Introduction

Stiftung Wissenschaft und Politik German Institute for International and Security Affairs

The Rule of Law in Contemporary Widespread Elite Failure Puts Reforms at Risk

Susan Stewart SWP Comments

Ukraine’s protest movement, which brought about the fall of President Yanukovych in 2014, has led to a comprehensive process of reforms. However, this pro- cess is being hampered and delayed by a large number of internal and external hurdles. There are particularly significant obstacles to establishing a state governed by the rule of law. Preserving areas in which a legal vacuum exists is in the interests of influential political and economic actors because such areas contribute to their personal enrich- ment and help maintain their power. It is therefore important to examine the progress that has been made and the hurdles that have been encountered in establishing the rule of law. Such an analysis can help German and European actors to take well-founded decisions on how to support Ukraine’s moves towards rule-of-law structures more effec- tively than they have in the past.

When Ukraine finds itself the focus of the support given the reforms by external western attention, this tends to be mainly actors such as the EU and the International because of the ongoing fighting in the east Monetary Fund (IMF). Reform-oriented mem- of the country, or the efforts to end that bers of the Ukrainian elite – those for whom violence on the basis of the Minsk accords the top priority is the common good – also and stabilise the situation in the Donbas. play a significant role in this process. On Less notice is taken of the fact that Ukraine the other hand, there are substantial hurdles has initiated an ambitious process of re- involved in passing and implementing the forms, the results of which are likely to reforms. To date, genuine systemic change have an even more decisive impact on the towards a law-governed state has not been country’s future than developments in its achieved. First, because the war in the Don- eastern regions. bas with all its consequences – especially On the one hand, Ukraine has gone the large numbers of internally displaced further down the path of reforms than persons – monopolises many financial and at any other point in its history since the political resources that could otherwise collapse of the USSR. This is due to the benefit the reform efforts. Second, these strong pressure exerted on the political efforts are suffering from the inadequate elite by Ukrainian (civil) society, and to experience and unsystematic approach of

Dr. Susan Stewart is a Senior Associate in SWP’s Eastern Europe and Eurasia Division SWP Comments 10 February 2016

1 both Ukraine’s elite and its administration. manager in Lithuania. (The latter submitted Third, established interest groups and cor- his resignation in early February 2016, but rupt networks in the bureaucracy and in it has not yet been accepted by parliament.) parts of the political and economic elite Both not only have good contacts among still play an influential role. Fourth, along- relevant external actors, they can also sug- side the war, is using a great number gest new models of governance and are not of levers to forestall the process of reforms trapped in existing networks. and thus the successful integration of There are no such conditions in place in Ukraine into western structures. the rule-of-law area. Whilst the economic Precisely because there are multiple reforms launched by the Ukrainian leader- forces that impact both positively and nega- ship have generally met with praise and are tively on the Ukrainian process of reforms, showing the first tender shoots of success, the latter’s outcome remains unclear. It is there is good reason to criticise the speed important to explore the favourable factors and application of the rule-of-law reforms. as well as the obstacles standing in the way These reforms pertain to many spheres, of the reforms, so as to determine how much since they concern not only the justice sys- potential there is for more effective external tem but also institutions for combating support that raises the chances of a positive corruption, as well as many measures for outcome. The alternative is a Ukraine that increasing transparency in politics and remains unstable in the long run, thwart- the economy. It is therefore appropriate to ing the goals of the revised European Neigh- judge the progress made so far against a bourhood Policy and aggravating the cur- broad understanding of the rule of law, rent refugee crisis in Europe through addi- rather than one limited to specific reform tional migrant flows. sectors. The framework of the World Justice Project (WJP) lends itself to such an evalu- Measuring Rule-of-law Reforms ation. This non-governmental organisation The amount of progress that has been based in Washington, D.C. uses a Rule of made so far differs across reform sectors. Law Index to estimate and compare the Macro-economic reforms have seen the most progress made in establishing the rule of favourable development. These were not law in over 100 countries. For this purpose, only particularly urgent due to the need to the WJP conceptualises the essence of the prevent state default, but were also actively rule of law in four principles: supported by external actors. The IMF has 1) The government, including civil servants made its financial assistance explicitly con- and plenipotentiaries, as well as individ- ditional, setting specific benchmarks that ual persons and private establishments must be met if Ukraine wishes to continue are held accountable under the law. receiving that assistance. Payment of the 2) Laws are clear, publicly known, lasting, tranche scheduled for late 2015 has been just, and applied without distinction, delayed because there was no acceptable and protect fundamental rights, includ- budget for 2016. This shows that the IMF is ing the right to security of the person sticking to its terms of reference. The fact and safety of property. that the relevant ministries in are 3) The process for passing, applying and run by people who were socialised outside enforcing laws is transparent, just and of the Ukrainian system also seems to be efficient. having a positive impact. Finance Minister 4) Laws are enforced promptly by compe- Natalie Jaresko was raised in the US and has tent, morally irreproachable and inde- worked for the State Department and as an pendent plenipotentiaries or neutral investment banker, Minister for Economy persons, who are sufficient in number, and Trade Aivaras Abromavicius as a fund have the required resources at their dis-

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2 posal and reflect the characteristics of planned. This was mandated by an incon- the society they serve. spicuous paragraph inserted into the Bud- By engaging with these principles with get Law of 25 December 2015 at the last reference to present-day Ukraine, it is pos- minute. The system is now to be activated sible systematically to judge the level of on 1 January 2017, at the earliest. rule of law in the country and point out the As the example of allocating the NACP most serious shortcomings. The reasons posts indicates, conflicts of interest are a behind these shortcomings can then be highly relevant topic for Ukraine. The anti- sought and solutions suggested for rem- corruption law is intended to regulate the edying them. way such conflicts are dealt with. Here, too, the NACP has the final say. However, suc- cess depends not only on the agency but Accountability also on the ability and readiness of superi- The ’s Public Accountability ors to recognise and address potential con- Mechanisms Initiative lists four parameters flicts of interest in their colleagues. There for ensuring sufficient levels of account- is a lack of sensitivity for this issue, as the ability of public actors: disclosure of in- example of the Deputy Minister for Energy come and asset declarations; a reasonable Ihor Didenko demonstrates. In his view, approach to dealing with conflicts of inter- co-owning a company with the Ukrainian est; freedom of information; and resolving oligarchs and Hennadiy questions of immunity. Boholyubov does not constitute a conflict In early 2015, the Law on Preventing of interest – although both of his business Corruption came into effect in Ukraine. It partners possess substantial interests in the tightened the reporting requirements on energy sector and have received preferen- income and assets for high-ranking politi- tial treatment from Didenko in the past, cians, government officials and their close when he held other state posts. Up till now, relatives, as well as the conditions for veri- such conflicts of interest have been common fication and publication of their declara- practice in the country’s political system tions. The OECD considers that its recom- without being penalised or even acknowl- mendations to date for this sector have edged as such. It is therefore necessary to been fully implemented by the new rules. raise awareness of the problem, both inside However, the success of this reform depends Ukraine and with relevant external actors. on how the National Agency for Corruption Progress had already been made concern- Prevention (NACP) handles it – this agency ing freedom of information during Viktor is responsible for checking income and Yanukovych’s presidency (2010–2014). Fol- asset declarations. Unlike the Anti-Corrup- lowing a campaign by local and interna- tion Bureau, which began work in October tional NGOs, a law came into effect in 2011 2015, the NACP’s activities are to be coordi- that provides a broad definition of the con- nated by the government. cept of “public information” and stipulates Although the Agency was created in that relevant data should be published even March 2015, its top posts have still not all without an individual request. The main been filled. Members of the supposedly purpose is to inform the public about the independent selection committee, as well authorities’ activities and decisions. In as candidates for high office in the agency, March 2014, important changes to the law failed to disclose their connections to Prime were passed. They extend the range of the in- Minister , causing a scan- formation to be published and are intended dal. In addition, a system that electronically to promote the implementation of said law. registers the assets of high-ranking actors However, it is precisely this implementation for verification by the NACP is scheduled to that leaves much to be desired. Experts have be introduced a year later than originally therefore been calling for the creation of

SWP Comments 10 February 2016

3 a monitoring body with sufficient compe- sense. They address the content of laws as tences to enforce implementation. well as their preparation, passage and im- Finally, accountability also covers issues plementation – the latter being particularly of immunity. To make good on a campaign problematic in Ukraine. promise, President Poroshenko presented a Ukrainian laws are published and can be draft law that would abolish parliamentary publicly accessed on the Parliament’s web- immunity in general. While the draft was site. On the whole, the statements contained declared constitutional by the Constitution- therein are clear and intelligible. However, al Court in June 2015, many experts as well contradictions and vague wordings also as the Council of Europe’s Venice Commis- occur – shortcomings that tend to derive sion have spoken out against the planned from two sources. First, many Rada mem- law. It is certainly the case that, for many bers and staff lack professionalism in harmo- of those wishing to escape prosecution, nising legal texts. Second, individual mem- parliamentary immunity is an incentive bers of parliament, or small groups of them, to stand for election. This is especially true deliberately keep wordings imprecise so as for corruption cases. However, at the same to enable different readings of the laws and time there is a risk, in a still unconsolidated thus secure their own interests or those of democracy with a poorly functioning divi- their respective patrons. sion of powers, that unwelcome members of As a rule, the durability of laws is a given. parliament who are not protected by immu- There are, however, at least two exceptions. nity will become a target for the executive, First, certain types of law are regularly re- especially where the latter can exert substan- written. This primarily concerns electoral tial influence on the judiciary. Whether for legislation, which is traditionally altered these or other reasons, members of parlia- shortly before each election in favour of the ment have yet to pass the law in question. ruling elite. As a result, there is no con- In practice, therefore, it continues to be the tinuity in the electoral or party system, and case that members of the Rada (the Ukrain- the electoral code that has been repeatedly ian Parliament) are only stripped of their demanded by the OSCE to establish a basic immunity if there seems to be clear evidence foundation for holding elections has not of criminal offences. This occurred recently materialised. This trend persisted during in the case of Mykola Martynenko: the Prime the local elections in October 2015. The Minister’s political ally stands accused of relevant law had only been passed in July corruption, and the Anti-Corruption Bureau of that year, without substantial debate is investigating. However, a new general set either in parliament or in the wider society. of rules to regulate questions of immunity “Open lists”, which were meant to offer is currently not on the agenda. citizens more freedom to choose individual Overall, two trends can be identified in candidates, were announced but not in fact the area of accountability. First, the pattern introduced. Access to elections was made that already existed prior to the Euromaidan more difficult for independent candidates. still applies: the legal texts are largely ac- The many internally displaced persons, ceptable, but implementation is flawed. meanwhile, were not given an opportunity Second, a majority of the elite is not pre- to go to the ballot box. Additionally, for pared to introduce transparent procedures security reasons no elections at all were or relinquish existing privileges. held in a number of districts, although the criteria behind that decision remained opaque. These last two factors presumably How Legislation is Handled played into the hands of the ruling coalition The second and third principles set out by because they are likely to have reduced the the World Justice Project concern the way voter potential of the successor parties to that legislation is tackled in the broadest Yanukovych’s former Party of Regions.

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4 Second, there are laws that are amended Rada, which has not yet voted on changes frequently to satisfy special interests. An that have already been promised) impede example that illustrates the differences the necessary confrontation with the coun- between the Yanukovych period and today try’s past and the urgent renewal of its elite. is the law on public procurement. Under The justness of certain key laws under- Yanukovych, the law in question was hol- goes examination by an international lowed out by a series of changes, which for group of lawyers and other legal experts instance made it legal in certain cases to from the Venice Commission. This is an have calls for tenders with only one appli- important procedure, which often leads cant. After a new law on public procure- to meaningful changes in legislation. How- ment was passed in April 2014, a wave of ever, key Commission recommendations modification proposals began. However, are often ignored, or else Ukraine fails to these have largely been blocked. In addition, wait for the Commission’s final report. In- an electronic system for awarding con- stead, the Rada revises and passes the law tracts, called ProZorro, has been gradually in question after only a preliminary assess- introduced. After a pilot phase, a law was ment by the Commission, picking up mainly passed in December 2015 to extend the on smaller points made by the experts. The system to all areas of public procurement. latter approach enables the ruling elite to In other words, this sector provides an claim that international opinions have been example of a procedural improvement, taken into account, without sacrificing its even though it remains vulnerable to cor- own interests to considerations of justice. ruption, primarily because of the huge As has already been implied, the speed sums of money involved. at which many laws are whipped through The question of whether the contents Parliament is a substantial problem. Fre- of Ukrainian laws are just is not easy to quently, pressure from the President or from answer. The fact that a large number of foreign actors is behind such fast-tracking. laws are fast-tracked is, if anything, an Examples include the budget law, as well as argument against: this method makes it laws on decentralisation and tax reforms. more difficult to check whether draft laws According to a study by the Open Society have been influenced by special interests. Foundation, about 60 per cent of all laws Moreover, without any debate in parliament adopted since the current Rada was elected or society at large, it is hardly possible to in October 2014 were passed using abbrevi- broach the issue of different concepts of ated procedures. This puts an end to any justice or to find a compromise between possibility of a meaningful debate or the them. Finally, the highly problematic necessary fine-tuning of paragraphs. Ukrainian justice system (see below) is hard- The greatest hurdles to applying and ly in a position to deliver objective verdicts, enforcing laws are still to be found in the even when it is not being used to delay or administrative system. The state apparatus complicate the implementation of laws. operates in hopelessly outmoded ways and The latter seems to be the case for the so- continues to be largely rooted in Soviet called lustration law, which is intended to patterns. After substantial delays, the Law regulate the dismissal of civil servants on on the Civil Service was adopted in Decem- political grounds. For an entire year now, ber 2015, and is intended to initiate admin- this law has been in the hands of the Con- istrative reforms. Further delays in its im- stitutional Court, many of whose judges plementation should, however, be expected. would themselves be affected by the lustra- In addition, secondary documents such as tion process. According to international regulations, which make it possible to im- evaluations, the law does have questionable plement laws, often do not materialise at aspects and should be reworked. The delays all or only inadequately. This is a further by the Constitutional Court (and by the indication of insufficient professionalism –

SWP Comments 10 February 2016

5 or of the implementation of undesired laws appointed by Poroshenko in March of that being deliberately sabotaged, depending on year approved a draft law that should pro- the circumstances. tect the independence of the judiciary much Finally, a chronic problem is the fact better than has been the case so far. First, that legislative acts concerning aspects of it would abolish the trial period for judges the rule of law do not stipulate adequate (currently five years) so that appointed sanctions to deter actors from corrupt be- judges would no longer be dependent on haviour. Inversely, certain people can – if being confirmed by Parliament. Second, the it is politically desirable – be punished with role of the President in appointing judges disproportionate severity for smaller viola- would be limited. Third, the Supreme Judi- tions, because the relevant laws provide too cial Council (SJC), which selects judges, much leeway. This is now changing to some would be less dependent on the President extent, for instance in anti-monopoly or and Parliament than hitherto. The latter labour legislation. However, the lack of would each be allowed to nominate two positive incentives continues to be problem- members of the Council, with the remain- atic. As a rule, civil servants are woefully ing 17 members being appointed by profes- underpaid; the temptation is correspond- sional bodies. Judges would not be com- ingly great to engage in bribery or other pletely unassailable, since they could still corrupt practices. be transferred by the President or recalled As this overview has shown, the main even for minor misconduct by the SJC using problems with the way legislation is handled disciplinary proceedings. Nevertheless, the lie partly with the substance, but mostly law is potentially a milestone on the road with the procedures. Procedural problems to an independent judiciary in Ukraine. exist starting with the debates on draft laws In December 2015, Parliament voted to and continuing through all phases including submit the law to the Constitutional Court, the implementation of adopted legal norms. which declared it to be constitutional on There is a striking lack of professionalism, 22 January 2016. (Since the law amounts and the influence of powerful actors inter- to a change to the constitution, the Court ested in poorly regulated legal areas ensures must approve the draft law before it can be that important laws intended to promote adopted with a two-thirds majority by Par- rule-of-law processes are blocked, delayed or liament. A simple majority suffices for the not effectively implemented. At the same referral to the Court.) However, there seems time, Parliament lacks a culture of debate to be some resistance on Prime Minister and compromise, which further encourages Yatsenyuk’s part, since he has suggested irregularities. All of this indicates extensive an alternative: dismissing all judges and continuity among the political and adminis- replacing them with new ones. The draft trative elite: it has little genuine commit- law, by contrast, merely provides for a ment to reform and only agrees to changes review of the existing judges. The Prime when external actors or reform-oriented Minister’s party, People’s Front, currently forces inside Ukraine exert correspondingly refuses to support the law and may insist strong pressure. on a referendum on any possible changes to the constitution. This is liable to prevent the required two-thirds majority from being Reforming the Justice System attained and thus further delay the reform A major problem with the justice system is of the justice system. the persistent lack of independence among A second crucial topic is the slow progress judges, some of whom are de jure subordi- being made in reforming the Ukrainian nate to the executive, while even more are Prosecutor General’s Office (GPU). In Octo- de facto subordinate. However, in Septem- ber 2014, a law on this issue was in fact ber 2015 the Constitutional Commission adopted, but it only came into effect in

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6 April 2015 and is being implemented very In conclusion, the independence of the reluctantly. The powers of the Prosecutor Ukrainian judiciary is as questionable as General, which had been extensive, were the informal norms of conduct that guide limited, and the institution is to be more its representatives. While new laws are now closely embedded in the justice system in tackling these problems, there are substan- the future. In addition, new prosecutors tial obstacles to the reforms, as is indicated have been appointed locally. By mid-Decem- by the delays that have arisen and by the ber 2015, Prosecutor General dubious personalities who enjoy power and had appointed 154 local GPU representa- influence in this area. Second-tier civil serv- tives, albeit using a partly non-transparent ants often spend much time and energy on application procedure which prevented out- achieving a sustainable reform of the sys- siders from being hired. tem, but they are not infrequently thwarted At the national level, reform-oriented in- at the highest level. dividuals have been appointed as deputies of the Prosecutor General. However, the Prosecutor General himself is a very con- Overcoming Deficits troversial figure. This was already true for As this evaluation of the measures taken to , who held the post from June introduce the rule of law has shown, large 2014 to February 2015, and it continued parts of Ukraine’s current elite lack the will to be the case for his successor Shokin, who to bring about substantial change. In addi- worked for the GPU since 1981, with the ex- tion, many civil servants are corrupt and ception of a few short interruptions. Shokin lack professionalism. Reforms in the rule- has been explicitly criticised by representa- of-law area are therefore proceeding very tives of Ukraine’s civil society as well as by slowly and often remain ineffective. It is external actors, such as US Vice-President thus evident that the main driving force for Joseph Biden or Jan Tombinski, EU Ambas- such reforms must come from outside of sador to Ukraine and Head of the EU Dele- the elite – primarily from external actors gation in Kyiv. Viktor Trepak, who until No- and Ukrainian civil society. vember 2015 was First Deputy Director of Since external actors are not in a posi- the Ukrainian domestic intelligence service tion to replace problematic political fig- (SBU), stated that he had terminated his ures, they should place more emphasis on contract because Shokin was blocking the raising the level of professionalism. Training fight against corruption. Shokin’s former measures, for instance on tackling conflicts deputy, Vitaly Kasko, claimed that Shokin of interest, can make a contribution here if did not approve of lawsuits against former they are tailored to the Ukrainian context. high-ranking GPU staff and had therefore To guarantee this, it would make sense to asked Trepak to give notice. (Kasko himself cooperate closely with relevant civil society has since resigned in frustration.) The organisations in the country. Experience reform of the GPU has therefore stagnated, has shown that interactive formats, which putting at risk both financial support from focus on practical exercises, are more effec- abroad and the fulfilment of the Visa Liber- tive that one-sided consultancy situations. alisation Action Plan agreed upon with the It seems advisable to aim for a snowball EU. Shokin was finally sacrificed after the effect, where committed participants iden- Rada found the work of the Cabinet of Min- tify other potential interlocutors. This would isters over the past year inadequate, casting gradually build up a critical mass of indi- doubt on both Yatsenyuk and Poroshenko viduals who would be able to assert them- (the latter in his capacity as founder of the selves against a majority attempting to party with the largest parliamentary fac- block the reforms. Such measures should tion in the ruling coalition). However, the not remain limited to the capital city. future trajectory of the GPU is still unclear. Ukraine has started to decentralise; this

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7 offers opportunities for training sessions that can increase administrative capacity in the regions and simultaneously strengthen elements of the rule of law. Should the twinning approach be used here – whereby civil servants from EU member states are brought together with corresponding part- ners from the Ukrainian state apparatus – two things will be important: first, to en- sure that those involved have adequate lan- guage skills; second, to select civil servants from the EU member states who are familiar with the Ukrainian context. For elite renewal, performance-based

© Stiftung Wissenschaft und transparent recruiting and hiring proce- Politik, 2016 dures are imperative (such as have already All rights reserved been implemented for the newly estab- These Comments reflect lished police force). It will presumably take the author’s views. some time until such procedures become SWP the rule, especially for high-ranking posts, Stiftung Wissenschaft und but the EU and its member states can en- Politik German Institute for courage this process through training, International and exchange of views, and monitoring. Security Affairs Finally, conditionality can and should be Ludwigkirchplatz 3−4 used in a more targeted and visible manner. 10719 Admittedly, this is more difficult with Telephone +49 30 880 07-0 Fax +49 30 880 07-100 regard to the rule of law than in the sphere www.swp-berlin.org of economic reforms. Suitable benchmarks [email protected] cannot always be clearly defined, and the ISSN 1861-1761 quality of results depends very much on the Translation by Tom Genrich attitude of those involved in their imple- mentation. However, there is solid evidence (Updated English version of SWP-Aktuell 3/2016) that external pressure has already led to some progress in Ukraine, for instance in creating institutions to fight corruption. The fact that the EU is currently making detailed demands in this area as a precon- dition for a visa-free regime with Ukraine is a good example of concrete conditionality, without which real progress is unlikely. The goal should be to insist on small but steady steps until a point in the adoption of the rule of law is reached that renders a return to previously entrenched behaviour patterns all but impossible.

SWP Comments 10 February 2016

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