ENP Country Progress Report 2013 – Ukraine

March 28, 2014.

    The 2014 annual “Neighbourhood Package” consists of a joint Communication (“Neighbourhood at the Crossroads”) and a set of country specific and regional reports. The report on the Republic of Ukraine underlines key/main developments and reform efforts in 2013 and makes recommendations for the future.
    
    Ukraine decided on 21 November 2013 to suspend preparations for signing the Association Agreement (initialled in March 2012), citing national security interests and the need to restore lost trade with Russia and Commonwealth of Independent States partners. In the Joint Declaration from the Eastern Partnership Summit on 28-29 November, Ukraine reiterated its commitment to signing the Association Agreement.
    
    Ukraine’s decision to suspend preparations for the signing of the AA/DCFTA sparked massive civil protests (so-called "Euromaidan") in support of political association and economic integration with the EU. The President and the opposition reached an agreement on the way out of the political crisis on 21 February which was facilitated by the EU. Subsequently, the Parliament voted the law to reinstate the constitution of 2004. Following the sudden departure of President Yanukovych from Kyiv, the Parliament dismissed with constitutional majority President Yanukovych, for failing to perform his duties, and appointed a new government headed by the Prime Minister Yatsenuk.
    
    Ukrainian sovereignty and territorial integrity were violated clearly by acts of aggression by the Russian armed forces. The Federation Council of Russia authorized on 1 March the use of the armed forces on the territory of Ukraine. These actions are in clear breach of the UN Charter and the OSCE Helsinki Final Act, as well as of Russia's specific commitments to respect Ukraine's sovereignty and territorial integrity under the Budapest Memorandum of 1994 and the bilateral Treaty on Friendship, Cooperation and Partnership of 1997. On 16 March 2014, a “referendum” was held in Crimea on joining the Russian Federation. On 18 March 2014, the Russian Federation signed a treaty with the de facto authorities of the Republic of Crimea and of the City of Sevastopol, sealing the de facto annexation of Crimea with immediate effect. As stated by Presidents H. Van Rompuy and JM. Barroso on 18 March, the European Union does neither recognise the illegal and illegitimate referendum in Crimea nor its outcome. The sovereignty, territorial integrity and independence of Ukraine must be respected. The European Union does not and will not recognise the annexation of Crimea and Sevastopol to the Russian Federation. The European Council shares the view on the illegality of the referendum and the ensuing steps, as expressed in its conclusions on 20 March 2014. On the next day, the EU and Ukraine signed the political provisions of the Association Agreement, and confirmed their commitment to proceed to the signature and conclusion of the remaining parts of the Agreement which together with the political provisions constitute a single instrument.
    
    In 2013, Ukraine partly addressed some of the recommendations of the last progress report, in particular those relating to electoral law and practice and the judiciary. On the basis of this year’s report, and with a view to the sustained implementation of the Association Agenda in 2014, Ukraine is invited to:
    
     investigate independently the violent acts on both sides which occurred during civil protests, preferably with the support of the International Advisory Panel proposed by the CoE;
     take early steps to establish a reliable and uniform electoral system for regional, parliamentary and presidential elections and referenda, establish clear rules for balanced media access for candidates, and ensure that elections take place for Kyiv Mayor and City Council;
     bring the law on referenda into line with international standards, in particular by removing the possibility of by-passing Parliament when adopting constitutional amendments;
     adopt the law on reform of the Prosecutor General’s Office, in line with the recommendations of the Venice Commission;
     take further steps to reform the judiciary to prevent any recurrence of selective justice;
     in the framework of the implementation of the Criminal Procedure Code, adopt a law establishing a State Bureau of Investigations;
     ensure that the constitutional reform process is carried out in an inclusive and transparent way and completed by September 2014, in line with the constitutional review procedure set out in the Constitution and in close cooperation with the European Commission for Democracy through Law of the CoE (Venice Commission);
     ensure that the revised constitution strengthens the independence of judges, adopt laws setting out the role of the High Council of Justice, the judicial system, and the status of judges;
     draft a plan for police reform, to pave the way for comprehensive reform of the police, including the establishment of a police complaint mechanism for allegations of ill-treatment and torture by law enforcement officers, as well as an independent and effective investigative mechanism for such crimes;
     step up the fight against conflicts of interest, corruption and fraud, targeting all areas of public life, including in particular in the judicial system and in the business world;
     reverse the backsliding on public procurement and budget transparency and begin implementing a public finance management strategy;
     make greater efforts to meet the remaining benchmarks set out in the Action Plan on Visa Liberalisation;
     comply with its obligations under international refugee and human rights law;
     establish a macroeconomic framework conducive to the resumption of International Monetary Fund (IMF) support, addressing such issues as fiscal sustainability in the energy sector;
     take further steps to improve the business climate;
     resolve the remaining trade cases (car recycling fees, local content of renewable energy equipment) which are not in compliance with Ukraine’s WTO commitments;
     comply with its obligations under the Energy Community Treaty, in particular in areas such as independence of the energy regulator, unbundling, transparency, market opening.
    
    Reforms initiated, carried out, or delayed during 2013 in the different areas of cooperation between the EU and Ukraine are described in the annual country report. Some of the issues reported deserve special attention.
    
    There were positive developments in the field of legal reform, including the judiciary and its system of self-governance and some progress on cases of selective use of justice. No work was undertaken to improve other important pieces of legislation, such as laws on presidential and local elections. Media freedom worsened. Reports of physical attacks on journalists have become more frequent; documented attacks occurred in December 2013 and in January 2014 during the civil protest in Kiev.
    
    The perception of corruption remained high. There was, however, an improvement in the field of anti-corruption legislation, through the adoption of legislation to address UN and Council of Europe (CoE) recommendations in the context of the visa liberalisation action plan.
    
    While Ukraine continued to be a country of origin, transit and destination for victims of human trafficking, good progress was made in 2013 in the fight against human trafficking.
    
    Economic performance was weak in 2013. The recession that started in the second half of 2012 continued throughout 2013, and annual growth was negative.
    
    The Common Aviation Area Agreement was initialled in November.