Establishment of Rule of Law is Central for Post-Conflict Ukraine

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Establishment of Rule of Law is Central for Post-Conflict Ukraine

A study by the ZHAW and CASE Ukraine shows how economic reconstruction could succeed in Ukraine after the end of the war. The most important area of reform is the establishment of a functioning rule of law.

Ukraine has been at war for 14 months. At the same time, intensive work is being done on the country’s post-war future. According to the study " Economic priorities in post-war Ukraine ", the lack of rule of law in Ukraine is one of the biggest failures. Therefore, according to the study authors from the ZHAW School of Management and Law and CASE Ukraine (Center for Social and Economic Search), post-war Ukraine should prioritize the establishment of a functioning rule of law. This includes reforming the judiciary, strengthening property rights and continuing the successful decentralization process. "Among all the economic reforms, establishing the rule of law will be key to success," says Christopher Hartwell, director of the International Management Institute at ZHAW. "Thirty years after independence, the quality of judicial and law enforcement institutions has not been achieved, which Poland, Slovakia or the Baltic states had already at the beginning of their market reforms in the early 1990s."

From a war economy to a market economy

During the transition from a war economy to a market economy, almost all aspects of interaction with the government should also be simplified, according to the study. In taxation, for example, this includes shifting the burden of proof from the taxpayer to the tax authority. In addition, licenses and permits should be eliminated wherever they are not absolutely necessary, and decentralization reforms must be pursued. This will not only promote continuity of foreign reconstruction assistance, but also facilitate the investment necessary for economic growth. Such measures will further help Ukraine continue on the path of European integration, even if accession to the European Union remains a longer-term goal. "Ukraine’s survival as an independent state will largely depend on its ability to implement these bold political reforms. It will take considerable political will to achieve this," Hartwell explains.

European integration as a catalyst

The status of an official EU member candidate in June 2022 stems from long-standing integration efforts that began in 1994 and reached a first peak in 2014 with the Association Agreement. Important reforms for the country’s modernization were advanced as a result: Clear targets were set to implement decentralization, public administration reform or judicial reform. Ukraine’s biggest achievements since 2014 have been in the trade area of the agreement, such as tariff reductions and the removal of non-tariff barriers for Ukrainian exports to the EU. How fully Ukraine had implemented the 2014-2024 Action Plan from the Association Agreement by the end of 2022 is estimated between 49 to 66 percent. Nevertheless, Ukraine was able to achieve EU candidate status. However, a number of reform issues remain for possible accession negotiations.

Reform efforts frozen

Much has been achieved in Ukraine since 2014. According to the study, "frozen" developments should be resumed. The establishment of the rule of law, the persistent weakness of public administration, and the dominant role of the state - and the political interference it allows - remain the most central problems. This means that some of the commitments made by Ukraine during this process of rapprochement with the EU have yet to be fulfilled. These include complex political and regulatory decisions such as anti-oligarch legislation, implementation of anti-monopoly regulations, or improved access to financing for reconstruction.

Implementation requires determination

The team around the study "Economic priorities in post-war Ukraine" agrees that the implementation of these economic reforms will be challenging. Particularly in the fight against corruption, there is great resistance. It is therefore necessary to show a strong will to reform, it says. "The extensive anti-corruption investigations during the war and the related dismissals in January 2023 could be a positive signal that the necessary change for a stable future of Ukraine is possible," Hartwell concludes.