How To Create Trustworthy Institutions in Eastern Europe

Lack of trust in institutions, governments and politicians is a global problem. Historically, in Ukraine and Eastern Europe the population has every reason to be concerned. Now Ukraine is struggling with the dilemma of building new state institutions from scratch or reforming the old structures. How can we create trustworthy institutions? This was the topic of a discussion Hromadske recorded with Peter Wagner, Head of the Ukraine Support Group to the European Commission, Khatia Dekanoidze, the Head of Ukrainian National Police from 2015–2016 and moderator Hlib Vyshlinskiy, Executive Director, Centre for Economic Strategy.

In particular, they spoke about how to reform law-enforcement agencies and courts, what should be done with state property and how to restore confidence in the financial sector.

Hromadske invited Peter Wagner, Head of the Ukraine Support Group to the European Commission, Khatia Dekanoidze, the Head of Ukrainian National Police for 2015–2016 and Hlib Vyshlinskiy, Executive Director of the Centre for Economic Strategy to talk about all of these issues.

Ukraine has recently been granted visa-free travel to EU countries. In order to achieve this, Ukraine had to fullfil EU requirements and make some key reforms, for example, lauching the National Agency for Corruption Prevention. Now, the visa-free regime is no longer an incentive for reform and there are concerns that the reform process will decelerate. Corruption, for one, is still an issue that limits people’s trust in the institutions.

As Khatia Dekanoidze notes: “If there’s corruption, and if the ordinary citizen, the ordinary civil servant, sees that there’s still a kind of re-distribution of the authority and the financial resources in the government, and in the people who were in charge of the reforms, then the ordinary citizens won’t trust the institutions."

In addition to these “internal demons,” Ukraine is also a country dealing with external threats. Peter Wagner underscoes the "duality" of Ukraine's situation: “From the outside, people see mainly the internal conflicts with a very strong focus on anti-corruption measures, nobody looks at the enormous reform efforts, and sometimes, successes in areas such as procurement, the national bank, and of course, forthcoming challenges like the pension and health reform. And on the outside, everybody is ignoring the fact that Ukraine is a country that is suffering from external aggression”.

The experts also discuss the role of international partners, such as the EU, in Ukraine’s reform process. Peter Wagner describes the EU as a “benchmark” for reform in Ukraine: “The people see the EU as a partner in the fight for certain principles and that we stick to these principles, not only internally but also in the way that we defend them vocally outside the EU."

Hlib Vyshlinskiy: Today is essential for economic strategy, organized discussion on how to create trustworthy institutions in Ukraine. And now, after this debate, we are speaking to Peter Wagner, Head of the Ukraine Support Group to the European Commission and Khatia Dekanoidze, the Head of Ukrainian National Police for 2015–2016 about some issues that were not covered during the discussion, that are the most important for the country right now, and not only from the strategic perspective as was discussed earlier. So my first question, and I will start with Khatia, is what are the key risks and challenges for Ukraine now? We see very low level of trust in all government institutions, in politicians, in opposition. What’s your opinion on what government, civil society, and the general public should focus on now to prevent further political, economic, or military crisis?

Khatia Dekanoidze: Unfortunately, there’s still the so-called internal demons, which we call corruption. It’s still in-charge of everything. And if there’s corruption, and if just ordinary citizens and ordinary civil servant, sees that there’s still a kind of re-distribution of the authority and the financial resources in the government, and in the people who were in charge of the reforms, then the ordinary citizens, they really don’t trust the institutions which might be trusted, right. So, corruption is the main challenge. Second is not to risk reversing the reforms which have been done after Maidan.

We have visa-free right now and all reforms can be stopped, right, or just doing nothing. And also, I think the third main challenge, of course, which is very much important, is to be under the threat of the external enemies, which is still strong, and still is occupying, trying to occupy our territory. But actually, we have always been talking about defeating this outside enemy, but we have to understand that we can only defeat our external enemy if we can defeat our internal enemies. We can go inside, in-detail, I mean, about what kinds of reforms are very important for the country, but to run the country is much more important.

Peter Wagner: You have the fact that Ukraine, you referred to it, is fighting at the external front and at the same time, fighting at the internal front with numerous reforms, and fight against many people, enemies of progress achieved since Maidan. And that is, the other dimension is that the external side, is not seen as Ukrainians do. Ukrainians very much see the two conflict, the internal and external one, at more or less equal level. From the outside, it is that people see mainly the internal conflicts with a very strong focus on anti-corruption measures, nobody looks at the enormous reform efforts, and sometimes, successes in areas such as procurement, the national bank, and of course, forthcoming challenges like the pension and health reform. And on the outside, everybody is ignoring the fact that Ukraine is a country that is suffering from external aggression. I think this duality is a bit challenging because you are talking and perceiving different things.

Hlib Vyshlinskiy: Regarding the question that was raised by Khatia, what to do after the visa-free regime is granted with the European Union? Today, there was a debate on whether the pressure between the international partners and civil society should continue as the main trigger and driver of reforms or should Ukrainian politicians start doing their job under the pressure of regular citizens to work properly and conduct reforms? Do we believe that there are some tools that are needed by the European Union and by the international partners that should serve as the new external driver for Ukrainian reforms? Or that those who defended today’s idea that Ukrainians should be in charge are right?

Peter Wagner: Ukrainians are in charge of the reforms and have to be in charge of the reforms. This is a famous ownership issue. I’m deeply convinced that there is a strong sense of ownership in the Ukrainian population. And there’s a strong sense of ownership for reforms in the government, in politics. That momentum has to be kept up. Where I have my very strong doubts is these external elements. Ukraine will for a long time need, and for sure, receive support from its international partners as long as it is on the reform path. But generally speaking, I have very strong doubts that you can buy or force reforms from the outside. The IMF trenches the macro-financial assistance of the EU. There are elements that help Ukraine to move on the reform path, but they will never get a reform only because it has been put into a memorandum of understanding. You have to have as a starting point something else. And that is where I think one should not forget, and also not underestimate, that the moral dimension of what is going on in Ukraine. Because it was not a revolution because of a shortage of cash flow. It was a revolution for certain values, for certain principles. And that is where, I think, the external side, the EU and others, definitely still has a word, a role to play.

Hlib Vyshlinskiy: In fact Georgia was the only country in the region that achieved significant success in destroying the corrupt Soviet system without EU accession as the main trigger and drive. It was the only case. Do you think that Ukraine has a chance to do the same as Georgia did or is EU accession prospects the only strategic project that will help Ukraine to really get rid of the Soviet system?

Khatia Dekanoidze: Well each country has the preliminary requests and demands from the EU before becoming part of the EU. Of course if we admit that a huge success has been done in Georgia, it’s true and let me explain in a few words why the success was a true story and a true success story. First the success of the teamwork of the government. Because of the true political will that if we change, we change everything, this is first. Second, Georgia was in a war beginning from the early 90s, 25% of the territory in Georgia is still occupied by the Russian Federation. And if you remember in 2008 we had a massive attack from Putin in Georgia, but despite that fact Georgia still had a very good atmosphere for foreign investment and freeing from corruption and the Georgian exchange rather, the national lari, was a very favourable so it meant that the political will was very broad and people in the government understood that to create the modern country and state of Georgia is very important. Because before the Rose Revolution when some foreign articles were mentioning Georgia they mentioned it like a failed state and after the revolution we became the number one country in the region which was free of corruption.

Hlib Vyshlinskiy: So Peter the last question, on one side, from the experience of the member states that came through the accession process, on the other side with the current situation in Ukraine, what tools could be used by the EU to help the democratization of Ukraine and building those trustworthy institutions?

Peter Wagner: What is very important is what I think we have now done with the delivery on the visa liberalization and the DCFDA association agreement, that we also deliver on our promises and confirm and prove that we are reliable partners. Secondly, I think there is, still, an enormous readiness to support Ukraine and there is the impression that it is not necessarily an issue of money. Many of the things, the EU makes available, an nearly around 200 million euros just for reform support. With that you can run a lot of reform support projects, the macroeconomic situation has improved. Now it is important that this money is used strategically, and that is where on the one hand the wider economic and legal situation has to allow for business to develop, because then the EU can come in with a whole set of financial instruments, guaranteed micro-credit loans that can come in, for which the money is available, and can help stimulate the economy. But none of these instruments makes a lot of sense in an environment of uncertainty where everybody has to fear corporate raiding.

Thirdly, it’s very important that the EU remains a kind of benchmark on this value dimension. That the people also see the EU as a partner in the fight for certain principles and that we stick to these principles, not only internally but also in the way that we defend them vocally outside the EU. And then I think there is a fourth one, and that is we can help by policies of what I would call stability and a quiet heart. We have to accept, and that’s more towards us than towards Ukraine, that the changes to come are not an issue of two or three years and we have to get out of what I would call the romantic approach that was the revolution and in three years the country will be different. Yes there was a revolution but now we are in transition and this is something that will take a very long time and one has to just recall permanently that they’re ready to go that way and stay the manner together.