One year of President Zelenskyy: a summary of policies
After taking a closer look at President Zelenskyy’s values and beliefs, it is time to shift attention to his policies.
July 3, 2020 - Valerii Pekar - Articles and Commentary
I started an analysis of the first year of Ukrainian President Volodymyr Zelenskyy with a recently published poll on his values and beliefs. This helps us understand his policies, some of which are controversial.
Zelenskyy ran on a campaign that promised an “end of the poverty epoch,” but his one-party majority and government has not done enough to promote economic growth. The parliament controlled by Zelenskyy has made two prominent economic changes under pressure from IMF requirements: land reform and a law prohibiting the return of nationalised banks to their former private owners. However, the so-called “anti-Kolomoiskyy law,” named after the former major owner of the biggest nationalised bank, Privatbank, will most likely be challenged by the constitutional court, which may create unresolvable risks for the financial stability in Ukraine. Furthermore, the long-awaited land reform has such extreme limitations on ownership that it is economically meaningless.
President Zelenskyy received a relatively healthy financial sector from his predecessor. The most complicated and challenging reforms were made from 2014 to 2016, and Zelenskyy has to continue those reforms. The ‘split law,’ which transferred financial sector surveillance to the National Bank, has made a positive impact. The pandemic was the first crisis in Ukrainian history which was not accompanied by great inflation and a deflated currency, which is an indication of the success of the reform run by the National Bank. However, permanent pressure on the National Bank (political statements, negative evaluation made by the parliamentarian committee, initiation of the commission of inquiry, which finally led to the resignation of the head of the National Bank) will not help this independent regulator to perform well.
The last year did not see any advances in tax and fiscal policies. Despite some positive elements, amendments to the tax code mostly expanded corruption opportunities and provided more pressure on micro and small businesses by decreasing transparency and increasing discretion. The tax office and custom office reforms were suspended and reform-oriented managers were ousted.
One of the key issues in Ukrainian economics is state property management. Big privatisation has been unfrozen but nothing came up for sale in 2019 nor this year. Small privatisation was activated and concessions launched, which are positive steps. But state property lease reform was suspended. And the biggest disappointment for civil society is the roll back in corporate governance: independent supervisory boards of state-own enterprises are under threat, foreign board members are under pressure, and more oligarchic influence is being witnessed in state-owned enterprises. CenterEnergo, UkrNafta, and the Ukrzaliznytsia state railroads are just a few well-known examples.
The greatest challenge for economic reforms is fighting monopolies. There seems to be zero anti-monopoly activities, but even more privileges are being granted to specific monopolies and individual oligarchs. And recently the president forced the head of the Anti-Monopoly Committee to write a letter of resignation for the persecution of one of the monopolies.
Anti-corruption regulations are another key issue. The award-winning public procurement system ProZorro is under a threat of introducing protectionism measures with high corruption risks. At the same time, there is some positive sectoral news like the reforms of the state defence industry holding UkrOboronProm, the de-monopolisation of spirit production, and the legalisation of amber production.
In the energy sector, Naftogaz was unbundled, which is one more step towards European regulations. However, misbalances are growing, like the reduction of nuclear power generation in favour of the coal industry that is largely controlled by oligarchs. The green energy tariff is under threat, but it was promised to investors to green power generation projects.
Other important policies
In addition to the economic policies of the last year, other sectors have to be considered. There was anxiety concerning roll-backs in health reform. In fact, there has been no roll-back, but many controversial statements have been made by Zelenskyy, his aides and ministers. Combined with the reports on growing corruption in medical purchases, the anxiety is proving to be justified.
One of the most successful reforms from 2014 to 2018 was decentralisation, and President Zelenskyy has continued this course of action. However, Zelenskyy offered a draft law “On Amendments to the Constitution of Ukraine (on decentralisation)” that was criticised harshly by G-7 ambassadors and Ukrainian city mayors and was eventually revoked. Attempts to reduce self-governance in budgetary issues have led to confrontation with many local leaders and communities.
State service reform is, in many ways, the foundation for the successful implementation of other reforms. Unfortunately, political dismissals are now back, which nullifies the reform advances in previous years. More and more assignments are being made without contests. The salaries of top public servants have been limited due to populist reasons, which discourages people from the private sector to serve to the state.
It is rare to hear from President Zelenskyy about the rule of law; instead, he speaks about “investment nurses” (special bureaucrats appointed to help investors overcome bureaucratic obstacles) which scares many investors away, as far as this is something opposite to transparent and equal rules of the game.
Another big promise of Zelenskyy’s campaign was the imprisonment of top corruption officials. In spite of many cases reported by investigative journalists and even publicised audio and video recordings, there have been no court cases. The National Anticorruption Bureau is under pressure, and so are other independent institutions.
The reform of the judiciary (more exactly, the reloading and cleaning of top authorities, namely the High Qualification Commission of Judges and the Supreme Council on Justice) was blocked and suspended, and now this reform is practically cancelled. Also, the reform of the Procurator’s Office has stopped and the reform of the Security Service (SBU) was replaced by further empowerment of this agency, including its influence on anti-corruption cases.
Many resonant cases against civil activists, army volunteers and veterans, active Euromaidan participants, and opposition politicians continue to increase tension between the authorities and the civil society.
Institutions are the key
Institutions are the key to successful reforms, but President Zelenskyy dislikes them, as was shown by the poll mentioned at the beginning of this article.
For the first time in Ukrainian politics, Zelenskyy has managed to maintain a single-party majority in the parliament, but in practice it turned out that his MPs are people with different values and report to different centres of power. The number of scandals and cases of immoral behaviour and incompetence is growing day by day, which is a consequence of quick and non-controlled recruitment. Now the one-party majority faction is split, and votes of the opposition are necessary for successful voting. The liberal pro-European opposition provides votes for further reforms and the pro-Russian anti-democratic opposition provides votes for roll-backs.
Another source of scandals is the president’s office. Increased expenses, corruption scandals, and undeclared travel have all undermined trust in the leader. Zelenskyy promised to be different from predecessors who practiced nepotism, but more than 30 colleagues, friends, relatives and business partners are in top positions at the president’s office and other institutions.
The big pain is government formation. The government of Prime Minister Oleksiy Honcharuk was oriented towards liberal reforms, supported by civil society and welcomed by international partners, but it stayed in office for only 6 months and was dismissed on the threshold of the crisis. Many acknowledged and trusted reformers left their positions at government institutions, and the list of those who are still there is shrinking day by day. At the same time, some people close to ex-president Yanukovich are back. Completely destructive mergers and divisions of ministries is one more obstacle for government efficiency, and some key ministers have still not been assigned.
The war is still continuing without any ceasefire. Many opponents of Zelenskyy were afraid that he is inclined to accept all and any Putin’s demands, which is considered by an essential part of society as a true capitulation. But Putin’s escalation of aggressive rhetoric shows his real attitude to everyone. Zelenskyy’s decisions on the unilateral withdrawal of forces, promises to supply water to occupied Crimea (specifically to the Russian army, as there is enough water for the population), and some similar steps have all been criticised by civil society, the army and even a part of the president’s faction in the parliament. The undoubted achievement of the president is the return of some famous prisoners of war, but the exchange was generally controversial: Ukraine got not only victims but also some persons who turned out to be their former executioners who later fell out of favour with the occupation authorities, instead giving Russia a key witness on MH17, convicted terrorists and Maidan killings suspects.
What kind of president?
The analysis of values and beliefs shows that President Zelenskyy is inclined to favour a system of oligarchy and nepotism, prefers personal leadership to institutions, balances between the East and West, and is not the great fighter for liberalism and democracy. This explains his policies and decisions listed above.
According to a recent poll by Kyiv International Institute of Sociology, President Zelenskyy’s rating is still high. Approval of the president’s activity was 47 per cent in May as compared to 52 per cent in March and 51 per cent in April, which is a good result for a time of crisis and epidemic. 46 per cent of respondents consider Zelenskyy’s first year in office successful, but in fact, not all sentiments are so positive: just 26 per cent say he is successful in fighting against corruption, 21 per cent in preventing economic crisis, and 21 per cent in stopping the war.
The key problem for Zelenskyy is that there are no more low hanging fruits or quick wins and easy solutions which he looks for. His challenge is to continue the long and tedious process of building institutions, but it is not the president’s choice. From an outstanding mandate of trust at 73 per cent of votes, he has come to very low institutional capacity in one year. Good intentions were not supported by respective execution, and no investments were made into institutions. This is how we start the second year of his presidency.
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.
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