Ukraine has done much to improve governance over the past year but rule of law must be a focus of the reconstruction.
Talk about how to rebuild Ukraine began soon after Russia’s full-scale invasion of the country: by March 24, 2022 I had already chaired a discussion focused on the country’s future with Alain Madelin, a former minister of industry, business, and economy in three French governments.
I recall the frustration and impatience on the faces of Ukrainian participants when they were advised to learn one thing from the French, another from the Germans, something else from other nations. There was never any sense that these nations could learn from Ukraine.
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Since then, I have taken part in sever similar events discussing the topic, including an entire programme at EXPO Real in Munich, and a fireside chat with Thomas Kleine-Brockhoff, vice president and director of the Berlin Office at the German Marshall Fund of the United States (GMF). The latter had led the team working on Designing Ukraine’s Recovery in the Spirit of the Marshall Plan, a paper that says the ultimate goal of recovery “is for Ukraine to find its place among market-oriented democracies and, ultimately, the European Union”.
However, most of these blueprints seem to provide ready-made solutions defining generous funding for the government of Ukraine — always regarded as the main driver of post-war recovery.
They lack guidelines encouraging private investment and do not always take the Ukrainian point of view into account.
The last 12 months have shown how much Ukraine has achieved through hard work, determination and commitment to change. This is widely recognised around the globe. Less attention is given to how Ukraine has improved governance.
The rule of law
Both governance and the rule of law were often referred to during the multiple discussions that I have had over the last year.
Economic Priorities in Post-war Ukraine, released by CASE Ukraine in mid-February 2023, eventually addresses many of the complex tasks that Ukraine needs to complete, with the main challenge being the rule of law, a problem lasting for three decades.
“This report was built by Ukrainians for Ukrainians and addressed the microeconomic challenges that the country is facing – other plans have focused on headline numbers and macroeconomic stability. This one proposes a transition mechanism to achieve rule of law in the country,” says Christopher Hartwell, head of the International Management Institute at the Department of International Business of Zurich University of Applied Sciences (ZHAW) School of Management and Law and a former president of CASE Poland.
One of the primary challenges that Ukraine will have to confront once the war has been won is how to achieve economic growth in an economy that has been completely devastated. Funding that the country will receive might be ample. What will remain a question is the quality of the judicial and law enforcement systems, which might take even a decade to be established — what measures can be taken while the rule of law is under construction?
Dmytro Boyarchuk, CASE Ukraine’s executive director, gives the example of the country’s accession to the European Union, which is said to take place in two year’s time.
“European Integration requires establishing and strengthening basic institutions, which boils down again to the rule of law. The speed of European integration is effectively the speed with which a functional judicial system and law enforcement system can be created. There is now a strong opinion in the country that Ukraine should harmonise legislation while the rule of law is under construction but the problem is that the ‘transmission mechanism’ from legislation into action is broken in Ukraine, and international indicators such as the World Bank’s governance indicators confirm that. The rule of law is dysfunctional in Ukraine.” He argues that basic institutions should be created first and then legislation harmonised.
Boyarchuk proposes the creation of a comprehensive system of indicators, similar to the World Bank Governance indicators but more detailed, to monitor the progress of both judicial and law enforcement reforms as this would provide a comprehensive overview of what is being achieved and which areas require further attention.
“The key thing is moving towards a proper and welcoming business environment. This will require reorienting the mindset of the government for sure,” Hartwell adds.
This means the rule of law should be the absolute priority for reform in the coming decade, as it underpins everything else.
“While the rule of law is still being established, Ukraine should simplify its economic and fiscal policies to promote growth, even if this means diverging from EU practices for the time being. We do not anticipate that Western partners will provide large-scale funding for Ukraine’s recovery until strong institutions have been established.
“However, funding is urgently required. To attract financing in an environment with a non-functional rule of law, a proxy-judicial system may be a viable solution, similar to anti-corruption bodies which serve as a proxy judicial system. Moreover, financial support for post-war recovery should be directly linked to progress in reforms. In other words, recovery funding should not only be directed towards constructing buildings and infrastructure, but also towards establishing a functional judicial and law enforcement system,” Boyarchuk says.
The process aimed at strengthening the rule of law needs to begin and completed as soon as possible. The Kyiv School of Economics estimates that the total amount of documented damage to Ukraine’s infrastructure between the start of the full-scale invasion in February and the and of December amounted to 130.5 billion euros.
Since the beginning of Russia’s war against Ukraine, at least 64 large and medium-sized enterprises, 44 social centres, almost 3,000 shops, 593 pharmacies, almost 195,000 private cars, 14,400 public transport vehicles, 330 hospitals, 595 administrative buildings of state and local administration have been damaged, destroyed or seized.
February 24 marked the first anniversary of the invasion and it is unclear when it might end. Ukrainian leaders are adamant to start rebuilding the country.
“Some of our partners in Europe said that it is not so obvious that [we] should start the reconstruction now — but for us, it’s obvious that it should start during this year,” First Deputy Prime Minister Yulia Svydyrenko said during her visit to Brussels just two days before the anniversary of the invasion.
It is equally important to concentrate on strengthening the rule of law in the country.
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