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MP Yaroslav Zhelezniak: Developments in Ukraine’s parliament on economic reforms, international obligations — Issue 60

by Yaroslav Zhelezniak June 21, 2024 3:29 PM 7 min read
A sitting of the Verkhovna Rada, Ukraine's parliament, livestreamed from the session hall in the media room in Kyiv, Ukraine on June 5, 2024. (Eugen Kotenko / Ukrinform/Future Publishing via Getty Images)
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Editor’s note: This is issue 60 of Ukrainian lawmaker Yaroslav Zhelezniak’s weekly “Ukrainian Economy in Brief” newsletter, covering events from June 10–June 16, 2024. The digest highlights steps taken in the Ukrainian parliament related to business, economics, and international financial programs.

The Kyiv Independent is republishing with permission.

The IMF benchmarks in focus


The Tax Committee finalized the preliminary text of the draft law on restarting the Bureau of Economic Security for the second reading, but it hasn’t been considered or included in the agenda of the plenary week yet.

The Committee on Finance, Tax and Customs Policy has prepared the final version of draft law #10439 on the relaunch of the Bureau of Economic Security for the second reading. The Committee is expected to meet and vote on the final text this week. However, the Committee is also waiting for the Cabinet of Ministers to confirm that the text is aligned with what has been promised to international partners.

It should be said that the draft agenda for the last plenary meetings of the Verkhovna Rada in June, which was sent to lawmakers, doesn’t yet include the draft law on restarting the bureau However, the draft law may be included in the agenda after a meeting of the coalition with the president.

The last plenary meetings this month are scheduled for June 18-21. Deadline for adoption of draft law #10439 on restarting the bureau is set for the end of June.

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As for the preliminary text prepared by the Tax Committee, first and foremost, we would like to draw your attention to the fact that the version of the draft law formed by the Tax Committee ignored proposals of international partners regarding the participation of their representatives in personnel and re-certification commissions. The absence of politically independent representatives nominated by international organizations raises doubts about the transparency, independence, and openness of the re-certification process as well as quality of professional staff selection.

The proposed version also provides for the possibility of selection of "convenient" representatives of civil society organizations to the permanent personnel commission. Thus, virtually any civil society organization will be allowed to participate in the selection of candidates, not just those that receive a recommendation letter from international partners. Therefore, it is necessary to return the obligation to obtain these letters of recommendation.

In addition to the above, we ask you to study the wording of the draft law prepared by the Committee and pay attention to the following provisions, which, in our opinion, require additional elaboration and approval by international partners, namely:

1. The proposal to select only one candidate for the position of the director of the Bureau of Economic Security by the Selection Commission has not been accepted. Instead, the provision on the selection of "no more than two candidates" remains. We continue to insist on the need to select only one candidate and to consider the relevant amendments suggested by lawmakers in this part. The selection of more than one candidate creates additional leverage for the election of a "handy-picked" candidate, rather than a more professional one.

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2. There are no changes that remove the minimum age requirement of 35 years for candidates for the position of director and the requirement of previous managerial experience, which seems to be unjustified as it reduces the number of worthy candidates with sufficient work and management experience.

3. There are concerns regarding competitive procedures for civil service positions (i.e., administrative personnel) within the bureau during martial law. According to the Law of Ukraine "On the Legal Regime of Martial Law," during the period of martial law, it is possible to appoint civil servants without competitive selection. Therefore, there are no competitive procedures for civil service positions in the bureau. At the same time, the competitive procedures for the positions of officers and covert agents of the bureau are currently in effect. We call on international partners to consider in their recommendations the possibility of clarifying the specific provision below, which will regulate the resumption of competitive procedures for all employees of the bureau, including civil servants.

4. We express our reservations regarding the provision of additional grounds for restrictions on the appointment of the director and the dismissal of bureau employees who are included in the Unified State Register of Persons Who Committed Corruption or Corruption-Related Offenses. In our opinion, there is a great risk that "inconvenient" candidates for the position of the director will be removed through politically motivated procedures (as was attempted with the previous director of the National Anti-Corruption Bureau of Ukraine). It should be noted that the entry in the above-mentioned register is indefinite. In addition, these provisions are absent in the laws of Ukraine "On the National Anti-Corruption Bureau of Ukraine" and "On the Prosecutor's Office." We suggest considering the option of excluding the relevant amendments.

5. The proposals of lawmakers who suggest excluding the possibility to dismiss the director of the bureau on the grounds of bringing him to administrative responsibility for an administrative offense related to corruption have not been accepted. As noted above, these grounds were used in a politically motivated attempt to dismiss the previous director of the National Anti-Corruption Bureau of Ukraine.

Obligations to the EU


The Cabinet of Ministers submitted a draft law which will allow anyone involved in corruption crimes to redeem themselves from severe punishment, the Anti-Corruption Action Center (AntAC) says.

Last week the Cabinet of Ministers supported and submitted to the Verkhovna Rada draft law #11340 with the amendments to the Criminal Code and the Criminal Procedure Code on increasing the effectiveness of plea agreements. It’s one of the obligations of the Ukraine Plan within the mechanism of financial support Ukraine Facility.

However, experts of AntAC claim that the current version of the draft law creates a loophole for the organizers of the corruption schemes, so that they can redeem themselves from responsibility.

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According to AntAC, the draft law allows those accused of corruption to be given a less severe sentence if they enter into a plea agreement and make full or partial restitution for their actions. At the same time, the draft law doesn’t oblige those accused of corruption to name accomplices and reveal other crimes known to them in order to reduce the punishment.

The AntAC experts emphasize that the draft law in the current government’s version will make it possible to make agreements even with the organizers of corruption schemes in exchange for their compensation for losses, even with oligarchs such as Ihor Kolomoiskiy or Oleh Bakhmatyuk.

Other key economic issues


The Parliament will consider draft laws on establishing a bank of development.

The Verkhovna Rada of Ukraine will consider in the first reading draft laws #11238 and #11239 on establishing the National Development Agency (submitted by Danylo Hetmantsev and other lawmakers). These draft laws are included in the agenda for plenary meetings scheduled for 18-21 June.

As we reported in Issue 58, according to draft laws, the National Development Agency is aimed to be a state specialized institution with a special mandate for the recovery and structural transformation of the economy, which will implement lending programs for the recovery of the country. Authors of draft laws explain that the National Development Agency is designed as an analogue of the German KfW.

The Verkhovna Rada will vote for the draft law on creating a so-called ““white” business club” in the second reading.

During plenary meetings scheduled for June 18-21 the Verkhovna Rada will consider in the second reading draft law #11084 on tax administration incentives for the "'white' business club” – businesses which pay taxes properly. The draft law suggests that if the entrepreneur meets simple and transparent criteria and his enterprise’s level of tax payment is above the industry average and the wage level is higher than the industry average, he will be released from tax audits and will receive the support of the compliance manager to have individual tax advice. The draft law has been significantly improved together with business associations and experts. All recommendations had to be taken into account.

This week the parliament may appoint officials for vacant positions in the Cabinet of Ministers, however it hasn’t yet received proposals of candidates.

The Verkhovna Rada may appoint a new infrastructure minister and regional development minister during plenary meetings scheduled for June 18-21. The Parliament hasn’t yet received proposals of candidates to vote for. However, we expect to receive official proposals as all top authorities of Ukraine have already returned to Kyiv.

As we reported earlier, the most likely candidate for infrastructure minister is Oleksiy Chernyshov, CEO of Naftogaz. Oleksiy Kuleba, deputy head of the Presidential Office, will most likely take the position of regional development minister.

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