Espreso. Global

War is expected to be prolonged, and US has now come to realize this fact

27 September, 2023 Wednesday

Regarding the list of reforms sent from the US Embassy to Ukrainian government officials, I'd like to share my feelings and expectations without adding any hype or political bias. That's going to be added later by others 

During a meeting in Brussels, the United States presented Kyiv with a list of key reforms for discussion and feedback at the Multi-Agency Donor Coordination Platform for Ukraine.

This document is authentic and has been confirmed by the US Embassy. It has also been shared with all international donors to Ukraine. However, it's important to note that these are proposals for discussion, not ultimatums. I will use my own example to demonstrate that these are indeed suggestions. Some people may have misconstrued them as ultimatums due to the way they were presented. This format is based on IMF memoranda, which are framed as obligations for Ukraine, ones that we willingly accept. Hence, you'll find statements like "Ukraine will do X in X time" because this is the language we use when signing a memorandum with the IMF.

Let me begin with a point made by financial expert Yevhen Dubohryz. For the first time in many years, such a document does not touch upon Ukraine's financial sector. This absence actually speaks highly of the National Bank and its head, Andriy Pyshnyi, as well as the Ministry of Finance and its head, Serhiy Marchenko, in the eyes of our allies.

Typically, such documents include a statement about strengthening the independence of the National Bank. During Kyrylo Shevchenko's tenure as head of the NBU from 2020 to 2022, even stronger recommendations were made, suggesting that Shevchenko had weakened the institution and that corrective actions were needed. There are usually discussions about corporate governance in state-owned banks, where legitimate questions arise. However, it appears that the White House has no doubts about the NBU's ability to oversee corporate governance in state-owned banks, which is why there are no concerns addressed in the financial sphere. Congratulations to the teams at the NBU and the Ministry of Finance; this is a significant achievement.

This further underscores that the journalist Yevhen Plinsky, who circulated fake documents claiming dissatisfaction with the NBU by international parties, was indeed peddling false information. There are no such claims or proposals in this document.

Another important point to note is that the war was expected to last a long time, and the United States has finally come to realize this.

Many people describe this document as a deal where money is provided in exchange for making changes or improvements. However, I have a slightly different perspective. The United States recognizes that the war in Ukraine will be prolonged, and the document aims to make Ukraine better equipped to endure a lengthy conflict. This involves making the government more transparent, restoring competitive bidding for important state-owned businesses, strengthening the Ministry of Strategy and Industry as well as Ukrainian Defense Industry (Ukroboronprom), coordinating the military industry and the armed forces, boosting the military's capabilities, and, MOST IMPORTANTLY, finding ways to finance military operations and attract investments. Plus, rebuilding.

In essence, there are two main aspects: supporting the military and attracting investments.

This is why there's a focus on the military and defense agencies, as well as national security, particularly economic security. Relying solely on government funding and international donations won't be sufficient in the long run. Therefore, the ability to attract private investments into the country becomes crucial. We need to learn from countries like Israel and South Korea, which have managed to attract investments even in the face of threats, such as missile strikes.

We must also work on modernizing our military during the ongoing war, although this is a very challenging task.

The military aspect involves reforms in the Ministry of Defense, the Ministry of Strategic Industries, the former Ukroboronprom, and the alignment of military industry standards with NATO.

On the investment front, the focus is on improving corporate governance, addressing antitrust concerns, and strengthening institutions like NABU, SAPO, High Anti-Corruption Court of Ukraine, NACP, SBU, Economic Security Bureau of Ukraine, the courts in general, Constitutional Court of Ukraine, the energy market, ARMA, the National Police, the Prosecutor General's Office, customs and border protection, accounting practices, and the much-criticized State Audit Service of Ukraine.

There's also a point about inspectors in the context of reconstruction.

It's worth noting that there are no specific issues raised regarding the tax office. Taxes do not directly affect the military, and it would be unusual to see concerns related to Ukrainian business tax matters in an American investment package. According to the American perspective, if there are issues with the tax office, bodies like NABU and SAPO will handle them. Any disruptions in tax invoicing won't significantly impact large investors. Ukrainian businesses will need to address these tax-related issues themselves, the Americans are not really concerned about them.

I was surprised when I read about forming a public oversight council for NABU. The NABU Public Control Council already exists and functions. This might be related to accusations of NABU's politicization, which came up during the case involving the former Naftogaz head, Andriy Kobolev. It's puzzling that the PUBLIC Control Council didn't consider the public's concerns about the Kobolev case. What's even more surprising is the proposed timeline of 0 to 3 months. Even if the law about NABU Public Control Council elections changes now, the current Public Control Council’s term won't expire until next year. These are just suggestions, so let's see what happens.

Although it may seem like there are more investment priorities, the military ones are more crucial and, in my opinion, more challenging. Most investment items involve enhancing transparency, personnel selection, and establishing independence, which can be achieved with political will or broad agreement between the Office and the White House. There will be scandals, but it's doable within the specified timeframe, although there's still a lot of work ahead.

Implementing NATO standards across the board is a complex task in itself. I can't quite grasp how to achieve this in an army that's actively engaged in combat. Creating connections from the General Staff and the Ministry of Defense to the Ministry of Strategic and Industrial Production and Ukroboronprom is just one aspect of the document, but it entails a lot of work. The timelines are very tight. I sympathize with Oleksandr Kamyshin, Minister of Strategic Industries, and Rustem Umerov, Minister of Defense. I hope that in the next package, there won't be as many questions about their institutions. We all need this as well.

In general, this document indicates that the United States is committed to a long-term strategy and wants a stable Ukraine over time. If some people are concerned about a protracted conflict, I mentioned this back in March 2022, so it's not surprising to me. What would be more worrisome is if there were no offers, as that could suggest fatigue with Ukraine and a lack of willingness to engage with us.

Some may find this document terrifying, but I see it differently.

It's a way to build trust for the future. We defied expectations when the world thought we'd collapse, and initially, they were cautious about getting involved with us. Now they believe in our country. We're not like Iraq, Syria, or Afghanistan. We have the potential.

They're telling us that this is a long-term commitment, and they believe we can become like South Korea or Israel.

Well, I'm okay with that.

Let's get to work.


About the author. Anton Shvets, Ukrainian blogger, TV presenter, publicist and politician

The editors do not always share the opinions expressed by the blog authors.

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