Track of Ukraine's updates on international obligations in February

In January and February Ukraine mostly didn’t have deadlines within the IMF’s structural benchmarks. Moreover, in December 2023 Ukraine received the last tranche under the EU Macro-Financial Assistance program and currently is waiting for the final agreement on conditionalities. 

However, in February we had an obligation to adopt several draft laws to receive $1,5 bn from the World Bank which were guaranteed by Japan. One of them is the draft law #5865 on financial markets, several provisions of which are opposed by the Head of the National Securities and Stock Market Commission and the Office of the President. This particular draft law still isn’t signed. 

We also remember February because of the battle over the draft law on the restart of the Economic Security Bureau of Ukraine (ESBU). The restart of the ESBU is one of conditionalities in the IMF Memorandum, G7 and the USA priorities and it seems to be included to the Ukraine Facility Plan of the EU. However, the draft law #10439 submitted by the Cabinet of Ministers (CMU) met the vast critic from Ukraine’s international partners, business and expert community and MPs for keeping the status-quo in the ESBU. 

Despite all the warnings from numerous business associations, international partners, exceptionally clear letter from the G7 Ambassadors, the CMU and the Office of the President (an ideological inspirer) tried to fool the Verkhovna Rada and the stakeholders and make the CMU’s draft law to pass in the first reading. Fortunately, the draft law hasn’t received enough votes. More on this issue and other key developments in Ukraine’s international obligations and economy in February you can find below in our digest. 

Despite the pressure from the Presidential Office the Verkhovna Rada rejected the CMU’s draft law on the ESBU restart. 

On Friday, 23 February, the Verkhovna Rada of Ukraine rejected the Cabinet of Ministers’ draft law #10439 on the fake restart of the Economic Security Bureau of Ukraine. Despite a huge pressure from the Office of the President and persuasion from the Minister of Justice and the Minister of Economics, the Parliament gave only 222 votes instead of at least 226 needed. 

The draft law #10439 was vastly criticized by key business associations, expert NGOs, and moreover doesn’t meet Ukraine’s obligations within agreements with the IMF, the EU, G7 and other international partners. 

Unfortunately, the alternative draft laws, including #10439-2, which was developed by me and my colleagues with all the stakeholders from business associations and international organizations and IFIs, were also automatically rejected. 

Regarding this situation, the President Volodymyr Zelenskyy, while talking about the importance to restart the Bureau of Economic Security at the public event, emphasized that only Ukrainians have to decide when to vote the draft law on the ESBU.

"The Chairman of the Verkhovna Rada of Ukraine is present here. I really want the draft law to be voted in the near future. Everyone is waiting. And it is very important that everyone is waiting inside Ukraine. It is very important that Ukrainians determine when to vote and adopt this or that law in Ukraine" – the President addressed Ruslan Stefanchuk, the Chairman of the Ukrainian Parliament.

On 28 February, MPs Yaroslav Zhelezniak, Anastasiia Radina and others resubmitted the draft law on the restart of the Economic Security Bureau of Ukraine. The new draft law is registered as #10439-4. Its text is based and repeats the text of the draft law #10439-2 which was fully supported by all key business associations, NGOs and international partners. Among changes is the provision which gives members of the Civil Oversight Council an opportunity to take part in the competition commission in future.

The Cabinet of Ministers also has already sent its propositions of changes to its initial draft law #10439. Unfortunately, despite all the private and public promises to business and international partners, the government doesn’t intent to consider all criticism and change the draft law significantly. 

The Cabinet of Ministers still insists on several aspects of the bill which actually block a proper restart of the ESBU and are not supported by business associations, expert NGOs and international partners. For example, the CMU refuses to clarify the detailed procedure of the re-attestation process directly in the law. 

The CMU suggests leaving the opportunity to design and determine a re-attestation procedure on their own which may result in political influence. Moreover, the CMU doesn’t determine the clear structure of re-certification commission in the draft law and leave this decision on the current ESBU director, so it’s a risk that re-certification commission will be formed in favor of current employees. Furthermore, the CMU’s draft law doesn’t give a decisive vote to international representatives in the competition commissions, that can also result in political influence and electing the Director which is loyal to the OP authorities, and so on.

According to our information, the CMU and the Ministry of Justice still negotiates on the text with Ukraine’s international partners. As for the next steps, after all comments and proposals will be submitted, the Committee on Finance, Tax and Customs Policy agrees on the text of the draft law and votes for it at its meeting. This text agreed by the Committee then will be submitted to the VRU and will be reconsidered during the plenary meeting along with the new alternative ones.

The Office of the President blocks MPs’ business trips due to their voting against the OP’s will. 

According to our information, the Office of the President blocks MPs’ business trips according to their voting for draft laws which are crucial for the OP. 

The evidence show that the OP forbids the MPs’ trips despite all permissions from the VRU management. Roman Kostenko, MP from the opposition faction Holos was forbidden to go on a business trip literally on his way to Munich to take part in the conference on security issues. 

Other MPs from coalition and opposition factions who didn’t vote for the CMU’s draft law #10439 on the fake restart of the ESBU received unofficial messages that their business trips will be rejected or cancelled. For example, Yaroslav Zhelezniak, the first author of the draft law on the proper ESBU restart alternative to the CMU’s, received rejection for his business trip to Brussel on 06 March at the invitation of the European Parliament Member. Zhelezniak was also warned that he will be banned to visit Paris to take part in the Meeting of the OECD Global Parliamentary Network as the Co-Chair of the Ukrainian Group of Friends with the OECD. 

The list is much longer and concerns MPs not only from Holos faction, but also members from other groups and opposition factions like European Solidarity as well as members from the President’s faction Sluga Narodu. 

Updates on the World Bank's priorities

The time is running out for the President to sign the draft law for the World Bank’s tranche. 

On Tuesday. 22 February the Verkhovna Rada of Ukraine finally adopted three draft laws from the World Bank DPL. Those are the draft law (DL) #5865 on financial markets, #5593-d on SOE corporate governance reform and the draft law #9266 electronic crop receipts. These draft laws have to be signed not later than 04 March to ensure that the World Bank will send to Ukraine $1,5 bn guaranteed by Japan. 

The Chairman of the Parliament signed and transferred the documents to the Office of the President last Monday, 26 February.

However, the President signed two of them only on 05 March. The draft law #5865 on strengthening the independence and institutional capacity of the National Securities and Stock Market Commission in accordance with the IOSCO Principles hasn’t been signed yet. Moreover, according to our information the OP is preparing a veto in response the request from the Head of the NSSMC Ruslan Magomedov. 

According to the letter from the Head of the NSSMC, which appeared at our disposal, he asks the President to veto the DL #5865 as it doesn’t include the provisions of increasing salaries to 300 thousand hryvnas a month. Furthermore, he asks to eliminate provision which ban the right for person to work or lead the NSSMC if he/she has a relative working or somehow related to еру professional market players. This request considers the current Head’s conflict of interests as the life partner of Mr. Magomedov Yevhenia Hryshenko works as the head of the department in the investment company ICU. 

Updates on the EU conditionalities

The Verkhovna Rada adopted the governmental draft law on ethical lobbying. 

On Friday, 23 February the Parliament adopted the draft law #10337 on ethical lobbying submitted by the Cabinet of Ministers. It’s one of Ukraine’s obligation within the EU integration process. The law comes into force only two months after the National Agency on Corruption Prevention (NACP) launches a public register, but no later than 01 January 2025. 

Moreover, the Verkhovna Rada adopted in the first reading the draft law #10373 on administrative responsibility for violations under the lobbying law.

The election commission chose the winner of the competition for the NACP Head.

On Sunday, 25 February the election commission announced the winner for the position of the Head of the National Agency on Corruption Prevention.

Viktor Pavluschyk, head of the NABU detective unit, was chosen as the winner by all 6 members of the election commission, both international and the government representatives.

On the next step the CMU has to approve Mr. Pavluschyk as the Head of the NACP.

It’s noteworthy that the candidate from the State Bureau of Investigation received votes only from all 3 members of the election commission delegated by the CMU.

The powers in the Accounting Chamber were probably redistributed in favor of members closed to the Office of the President. 

According to our information, newly appointed member of the Accounting Chamber of Ukraine Gennadiy Plis, who is known to be closed to the Office of the President, will be responsible for all areas related to the security and defense. 

Meanwhile, Elizabeth Pushko-Tsybuliak will analyze and control finances of all law enforcement state bodies. She previously worked as the head of the Accounting Department of the State Bureau of Investigation and the adviser to its Director.

Such a division of powers may indicate the risk of political influence over the Accounting Chamber. 

At the end of December, the Parliament appointed four new members of the Accounting Chamber. The Head was also appointed in early January. These decisions were pushed by the Deputy Head of the Office of the President Oleg Tatarov despite the private and public warnings from G7 Ambassadors and the USA. According to our information, 3 of newly appointed members are connected with the Office of the President.