Ukraine Reform Monitor team of Ukraine-based scholars assembled by the
Carnegie Endowment independently assessed the extent and quality of reforms in
Ukraine implemented in the past one and a half years in four key areas:
national security, economic policy, decentralization, as well as political and
judicial reforms.
"Political reforms have succeeded in rebuilding the political
system after it collapsed in February 2014 but have not yet produced a
well-functioning democracy," say the experts.
However, the pace of judicial reform is reported to be slow, and political control of the judiciary is still
a problem.
Ukraine
has so far avoided default and worked
aggressively to stabilize the economy in the face of unprecedented challenges
and pressures. There are clear, positive trends in a number of areas, like
deregulation, opening up data, reforming the energy sector, cleaning up the
banking sector, and implementing anticorruption measures.
"Supporting at least temporary macroeconomic stability remains crucially
important to staying the course," says the report.
Given
the scale of the security crisis in the east, law enforcement agencies have responded to security threats relatively
well in an extremely difficult environment, say the experts. The army, national
guard, and police are gradually becoming better equipped and more capable of
responding to the challenges of the conflict with Russian-backed separatists. The security service is responding well to the need to
neutralize the threats of terrorist attacks in the areas bordering the antiterrorism operation zone. However,
progress on security and law enforcement reform is mixed and uneven, and
mistrust in law enforcement agencies remains a problem.
Decentralization
reform has the
potential to install a well-balanced, significantly decentralized public
financial management system. However, it also entails risks. It may
substantially increase the level of local debt and corruption, and create
fiscal vulnerabilities. The introduction of a local property tax is a
progressive measure, but many communities need technical support in developing
local systems for administering this tax. The major source of local revenue—the
personal income tax—remains based on employment rather than residence. This
distorts allocation toward more affluent communities and undermines plans to
introduce local income tax surcharges. The politics of decentralization plans
are likely to be highly complicated.
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