Constitutional changes introduced after the 2014 Revolution of Dignity restored parliamentary-presidential system in Ukraine and limited presidential powers. However, Ukraine’s President still has enough leverage to impact Ukrainian politics and the economy, and foreign affairs and defence remain under direct President’s control. We believe that newly-elected President should use his/her popularity to bring more reputable and professional people to the Parliament and state bodies. He/she also should promote reforms in several key areas.
Why the President?
The main spheres of responsibility of Ukraine’s President are foreign policy and defense (although ministers of foreign affairs and defense are still to be approved by the parliament). However, the President has an impact on many important positions in the country. In particular, they play a crucial role in appointing the Prosecutor General, Heads of the State Security Service, the Anti-Monopoly Committee, the State Property Fund. The President suggests candidates for these posts who then have to be approved by the Parliament. They also have an influence over the central bank (NBU), as they submit to the Parliament the candidate for the NBU Governor and directly appoint a half of the NBU Council – the central bank supervisory body.
The President also signs decrees which formally appoint judges to their posts after they’ve been selected by a Qualification Commission and approved by the Higher Council of Justice. According to the law, the President has to sign a decree in 30 days. If there are some reservations about a candidate judge, the President can launch an inquiry about this candidate. In our view, if the concerns are serious, the President must launch such an inquiry.
Another influential instrument in the hands of the President is the right to submit draft laws to the Parliament as well as to veto laws adopted by legislators.
Importantly, President’s powers could be significantly extended if his/her political party masters sufficient number of seats in the Parliament to influence election of the Prime-Minister and the entire Cabinet. In this case, the President may directly impact economic policies of the Cabinet through a loyal Prime-Minister or selected Ministers.
Thus, despite having limited direct responsibilities, President’s actual powers could be quite significant, affecting businesses and the entire economy. For instance, the prosecution is an essential part of the law enforcement system and can be used for political pressure. The Security Service has a right to interfere into economic activity of enterprises and thus could be used as a tool to exert pressure on business. The State Property Fund is responsible for privatization process and managing state assets.
We believe that for the benefit of the country the newly-elect President should bring in more reputable and professional – but not unconditionally loyal – people into the next parliament* by leading them under his umbrella brand. Ukraine has introduced a lot of progressive reforms since 2014, however, much more remains to be done. And the first step of each reform is legislation. That is why Ukraine (perhaps as any country) needs competent legislators.
Second, the newly-elected President should select true professionals to lead the Prosecutor Office, the State Security Service (SSS), the Anti-monopoly committee, the State Property Fund (SPF) and other agencies which would develop these bodies into strong institutions. In particular, SSS should concentrate on its direct responsibilities of protecting the state security, while it should be deprived of the right to investigate economic matters and put pressure on business. The President should submit a respective draft law to the parliament. However, SSS can stop its interference with business even without the legislation change.
SPFs key priority within the next 2-3 years will be implementation of the large-scale privatization, for which a modern law has been adopted in March 2018. Implementation of privatization procedure in strict accordance with the law will be a major signal for both foreign and Ukrainian investors that Ukraine is a country worth investing into.
The new legislation approved in 2016 has greatly increased independence of the judicial system. Nevertheless, there can be informal attempts on the side of politicians or business to influence the judges.The new President should clearly state that such attempts would be unacceptable and immediately terminated. And actually implement this statement.
Finally, regardless of his/her influence over Parliament, President is a popularly elected figure and may use this popularity to hurt or benefit the country. A good use of popular trust would be to advocate and support economic reforms.
In our view, the most important reforms which the next President should support are the following:
- the constitutional reform that would finally complete decentralization and ideally eliminate the dualism of power in the Ukrainian executive branch (or the President may want to call a constitutional assembly to complete this task). The decentralization is essential for development of democracy and prevention of the state capture.
- implementation of the Association Agreement with the EU – which implies a lot of day-to-day work on harmonization of the Ukrainian legislation with the European one. In the longer perspective, this work opens opportunities for closer EU-Ukraine cooperation at all levels.
- introduction of the sales and purchase market for agricultural land – this will bring in investors, improve efficiency in the sector and increase GDP by about 1.5 p.p.
- healthcare and education reforms – these reforms are essential for development of human capital, and in today’s world people are the main asset of a country;
- Improvement of the business environment, i.e. deregulation and enhancement of competition; improvement of corporate governance standards in the country, including via privatization of state-owned firms that do not create a unique social value.
What the next President should not try to do is to logroll in the parliament. Using such old schemes to adopt even progressive laws would be a disservice to the country where the long due political reform – establishing the trust and cooperative mindset between citizens and the state – has barely started.
In line with the above mentioned reforms, the President should not sign any legislation that tries to implement uneven conditions for economic actors, create opportunities for unfair profits, or to roll back progressive changes, e.g. to scrap the public procurement system or the central bank independence.
Also, the President should not undermine government policies or stall important legislation in attempts to support their own popularity at the expense of other players. Such political games would result in a loss for the entire country.
* The parliamentary elections are scheduled for October 2019
- Oleksandra Betliy, Ministry of Finance of Ukraine
- Olena Bilan, Dragon Capital
- Volodymyr Bilotkach, Newcastle U
- Tymofii Brik, KSE
- Kateryna Dronova, Berkeley
- Yuriy Gorodnichenko, UC Berkeley
- Veronika Movchan, IER
- Zoya Mylovanova, Northwestern University
- Alex Nikolsko-Rzhevskyy, Lehigh University
- Olena Nizalova, University of Kent
- Denys Nizalov, KSE
- Natalia Shapoval, KSE
- Ilona Sologoub, KSE
- Oleksandr Talavera, Swansea University
- Dmytro Yablonovskyy, Centre for Economic Strategy
- Oleksandr Zholud, NBU
The authors do not work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations