BY KOSTIANTYN FEDORENKO
It has been four years since the mass protests in Ukraine, which eventually led to regime change, began. People protested against a foreign policy shift to Russia; they were eventually beaten up by the police. As the violence escalated and protesters did not give up, despite sustaining numerous casualties, Yanukovych fled the country, and the regime fell.
Now, four years later, Ukraine has definitely changed in many ways. There are, however, different takes on whether these changes have been positive, and on their causes. In this article, I look briefly at what happened to Ukraine in the last four years and where the country stands now.
During the first post-Euromaidan years, Ukrainians saw an unquestionable drop in their welfare. As an illustration, according to data gathered by the World Bank, from 2013 to 2015, GDP per capita in U.S. dollars fell by half, and the country’s external debt grew from 78.6 percent to 131.5 percent of GDP. In December 2013, the average salary in Ukraine was 3,619 UAH, which, at an exchange rate of U.S. $1 = 8.24 UAH, equaled approximately U.S. $469. In June 2017 the average salary equaled 7,360 UAH, yet with an exchange rate of $1 = 26 UAH, its U.S. dollar equivalent was $283.
Since the Ukrainian economy is largely import-dependent—and in particular relies heavily on energy imports—the depreciation of the hryvnia had a dramatic effect on the prices and affordability of desired goods and services to Ukrainians. Indeed, as official data indicate, consumer prices grew rapidly, with a CPI change of 43.3 percent in 2015, and imports dropped by 22.1 percent in 2014 and by 17.9 percent in 2015. New car sales decreased sharply, as did the number of passengers served in the country’s airports.
At the same time, explanations that attribute these developments exclusively to a failed economic policy of the new administration are insufficient. As a result of the military conflict in the Donbas, Ukraine lost control over an area of high industrial output. It had to hike spending on defense, and an ongoing, if local, armed conflict is not exactly an attractive factor for potential foreign investors.
Indeed, post-Euromaidan Ukraine can and should be praised for several major economic achievements. These include cleaning up its banking system; reforming Naftogaz, the national oil and gas company; creating a transparent system of public procurements; and adopting norms allowing fiscal decentralization. In macroeconomic terms, Ukraine did achieve stabilization and a return to growth. At the same time, international experts surveyed by Carnegie Europe noted a lack of definitive reforms in the country and lack of action in tackling the prevalent corruption.
Conditionality and Reforms Stalling
This problem of failure to press forward more definitively with planned reforms is in turn closely tied to a concept that the EU actively uses in its foreign relations: conditionality. Indeed, in an overview of the iMoRe reform index by Vox Ukraine, Hlib Vyshynskyi, executive director of the Centre for Economic Strategy, notes that Ukraine performed best in implementing reforms when it faced precise demands from the EU and the IMF. This is entirely explainable: getting the EU Association Agreement signed and the visa-free regime implemented was a major promise that the government had to keep. IMF funds in turn kept the country from even harder economic blows in 2014–2015.
Yet Ukraine is now in a position where its citizens already enjoy visa-free travel with the Schengen zone countries, a free trade area with the EU has been established, and the economy is no longer facing a realistic threat of defaulting, at least in the short term. And as the reform index shows, without proper external incentives, reform processes in Ukraine have stalled.
Moreover, in some cases, progressive reforms were later undermined. For instance, the police reform started in 2015 initially seemed like a grand success, and levels of trust in “the new police” went up. The reform was visible; as a Kyiv resident, I could see foot patrols and patrol cars everywhere, which made people feel more secure. However, with time and with several scandals, their presence rapidly decreased, as did the popular trust.
Another example is a recent law passed by the Ukrainian parliament that reestablishes political appointment for heads of local administrations. This was done despite adoption of a depoliticized, competitive process for appointing public servants in 2015, at the demand of the EU. Finally, the Naftogaz reform was also dealt a blow, with increased attempts at political control over the corporation.
The return to a more politicized civil environment indicated by the changes just mentioned is tied to other troublesome developments in today’s Ukraine that indicate an increasing concentration of power in the hands of the president and the cabinet he controls. The opposition remains strong, but there is not much trust in seasoned politicians like Tymoshenko or in populist figures like Saakashvili either. Recent polls indicate that both Poroshenko and his party are ahead in their races. A recent increase in pension payments might have contributed to that uptick; pensioners received “information letters” stating that the payments had been increased on a decision by Prime Minister Volodymyr Groysman.
It is broadly recognized that one of Ukraine’s main problems is widespread corruption. It did establish several specialized anticorruption institutions; however, there have been few successes in tackling high-profile corruption, in part because of the unreformed judiciary. The IMF pushed Ukraine to create an independent anticorruption court, yet until recently, Poroshenko claimed that such a court would take too long to establish and that an anticorruption chamber in the Supreme Court should be created instead. The rejection of an independent court comes alongside continued pressure on anticorruption activists as, according to a new regulation adopted in March this year, they are required to submit public electronic declarations—and as human rights activists fear, the regulation is open to being used “to harass specific individuals,” that is, for political persecutions.
Such a complicated situation is exacerbated by other worrisome changes—and in some cases by a worrisome lack thereof. The country adopted an openly nationalist memory policy, one that not only proved domestically controversial but also led to quarrels with its key partner, Poland, and has limited online freedoms by prohibiting access to a number of Russian websites that were among the most popular in Ukraine. Recently the country also adopted an education law that limits, and in the short term forbids, secondary education in minority languages, which precipitated ice-cold reactions from, in particular, Romania and Hungary. Furthermore, all these actions have been broadly supported by Ukrainian commentators online. “It turned out that most people wanted a country free of Kremlin commands, not a free country,” Andriy, an active participant in the Euromaidan, said to me bitterly.
Meanwhile, the fight against corruption did not result in any prison terms for major violators. Reform of the judiciary has been a failure as, despite Poroshenko’s loud talk, 80 percent of the newly appointed Supreme Court judges had previously served in the widely mistrusted court system, and many of them were accused of corruption.
Looking to the Future
But was Euromaidan for nothing? Ukrainians do not seem to think so. According to a December 2016 poll by SOCIS, when asked whether they would have supported the Euromaidan knowing its consequences, a quarter of Ukrainians responded that they would have personally taken part in the protests anyway. A further 31 percent would have supported the protesters without taking part themselves.
“You will inevitably get dirty. That does not mean you don’t have to wash,” Anton, another Maidan participant, added while talking to me.
The problem is, Ukraine has to change much faster than it is. It is a poor country and has not yet returned even to its modest 2013 economic indicators. Disappointed citizens emigrate in numbers, “powering Poland’s economy”—and not only Poland’s. The only way to change this situation is to have the Ukrainian government pressed both by active citizens and by its international partners.
Kiev also has to be presented with positive conditionality. The EU should recognize a possibility for Ukraine gaining membership, but in the future, when Ukraine meets the required criteria. This by itself would not oblige Brussels to do anything as, according to Article 49 of the Treaty on European Union, any European state respecting the EU’s values has the right to apply for membership. In talks, Ukraine will face new conditions, and as there is a broad pro-European consensus among Ukrainians, Kiev will attempt to comply with these conditions in order to reach the desired goal—and will move forward faster with reforms.