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Rebooting institutions in Ukraine

The institution-building process in Ukraine has been complicated and remains incomplete. Incorporating best business practices and finding new people dedicated to transform Ukrainian state institutions could go a long way as Ukraine seeks to strengthen itself.

February 26, 2019 - Valerii Pekar - Blogs and podcasts

Pechersk Lavra in Kyiv Photo: Alexxx Malev (cc) flickr.com

Ukraine: The European frontier – a blog curated by Valerii Pekar.

Economists and sociologists have long concluded that the quality of state institutions is a key factor in the development of countries, determining both their economic successes and failures (which are easily comparable by objective data) and also subjective feelings of security, justice and even happiness. Moreover, weak institutions in the modern world are not only a country’s own problem, but also a threat to international security, as many conflicts have proved.

Ukraine epitomises the institution-building struggle

In this regard, Ukrainians bear a heavy legacy. Soviet institutions, on the one hand, were totalitarian: their range of authority was extremely wide and covered all spheres of life. On the other hand, these institutions were too weak: the state took responsibility for everything but could not cope with anything. For the success of Ukraine, it is necessary to reduce the sphere of responsibility of state institutions (this includes the processes of deregulation, decentralisation, privatisation and so on), but at the same time significantly strengthen them. A weak army will not defend the country from the aggressor, a weak court and prosecutor’s office will not be able to put a criminal in jail, a weak board of a state-owned enterprise will be influenced by corrupt clans, a weak government will not make important decisions in time, and a weak intelligence system will not learn anything about the enemy’s plans (but will share theirs with it). The Soviet institutions inherited by Ukraine worked somehow until the country faced serious challenges. According to the World Economic Forum’s Global Competitiveness Index, Ukraine ranks 35th in higher education, 61st in innovation and 81st in technological readiness, but a miserable 118th (out of 137) in institutions.

But one cannot blame only the Soviet legacy. Ukrainians are not accustomed to their own state, having lived for centuries under the rule of foreign states. Hence the mistrust of any state institutions and the desire to hide from them. Fortunately, there is now a critical mass of Ukrainians who understand the necessity and lack of alternative of their own state and are ready to build it and to fight for it. Those who live on the border with chaos certainly cannot afford a weak state.

Principles of institution-building

The war and crisis gave rise to an understanding of the importance of rebooting institutions. A considerable positive and negative (also useful) experience has already been accumulated. There are people who know how to do this, and there are many success stories and failures. Here are some of the basic principles expressed at the recent Future Talks: Rebooting Institutions conference.

First, reformists have to simultaneously introduce new people, new structures and new processes. Old people in new structures, like new people in old structures, will not be able to work. This does not mean that old people are not suitable in general: they possess the necessary competencies, but the old institutional memory and patterns of thinking pull them into the past. An organisation needs a critical mass of new people with new thinking and values, which will open up space for the culture in the organisation to change; some of the old ones will still fit perfectly into it. But in order for new people to come, institutions must first offer competitive selection processes and decent salaries. Technology greatly reduces the need for people and dependence on them, but in the end, technology is still in the hands of people. Of course, leadership, which sets a new standard of values, is also of great importance.

Best business practices as inspiration

When building state institutions, despite the objections of theorists, the culture borrowed from business works perfectly (after all, in Ukraine it has overtaken the state by dozens of years). Many Ukrainian success stories are the stories of “state start-ups”, where innovations, flexibility and customer focus are “embedded in organization’s DNA”.

Success cannot be achieved without a large coalition of allies and stakeholders, nor can it be achieved without building trust through open communication and the first small successes. In Ukraine successful institutional reformers are famous public speakers because only communication with the low-trust social environment can help to manage expectations, understand goals, recruit allies, and build coalitions. It is not strange that many ministers, deputies and state-owned enterprise CEOs are active on Facebook, where details of reforms are being discussed every day. (Facebook, after all, provides more bilateral communication than Twitter, does it not?)

It is impossible to do everything at once, and therefore “pilot projects” work well, gradually complicating and expanding the scope of action while always keeping overall strategy in mind. Windows of opportunity, as a rule, close quickly, so reformists must be prepared in advance and keep pace in order to attain results in a timely manner. Last but not least, they have to do many unpopular things, despite the prejudice of the majority of citizens (it is at this point where western support for state building in Ukraine is vital).

Personal dimension of institution-building

Institutional transformation is a marathon: it took decades for other countries, but perhaps Ukraine can perform a little faster by taking into account their experiences, successes and failures. But it is also a relay race: the work to clean out old stables is hard and unpleasant, and new people quickly get tired of the old systems, often saturated with bureaucracy, corruption and irresponsibility. New ones having the ambition to change the country should come to replace the tired ones; this is the only method by which a country undergoing the institution-building process can hope to stave off backsliding and to instead encourage transformations of both the state and society. For this, a successful role model of a builder of new state institutions should appear in the country, and there are already quite a few such people who know how to be that spokesperson and get the job done. Promoting their experiences and success stories, as well as sharing analyses of their failures, is an important part of further reforms.

Valerii Pekar is a co-founder of the Nova Kraina Civic Platform, a lecturer at the Kyiv-Mohyla Business School and a former member of the National Reform Council. He curates a blog on New Eastern Europe titled Ukraine: The European frontier.

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