4. Conclusion
The EU is the biggest donor to Ukraine. Since 2014, EU institutions and member states have stepped up their support. Ukraine’s demand for better governance has met with a strategic, tailored and dynamic approach from the EU. Promotion of good governance in Ukraine has become a tool of the EU’s ‘purposive power’.93
As a result, Ukraine stands out among the Eastern Partnership countries in having tailored and flexible support for state-building and for implementing the AA-DCFTA. Since the Revolution of Dignity, the EU has responded to the country’s needs in a concerted and innovative way, such as through the SGUA, macro-financial assistance and by providing fiscal space for reform teams of civil servants. These are important adaptations to how the EU usually assists a country.
Assistance is needed because Ukraine continues to face the unprecedented task of having to rebuild the state and economy. This explains why it has high hopes for the EU’s transformative power. But assistance to Ukraine requires a multi-layered and dynamic framework. Ukraine has opted for integration with the EU (even without membership) in order to overcome decades of bad governance. The dramatic events of 2014 illustrated the weakness of the state and the economy.
Four years on, it is clear that it will not be quick or easy to fix Ukraine’s entrenched dysfunction, an example of which is its weak institutions that are dominated by strong rent-seeking networks. In many respects, 2014–17 can be regarded as a period of learning about the scale and nature of the challenges for Ukrainian reformers and for donors.
The challenges remain formidable. EU grants to Ukraine have almost doubled since the launch of the European Neighbourhood Policy in 2004, with roughly the same level committed during the current Multiannual Financial Framework (2014–20). However, the UK’s exit from the EU will leave a gap in EU finances that is likely to impact the eastern neighbourhood. Thus, the overall amount of grant assistance to Ukraine is unlikely to increase after 2020 (and it is important that it is not actually reduced). This calls for more efficient use of existing funds.
By 2020, the EU’s total grant assistance to Ukraine since independence will be comparable to the amount each received by Central and Eastern European countries by the time they joined the EU. Ukraine has received this considerable assistance while taking on massive commitments under the AA-DCFTA. Yet it is still much further from matching EU ‘standards’ than the Central and Eastern European countries were upon joining the EU. As such, there remains a major need to shift to more results-oriented grant allocation and technical assistance.
Recommendations
- The Support Group for Ukraine has been an important innovation. It brings additional resources and sectoral experience to assistance efforts, and is ready to operate in new ways. Its size, capacity and mandate should be strengthened so that it can work productively with the EU delegation and improve effective implementation of projects and programmes.
- In conjunction with the efforts of other actors, such as the European Bank for Reconstruction and Development, the EU should continue to support reform posts in the civil service and look to strengthen these endeavours (or, at a minimum, extend their time frame).
- It is imperative that Ukraine uses reformed ministerial structures to implement changes to public administration, which move towards better policymaking and implementation based on adequate budgetary funding, streamlined functions and adequately paid civil servants.
- As part of implementing the AA-DCFTA, the European Commission should support a cost-benefit (impact) assessment based on the development of sectoral policies for integrating Ukraine into the EU and for building institutions to implement those policies. The European Commission should tie its assistance to implementation. At present, numerous road maps and scorecards for various sectors are too broad-brush in their scope. Many government plans and strategies do not deal with the sectoral priorities for implementing AA-DCFTA or do not address them in sufficient detail.
- To be more efficient, the EU’s grant assistance, especially for institution-building and sectoral reforms, should meet the following criteria:
- It should only be given conditionally to carefully screened and designed projects. Reformers with a proven track record (including ex-government officials) must be involved.94 While it may be necessary for EU experts to initially manage the projects, the goal should be for more Ukrainian experts to contribute and take charge. (This should increase local ownership of products and results, especially if coupled with the online library suggested below.) In this regard, it is worth incorporating the experience and practices of the Business Ombudsman Council of Ukraine.
- It should be less prescriptive. This means addressing Ukraine’s specific problems rather than relying on terms of reference written by experts who are unfamiliar with the country context and who favour ‘best practice’. Project design and planning needs to be fully cognizant of local issues being addressed.
- Transfer of ‘best practice’ models should be restricted to technical programmes where the beneficiary institutions recognize and favour harmonization with specific EU rules or procedures. This means that narrowly defined, short-term technical assistance is only made available to institutions with sufficient absorption capacity in which there are clearly identifiable reform teams. The phrase ‘best practice’ should not be included in the terms of reference for projects concerned with institutional development.
- Institution-building projects need to be less ambitious and granted a longer implementation period. The default period for implementation should be at least five years, in line with examples of other major donors. In addition to providing a more realistic time scale, this should improve continuity between projects tackling similar issues.
- Such projects need to be less extensive and more intensive, with less focus on large numbers of outputs and more on a limited range of desired outcomes.
- Assistance needs to be problem-driven and solution-focused to help solve the most urgent needs of institutions, and not merely focused on training and the transfer of generic good practices.
- Reflective implementation is essential. While initial terms of reference and logical framework approaches are necessary in order to recruit staff and instil discipline for project implementation, they should be kept under continuous review and open to amendment in conjunction with project partners.
- The assistance needs to be longer-term and combined with other forms of support. Most international donors in Ukraine have already moved to longer-term projects. Assistance projects should aim to cover at least one electoral cycle and thereby help to sustain institutions through leadership changes. In this regard, the introduction of the delegated agreements is an interesting innovation.
- It should build on the history of reforms in particular policy areas, and on previous assistance provided by the EU and bilateral donors, rather than replicate them. Technical assistance should not ‘start from scratch’ each time.
- There should be an open, online archive or library that houses documentation related to European integration projects (terms of reference and products, analytical reports, training materials etc.). This would enhance the knowledge of public policies and reform initiatives among donors, civil society and state officials, and help to close the institutional memory gap in Ukraine and in EU institutions. It would also encourage civil society and policy analysts to grasp Ukraine’s integration activities. Above all, it would help the European Commission to provide a better return on European taxpayer money and avoid commissioning unnecessary projects that duplicate past efforts.
- A premium should be placed on local knowledge and the capacity of experts to lead and engineer results, instead of focusing on detailed and prescriptive implementation of terms of reference. The selection of project personnel should prioritize those with ‘deep knowledge’ instead of those who are merely fluent in EU aid rules and procedures.
- Project leaders must be allowed to adapt to changing local needs. Well-informed steering groups with reputable domestic and international stakeholders could be indispensable in this regard.
- More attention needs to be given to the micro-level context and actions within individual projects to make them results-oriented. This would require an adjustment in the workload of individual project officers. More broadly, the European Commission and the European External Action Service should be flexible with EU delegations and allow them to pursue results instead of merely focussing on formal disbursement compliance.
- On the monitoring side, it is time to conduct in-depth sectoral reviews of EU assistance to reforms in Ukraine over the past decade, in order to achieve a deeper understanding of local context and to learn from past successes and shortcomings. The European Court of Auditors can undertake this if it manages to incorporate local knowledge and focus on results. As it is, the court’s reports are too general and do not seem to ask essential questions about technical assistance. Demands for such assessments need to come from the EU institutions and member states. This is indispensable for improving the effectiveness and image of the EU in the neighbourhood countries.
- The implementation of the AA-DCFTA needs to be based on impact assessment studies in order to be realistic and pragmatic. Its technical components should take into account a wider spectrum of interests surrounding reforms during implementation.
- The European Commission and the EU delegation should be much more protective of investments made via technical assistance and twinning by ensuring that outcomes and skills remain available and are used.
- The culture of ‘never-ending EU financial support’ regardless of circumstances and results achieved by individual projects should change. This would provide incentives for better project design and implementation to ensure tangible results.
- Ukraine would also benefit from other types of EU financial support, such as preferential loans to finance developmental needs, especially in transport and social infrastructure, energy efficiency and the environment (as envisaged in the proposal for the New European Plan for Ukraine and the External Investment Plan). In addition to anchoring Ukraine to the long-term perspective of reforms and European integration, these initiatives should help to address the urgent need to build the country’s capacity to implement investment projects.