Ukraine 2017

another half via single mandate constituencies. Due to inability to conduct elections in several occupied and conflict affected constituencies, some seats in the parliament remained empty. Changes in the electoral law at the beginning of 2016 allowed political parties to remove candidates from their list after the elections and before Central Elections Commission verified their mandate. On the ground that it incited hatred, Communist Party has been restricted from operating and running at elections. During the last year, by-elections in 7 constituencies and local elections in 185 newly merged territories were held.

and their close ties to political elites, whose relations can influence decision making process on some issues. Also, corruption among public officials is widespread. It remains one of the most serious problems in Ukrainian society.

violence against journalists is not rare, whereby political journalist Pavel Sheremet was murdered by a car-bomb in July 2016. Therefore, an environment of fear made self-censorship present among reporters as well. Russian channels remained restricted in Ukraine due to its animosity towards the “pro-Russian propaganda”, in the light of recent conflicts. A positive move towards more freedom of the press was a government decision as of November 2016 to privatize a number of printing media outlets, as a part of broader reforms.

assets so as to decrease corruption in courts. Longer term effects of those changes are yet to be monitored. As for public prosecutors, situation is more complex and their dependency on political power is still huge and hardly even touched.

has brought 50 cases to courts and had 12 decisions implemented. Changes in the public procurement system, introduction of e-government in various fields (especially e-declarations by public officials, or opportunities to monitor much of the public spending online), as well as abolition of various subsidies (such as in the energy tariff system), might bring down corruption, because economic liberalization has in similar countries (e.g. Georgia, Estonia, or even post-2000 Serbia) already proved as key to narrowing the ground for high level corruption. Former President of Georgia Mikheil Saakashvili - upon his adoption to Ukrainian citizenship - had tried to help fighting high level corruption and misuse of power, by transferring some of his past experience, but in November 2016 he resigned his post in Odessa region over the lack of support by national authorities.

spirit of democratic values as opposed to the hybrid war launched from the east. However it is suspicious or hostile towards some critical media, the government mainly allows civil society to function autonomously, while being aware of its vital role in the post-2014 democratic development. Newly gained pluralism includes also some far right or ultranationalist groups, while also the organized crime is still present on the public scene. Thus, attacks on journalists are numerous. In July 2016, a journalist was murdered in Kyiv. LGBT rallies, tolerated and protected by the police, are occasionally attacked by extremist groups, such as in Lviv in March 2016, while otherwise police managed to keep the events uninterrupted, such as in Kyiv in June 2016 and 2017, and Odessa in August 2016. In two eastern regions held by Russia-backed separatists, Luhansk and Donetsk, human rights are in the worst shape. Disappearances are common, local elections are rigged and there are no free media or critical NGOs at all. Human Rights Watch accused both the Ukrainian government and the rebels in the east of arbitrary detention and degrading and cruel treatment of the detained political opponents (or suspected agents of the other side), noting that Ukrainian secret services held a secret detention center in Kharkiv, while local security forces in rebel-held territories held several scattered ones which operated completely outside the rule of law.

for determining the transfer tax. Although restrictions on foreign investment are mostly lifted, mandatory state registration of foreign investments was only recently abolished, i.e. in June 2016. Foreign nationals still cannot own land, but they could lease it or acquire it through locally registered companies. The privatization process has been plagued with different problems and is not considered transparent, nor fair, while Russian and off shore companies are banned from participation in it, due to political concerns.

institutions. Reforms regarding this have been limited, apart from electronic government procurement becoming mandatory in August 2016, through the ProZorro platform. State owned enterprises (SOE) in Ukraine are numerous and active in many fields - from utilities to transport, energy, infrastructure and machine building. Their operation is mostly inefficient, leading to high losses and subsequent state subsidies. Recently, the government made significant changes in the energy sector prices in order to reach full cost recovery and lower the sector’s reliance on subsidies. The bad management practices were tackled through the setting of new corporate management standards and making independent advisory boards mandatory, but SOEs are still considered to be under political influence, serving as a tool for corruption and political financing. Privatization has been very slow, due to different political obstacles, e.g. there were delays in transferring SOEs from respective Ministries to State Property Fund that is in charge of privatization. The reorganization of SOEs is slow. Both corporate and personal income tax rates in Ukraine are set at moderate 18%. VAT rates are 20% (general) and 7% (preferential).    

slow procedures and high costs stemming from inefficiencies within the public utility company. Obtaining a construction permit is very costly, although not time consuming. Tax regulations are complicated, although there are just a few annual payments which are usually done electronically. Most burdening tax regulations are those regarding VAT, so the Ministry of Finance finally launched an electronic VAT refund registry in April 2017, which was expected to bring transparency and efficiency to the refund system. Corruption, policy instability and inefficient bureaucracy are considered as the biggest obstacles to a more business friendly environment in the country. Labour regulations are a mixture of flexible and inflexible solutions: fixed-term contracts are prohibited for permanent tasks, but their length is not limited. Redundancy and reassignment rules pose stringency in determining staffing, but severance payments and notice periods are flat and do not rise with years in tenure. Collective bargaining agreements are numerous, covering numerous industries across the economy. Trade unions, which are included in the social dialogue, are connected to political parties and use their influence as a bargaining chip for dealings other than worker rights. The minimum wage was sharply increased in January 2017, almost doubling and now reaching 50% of the average wage.    

the economy, as imports of coal for energy and heavy industry sectors plummeted, which translated to lower exports. Low quality of transport infrastructure provides hurdles to international trade, increasing costs and time; quality of roads is especially worrisome. Custom procedures are slow and demand long hours in document processing, both for import and export. The National Bank of Ukraine has recently been carefully easing some of its capital controls that were put to action after the 2014 crisis in which the national currency, the hryvnia (UAH), had plummeted. However, those controls are still widespread even though the national currency is stable. Mandatory foreign currency sales to the National Bank were decreased from 65% to 50% in February 2017. Ukraine became member of the WTO Government Procurement Agreement in June 2016, further liberalizing the sector for foreign competition. Main Ukrainian trade partners are the EU, Russia, China and Turkey, followed by other CIS countries.