Archive for February, 2016

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“Ukraine Week” – EU Parliament

February 29, 2016

29th February sees the start of “Ukraine Week” within the European Parliament, Brussels.

EU-parliament

A total of 40 Ukrainians – MPs, political party leaders, Verkhovna Rada committee leaders and assorted others, together with the EP counterparts (and a few stray EU Member State politicians) will be grazing upon EU canapes for 3 days whilst attempting to keep Ukraine high upon the European agenda, dispel any creeping “Ukraine fatigue”, and also try and find/refine solutions to the dysfunctionality that envelopes the generally feckless Ukrainian political class and how it actually functions within the Verkhovna Rada building.

The 40 strong Ukrainian delegation is appropriately headed by Verkhovna Rada Speaker, Volodymyr Groisman.

Of the numerous formal and informal issues big and small that will be discussed over the 3 days, both centrally and “on the fringes”, the main agenda item is the unveiling/public announcement of a plan to reform the internal workings of the Verkhovna Rada itself, by Speaker Groisman to the European parliamentarians.

As Mr Groisman has (rightly) stated – “The reforms should start with us, the parliament, and with the cabinet of ministers in order to change Ukraine and take on challenges.”  There would be no argument with that statement from anybody even remotely familiar with the overly onerous formal internal procedures and protocols of the Verkhovna Rada.

An overhaul of current internal bureaucratic machinery within the Vewrkhovna Rada is absolutely necessary to move from a post-Soviet administrative hangover to a more functional, modern legislative chamber.

With the EU having had a delegation in Ukraine for some time assessing just how onerous and misused the current protocols and procedures are within the Verkhovna Rada, and having drawn and documented its conclusions and recommendations, just what could Mr Groisman unveil that is likely to garner the support of European parliamentarians, other than simply announcing the delegation’s recommendations are indeed the plan (wrapped in a Ukrainian accent)?

Thus this “headline” agenda issue will be little more than scripted theatre.

That is not to infer that the actual EP visit by the Ukrainian delegation is a waste of time (and canapes) all being pure stage management during an otherwise dull domestic political moment as new coalition talks begin and a virtual purdah descends as negotiations are on-going.

Far from it.

It would be incredibly foolish for Ukraine not to take any opportunity to raise its profile anywhere – and the EP is certainly up there on the list of necessary and preferred venues.  Away from the stage-managed theatre, the meetings behind the curtain, the “fringe” meetings, the tête-à-tête from which personal contacts and relationships grow are all quite necessary.

Undoubtedly certain Ukrainian delegates will be attempting to persuade EP counterparts that certain personalities are not as important as they may appear and their possible removal/departure does not constitute a major departure from any path Ukraine has undertaken.  The EP members will seek such assurances should that eventually transpire.  They will also be trying to ascertain whether the (almost inevitable) early Verkhovna Rada elections will occur and grasp the probable outcomes.  That PM Yatseniuk will stumble onward until the summer break is all but assured.  Thereafter, unless a reliable coalition is formed that garners consistent parliamentary support for government policy, PM Yatseniuk will be very lucky to be PM by Christmas.

Thus the stage-managed moments will actually be far less interesting than everything else that occurs for all concerned – including the on-lookers – and there is a difference between things that are “interesting” and things that are “of interest”.  For example, the public statement by Bundestag Deputy Carl-Georg Welman that Germany is working on a “Marshall Plan” for Ukraine is “interesting”.  What is “of interest” is what the “Marshall Plan” actually consists of, how it will be implemented, and by whom.  Firstly, will any conditionality for its realisation be met, and secondly will any conditionality for its implementation be accepted?  (Indeed in an interview with the Agency for Modernisation of Ukraine, said Bundestag Deputy states it is not official policy – the AMU being a Dmitry Firtash front.)

As such the news that comes forth from Brussels for the next few days will mostly be “interesting” – several weeks, perhaps a month or so from now, information from the “fringe” meetings and the tête-à-têtes will begin to leak and will likely be much more “of interest”.

Nevertheless, it is hoped that Ukraine makes the maximum of its time physically present within the European Parliament over the next 72 hours – both in the scripted and impromptu scenes.

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What to make of Decree 68/2016 (On promotion of civil society in Ukraine)?

February 28, 2016

Civil society in democratic State-society relations occupies a distinct and wide space.

concentric-circles

Imagine four concentric circles.

In the centre circle is a reasonable/sensible sized circle – The State.  The next circle is that of “political society”.  The following circle would then be civil society – meaning the mass media, NGOs, intellectuals and cultural entities etc. The outer circle is that of the “parochial society” – religion and family, as well as corporations, business and trade unions.  Somewhere else in a square reinforced box segregated from the concentric circles are the “uncivil/unlawful” groups that act outside of the rule of law, only being allowed to enter the circular world having given up their unlawful ways.

(The concentric circles for an authoritarian, or totalitarian, or authoritative corporate state would look very different in their proportions to that of a democratic state society.)

Civil society has several distinctive features.  The most distinctive is that it is solely concerned with public and not private ends.  Whilst it relates and interacts with the State, unlike the concentric circle of “political society” it does not seek State power.  It inherently respects pluralism and diversity for it accepts it does not and cannot (nor does it seek to) represent all community interests.

Using a broad generalising brush, civil society seeks to provide some vertical accountability by way of checks and corrections of abuse of power.  It is usually vigilant and mobile against authoritarianism stimulating political and civil participation.  It attempts to educate toward a rights/values-centric constituency.  It aims to articulate societal interests to The State.  It builds horizontal relations and forms trust.  Invariably civil society causes have cross-cutting cleavages across societal identities.  It produces its fair share of next generation political leaders.  It enhances and insures the effective functioning of democratic institutions, and thus has a role in policy implementation.  It can provide a vehicle for local empowerment when taking on patriarchal fiefdoms.   As Ukraine clearly shows, it promotes democratic and institutional reform.  It disseminates information and ideas, empowering society.  It can mediate political-societal conflict.  It provides a vehicle for local development.  Although it is possible to go on (and on) enough has been said.

On the dark side, civil society can simply overload The State with demands.  Civil society can have a subconscious and cynical oppositionist culture toward the The State.  It can be (potentially) corrupt and/or corrupted.  Civil society can indeed be extremely uncivil, undemocratic and intolerant – both within and without its own concentric circle.  It can also increase social mobilisation and in doing so, if not prudent, increase social conflict.  There is the issue of financing and thus dependence upon donors which can lead to bias, a lack of integrity and the promotion of vested interests.  There can be a collective loss of interest in a particular societal issue, or the formation of “cliques” that exclude others without warrant.  Unhealthy relationships with certain political (or oligarchical) parties can form – indeed faux/poisoned civil society groups can be created by certain parties simply to cause discord and strife – something that seems quite likely to become more prominent in Ukraine fairly soon.   This list too can go on (and on), though again enough said.

The scholar Putman’s “Civic Community” provides civil society with distinctive relations between its groups based on trust, common norms, and networks that facilitate the public good – controlling corruption, monitoring and assisting in implementation of laws and rules impartially, advocates for public goods, achieves political compromise, horizontal accountability, protects liberties, seeks social and political trust and equality, generates awareness and participation and promotes the rule of law.

There is no need to continue – this is not an academic essay, nor paid piece, and the tip of the theoretical iceberg relevant to the entry has been exposed.

Ukrainian civil society since the Yanukovych departure has generally ceased to be the uncivil and ineffective society it once undoubtedly was.  Indeed it stepped into the void, as one would expect, where governance was absent – doing a far better job of getting things done than the feckless political class would have done in the aftermath.

Ukrainian civil society moved from existing in spite of Ukrainian politics (and sometimes in  spite of itself), to empowerment in the absence of governance post Yanukovych and pre Poroshenko, to (generally speaking) working with the political class – despite those political-civil interests fairly often diverging.

This brings about the 26th February signing of Presidential Decree 68/2016, which seeks to achieve a strategy for the development of Ukrainian civil society until 2020 – whilst civil society seeks the development of the political class into something other than feckless.  Given that potential conflict, some may be concerned about presidential (and governmental) feet treading upon the newly grown (and flourishing) grass within the civil society space/concentric circle – and perhaps rightly considering the Ukrainian ability to produce poorly crafted legislation, circumvent its own legislative rules, and generally try to deliberately under-regulate or over-regulate, vested interests – depending.

The Decree, readers will note, was made after (what appears to be significant) input by (certain) NGOs – although much like the Constitution of Ukraine, it appears far to “micro” and over detailed in some places and far too “macro” and lacking detail in others:

UKRAINE Presidential Decree №68 / 2016 (On the promotion of civil society in Ukraine)

Given the increasing role of civil society in various areas of state and local governments, including the implementation of reforms to support the initiatives of the public and to establish effective dialogue and partnerships of public authorities, local governments and civil society organizations, especially on the rights and freedoms of man and citizen, guided by Article 102 of the Constitution of Ukraine and in accordance with paragraph 28 of Article 106 of the Constitution of Ukraine, decrees and t n o I decree:
1. The National Strategy for Civil Society Development in Ukraine in 2016 – 2020 (attached).
2. Create a Coordinating Council for Civil Society Development (hereinafter – the Coordination Council) as an advisory body to the President of Ukraine.
3. To appoint the co-chairmen of the Coordination Council Gennady Zubkov G. – Vice Prime Minister of Ukraine – Minister of Regional Development, Construction and Housing and Communal Services of Ukraine and Pavlenko Rostislav Nikolayevich – Deputy Head of Presidential Administration of Ukraine.
4. The Co-Chairs of the Coordinating Council to bring in a three-week period in the prescribed manner agreed proposals on:
draft Regulation on the Coordinating Council for Civil Society Development;
the membership of the Coordinating Council, providing for the involvement of the representatives of the Cabinet of Ministers of Ukraine, other state agencies, local governments, academic institutions and representatives of civil society organizations, whose number should be at least half of the members of the Coordinating Council.
5. The Cabinet of Ministers of Ukraine:
1) ensure development with the participation of civil society and in the three months to approve the Action Plan for 2016 to implement the National Strategy for Civil Society Development in Ukraine in 2016 – 2020;
2) to provide annual approval by 10 January based on the results of public discussions of the action plan for the relevant year for the implementation of the National Strategy for Civil Society Development in Ukraine in 2016 – 2020, monitoring and evaluation of the involvement of civil society the implementation of the plan and disclosure 20 February report on the plan last year and anticipate when drafting laws on the State budget of Ukraine for 2017 and subsequent years, the funds needed to finance the implementation of action plans;
3) develop effective mechanisms for providing financial support to community initiatives aimed at implementing the National Strategy for Civil Society Development in Ukraine in 2016 – 2020.
6. regional, Kyiv city state administration in the prescribed manner:
1) create advisory bodies for the promotion of civil society, providing inclusion of their composition representatives of the local administrations, members of respective local councils, representatives of the territorial bodies of ministries and other central executive authorities and representatives of civil society organizations, whose numbers should be at least half of these advisory bodies;
2) develop and secure approval of regional programs to promote the development of civil society;
3) ensure the development, public discussion and approval of the annual regional action plans to implement the National Strategy for Civil Society Development in Ukraine in 2016 – 2020.
7. To declare invalid:
Decree of the President of Ukraine of March 24, 2012 № 212 “On the Strategy of State Policy to promote civil society in Ukraine and priority measures for its implementation”;
Article 2 of the Decree of the President of Ukraine from April 28, 2015 № 246 “About liquidation of some advisory bodies established by the President of Ukraine.”
8. This Decree shall take effect from the date of publication.
President of Ukraine Petro Poroshenko

Time will tell whether the road to (civil society) hell is paved with good intentions.

But what is the actual strategy?

NATIONAL STRATEGY (promote the development of civil society in Ukraine in 2016 – 2020)

1. Approval of the National Strategy for Civil Society Development in Ukraine in 2016 – 2020 (hereinafter – Strategy) due to the need to create favorable conditions for the state of civil society, various forms of participatory democracy, establishing effective cooperation of the public with the government and local authorities.
The active, influential and developed civil society is an essential element of any democratic state and plays a key role in the implementation of urgent social change and good governance in public affairs and matters of local importance, development and implementation of effective public policies in different areas the approval of the responsible person in front of law, addressing political, social, economic and humanitarian problems.
Advantages Revolution opened a new phase in the history of civil society, the public demonstrated impact on the socio-political transformation, was the impetus for updating and reformatting power.
Due to the Association Agreement between Ukraine, on one hand, and the European Union, the European Atomic Energy Community and their Member States, on the other hand, faces new challenges in relations between the state and the public, due to the need to introduce European rules and approaches such relations based on the principles enshrined in this Agreement. In addition, it is vital to the development of cooperation between civil societies of Ukraine and countries – members of the European Union.
Development of a strategy due to changes in the main trends of development of civil society, increasing its role in various spheres – from promoting reforms at the state and local level, European integration and the development of e-government to provide volunteer assistance to the Armed Forces of Ukraine, other military units, law enforcement agencies, state authority during the particular period of the anti-terrorist operation, assisting internally displaced persons. The strategy relies on the basic values ​​of the relationship between democracy and civil society, caused by the formation of such a society as the basis of democracy and the desire to create the right conditions for effective cooperation between the state, civil society and business to modernize Ukraine, welfare and equal opportunities for all.
The experience of democracies, civil society development for the system of state support makes it possible to attract additional human, organizational, financial and technical resources to provide social and other socially important services, promoting decentralization of public administration and improve its quality, and reduce public spending and prevent corruption risks.

2. The main problems of development –Civil society in Ukraine

Interaction of public authorities, local governments and the public is ineffective due to lack of transparency and bureaucratic procedures of this interaction, the low level of mutual trust.
The negative impact on the development of civil society and the rights and freedoms of man and citizen have a temporary occupation of the Russian Federation and the Autonomous Republic of Crimea and Sevastopol Russian military aggression in parts of Donetsk and Lugansk regions, existing in connection with the obstacles in the formation and activities civil society organizations in the territories.
Gaps in current legislation creates artificial barriers to the realization of civil initiatives, the formation and activity of certain types of civil society organizations, public review and consideration of proposals by state bodies, local self-government.
The level of harmonization of Ukraine with the European Union and taking into account the best international practices in the sphere of civil society is insufficient.
This situation led to the fact that:
no effective public control over the activity of state bodies, local self-government;
Practice is insufficient public participation in the formulation and implementation of public policy and issues of local importance;
philanthropists have effective incentives from the government, including tax, burdened by bureaucratic procedures, there is no effective mechanism to protect against fraud and other abuses in charity;
most civil society has no access to state financial support because of its limited scope, the non-use of transparent competitive procedures and provide undue advantages to individual types of civil society; program implementation (project management), developed by civil society organizations for execution (implementation) which provided financial support to state, complicating excessively short time during which it is given and unreasonable restrictions on the types of costs that can be financed from the budget;
capacity of civil society organizations are not fully used by the executive authorities, local governments to provide social and other socially important services; the tendency of preferences in the field of state and municipal enterprises and institutions, which is not conducive to improving the quality of services and leads to excessive growth of budget expenditures;
there are insufficient incentives to implement civil society entrepreneurship aimed at solving social problems (social entrepreneurship), adding such organizations to provide social services to promote the employment and training of socially vulnerable groups;
No single state information-education policy in the promotion of civil society.

3. The purpose and principles of the Strategy

The aim of the Strategy is to create favorable conditions for the development of civil society, establishing effective cooperation of the public with the government, local authorities on the basis of partnership, providing additional opportunities for realization and protection of the rights and freedoms of man and citizen satisfaction of social interests with various forms of participatory democracy , public initiative and self-organization.
The strategy is based on the following principles:
priority of rights and freedoms of man and citizen;
rule of law;
transparency, openness and mutual responsibility of state authorities, local authorities and civil society organizations;
political impartiality and non-discrimination against all kinds of civil society;
ensuring constructive engagement of public authorities, local governments and civil society organizations;
promoting public participation in the formulation and implementation of state and regional policy issues of local importance.

4. Strategic directions and objectives

Strategy implementation is expected to perform in the following strategic areas:
creating favorable conditions for the development and institutional development of civil society;
ensuring efficient procedures for public participation in the formulation and implementation of state and regional policy issues of local importance;
stimulate the participation of civil society in socio-economic development of Ukraine;
creating favorable conditions for intersectoral collaboration.
4.1. Creating favorable conditions for development and institutional
Development of civil society
In the framework of the strategic direction be implemented following tasks:
shortening and simplifying registration procedures for organizations of civil society, including the procedures for submission of documents in electronic form or on a “single window”; improvement of the order classifying civil society organizations to non-profit organizations;
improving the legal status, order creation, organization and termination of community organizations, expanding their powers to participate in solving local problems;
legislative regulation of the issue of mandatory planning the state budget of Ukraine and local budgets expenditures for the competitive provision of financial support for the implementation of programs (projects and measures), developed by civil society organizations;
introduction of a single competitive procedure for the selection of executive power applications (project management), developed by civil society organizations for execution (implementation) which provided financial support to the state and to ensure the legislation equal access of these organizations, including charities, to participate in this selection ;
making involving public priorities and common criteria for financial support from the budget for the program (projects, measures) developed by civil society organizations and aimed at the realization of state, regional policy, the definition of medium- and long-term indicators such financial volume rendering support;
the introduction of effective mechanisms for providing financial support to community initiatives aimed at implementing the Strategy;
establishment of best practices, taking into account the European Union’s favorable tax environment for businesses and individuals who provide charitable assistance, and individuals who receive charitable assistance;
introducing uniform approach to taxation on personal income in obtaining free social services of budgetary institutions and organizations of civil society;
introduction auxiliary (satellite) accounts for statistical accounting of civil society organizations and accounting of their activities in accordance with international standards;
activation of complex measures to improve civic education of the population on the possibility of protecting their rights and interests through the expression of various forms of participatory democracy.
4.2. Ensuring effective procedures for public participation
during the formation and implementation of state and regional policy,
Local Decision
Under this strategic direction resolved following tasks:
normalization in law:
– The order of the executive authorities, local government public consultations on the draft legal acts during their development with the establishment of an exhaustive list of cases where such consultations are not held, and a mechanism to prevent violations of mandatory requirements for such consultations;
– About initiating and conducting local referendums;
– Guarantees the right to peaceful assembly with fixing exhaustive list of grounds for restriction of peaceful assembly;
– Order initiation, the general meeting (conference) of members of the territorial community of the place of residence and implementation of their decisions;
– The compulsory approval of each local community’s charter that defines the particular order of public hearings, making local initiative and the implementation of other forms of participatory democracy;
Promote a level of local government public consultation with the public, public examination of their activities and the activities of executive bodies, officials, utility companies, organizations and institutions;
Promote a mandatory public consultation in the preparation of the State Budget of Ukraine and local budgets;
determine the procedure for public examination of administrative services and activities of budget institutions that provide social services;
creating an effective mechanism for ensuring the right to apply to local authorities with electronic petitions;
promoting the inclusion of the regulations of local councils mandatory procedures to ensure transparency and openness of information, including on public participation in the preparation of draft acts with social significance.
4.3. Encouraging the participation of civil society – Socio-economic development of Ukraine
This strategic direction involves the following tasks:
implementation of procurement practices of social and other socially important services through the social order and to ensure equal access of civil society organizations and budgetary institutions providing social and other socially important services from the budget;
encourage the development of social enterprises, including improving the mechanisms of financial support for such activities;
ensuring equal conditions for participation of civil society in public procurement procedures;
establishing a competitive basis, performers determining national, regional and local programs of civil society and equal opportunities for participation in such competitions;
ensure the right of non-profit civil society organizations carried out in accordance with the law business, if such activities are consistent with the objective (objectives), civil society organizations, contributes to its achievement and does not provide for the distribution of revenues (profits) or of the founders (participants), members of the organization;
introducing mandatory involvement of civil society organizations to assess the needs of citizens in social and other socially important services;
ensuring implementation of EU legislation regarding taxation value added tax social and other socially important services;
provide civil society organizations providing social services at the expense of budget funds, the right to use state and municipal property on favorable terms.                                                                                      4.4. Creating favorable conditions for inter-sectoral cooperation
This strategic direction is aimed at implementing the following tasks:
providing executive bodies and local authorities access to public consultation and legal assistance (including free) on the order of creation and activity of civil society;
the introduction of mandatory monitoring and evaluation of spending funds programs and projects carried out by civil society organizations from the budget;
the introduction of mandatory reporting of CSOs that receive state financial support, public access to such records, as well as the results of mandatory monitoring, evaluation and examination results of state financial support for civil society organizations;
promoting inter-sector cooperation in preventing and combating fraud and other abuses in the field of charity, strengthen legal liability for misuse of charitable assistance;
stimulate voluntary activities, including working toward the participation of Ukraine in the European Convention on long-term volunteer service;
introducing a mechanism charitable activities by sending charity telecommunication;
expansion of the use of public-private partnership involving civil society organizations;
inclusion in the curriculum of secondary, vocational and higher education courses and topics for development of civil society;
the introduction of training in higher and further education of specialists in the management of non-governmental organizations;
provision of technical, consultative and organizational assistance to public authorities, local governments on cooperation with civil society organizations of civil society;
educational activities and social advertising on interaction with civil society organizations, development of civil society;
stimulating research, publications and educational events in the development of civil society and intersectoral cooperation.
5. Implementation, monitoring and evaluation of the Strategy
The Strategy is provided by the joint efforts of public authorities, local governments and civil society to achieve the goals and principles of the Strategy.
Supportive, monitoring and evaluation of the implementation of the Strategy rests with the Coordination Council for Civil Society Development (hereinafter – the Coordination Council). To monitor and evaluate the implementation of the Strategy Coordinating Council defines the criteria for evaluating the effectiveness of implementation strategies and indicators that are developed it with the assistance of the National Institute for Strategic Studies and other academic institutions, non-governmental think tanks and independent experts. As a result of monitoring and evaluating the implementation of the Strategy Coordination Council is subject to proposals for updating the Strategy.
The Cabinet of Ministers of Ukraine approved annually based on the results of public discussions on the action plan implementation strategy and ensure its implementation on the principles of openness and transparency, reports on its implementation.
Openness and transparency of the Strategy implementation provided by informing on the progress of its implementation on the website official website of the President of Ukraine, and by informing on the status of its implementation and fulfillment of annual action plans for implementation of the Strategy executive bodies on the official websites of the relevant authorities .
It appears appropriate to laying in the executive branch function of a Strategy for Structural units responsible for interaction with the public.
Local authorities are involved in the implementation of strategies on the basis and in the manner prescribed by the laws of Ukraine statutes of local communities and their own acts.
National Institute for Strategic Studies has scientific support implementation of the Strategy with the assistance, if necessary in the prescribed manner other academic institutions, non-governmental think tanks and independent experts.
6. Financial Strategy
The Strategy at the expense of budget funds and other sources not prohibited by law.
In order to target support on a competitive basis to finance programs, projects and activities of civil society organizations aimed at implementing the Strategy, it is advisable to study the issue of Civil Society Development Foundation.
Head of Administration
President of Ukraine B.LOZHKIN

There are many laudable sentiments and requirements within the above Decree – and there are also many areas that could infer the de facto if not de jure subordination of civil society to The State too, if due care is not taken.

Indeed some may see some financial issues as a precursory strategy that which mirrors what many perceive as the international aid “administration” – with the emergence of some very dubious civil society actors in search siphoning funding/functionary roles.

International Aid

Nevertheless, the issues the Decree raises regarding what the government is “to do” with NGOs is perhaps surpassed by the opportunities the document presents to NGOs.  If you had to place you bets on the political class or civil society eventually coming out on top, right now smart money would be placed on civil society.

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Ukraine casts its net for SOE CEOs – but what will it catch?

February 27, 2016

The 26th February saw Government Ukraine launch an official public selection process to attract and appoint CEOs for several large State Owned Enterprises (SOEs).

The SOE’s in question are formally described thus – “PJSC Ukrzaliznytsia (UZ) is state-owned rail monopoly which operates 6 regional rail operators and close to 140 other subsidiaries. The domestic rail network is Ukraine’s strategic asset and a key transport link between the EU and Russia and Central Asia (4 out of 10 pan-European transport corridors cross Ukraine). UZ operates 21,600 km of rail tracks (47 % electrified) and a fleet of c. 4,000 locomotives and 123,000 railcars. It accounts for c. 60 % of total freight transportation and 38 % of passenger transportation in Ukraine, ranking first in Europe (ex-Russia) on freight turnover. UZ is number 2 by passenger turnover in the CIS and number 4 in Europe. Metal and mining goods accounted for 58 % of its 2014 freight transportation in volume terms, followed by construction materials (15 %) and grain (8 %). With over 300,000 employees, UZ is one of the largest employers in Ukraine. Company reported net revenue of UAH 28.9bn for 6m2015 (+23% y-o-y). Company’s net loss narrowed to UAH 4.7bn in 6m 2015 vs. net loss of UAH 8.2bn for the same period of 2014. 

PJSC Centerenergo is one of the TOP-100 largest SOEs in Ukraine managed by the Ministry of Energy and Coal Industry of Ukraine. Centrenergo is Ukraine’s second-largest thermal generator by capacity (7,660 MW), operating three power plants in the industrialised regions of Kyiv, Kharkiv and Donetsk. In 2014 it accounted for 7 % of the total electricity production in Ukraine (18 % of the total production by thermal power generation). For 9m 2015 company generated UAH 82m of net loss compared with net income of UAH 219m for 9m 2014. 

SE Ukrposhta is governed by the Ministry of Infrastructure of Ukraine and is one of the TOP-100 largest SOEs in the country. SE Ukrposhta is a national postal operator of Ukraine, which is wholly owned by the State. The enterprise has 29 branches (inc. 25 regional directorates) and more than 11 800 postal departments all over the country, which makes it the largest postal network in Ukraine. With over 87 000 employees, Ukrposhtaprocesses and delivers to customers about 240 million postal items, 16 million parcels and insured items, 15 million orders, and more than 83 million pensions per annum. For 9m 2015 net income increased 2.5 times compared to 9m 2014 and amounts UAH 30m.

SE Plant Electrovazhmash is governed by the Ministry of Economic Development and Trade of Ukraine and is one of the TOP-100 largest SOEs in the country. The company produces hauling equipment for mines and railways as well as turbo and hydro generators and direct-current electric machinery. EVM’s equipment is used in over 40 countries globally. 73% of thermal power stations in Ukraine is equipped with Electrovazhmash turbo generators and 78% of hydro power stations use hydro generators produced by Electrovazhmash. The enterprise supplies Europe, Asia, Latin America and Middle East markets. Partners of the enterprise are Siemens,ArcelorMittal and others. For 9m 2015 company amounts UAH 53m of net loss and for 9m 2014 company reported about UAH 84m of net income.

SE Ukrspyrt is a 100% state-owned holding company operating 41 domestic distilleries with total annual capacity of 31.3 million decalitres, located in Lviv, Ternopil, Vinnytsia and other regions. Being a state monopoly in production and export of ethyl alcohol, Ukrspyrt is responsible for the implementation of government policy and effective management of state-owned companies in the alcoholic beverage industry. The company has approx. 5 thousand employees, being the main employer in villages and towns where its production facilities are located.Ukrspyrt reported net income of UAH 164m in 9m2015 (+71% y-o-y).

SE Ukrenergo is governed by the Ministry of Energy and Coal Industry of Ukraine and is one of the TOP-100 largest SOEs in Ukraine. The enterprise is responsible for operating the domestic high voltage transmission system and cross-border transmission lines and providing power dispatching services. It controls real-time electricity output and monitors power generators’ operational generating units, fuel stocks and production efficiency, balancing electricity consumption with production. Due to its status as natural monopoly, tariffs for the company are set by the sector regulator, which uses a cost-plus approach to set tariffs based on its OPEX and CAPEX needs. Ukrenergo unites seven regional networks and operates 23,000 km of transmission lines operating at 220-750 kV voltage levels. The company regularly conducts cross-border capacity auctions and sells rights to export electricity from Ukraine to neighbouring countries. For 9m 2015 Ukrenergo generated UAH 408m of net income comparing with net loss of UAH 478m for 9m 2014.”

These are CEO roles that clearly require top quality candidates and eventual appointees if these enterprises are to be turned into what they could (and already should) be prior to any privatisation they may ultimately be subjected to.  (Though all may be currently listed for privatisation, certainly there remain questions over just how, exactly, rail will be privatised – a model similar to the US, or a model similar to many European models.  As a former-Deputy Minister was overheard to say by this blog, “privatising rail is simply too difficult” – which is perhaps why this individual is now in the “former” category of Deputy Ministers.)

This is not the first time Ukraine has openly sought top talent for its SOEs.  On 22nd July 2015 it attracted Mark Rollins to head Ukranafta. Mr Rollins’ remuneration is not clear, but a reader would suspect that it is probably far in excess of the (official) remuneration for the CEO of Naftogaz Ukraine.

The issue of remuneration (and perks) is of course pertinent when trying to attract top management – though for many genuinely top managers in any field of endeavour remuneration is perhaps secondary to the challenge placed before them.  Government Ukraine states ” Winners of the selection procedure will receive a competitive remuneration comparable to the private-sector compensation in Ukraine” – Prima facie not that enticing when it is problematic to accurately ascertain what “a competitive remuneration comparable to the private-sector compensation in Ukraine” actually is.  Official remuneration or actual remuneration?  Is Government Ukraine going to use the “actual” rather than the “official” remuneration figures?  The former is certainly far more attractive than the later.

CEO

The governmental plan is to have a Nomination Committee (consisting of 5 Ministers and 5 independent experts) initially compile a shortlist (between 2 – 10 candidates), followed by a final (undefined) selection phase thereafter which the Nomination Committee will recommend an individual to the Cabinet of Ministers for appointment.

Naturally all attention will be focused on the successful candidates as and when they are appointed – there will be “expectations” after all – however it would be perhaps worthy of paying attention to the number of quality candidates (if there are any quality candidates at all) that are subsequently unsuccessful, for they form part of a wider view when considering the attractiveness, challenges and opportunities, top industry professionals mull over when pondering CEO positions in Ukraine.

With Ukraine listing literally hundreds of SOEs for privatisation in the coming years, if it can’t attract top quality candidates for the headline SOEs, what hope for competent management for the lesser SOEs the State ultimately wants off the budget (subsidy) books?

In short, the quality and size of the applicant fields for these first six headline SOEs will be an indicator as to the expectations of candidate calibre for the second tier SOEs.  Whoever is eventually appointed for these first half-dozen CEO roles is perhaps less important than the quality of the applicant pool from which they are pulled.

For any readers interested in applying, the relevant links can be found within the Government of Ukraine announcement.

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NATO takes up (de facto permanent) residence in Ukraine

February 26, 2016

On 26th February 2016, President Poroshenko signed into being the law “On Ratification of the Agreement between the Government of Ukraine and the North Atlantic Treaty Organisation on the status of NATO to Ukraine” – which finally paves the way for a “permanent” NATO presence in Ukraine per the agreement between Secretary General of NATO Jens Stoltenberg and President Poroshenko signed on 22nd September 2015.

Thus it comes to pass that a “NATO Liaison Information and Documentation Office” with full privileges, immunity and assistance provided to diplomatic missions in accordance with the Vienna Convention on Diplomatic Relations of 1961 can now legally take up residence in Ukraine de facto permanently.

nato

De facto permanently, for it seems highly unlikely that NATO will decide to close its Liaison Office (de facto Embassy) in Ukraine of its own volition during the next few decades, and even less likely that any Ukrainian politician/legislature would ask it to leave for at least a generation.  After all, there will be no return to normalcy with Russia for this Ukrainian generation and only the retarded or naive could think otherwise.

Ergo whatever stresses and strains that may lay ahead in the NATO-Ukrainian relationship, NATO will de facto be permanently on Ukrainian soil henceforth.

According to the Presidential Website, “the Agreement, provides for exemption from taxes, duties and other taxes, quantitative restrictions on the activities of the projects in Ukraine by financing NATO (in particular, this will involve the import and export of goods, for the purchase of goods and services contracts for the projects under the trust funds, scientific, educational and other programs)” – notwithstanding the other usual diplomatic privileges such as parking where you like and never paying the parking tickets.

A reasonable and sensible decision by both parties in reaching this agreement it has to be said – for there is much more to NATO than its collective military force.  It is something of an achievement for Ukraine to now have a NATO presence (de facto permanently) on its soil, for it means that the NAC were in favour of the opening such an office – and that requires a lot of “Yeahs” and absolutely no “Nays” (unanimous decisions only) from the NAC members that take the political decisions.

Whatever the case, there will now permanently (de facto) be, if not “NATO boots” on the ground in Ukraine, then certainly highly polished “NATO brogues and suits” in Ukraine – complete with full Vienna Convention niceties.

It will be interesting to see who staffs the office!

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And the next Prosecutor General is……not looking promising

February 25, 2016

Upon the cusp of August/September 2015 when it became abundantly clear to all that Prosecutor General Shokin simply had to go, this blog opined that Yuri Lutsenko would push for the role.  The reasons put forward were that he considers himself worthy of far greater roles than that of heading President Poroshenko’s Solidarity Party Verkhovna Rada faction, and that his frustration in that role was evident.  He wanted, and expects, bigger and better roles.

And so it comes to pass that the whispers behind the political curtain suggest but two runners and riders for the role of Prosecutor General now that Mr Shokin has submitted his long overdue resignation.

Those two individuals being Pavlo Zhebrivskyi the current Governor of Donetsk, formerly of the PGOs office (January – June 2015) and before that (Our Ukraine) parliamentarian for many years, and unsurprisingly, Yuri Lutsenko, Yulia Tymoshenko’s very average former Interior Minister and who is now among the half dozen Poroshenko Grey Cardinals/High Chamberlains that is government within/behind the government.

Pavlo Zhebrivskyi

Pavlo Zhebrivskyi

When tipping Mr Lutsenko to be the next Prosecutor General of Ukraine as the 2015 Summer gave way to Autumn, this blog opined that he would be yet another (4th) poor Poroshenko choice for the role.

He is clearly of the “old political elite” no differently than Yulia Tymoshenko and Arseny Yatseniuk and his appointment to the role would be perceived as such.  Thus the appointment of another well known “old guard” figure to a position of significance would not sit well with a considerable proportion of the constituency even before he had a chance to do anything.  His tenure as Interior Minister was hardly replete with successes against corruption or organised crime either, which will not instill confidence.

More to the point however, Mr Lutsenko has the qualities that suit the role of Grey Cardinal/High Chamberlain striking grubby little (and big) deals behind the curtain, but those qualities are inherently conflicting for a role that requires robust personal morality and integrity, and leadership that inspires an institutional ethic that abhors grubby little deals behind the curtain.

Just as Yulia Tymoshenko may change her hairstyle but not her spots, (and she is currently unsuccessfully romancing Samopomich and Governor Saakashvili in preparation for any (likely) early elections and resulting coalitions), the Ukrainian (and international) constituency would not be easily or quickly convinced by the appointment of a Prosecutor General Lutsenko.

Mr Zhebrivswkyi carries far less public baggage and has been involved in far less questionable/dubious shuffling behind the curtain than Yuri Lutsenko, and thus of the two heavily rumoured candidates he is likely to have far fewer favours owing and far less compromising incidents to rear an ill-timed head if appointed.

Yet there is a very simple and blunt question to ask.

Having spent months putting senior prosecutors through very public scrutiny prior to anti-corruption appointments, with several outstanding candidates appearing, why is it that none of those individuals are (currently) being considered for the role of Prosecutor General?  Why are only long-in-the-tooth politicians with varying amounts of nefarious baggage being touted?

The question is somewhat rhetorical, for it is clear that President Porosehnko is simply either not prepared, or not brave enough, to give up political control over the Prosecutor General (and by extension the Prosecutor General’s Office), preferring to continuously appointment those personally loyal to him (rather than loyal to the nation first and foremost).

During the next few fairly quiet weeks as “coalition consultations” occur (don’t be too surprised by a Solidarity/People’s Front/Radical Party majority coalition outcome – nor the continued rejection of Tymnoshenko overtures by both Samopomich and Governor Saakashvili), a reader may ponder whether any other runners and riders will enter the Prosecutor General frame that would actually unambiguously project the perception of a morally upright, independent, robust servant of the nation (over vested interests or personal loyalties) in which the constituency (and external supporters) will believe.  Such people do exist and have successfully been through the rigours of public scrutiny and assessment very recently after all.  In their (current) absence from the running list, then Mr Zhebriviskyi appears to be the least worst option.

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Human Rights Commissioner unveils 2016-17 Strategic Plan – Ukraine

February 24, 2016

Ms. Valeriya Lutkovska, the oft forgotten (due to insufficient powers) yet very capable Human Rights Commissioner of Ukraine, the UNDP, and the Government of Denmark have conspired to produce an updated Human Rights Strategy for Ukraine for the period 2016 – 2017.  Not before time, for the last human rights national strategy your author can recall was published in 2012 in what was a very different time and very different circumstance.  Albeit the main core concerns of 2012 continue to feature heavily within the 2016-17 strategy, current and recent events have pushed forward human rights issues that were clearly unforeseeable in 2012.

As all policy and strategy can only remain good policy and strategy if reviewed and “tweaked” (lest it become ineffective or counterproductive) on a sensible and timely basis, clearly the new strategy document is long overdue.

Valeriya Lutkovska

Valeriya Lutkovska

Naturally the new strategy reads like a sensible “to do” list.  Naturally, like all lists, they are far easier to compile than to actually achieve and implement – particularly when achieving and implementing them is in part dependent upon a Verkhovna Rada crafting and passing legislation, the State budget for necessary financing, and institutional support and compliance from the institutions of State that will often fall foul of the Human Rights Commissioner opinions.

The new strategy document however, does what it should by way of planting a peg in the floor as to where Ukraine is currently, where it is expected to be by the end of 2017, and the issues (almost in the traditional SWAT and PEST analysis format) that will affect achieving the goals outlined within the specified time frame – or not.

Generally the strategy seems to strike a reasonable balance between prevention and due process, constituency accessibility and education, a striving for best practice and an honest self-assessment of current shortcomings.

Perhaps more worthy of note however, is the clear desire to confront, cajole, and cooperate with the political class in a far more public manner than has previously been the case.

If that be so, then a reader can only hope that both Government of Denmark and the UNDP (and others) will have Ms. Lutkovska’s back, for the more she and her office intercede in the crafting of legislation, any public naming and shaming where appropriate, the robust advocacy for dealing with truly systemic human rights problems within Ukraine, and the significant easing of accessibility to the Human Rights office for the citizenry, the greater the temptation will be for the political class to politicise the office of Human Rights Commissioner.

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Back in the saddle again

February 23, 2016

So after 1 month wandering fairly aimlessly across Asia, your author has returned to Ukraine having made only a single entry whilst away.

Despite jet lag, a swift recap of what can only be described as a particularly dire month for Ukrainian policy and politics can be summarized by several key events:

Perhaps most important of all was the inexplicable and ominous dilution (almost to impotency) of the October 2014 law regarding e-declarations for officials (and their immediate family members).  The amendments made to this law by Bill 3755 have no positives for the Ukrainian constituency, nor external supporters of Ukraine.  Indeed the only beneficiaries of this law are the corrupt officials the October 2014 law sought to place parameters upon.  To make matters worse, if that were possible, it appears this “dilution Bill” was created hastily within the Presidential Administration, and then went on to circumvent all Verkhovna Rada procedures (Committees etc), before being adopted.  An ethical and procedural disgrace .

There is now also 6 months of terminal convolutions of the current government which is devoid of a majority coalition with Samopomich and Batkivshchyna having terminated their membership thereof.  Should early Verkhovna Rada elections now occur it seems likely that Samopomich, “Team Saakashvili”, and Batkivshchyna would all poll above the President’s Solidarity (and in that order).  Prime Minister Yatseniuk’s People’s Front still facing political oblivion.  The Opposition Block would also gain (unless it divides into a Firtash Liovochkin “Party for Regional Development & Peace” and whatever Akhmetov backs under whatever name – in short splitting Opp Block).

Whatever the case, a previously feckless and dysfunctional Verkhovna Rada may well become more (rather than less) unworkable.  The October 2014 predictions of early Verkhovna Rada elections in Spring or Autumn 2016 made by this blog appear to still be on track.

The resignations of Abromavicius (and deputies) as well as Kasko were significantly politically expensive for President Poroshenko and Prime Minister Yatseniuk with the external supporters of Ukraine – notwithstanding causing notable ire amongst Ukrainian civil society and the broader constituency.  The resignation of Mr Shokin post Kasko resignation fails to mitigate the political costs – particularly when any replacement will have to be an enormous improvement upon President Poroshenko’s three previous appointments.   Whether the next appointment be a servant of Ukraine, or a servant of somebody/vested interests in Ukraine, will go a long way to determining continued external support/reduced support for the current political leadership dependent upon external goodwill for survival.

quid

To be entirely blunt, the Ukrainian constituency now requires the external supporters of Ukraine to adhere to a strict, itemised, programmed, reform for assistance quid pro quo.  Any retarded backward steps resulting in reduction, rather than continuation, of assistance.  More for more if progress is made.  More for less cannot be tolerated if the supporters of Ukraine intend to support the Ukrainians in tackling their odious political class, and the oligarchy sitting behind the political curtain.

With German FM Steinmeier calling for political stability and reforms when in Kyiv on 23rd February, a reader may perhaps ponder whether he is fully aware that political stability is dependent upon the oligarchy either being removed from Ukrainian politics, or alternatively appeased by Ukrainian politics.  If so, as many of the required reforms will not serve the oligarchy well, and appeasement therefore is not the way to go, perhaps a more robust external policy toward the Ukrainian oligarchy and their international assets/interests would be a policy worthy of consideration.

All in all, the month your (regular) author has been wandering around Asia has been something of a domestic political and policy disappointment – albeit a month that has produced no real surprises that were not foretold.

Now follows a few days of re-immersion into the political squalor (and the overcoming of jet-lag), so be kind enough to make some allowances as your author climbs back into the blogging saddle once more – the blog entries will get better.

On a final note, many thanks to MW Dabbs for keeping the blog ticking over whilst your author was away – a true gent!

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