Against the background of a protracted war and economic challenges, Ukraine is facing a critically important task – to effectively fight corruption, which has been eating away at its state institutions for years. Danylo Hetmantsev, head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, washed away by his scandalous statements, proposed a series of measures aimed at fighting corruption, which at first glance look like decisive steps to clean up the state apparatus. However, a more detailed analysis reveals that these measures not only do not achieve their goals, but can actually worsen the situation.
In his articles Danylo Hetmantsev suggested a comprehensive approach to stopping corruption among officials, taking systemic measures aimed at minimizing corruption risks. He included deregulation, digitalization, and privatization of a significant part of state assets.
Deregulation: delayed chaos and corruption loopholes
“Last year, the interdepartmental working group (MWG) audited the permit documents issued by various ministries and agencies. It turned out that out of more than 1,300 regulatory instruments, 456 can be canceled altogether, and another 584 can be optimized. However, the practical implementation of the IWG’s proposals is very slow, and the monthly extension of one or another instrument is a potential source of abuse and corruption.
Therefore, this case should be quickly brought to an end, and immediately after that, another iteration should be launched together with the business community to review, cancel and optimize the permitting tools and procedures that were decided to remain after the first stage of deregulation. I am convinced that there is still something that can be canceled and optimized.” – emphasizes Hetmantsev.
However, the abolition of regulatory instruments without sufficient analysis of their importance may lead to legal loopholes that will be used by unscrupulous persons to avoid liability. For example, the repeal of certain environmental regulations can lead to abuses in the field of environmental control, when companies begin to violate environmental laws en masse, causing damage to the environment without risk of being punished.
In addition, the process of repealing regulatory instruments is often accompanied by active lobbying by stakeholders. For example, in 2021, the government of Ukraine announced the cancellation of licensing of certain types of activities, however, due to bureaucratic obstacles, this process dragged on for years, creating opportunities for officials to demand bribes for speeding up the obtaining of licenses.
In 2022, after the deregulation of the energy sector was announced, several large companies were able to lobby to keep the old regulations in place, allowing them to continue to make profits despite the formal reform.
Danylo Hetmantsev also suggests that after the first stage of deregulation, the process of canceling and optimizing those permitting tools and procedures that were left behind should be continued. He is convinced that “something can still be canceled or optimized”. However, he did not specifically specify what “something” means.
The continuation of the abolition of the permitting instruments that were left after the first stage of deregulation may lead to the loss of important mechanisms for monitoring compliance with standards and norms in various sectors of the economy. These tools often remain because they are critical to ensuring safety, quality and regulatory compliance. For example, the permit procedures in the field of construction left after the first stage of deregulation may include norms that ensure the safety of construction objects. Their cancellation may lead to an increase in the number of construction violations and accidents. Optimization of permitting procedures in the field of health care can lead to a decrease in safety standards and the quality of medical services, which will directly affect people’s lives and health.
Permissive instruments perform the function of a regulator of economic activity, ensuring a level playing field for all market participants. Abolishing them could lead to big players gaining an advantage over smaller companies by exploiting loopholes in the law. This can disrupt economic stability and promote the development of monopolies. For example, the abolition of procedures governing activities in the field of natural resources may lead to excessive use of these resources by large companies, leaving smaller players with fewer opportunities to develop. After the first stage of deregulation in 2020, some permitting tools in the field of environmental control were abolished, which led to an increase in cases of environmental pollution. This shows that oversimplification of regulatory norms can have serious negative consequences.
Therefore, the lack of proper monitoring of environmental standards creates risks for the health of the population and the environment. Canceling and optimizing the remaining tools without a detailed analysis of their effectiveness and necessity can lead to unpredictable consequences, while corruption risks will still remain.
Digitization: electronic systems with a human face
“Those permit-regulatory tools that should be left should be digitized and adjusted to clear and unambiguous requirements-criteria for applicants, which cannot be interpreted in some cases – yes, and in other similar cases – the opposite. 90%+ of applications must be accepted and processed automatically: “requirements are met – there is a permit” / “requirements are not met – reasoned refusal with reasons”. The human factor must be removed as much as possible, electronic systems do not accept bribes.” – thinks Hetmantsev.
Therefore, in his opinion, digitization should eliminate corruption risks by automating processes. But practice shows that even automated systems can be prone to abuse. Often, the implementation of electronic systems occurs without a proper assessment of their feasibility and compliance with the needs of users. For example, the electronic declaration system in Ukraine, which was implemented to fight corruption, encountered numerous technical problems that complicated the process of submitting declarations and verifying data. This made it possible for some officials to submit unreliable data without the risk of being exposed in time.
Despite automation, people remain a vulnerable element in the system. For example, in 2022, cases were recorded when officials manipulated data in electronic registers, which allowed corrupt officials to escape responsibility. In 2023, an analysis of e-tenders revealed that some bidders deliberately falsified documents submitted through electronic systems, allowing them to win tenders using shell companies. This shows that even electronic systems can be susceptible to abuse if proper controls are not put in place.
Privatization: not a solution, but a source of new problems
According to Hetmantsev, the privatization of a significant part of state assets (except for a small number of business entities that are really of strategic importance for the economy and security of the state) should reduce corruption risks.
“Today, an unjustifiably large number of state-owned objects are a source of food and fodder for corruption. In this specific case: if the enterprises in the Donetsk region, as well as from the Lviv-Volyn coal basin, were not state-owned, but private, then they would solve the issue of equipment among themselves within the framework of commercial relations, without the need to go to the ministry with wads of money.” – emphasizes Hetmantsev.
However, reality shows that this proposal can backfire. In many cases, privatization leads to the formation of monopolies, which only strengthens corruption. For example, after the privatization of Ukrzaliznytsia in 2022, the transport sector became more closed and monopolized, which led to an increase in prices for services and a decrease in their quality. This created additional corruption opportunities for monopolists who could influence the decisions of state bodies in order to protect their interests.
Also, privatization is often carried out according to schemes that do not provide sufficient transparency. For example, in 2023, several strategic businesses were found to have been sold at significantly discounted prices to companies affiliated with senior officials. This caused widespread public indignation and suspicions of corruption conspiracies. Privatization of Ukrainian enterprises in the 1990s led to the mass closure of plants and factories, which left thousands of people without work. This shows that privatization without proper planning and control can have catastrophic consequences for the country’s economy.
Reduction of the state apparatus: a step into the abyss
“Serious reduction of the state apparatus. With both hands, I support the demand of professional associations and businesses, which I have repeatedly heard during numerous meetings in recent weeks in the process of working on the government’s tax initiatives. And the point is not even that it will provide a certain saving of budget funds (it will actually be very insignificant compared to our military needs), but in the need to build a compact and efficient system of state administration bodies that will have neither free time nor favorable opportunities for corruption, bribery or other manifestations of inappropriate behavior.
I fully support the Prime Minister’s previously stated initiative to reduce the number of ministries by a third (I remember that two years ago, as part of the Ukraine Renewal Plan, Deputy Prime Minister Mykhailo Fedorov proposed a system of 10-12 ministries in total). I am convinced that the number of other central executive bodies can be reduced by 40-50%. And with this – to significantly reduce the number of civil servants, offering a decent salary in the civil service, but at the same time significantly strengthened requirements for professionalism and integrity”, – believes Hetmantsev.
The proposal to reduce the state apparatus looks attractive, but in practice it can also lead to serious negative consequences. This process, without proper analysis, can lead to a decrease in the efficiency of public administration as a whole. For example, in 2019, an attempt to reduce the number of health and safety inspectors led to a significant increase in the number of accidents at work. This was the result of insufficient monitoring of compliance with safety regulations.
After the cancellation of the traffic police in 2015, the situation on the roads of Ukraine significantly worsened. In 2022, 154,480 traffic accidents occurred, as a result of which 3,541 people died and more than 31,000 people were injured. In 2023, the number of road accidents increased by 25% compared to 2022. In total, more than 192,000 accidents were recorded, in which more than 3,800 people died and another 35,000 were injured. As of August 2024, more than 85,000 road accidents have already occurred, resulting in the death of about 1,900 people and the injury of more than 14,000 people.
In addition, the reduction of the state apparatus often leads to an overload of those who remain to work. For example, after the downsizing of the Ministry of Internal Affairs and the Tax Service in 2020, the workload of the remaining employees increased significantly, which led to a decrease in the quality of their work and an increase in corruption risks due to the loss of control over processes.
In neighboring Poland, attempts to reduce the state apparatus in 2015 led to a serious decline in the quality of public service provision. Citizens complained en masse about delays in issuing documents, which caused public dissatisfaction and led to the rollback of reforms.
Therefore, corruption in Ukraine is a deep and systemic problem that requires decisive but effective measures, not ill-conceived slogans. Danylo Hetmantsev’s proposals look superficial and are not capable of solving the problem at its very root, and some of them only exacerbate this shameful phenomenon. Without real changes and a comprehensive approach to the fight against corruption, all these initiatives will remain at the level of declarations. Ukraine does not need cosmetic reforms, but radical and systemic changes that can put an end to the era of corruption and make the state truly transparent and accountable to its citizens.
