WASHINGTON, DC – Ukraine may not be grabbing as many headlines now as it did a year ago, but the crisis there is far from over. The latest ceasefire agreement, concluded in Minsk in February, has contained, but not stopped, Russian military aggression. And, though the stabilization program that Ukraine agreed with the International Monetary Fund last month is superior to last year’s deal – this one includes both more financing from the IMF and a more credible economic-reform plan from the government – it will be insufficient to repair the country’s economy. What Ukraine really needs is to escape the old Soviet order – and, for that, it needs the West’s help.
Ukraine never managed to recast its state after the Soviet Union’s collapse. Instead, the old Soviet elites held onto power – and most of the country’s wealth – through corrupt practices that became entrenched in the country’s economy and political system. Reforming both will be a major challenge – one that Ukraine’s leaders have lately committed themselves to meeting.
Since February of last year, when the parliament voted then-President Viktor Yanukovych out of power by more than a two-thirds majority, Ukraine has held fresh elections for both institutions. Hundreds of top officials have been replaced by young, Western-educated professionals, and the government is now working feverishly to implement deep and comprehensive reforms, including a new law on public procurement and a package of anti-corruption legislation. Dozens of superfluous inspection agencies have been abolished, significantly reducing the regulatory burden. Just last month, President Petro Poroshenko sacked the governor of the Dnipropetrovsk region, the billionaire tycoon Igor Kolomoisky
More recently, the authorities have been working to reform the energy sector – a hub of corruption. On April 1, household gas prices were quadrupled, taking them to half the market price, with offsetting compensation provided to the poor. And the parliament has enacted a law that harmonizes energy standards with those of the European Union, thereby delineating clearly the state’s role and opening the gas market to investors.