed openings for corruption among authorities involved in this procedure.

On November 18, the president signed a decree entitled On Priority Tasks on Deshadowing Economy and Fighting Corruption, which among other features elaborates "corruption"as a judicial term, provides a legal definition for "conflict of interest, "improves procedures of income and property declaration by state officials and their family members, limits state interference in business activities, and legalizes past income without proper taxation.

Despite certain efforts in 2005, an effective countervailing system to prevent the merger of politics and business was not introduced. On the contrary, prominent representatives of Yushchenko's entourage – Petro Poroshenko (former secretary of the National Council for Security and Defense), Oleksandr Tretjakov (former first assistant to the president), and Mykola Martynenko (head of the Our Ukraine parliamentary faction) – were accused by Oleksandr Zinchenko (former state secretary appointed by Yushchenko) of corruption and illegal lobbying of personal business interests. The accusations caused a crisis in Ukraine in September, leading to the so-called zero variant, in which President Yushchenko dismissed the government of Tymoshenko and accused persons individually.

These accusations had an ambiguous impact on Ukraine's political environment. On the one hand, the scandal demonstrated significant improvements in the transparency of power in Ukraine. Such a situation could not have existed in Kuchma's era of "mutual solidarity"among high officials. On the other hand, it has ultimately unbalanced the emerging political system of the new Ukraine and could further weaken Yushchenko's team in the 2006 parliamentary elections. This scandal substantially deepened spreading public disappointment in the new authorities, who have proved not to be a consolidated political team and are marred by the same corruption that infected the previous regime.

The process of job placement at governmental bodies still lacks transparency and public accountability. There is no clear distinction between political nominees and a professional civil service. Although many official bodies advertise job vacancies, including on their Web sites, this policy is mostly pro forma, with positions going to those candidates with personal connections to high-ranking officials rather than to applicants with the best qualifications and experience.

Law enforcement authorities, including the Office of the Prosecutor General, applied the law selectively. Accusations of corruption against officials in the inner circle of Yushchenko's entourage did not materialize into official, transparent investigations. As a result, those individuals, though dismissed from their positions, were neither officially charged nor fully cleared of suspicion.

In 2005, allegations of corruption were the frequent focus of the media. At the same time, a distinction should be made between corruption as a social phenomenon and abuse of corruption allegations by the mass media. Moreover, the mass media serve as an instrument in political battles. Cases of mass media abuses in this regard will no doubt become more frequent in the run-up to the March 2006 elections.

Although the Ukrainian public is highly intolerant of corruption among high officials or "oligarchs, "they frequently consider "small"corruption as an integral part of the Ukrainian political and social culture. Petty corruption is still seen by ordinary citizens as a natural way to overcome bureaucratic procedures, which appear to be obstacles to economic and other activities. At the same time, the Orange Revolution significantly raised the public's understanding of the relationship between personal dignity, government transparency, and the pervasive and negative effects of corruption.

Author

Oleksandr Sushko, Olena Prystayko, Center for Peace, Conversion, and Foreign Policy of Ukraine.

Local Governance (Score: 5.25)

In 2005, a new version of administration and territorial reform was initiated, including reforms of local government. The previous scheme for local governance featured a four-level administrative territorial hierarchy: Autonomous Republic of Crimea (ARC), oblasts (24), and cities with oblast status – Kyiv and Sevastopol; raions (oblasts' districts) and cities with raion status; cities; and villages and townships. Each raion is divided into a number of local councils (village or small-town councils).

Local governance is represented by a dual system of authorities: state administration and a self-governance council. Heads of the executive in the oblasts and raions are appointed by the president. Top executives of cities and the heads of local councils are elected by citizens. The divisions among bodies at different levels are not precise, and some administrative bodies – such as urban communities, village councils, and township councils – are not prescribed in the Constitution,

According to the dynamics of past years, there is a tendency to shift power to favor centralized local governance – that is, moving the powers and finances of self-governance gradually to executive local bodies and oblast and raion state administrations. As a result, the functions and resources of self-government bodies are almost fully occupied by state local administrations, which a priori cannot represent local community interests. Local self-government councils lack real powers and financial resources, and complicated interrelations between self-governance and state administrations block the path to transformation of the whole governance system in Ukraine.

This existing system of local governance is centralized, from the oblast, to the raion, to the local council (of the town or village). That extended chain from the state causes low efficiency and poor management at the local governance level. There are administrative imbalances among oblasts, leading to substantial social, economic, and territorial disproportions. These certainly comment on the inefficiency and inequality of the current administrative system.

Attempts to reform the administrative system have occurred in past years, and in April 2005 an administration and territorial reform was presented by Vice Prime Minister Roman Bezsmertny. This reform featured a revised division of powers between state administration and self-governance bodies, shifting powers to the lower bodies; changes in budget constitutions and spending; and redistribution of taxes according to new territorial designations. The reform's main principles are decentralization, distributing power and authority to lower levels, deregulation, and subsidiarity. The final stage of the reform's implementation provides a possibility for self-sufficient self-government bodies with wide powers and financial resources to address the needs of citizens.

The reform was expected to be realized through amendments to the Concept on the Administrative Reform (adopted in 1998), adoption of new laws, 4,000 subordinate acts, and constitutional amendments. Eight basic laws were drafted and debated in 2005 – the Law on Territorial Order of Ukraine, Law on Local Self-Government of Gromadas, Law on Local Self-Government of Raions, and Law on Local Self-Government of Oblasts – as well as an alteration of the Law on Local State Administrations, Budget, and Tax Regulations. Adoption of the Law on Territorial Order of Ukraine was crucial to starting the reform. It was presented in mid-April 2005 and received wide discussion throughout Ukraine.

The draft Law on Territorial Order of Ukraine stipulated the creation of a three-level administrative order: region – raion – gromada. The gromada (community) is the basic level created by uniting two or more settlements with no fewer than 5,000 inhabitants. A raion joins several gromadas with no fewer than 70,000 inhabitants. Raions can also be cities (with no fewer than 70,000 inhabitants). A region unifies standard raions and city-raions. These will include the current oblasts, ARC, and city-regions with no fewer than 750,000 inhabitants (Kharkiv, Odesa, Lviv, Donetsk, Dnipropetrovsk, Zaporizha, Kyiv, and Sevastopol). Altogether, there will be 33 regions. Gromadas will occupy the central position in the local governance system of Ukraine. According to these new authorities, the budget will also be redistributed in their favor.

Along with the new territorial and administrative order, a revised system of state governance for taxes, budgets, and municipalities is being developed. According to preliminary evaluations of state statistical bodies, the ongoing cost of reform could reach 1.3 million UAH (around US$260,000).

Major obstacles to this reform concern its implementation and timing, the latter being the more important point. Roman Bezsmertny insisted on implementing the reform before the parliamentary elections, which will take place simultaneously with local elections on March 26,2006 – or, alternatively, to separate them and hold local elections afterward. Bezsmertny's arguments, however, were not considered by the Parliament, and the reform enactment and implementation were postponed until after the 2006 parliamentary and local elections.

Another local government reform is connected to draft Law #3207-1 on constitutional amendments. It was adopted in the first reading on December 8,2004, and sent to the Constitutional Court for an opinion. The draft law stipulates preserving state administrations at the regional level – oblasts, the cities of Kyiv and Sevastopol – but abolishing them at the raion level and introducing executive bodies at the raion and oblast councils. Conceptually, the draft law is moving in the right direction of endowing regional administrations with additional authorities, but at the same time the proposed system could lead to an imbalance and weakening of the local governance system. Also, owing to the pressure to prepare a quick draft, the text is imperfect and poorly written. On September 13,2005, the draft law was announced by the Constitutional Court as being in conformity with the Constitution. The law had not been adopted at the end of 2005.

On September 8,2005, the Parliament adopted a new statute amending the Law on Status of Deputies of Local Councils to introduce immunity from criminal prosecution for local deputies. On October 6,2005, the president signed the law but simultaneously put in a request to the Constitutional Court to review its constitutionality. If the law is not suspended by the Constitutional Court before the parliamentary elections of 2006, it could hamper the democratic character of the election campaign. First, immunity status of local officials does not meet democratic principles; second, and widely discussed in Ukraine, this will pave the way for criminal activities at the local level; third, this will substantially raise the presence of "black money"in elections.

National Governance (Score: 4.50)

After Ukraine's Orange Revolution in 2004, the country has been in the process of a political transformation intended to lead Ukraine toward mature democracy. However, in some essential cases this process has lacked consistency. According to the Law on Changes and Amendments to Constitution of Ukraine adopted on December 8,2004, Ukraine moved toward a parliamentary model of power similar to those of other Central and Eastern European countries. This law enters into force on January 1,2006. In practice, this measure would allow the Parliament elected in March 2006 to create a government based on a parliamentary coalition (majority).

According to the new law, the president loses the authority to appoint and dismiss members of government without parliamentary approval. Furthermore, under the upgraded Constitution, the president nominates only ministers of defense and foreign affairs; other members of government are to be nominated by the prime minister. A coalition of political parties (more than 50 percent of parliamentary seats) nominates the prime minister and appoints a government, whereas the president is authorized to dissolve the Parliament if it is not able to form a coalition within 30 days. This newly created power model is more pluralistic and brings Ukraine closer toward European political traditions.

At the same time, a new model provides risks for the stability and sustainability of the government owing to the drastic shift of checks and balances within the political machinery and the evident weaknesses in Ukraine's party system. In addition, the constitutional amendments contain provisions that the Council of Europe's Venice Commission has repeatedly found incompatible with the principles of democracy and the rule of law, in particular regarding the imperative mandate of members of Parliament (MPs) and the powers of the prosecutor's office.

Ukraine still lacks legislation mentioned in the country's Constitution but not yet adopted, such as laws on the president, Cabinet of Ministers, the Parliament's temporary investigative and special commissions, pretrial inquiry bodies, and the Parliament's rules of procedure. The lack of legal provisions, for example, on the formation and function of the Cabinet of Ministers resulted in the president's continued practice of appointing deputy ministers and deputy heads of other central bodies of the executive. This raised doubts as to its compliance with the Constitution, which entitles the president to appoint only the top leadership of executive bodies. President Yushchenko has implemented a reform of the president's administration, which was a powerful "parallel government"during Kuchma's regime, giving the secretariat a more technical function. Current head of the secretariat Oleg Rybachuk expressed an ambition to develop a strong strategy-building unit within the office.

Despite certain progress, Ukraine has still not achieved European standards of economic freedom. In order to address crises in the fuel and sugar markets, Prime Minister Yulia Tymoshenko's cabinet (February-September 2005) used administrative instruments to interfere with prices by establishing maximum limits. The government tried to restrict bureaucratic procedures by introducing a "one window"principle for small-business registration, achieving partial success. Several thousand restrictive instructions for businesses were canceled. The taxation system has not yet been simplified, but related projects are under consideration in the government and the Parliament.

The Ukraine Parliament (Supreme Rada) may be considered fully independent from the executive. Unlike Kuchma, President Yushchenko has not attempted to control the Parliament through administrative pressure. Sessions of the Parliament are broadcast live on the 1st Channel of the National Radio. Yet existing freedom has another side: The lack of proper policy coordination in the Parliament-president-government triangle has led to significant dysfunction in parliamentary activity. This was clearly detected in the failure to pass all legislation necessary to join the World Trade Organization. Weakness and instability in Ukraine's party system is reflected in the Parliament. For example, more than 400 faction changes in the Parliament have been registered since the 2002 elections.

Access to public information is regulated by the Law on Information of 1991, which is considered to be relatively good but lacks proper procedures for granting access to public documents, obtaining information from state officials, and so forth. A group of NGOs (under the coordination of the local/regional NGO Kharkiv Human Rights Protection Group and the international NGO Article 19) has drafted a new wording of the Law on Information that contains detailed rules for access to information in line with European standards. The draft law has not yet been submitted to the Parliament. Legislation on the "informational openness" of state bodies and officials – submitted by Serhiy Holovaty, former MP and now minister of justice – was approved in the first reading in December 2004, but the draft law contains no detailed procedures. From the moment of taking office, President Yushchenko has signed more than 40 classified decrees with the stamp "Not Subject to Publication," yet such stamps are not foreseen by any Ukraine law. This policy of nontransparency was established by former president Kuchma.

Military and security services also face reforms and transformations. As the present government is more seriously committed to achieving NATO membership (announced in 2002), current armed forces reforms by Defense Minister Anatoly Grytsenko include stronger focus on transparency and accountability in order to achieve aims fixed in the NATO-Ukraine Action Plan – namely, reforming state security structures to reflect the Euro-Atlantic Policy of Ukraine and "strengthening civil control of the Armed Forces of Ukraine and other security forces, including enhanced cooperation and oversight of the Parliament and increased participation of civilians in decision making related to security issues." The security service, owing to continued restructuring (such as introducing a separate external intelligence service) and changes of leadership (Oleksandr Turchynov was replaced in September by Ihor Drizhchany), remains less subject to public control reforms. Ukraine's success in these reforms may be assessed as moderate in the military sphere and insufficient in the security services arena.