Is Ukrainian governance improving?

How important is it that Ukraine clears away a major source of corruption? An apparently obscure piece of legislation offers a useful insight into the challenges facing the way Ukraine’s system of governance works; and a good indication of whether Ukrainian governance is improving.

The Ukrainian government agreed in 2010 to adopt a public procurement law in line with EU standards. Public procurement means the buying of goods and services by official organs of the state. It may sound obscure, but such purchases involve a lot of money – in the EU, public procurement is worth around [euro]2 trillion (thousand billion) a year. This makes a good public procurement law vital for any country. Such a law fights corruption by making it harder for people in power to give valuable contracts to friends and relations without a proper competition to find the best price and quality. Result: everyone is better off – except corrupt people in power.

The problem is that, after a year of trying, the Ukrainian public procurement law has not yet been agreed. On several occasions a draft law which meets EU standards has been drafted; but before it can be agreed, those with an interest in having less effective public procurement laws have managed to have the draft law amended in order to weaken its provisions. This has happened several times. The latest situation is that in response to representations by the EU and World Bank that the latest draft law did not meet EU standards, President Yanukovych – helpfully from a point of view of ensuring a public procurement law with teeth – vetoed the draft and instructed the Supreme Rada to make it consistent with EU standards.

The fact it has taken so long to agree a public procurement law shows the difficulty the Ukrainian authorities have in squaring the interests of competing interest groups in the political system. While there are some within the authorities who understand the benefits to Ukraine for an EU-compatible public procurement law, they have so far been unable to make this happen against those who benefit from the current system. I shall therefore be watching with interest to see what happens next. If a new, EU-compatible version of the law is approved by the Rada, signed by the President and enters into law, that will be a good sign that Ukrainian governance is improving. If there is further delay or a law is adopted which does not meet EU standards, that will show the opposite.