UD. 11 April 2017.  

By Iryna Terlecky.

War on all fronts – including against civil activists

Electronic declarations

1 April was the deadline for public officials to declare and file their income for 2016 through the new e-declaration system brought into effect after various stumbles during the last eighteen months.

Not unexpectedly, the Ukrainian media and civil activists have focused not only on the income declared, but on some of the more unusual items of wealth that have been revealed. President Poroshenko declared the equivalent of around $455,000 in income from various sources for 2016 of which just over $13,556 was his salary, with the rest coming from interest and various securities. He also declared $25.9 million in and International Investment Bank account, as well as other smaller amounts in other bank accounts and cash. 

Prime Minister Volodymyr Groysman declared income and deposits of just over $109,000 and income from property leasing of 4.2 million UAH.

One of the features of the system has been to show how much top Ukrainian officials have in various bank accounts and in cash in various currencies. Interior Minister Arsen Avakov declared $23,177 in Oschadbank; $175,000 and 804,338 UAH, and also 200 thousand UAH in the form of assets in precious metals; and 15,000 UAH, $12,800, €65,000, £870,000, 3,015 Canadian dollars and 96,000 Japanese yen in cash.

The system also requires officials to declare property and other items of wealth. TV channel 112 profiled some of the more unusual items declared, which included horses, Chopard leather briefcases, an ostrich skin handbag, a 2015 Tesla electric car, a library of 18th and 19th century books, 5 private planes (owned by a spouse), numerous artworks, the copyright to over 100 songs, and a substantial holding in bitcoins.

The e-declaration system has been an uncomfortable experience for many of Ukraine’s officials, with many questions about how such comparative and actual wealth has been amassed over the years. While those questions may never be fully answered, there is no doubt that the level of transparency has undergone a step change which has been widely welcomed by Ukraine’s western partners.

Less welcome has been the most recent amendments to the law which would make it mandatory for leaders of anti-corruption groups to submit e-declarations of their assets. 

Bill No. 6172 on amending certain laws of Ukraine on the specifics of financial control of certain categories of officials was supported by 268 MPs on 23 March. The bill exempts servicemen of the rank and file, sergeant, sergeant corps, junior officers from the obligation to file e-declarations. At the same time, it obliges individuals who receive funds and/or property for anti-corruption activities, in particular, heads of relevant public organisations, members of public councils under state agencies, and candidates for elected offices to file data on property and incomes. 

Many regarded this move as hostile to the work of those civic activists who have done most to campaign for greater transparency. In a statement posted on the website of Transparency International, its head Jose Ugaz called on Ukrainian authorities to abolish the amendments.

«These new provisions must be abolished immediately. Lawmakers are trying to intimidate civil society and in particular anti-corruption activists. If these amendments come into force, it will be clear that Ukrainian top officials are not serious about fighting corruption. It will show that they have chosen to side with those who want to quash the anti-corruption movement.» 

EU Commissioner for European Neighborhood Policy and Enlargement Negotiations Johannes Hahn wrote on Twitter: «E-declarations should target #corruption in public administration - not hamper work of civil society. Changes to the law on e-declarations are a step back, not forward, and should be reconsidered.»

The U.S. Embassy in Ukraine said the changes in legislation are a step back in Ukrainian reforms. «E-declarations for senior public servants is a strong step forward for reform in Ukraine. Members of civil society play vital role for transparency; targeting them is a step backwards,» the Embassy wrote on Twitter.

In spite of the opposition, President Petro Poroshenko signed the bill into law on 27 March. At the same time he agreed with Transparency International Ukraine that activists should set up a working group with representatives of the presidential administration to develop amendments to the document, which the president will then submit to parliament as urgent before the law comes into force in 2018.

Some cautious good news on the economy

The World Bank is showing cautious optimism about the prospects for Ukraine’s economy, with its latest report showing a modest recovery in real GDP of 2.3 percent in 2016, supported by a bumper harvest which led to stronger growth of 4.8 percent in the fourth quarter. 

The World Bank reports other areas of growth during 2016, including 3.6 percent in manufacturing, 16.3 percent in construction, 4 percent in domestic trade, and 3 percent in transport. Fixed investment rebounded strongly by 20 percent from a low base, including manufacturing equipment and imported capital goods, pointing toward strengthening investor confidence. 

The World Bank highlighted the impact on ordinary people. After a significant increase in 2015, poverty is estimated to have moderated slightly in 2016. Moderate poverty (the World Bank’s national methodology for Ukraine) increased from 15 percent in 2014 to 22 percent in 2015, while the poverty rate (under $5/day in 2005 PPP) increased from 3.3 percent in 2014 to 5.8 percent in 2015. While household incomes have benefited from price stabilisation and modest economic growth, inflation is still running at over 12% (though lower than the 43% seen at the end of 2015) and unemployment is at 9.9%. 

Although the World Bank says that the prospects for economic growth remain modest, renewed reform momentum could support higher growth going forward, though this will be hampered in the current political climate and as a result of the escalation in the war in Eastern Ukraine. Specifically, the coal and trade blockade with the Russian-controlled areas in Donbas is expected to negatively impact steel production and electricity generation. Nevertheless, higher growth would be possible with acceleration of further reforms to address structural challenges, and create a more welcoming climate for investment. 

In the meantime, The International Monetary Fund (IMF) has approved a $1 billion loan payment to Ukraine as part of the $17.5 billion bailout programme in exchange for implementing reforms and tackling corruption, which brings the total paid so far to $7.6 billion.

Ukrainian President Petro Poroshenko wrote on his Facebook page on 3 April that the approval was «further recognition of Ukrainian reforms.» David Lipton, acting chair of the IMF’s board, said Ukraine’s economy was showing signs of improvement, with lower inflation and a doubling of international reserves. But he said Kyiv still needed to tackle corruption «decisively.»

The Eurovision war continues

The organisers of the Eurovision song contest have threatened to ban Ukraine from future competitions unless it reverses its three-year ban on Russian wheelchair-bound entrant Yuliya Samoilova, over illegally entering Moscow-annexed Crimea to perform at a concert in 2015.

The head of the European Broadcasting Union, Ingrid Deltenre, in a letter sent to Prime Minister Groysman, said the ban on the Russian singer taking part in next month’s Eurovision was “unacceptable”. As a consequence, Ukraine’s public broadcaster UAPBC “might be excluded from future events.” 

If Kiev’s ban against Samoilova is not lifted it “would certainly have a very big negative impact on Ukraine’s international reputation as a modern, democratic European nation,” said Deltenre.

“We are increasingly frustrated, in fact angry, that this year’s competition is being used as a tool in the ongoing confrontation between the Russian Federation and Ukraine,” she added.

Russia’s Channel One has refused the offer by Eurovision to have Samoilova participate in the competition by video link and the Russian Foreign Ministry has accused Ukraine of ‘cruelty’. So far, Ukraine is refusing to lift the ban so it may be a case of who blinks first…

And finally…

After what feels like an interminable length of time, more than 500 members of the European Parliament voted for visa liberalisation for Ukraine during a session in Strasbourg on 6 April, the latest stage in granting Ukrainians the ability to visit most EU countries without having to apply for visas.

Ukrainian citizens will be able to travel visa-free in the EU (except in Ireland and the UK) for up to 90 days within a 180-day period for leisure, business and family matters, but not for work.

Mariya Gabriel MEP said, “The EU and Ukraine are strategic partners for a safer, more stable and more prosperous Eastern Neighbourhood. Adopting the visa waiver for Ukrainian citizens is an important step forward to strengthening EU-Ukraine relations by bringing peoples together and building bridges beyond borders.”

Only a few more formalities remain. The decision is yet to be formally approved by the Council of Ministers and then published in EU’s Official Journal. The visa exemption will then enter into force 20 days after publication in the EU Official Journal.


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