Reforms in #Ukraine - the beginning or the end of the story?

Significant events have been taking place in the internal political life of Ukraine. The public conflict between Prime Minister Volodymyr Groysman and the head of the Ministry of Infrastructure Volodymyr Omelyan has been going on and on for several weeks. The official reason of the conflict is the recent decision of Ukrainian government to transfer the control of Ukrzaliznytsia state railway corporation from the Ministry of Infrastructure to the Cabinet of Ministers and the Ministry of Economic Development.

Ukrzaliznytsia Public Joint Stock Company unites six regional railways and about 140 enterprises throughout the industry. The company operates 21,600 kilometres of railway lines, around 4,000 locomotives and 123,000 cars (wagons). In the spring of 2016 the Cabinet of Ministers appointed former head of the Polish PKP Cargo Railway Corporation, Wojciech Balczun, to be the head of Ukrzaliznytsia.

Ukraine Prime Minister Volodymyr Groysman has justified the decision to transfer the control of state company by the existence of deep personal tensions between the board of Ukrzaliznytsia and Minister of Infrastructure that creates the dissonance in the work of one of the largest industries. The current head of the state monopoly W. Balczun has stated that he welcomes any steps, which may increase efficiency of the company. Whereas, the Minister of Infrastructure V. Omelyan explained his negative attitude to such decision with the inability of current head of railway to fight corruption and carry out reforms. The minister has issued an official claim to the board of Ukrzaliznytsia and handed corresponding materials over to Prime Minister during the government meeting. However, Groysman publicly told off Omelyan and supported Balczun.

According to opinion of Ukrainian experts and representatives of business, the claims to the board of Ukrzaliznytsia are perfectly reasonable. Positive statistics on the 2016 results are achieved due to raising of tariff rates. The enterprises have kept old corruption schemes and non-transparent rules of the game. Reforms of the sector and the arrival of large foreign investors are artificially postponed by the shadow lobbyists who are quite satisfied with the status quo. On the other hand, we have to agree with the fact that in the sphere of air transportation, management of seaports and development of road infrastructure, which are currently under the control of Ministry of Infrastructure, the situation with reforms and the results of economic activities is much better than in Ukrzaliznytsia. For example, it is pointed out that after years of loss-making activity, Borispol airport finally managed to earn about 1.5 billion UAH in 2016. This is not a solitary example.

Most likely, current conflict over the Ukrainian railway state monopoly is not purely subjective but reflects deeper internal processes. Some consider it as single reformers’ attempt to challenge the old state assets management system. Others note that the resistance from the local oligarchy is caused by arrival of large multinational players to Ukraine. Still others oversee this as emerging of the new technocratic elite, designed to substitute insufficiently competent and corrupted post-Soviet bureaucracy. Everyone is right in their own way.

By the way, ever since the controversial meeting of the Cabinet of Ministers of Ukraine, the rhetoric of Prime Minister Volodymyr Groysman has somehow changed. Ukrainian government intends to conduct an audit of Balczun’s activities. Appropriate personnel decisions will be taken based on the results of this auditing. We can only hope for an early audit and that the reformative course of Ukrainian government will be steady.

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