Archive for January 4th, 2012

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Stating the obvious – World Bank in Ukraine (but is it The Administration or the administration at fault)

January 4, 2012

Here is a statement from the out-going World Bank Country Director to Ukraine (Belarus and Moldova), Mr Martin Raiser:

“Country Director for Ukraine, Belarus and Moldova, Martin Raiser, has said one of the key lessons in partnership between the World Bank and Ukraine over the past four years is the following: Ukraine is seriously suffering state management problems.

 In his parting exclusive interview with the Dzerkalo Tyzhnia Ukraine (his four-year mandate terminated in 2011) Raiser said that Ukraine has no shortage of strategies or plans, but only some of them are realized.

 Raiser regrets that not all goals of the Partnership Strategy with Ukraine in the period from 2008 to 2011 were reached (the Strategy provided for financing from $2 to $6 billion to Ukraine). He said that the World Bank learnt several important lessons from the process, including three key lessons that would be absolutely crucial for further cooperation of the World Bank with Ukraine.

 “First, we should permanently think of introducing the things that were planned. Ukraine has no shortage of strategies or plans, but only some of them are realized. This is substantially typical for our cooperation with your country as well. We should apply more efforts to prearrange new projects so to be confident in their proper and expedient realization,” he said.

 He said that the second lesson is the fact that Ukraine is seriously suffering state management problems.

 He said that this is not only corruption. The consequence of the process is that even with good reforming ideas, there are many problems with their implementation, as people do not trust the state because shadow business is flourishing and it is hard to predict what will happen in the end and remain consistent on the way of the reforms, Raiser said.

 The new strategy of the World Bank would pay more attention to the analysis of how strong are partners in Ukraine, how strong are institutions that participate in the implementation of joint projects and how strong are the interests that could hinder their realization, he added.

 The third lesson is that so far there is a necessity to reach a consensus as for key reforms to be realized in Ukrainian society, Raiser said. This is not a common vision of the reforms without contradictions: people in Ukraine want to live better – under European standards, he said. However, when it concerns the concrete things and we have to start reforming of such sectors as state procurement, tax system, a necessity to apply large efforts to reach public understanding and support appears, he said.

 The key condition for the World Bank is the provision for balanced reforms, so that rich people and people with power also undertook a part of the burden.”

Well, I suppose we can give him 10/10 for stating the obvious.

Regular readers of this blog will be quite aware of how I have repeatedly wittered on and on about policy and how they are either effective, ineffective or counterproductive.  When it comes to policy, nothing else matters.

As I have frequently stated, the ineffective implementation of what would be an effective policy is no better than the effective implementation of an ineffective policy – or worse a counterproductive policy.

I regularly bemoan the fact that there seems to be no grand plan for Ukraine as far as any government Ukraine has ever had.  I did so again only a few days ago when talking about Ukrainian foreign policy here.

I often cite the Balcerowicz Plan employed by Poland when it comes to identifying the grand plan to the public.  There was undoubted pain for the Polish public when this plan was actioned for several years and indeed maybe it could have been slightly better than it was, but Poland came out of it very well and in a relatively short period of time.

Ukrainians by contrast have never been told what the grand plan is.  They are occasionally shown a tile from the mosaic which is held up to be admired but have no real idea where it fits into the design or the overall picture it helps to form.

Laws have been passed on public tender which I have written about before under the current government but no public tender is foolproof or indeed solely based on costs.  They are therefore still open to manipulation to nefarious ends even when seemingly transparent.

This blog has touched upon the subject of corruption numerous times and indeed has pointed out there are two sides to this coin in Ukrainian society.

The new Tax Code came into full effect from 1st January in Ukraine, so it is too soon to say how this will work out, however given the fact that Ukraine suffers from a serious communication problem between law makers and those who are not only supposed to abide by those laws but also by those who enforce them, we can expect the usual dysfunctional, sporadic and regional interpretations to anything that comes out of the RADA.

This returns us to the point raised over the ineffective implementation of policy.  In the case of the Tax Code we may very well see and effective policy, ineffectively implemented that by default may turn out to be counterproductive and drive more of the economy into the “grey” than that which previously existed in the shadows.  Time will tell but few will be surprised if this turns out to be the case.

There is a desperate need to reform the structure of the State and the channels of communication.  That will, regardless of whether a policy is effective, ineffective or counterproductive, at least provide a standard interpretation across the entire Ukrainian society.

This requires an immediate and very hard nosed, robust, sorting of the Ukrainian “civil service”.  It requires the ending of the pseudo-federalist regional patriarchal fiefdoms or their full autonomy.  The current halfway house distorts all aspects of Ukrainian life leading to massive differences in enforcement and interpretation of anything that leaves Kyiv.

Only when the State and regional structures have been made fit for purpose can there be any real possibility to tackle issues like corruption and the even handed distribution of the rule of law.

There seems no point adding new laws to a body that is effectively severed from the head, or indeed expecting the body to understand what the head has said when the spinal chord has been severely damaged.  Reconstructive surgery is an absolute necessity prior any expectation that the patient will recover and that the limbs will act in a manner dictated by the brain.

Thus far, not one Ukrainian government has realised it is paraplegic.  Even though it appears that the current government does have some perception of the diagnosis, it seems either unable or unwilling to go through the painful operations required to get on the road to recovery.

The Ukrainian government’s priorities (other than economic survival) must be to deal with the Ukrainian “civil service”, communication and its efficiency.  Forget new laws or a valiant fight (or not) against corruption in 2012.  Rebuild the body Ukraine so that it can effectively and efficiently fight against the cancer of corruption before it enters that long and difficult battle.  It is the only way to beat that disease.

If the Ukrainian government are looking for a plan for 2012 and one which may well be a vote winner prior to the October elections, they have 10 months to make serious changes to the Ukrainian “civil service” as any serious reform and increased efficiency will undoubtedly be noticed very quickly.

Somebody will eventually have to deal with this matter and upset the mandarins to the benefit of the Ukrainian society, so why not do it now?  Why not do it noisily, robustly and make it a clear policy for 2012?

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