Reading the Fine Print: Anti-Reforms Under the Banner of Reforms

Reading the Fine Print: Anti-Reforms Under the Banner of Reforms

Photo: ua.depositphotos.com / motortion
8 June 2023
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This article is a case study of a major attempt of reform backsliding by vested interests in Ukraine. Based on a number of expert interviews, it reconstructs the situation and explains how cooperation between external forces and civil society forced Ukraine’s vested interest to roll back on their attempt of backsliding on one of the most important reforms, the public assets declaration system. It also creates an analogy to current cases of questionable reforms and therefore represents a call for a closer cooperation between the Ukrainian civil society and external actors.

The Ukrainian system is described as a hybrid regime and characterized by the dominance of informal influence channels and the manipulation of institutions by vested interests (VIs). VIs, that is ‘people and groups [that]…receive…material benefits…[which] are being directly provided to them by the institution [they have a VI in]’, are considered key forces for the system’s stability due to their resistance to policy changes that threaten their benefits. Through this, they take a central role in backsliding processes, whereas previous reform progress, such as the establishment of independent anti-corruption institutions, is diminished. Through this, VIs hinder the transition towards a fully democratic regime. Whilst actors across different parties in the Ukrainian parliament nominally compete against each other, backsliding cases show how they join forces to act in their self-interest and together dismantle the independence of anti-corruption institutions. Other branches of power that are supposed to constrain and control these actors, have informal cross-linkages with these institutions and are also captured by VIs, through which they join or even initiate these efforts as part of broader coalitions.

To map and understand these processes, this study conducted an in-depth assessment of backsliding in pre-war Ukraine, which was based on twelve semi-structured interviews with EU representatives, Ukrainian civil society actors, and Ukrainian government representatives. The data collection process ran up until February 24, 2022, and was complemented by a thorough document analysis. It shows that in the pre-war period the main difference between various actors was that the executive and the majority of the legislative branch were nominally dependent on Western support, hence subject to external pressure. Through this, they resorted to a much more nuanced role in backsliding, whereas they often inserted small amendments to reform/repair legislations that made these reforms effectively impracticable. Although civil society in Ukraine is often characterized as apathetic, weak, and reactive rather than a driving force for democratization, its reactivity and understanding of the context becomes crucial in signalling such backsliding attempts and to incentivize Western actors to intervene by exercising their leverage on those pro-Western actors.

Whilst such a cooperation has successfully overrun some major backsliding attempts, it failed in other cases, mostly due to the inactivity of Western actors. This becomes particularly important in the current context. However, this also highlights the democratic deficiencies of a hybrid regime as a coalition of Western actors and local civil society organizations, that, without a democratic mandate from the Ukrainian people, is necessary to protect institutional independence and promote good governance reforms against coalitions of actors who are nominally obligated to it by their popular mandate.

Noisy backsliding

A very good example of these dynamics and processes was the Constitutional Court Decision of October 27, 2020, which dismantled the Law on Corruption, effectively abolishing the asset declaration system. This episode of backsliding was initiated by 47 parliamentarians from the ‘Opposition Platform – Party for Life’ (OPPfL), a pro-Russian party that was banned by court in 2022. They launched an official parliamentary inquiry to the Constitutional Court of Ukraine (CCU). The court was back then headed by Oleksandr Tupytskyi, who was installed by Yanukovych and who as late as 2018 acquired real-estate in Russian-occupied Crimea, showing his dubious ties. Moreover, he officially resided in a mansion owned by businessman Serhiy Levchenko, who ran for a Sluga Naroda (SN) mandate during the local elections in 2020 with the explicit backing of Oleksandr Dubynskyi, who was a SN parliamentarian at that time and an alleged ally of Ihor Kolhomoyskiy. This symbolises the informal cross-linkages across institutions and branches of power. Furthermore, Tupytskyi and two other judges ruled in this case just after being notified about the incompleteness of their asset declarations, indicating a clear conflict of interests on top of that.

Whilst personal benefit and the general desire of anti-reformist forces to derail reforms will have played a huge role in the initiation of this case and the verdict given by the CCU, parliamentarians from the OPPfL also acted in the hope to severely damage Ukraine’s relations with the West. The ruling put under question further tranches of the $5 bn standing agreement that Ukraine signed in June 2020 with the IMF and to which associated aid from the EU was linked, both being financial sources on which the country relied. Hence, having an explicitly geopolitical nature as well, this ruling quickly alarmed Western actors involved in Ukraine. The EU publicly copped further financial aid to its resolution and even threatened the temporary suspension of the visa-free regime as a consequence.

“Quiet” Backsliding Under the Banner of Reforming/Repairing

Whilst the first, ‘loud’, backsliding episode had a clear pro-Russian footprint, the subsequent attempt of ‘quiet’ backsliding was carried out in the ‘repair’ process by nominally pro-Western forces. For one, President Zelensky proposed draft law 4288 to the parliament, which foresaw the cancellation of the Constitutional Court decision 13-r/2020, hence the reversal of this decision as demanded by Western actors. However, it also came along with the dissolution of the entire judge composition of the CCU, an unconstitutional move itself that would have given the president significant prerogatives over the composition of the new CCU. Following domestic resistance and international criticism, this draft law was withdrawn.

Secondly, a ‘compromise’ draft law from Rada Speaker Dmytro Razumkov came close to being enacted. It foresaw the re-institution of the previous anti-corruption infrastructure but treating false declarations as a criminal offence and not a crime. A change in the small print, it would render the anti-corruption institutions toothless, thus civil society organizations called it ‘dangerous’ and ‘not a punishment [but] a way to increase corruption’. During a high-level meeting with Ukrainian PM Shmygal, EU High Commissioner for Foreign Affairs, Borrell, and EU Commissioner for Neighbourhood and Enlargement, Várhelyi, argued that the ‘law […] has several deficiencies and does not produce the necessary deterrent and corruption prevention effect’. Therefore, although having passed the Rada, it was eventually vetoed by President Zelensky, as required by the civil society and Western partners.

Western-CSO Cooperation as a Source of Backsliding Contention

As this example shows, nominally pro-Western actors in Ukraine, acting effectively as VIs, might use the repair/reform process to change details of laws in the legislative process that might seem minor but actually render institutions ineffective. Through this, they act in the pursuit of their own political and/or commercial interests whilst officially keeping a pro-Western narrative of reform. Western actors from the EU admit themselves that these changes in detail might be so minor that they remain under their radar without the close cooperation with Ukrainian CSOs, which is paramount to spot such instances of ‘quiet’ backsliding. In this case, the exercised pressure effectively stopped the law, and the original asset declaration system with criminal liability and other provisions on the functioning of the National Agency for Corruption Prevention Agency (NAPC) were reinstalled in December 2020 by passing draft laws no. 4470 and 4471 respectively.

Not only Western actors see the cooperation with Ukrainian CSOs paramount to contain ‘quiet’ backsliding, but also vice versa. CSO representatives argue that the leverage exercised by external actors, that is financial support and/or political concessions, is an important factor. Ukrainian CSOs lack this practical leverage either in financial or political form as their key weaknesses are in the ‘organization of activities aimed at influencing political decisions and support of the public interest in a specific issue’. In the case from 2020, the EU announced the disbursement of € 600 million in financial aid to Ukraine as part of an emergency package right after laws 4470 and 4471 were passed. And although the Memorandum of Understanding was already ratified in mid-September 2020, the dispersion was only allowed to happen after Ukraine continued its engagement, for which the reversal was crucial.

Change and Continuity after February 24, 2022

Conceptually, this leverage will have increased significantly following Russia’s large-scale invasion, not least due to the accession perspective. Combined with a significant blow to oligarchic power after February 24 and the final death of the Russian vector, new ramifications exist that might finally lead to a significant weakening of VIs and a breakthrough scenario. However, nominal changes have been accompanied by a certain continuation in the informal realm. The transformation of the OPPfL from the biggest pro-Russian political party in Ukraine towards a nominally pro-European one, the Platform for Life and Peace (PfLaP), is one of many symbols for the deep changes in the geopolitical as well as formal domain of Ukrainian politics.

However, the case of the law no. 2736-IX, which aimed to align Ukraine’s Financial Action Task Force (FATF) standards with those of the EU, is a telling example of why these changes are a call for action and vigilance rather than a reason for satisfaction. Within the legislative process, parliamentarians from the PfLaP added an amendment which removes the requirement for former state officials, including the president, to disclose their assets after three years of leaving public office. The CCU reform passed recently by President Zelensky, which grants him significant prerogatives and veto powers in the process was equally hailed as a reform breakthrough by representatives of the executive but received a very critical assessment by CSOs and Western representatives.

Visibly, the strong pro-Western vector in Ukrainian politics today, which means a significant legislative approximation in the years to come, coupled with the persistence of old habits to hollow out reforms, comes along with many opportunities for ‘quiet’ backsliding conducted by various VIs in Ukraine. An even closer relationship with Ukrainian CSOs, which are skilled at reading the fine print of laws and to distinguish between reform and anti-reform should therefore be a key cornerstone of Western support for Ukraine on its institutional path towards a strong and democratic country in the heart of Europe. That is because reforms might still be subtly captured and serve individual interests rather than the path of Europeanization.

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