Ukraine: New Trend of “Economisation” for Domestic and Foreign Policies

Sergey Gerasymchuk, Foreign Policy Council “Ukrainian Prism”

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Money, budget and economic cooperation are the main focus points of September. It would seem that the budgeting process is neglected, while EBRD forecasts regarding Ukraine are not hopeless. However, there is a risk of reforms rolling back, and, as a result, a risk of disrupting programs of Ukraine’s international financial partners. Under such conditions both economic and foreign policy sectors of the government will need to make their best efforts to help the country escape the risk zone.  


Domestic Policy

Local Elections According to New Rules 

The new political season in Ukraine launched with an official start of electoral campaigns for local councils. This year the process itself will be held according to the new Electoral Code that takes into account both the new territorial basis and the number of voters in territorial communities. The novelties include a mandatory gender quota (when forming the list of candidates, a political party should have at least 2 female candidates per every 5 positions in the list). Local elections are to take place on October 25. 

Another important political development of early fall is the following. On September 14 the Cabinet of Ministers of Ukraine approved the draft for State Budget 2021 at an extraordinary meeting and submitted it to the Verkhovna Rada. On the same day it was registered in the Parliament. The MPs harshly criticized the draft dubbing it as “catastrophic” and “being a utopia” and suggested revising the document. 

Along budget battles on September 16 the Constitutional Court of Ukraine ruled another decision regarding National Anti-Corruption Bureau (NABU). The Court in fact deprived the President of Ukraine of any influence on the institution. On one hand, such a decision of the Constitutional Court means more independence for NABU, especially when it comes to political influence. On the other hand, if the Ukrainian Parliament does not write a new procedure (amendments to the Law on NABU) within three months, a legal vacuum will appear and NABU activities, in particular regarding appointing its head, will be paralyzed. Such a development will work well for many power holders in Ukraine, however, it may create difficulties in the relations with international partners. The immediate reaction from G7 ambassadors followed. In their statement they called on current authorities to respect and support the independence of anti-corruption institutions in order to stop corruption from undermining the reforms already achieved.  



“The new Electoral Code includes a mandatory gender quota (when forming the list of candidates, a political party should have at least 2 female candidates per every 5 positions in the list)”




Don’t Count Your Budget Until…

Submitting Budget 2021 to the country’s Parliament has without a doubt become the main economic issue of the month. Among other things, the budget provides for the annual average exchange rate making up UAH29,1 to 1 US dollar, with the budget deficit being approximately UAH270,354 bn. In order to cover such a deficit, the state plans to use IMF assistance and the support from other creditors, as well as eurobonds. 

It is expected that prior to December 1 the state budget has to be approved by the Parliament. However, there may appear certain difficulties, as, according to Danil Getmantsev, the Chairperson of the Verkhovna Rada of Ukraine Committee on Finance, Taxation and Customs Policy, the Ministry of Finance of Ukraine did not hold consultations with the Verkhovna Rada when preparing the budget draft. Other difficulties may appear when it comes to IMF assistance and the part it plays in forming the country’s budget. The latter reminds that supporting the independence of the National Bank, Specialized Anti-Corruption Prosecutor’s Office and High Anti-Corruption Court of Ukraine are preliminary conditions for the current program of IMF assistance. 

Apart from the anti-corruption component, Kyiv has to concentrate on other directions of reforming the country’s economy, as according to 2020 Index of Economic Freedom, Ukraine ranked 138 out of 162 countries as mostly unfree. 

The only solace is that according to EBRD assessment, the decrease of economy in Ukraine is not critical and makes up 4,5%. 


Foreign Policy

In spite of Lockdown, International Contacts Are Being Revived 

The first month of fall 2020 saw an abundance of foreign policy developments. Series of official visits were paid by Ukrainian top officials to friendly countries. At the same time the partners of Ukrainian state had several visits to Kyiv.  

Earlier this month the head of Ukraine’s MFA Dmytro Kuleba had a working visit to Romania, where he held several meetings, in particular, with Ludovic Orban, Romania’s prime minister, and his Romanian vis-à-vis Bogdan Aurescu. The results of this visit included a decision to create a working group for developing energy cooperation. 

Immediately after his visit to Romania, Ukrainian minister of foreign affairs had a working visit to Portugal. In the course of his stay Dmytro Kuleba had a meeting with Augusto Santos Silva, the head of Portuguese Ministry of Foreign Affairs. During the press conference both sides stated that the two countries are planning to develop trade and military cooperation. Moreover, the Ukrainian minister had a meeting with Sergio Pinto, the chairman of the Parliamentary Committee on Foreign Affairs and Portuguese Communities. Both officials discussed the situation regarding security in Donbas region. 

The President of Ukraine Volodymyr Zelensky had official visits to Slovakia and Austria in the middle of September. There he had several meetings with top officials. The main issue discussed concerned joint economic projects, which is in line with a new trend – “economisation” of Ukrainian policies. The agenda also included energy security issues. An attempt to find common language with Slovakia was successful, while disagreements with Austria, the supporter of the “Nord Stream 2” project, remain.  

In September some European officials visited Ukraine as well, including Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission. In Kyiv he had a series of meetings with anti-corruption activists and the President Volodymyr Zelensky. In the course of his visit the head of EU diplomatic mission highlighted the importance of independent and efficient anti-corruption institutions and the judicial system reform and stated that they are crucial to Ukrainian society. As for the issue of visa-free regime for Ukrainian citizens, Josep Borrell noted that the country meets all the requirements. 

On September 18  Ekaterina Zakharieva, Deputy Prime Minister and the head of the Ministry of Foreign Affairs of Bulgaria visited Ukraine. In the course of her visit Ekaterina Zakharieva highlighted that Bulgaria prioritizes Ukraine among the Eastern Partnership countries. During the meeting with the Prime Minister of Ukraine an agreement was achieved on renewing the work of the intergovernmental commission on the issues of economic cooperation. 


Photo: Ukraine prepares for local elections