European Parliament criticizes Ukraine for weak implementation of EU association agreement

The European Parliament (EP) adopted a resolution on
Feb. 10, criticizing Ukraine’s implementation of the EU Association Agreement.
The EP reiterated that delivering tangible results in the fight against
corruption is essential in order to maintain a high level of support for the
reform process among citizens, as well as to improve the business environment
and attract foreign direct investments.

The resolution reads that the EP “is deeply concerned
by the high degree of systematic political pressure and by the acts of
intimidation perpetrated against the Chairman of the National Bank of Ukraine,
unfortunately not for the first time, which led to his resignation in July
2020” and urges the Ukrainian authorities to refrain from exerting political
pressure on independent economic institutions and enforcement authorities, and
to ensure that their independence is preserved as a guarantee for the correct
functioning of the market.

The EP regrets that the judiciary is still one of the
least-trusted institutions in Ukraine and is seriously concerned by the state
it has been in since the October 2019 reform, urging the Ukrainian authorities
to continue and accelerate the reform of the judiciary. “No visible effects
have been achieved in the de-oligarchisation of the country, as oligarchs still
have a strong impact on the Ukrainian economy and politics, in particular in
media ownership and influence over the judiciary and the law enforcement
system,” emphasizes the EP resolution.

The EP calls on the Ukrainian authorities to speed up
the process of de-oligarchisation and regrets the increasing number of
state-owned enterprises, urging to further advance their privatisation in order
to modernise and improve the functioning of its economy and avoid
oligarchisation. It welcomed the completion of the unbundling of Naftogaz in
2019 and the creation of a legally independent gas transmission system operator
but requested that the European Commission screen Ukraine’s compliance with
European Union acquis in the energy sphere with a view to the further
integration of energy markets.

The EP also regrets that the new wholesale electricity
market, that started operating in Ukraine since July 2019, is still not
competitive by EU standards and urges Ukraine to complete its reform and
improve the level of compliance with EU law, first and foremost by enhancing
Ukrenergo’s independence and avoiding cross-subsidisation. The resolution calls
on Ukraine to upgrade its existing power plants to meet strict European
environmental and safety standards and urges the Ukrainian authorities to
urgently complete the modernisation of nuclear power plants and investigate the
delays in these processes, in particular the upgrade of the Zaporizhia nuclear
power plant.

Yuri Svirko: Fighting corruption
and reforming the judicial system seem to be the eternal points on the
EU-Ukraine agenda. While other reforms, such as decentralization or
deregulation, are welcomed by the EU, European policymakers remain disappointed
with the permanent reform of Ukraine’s courts that continue to undermine the
essence of the rule of law. As many Ukrainian and foreign bankers and business
people say, Ukraine’s courts have always been the biggest problem for
investment and development. Although President Zelensky vows to launch a new
reform of the judiciary, the EU and the West in general would like to get
“visible effects” – the sooner the better.

While the EP resolution will have no immediate
effect on the EU-Ukraine relations, including the visa-free travel regime or
further trade liberalization, it is still an early warning signal for Kyiv.