Human beings consist of very different elements: bones, heart, lungs, liver, and so on. But which one is the most important? According to Vira Nanivska, there are basically two answers to that question: First, every one of them is indispensable, and second, the one that is sick or missing is the most important. Applied to democratic political systems, which also consist of a variety of structural elements, a country with dysfunctional institutions will never be viable. That is why the key challenge in the process of democratic transformation is how to transform the rule of power into institutionalized rule of law.
Ukraine’s attempt at transformation can serve as an important lesson for current democratization efforts. Failing to meet the challenge, Ukrainians witnessed the continued institutionalization of the rule of power. Political and economic reforms were implemented very quickly, deeply and radically in the 1990s: private property and economic competition were introduced, and the Communist Party’s monopoly vanished. But public institutions remained untouched. Ms Nanivska concludes that this incongruence is killing Ukraine even today.
Twenty years after independence and seven years after the Orange Revolution, Ukraine is repeatedly chastised for its failure to transform, at home and abroad. Protection of private property and fair competition remains insufficient and the government continues to ignore the rule of law, calls for transparency and the demand for public participation in the decision-making process. The legal system is unstable, not only adding to investment risks, but also allowing corruption to be widely and openly practiced with impunity. Today, decision-making procedures make it possible for any official to legally block resolutions without accountability, while providing no set penalties against those who violate procedures.
A year after the last Presidential election, Ukraine’s Government is facing the most challenging tasks imaginable: a constantly short State Budget, a reform strategy that has little voter support, nearly total corruption, the growing collapse of residential and community services, and dismal conditions for investment. Why does the country appear to be failing? Ms Nanivska says it is neither mentality, nor cultural or political history. Nor is it a matter of wrong leaders, or an East-West conflict. It is the unfinished democratization of institutions. And that is partly due to a theoretical approach to transformation in the 1990s that illustrated just how a bad theory can distort a country's development.
At the time, a theoretical debate raged between Jeffrey Sachs’s shock therapy and Joseph Stiglitz’s institution-building approach. Eventually, Sachs’s theory won out and no democratic and market institutions were built during the period of rapid liberalization and privatization. The free market was supposed to make institutions grow on their own, in due time, according to Mr. Sachs. But they never did. Despite billions in aid money, Ukraine still has no legal or institutional protection of property rights, human rights or fair competition.
And yet—Ukraine also has an impressive track record, in spite of this. It is the only former soviet country that has managed to maintain democratic liberties. Only Ukraine has had four elections in which the opposition won and power peacefully changed hands. Every other country that also underwent shock therapy and had no EU institution-building program has rejected liberalization and has restored the centralized, authoritarian model.
In a totalitarian model, the political leadership has complete power and can force decisions through, as is the case in China or Kazakhstan. In a democratic model, the political leadership has limited power, with political rivals and fiercely competing interest groups. How do they manage? What reforms are indispensable for transition countries?
• Build the government’s institutional capacity to manage reforms.
• Present reforms publicly, through standard documents and procedures.
• Determine and publicize:
• What we hope to get in the future?
• What problems face us today?
• What is the cost of delaying solutions?
• What kinds of effective solutions are there?
• What obstacles stand in the way?
• Who are the key interest groups and their positions?
• Draw up and publicize a clear timetable for implementation.
• Include procedures to oversee and monitor the timely fulfillment of the plan.
Without such procedures, consistent policies and consistent enforcement are impossible. In Ukraine, the democratic capacity for reforms, that is, public policy procedures, is absent in government institutions. Similar to the human body, Ms Nanivska sees this absence as a real disease affecting Ukraine’s political system.
How deep really is the problem? Democratic reforms remain unfinished in Ukraine and the state machine does not reflect free market democratic principles. On the institutional level, the problem obviously lies in the unreformed executive branch. But what makes the Ukrainian executive administration so different from democratic countries?
To answer this question, Ms Nanivska offers a comparative case study on the executive branch of various democratic countries to see how public services are organized outside Ukraine. Based on the principle of separation of powers and functions in a democratic executive, there should be seven separate public administration components: a supervisory body, a policy-making body, a monitoring and inspection body, an employment body, a number-crunching (statistics) body, a performance evaluation and professional development body, and an arbitration body. All these functions currently exist in Ukraine's executive branch, but they are all combined in a single institutional body, the Civil Service Department, which has a clear chain-of-command but no functional distinctions.
Moreover, there is no state-authorized institution for financial control. The Minister of Finance is the sole arbiter of financial matters regarding the Budget and the law, and his decisions are ratified by his own subordinates. Generally speaking, Ukraine lacks institutional control over the civil service within the executive branch. And while Ukrainian politicians almost invariably focus on decentralization, centralization reforms, that is, the oversight of compliance with the Constitution, human rights, national interests, the State Budget, democratic controls, territorial integrity and national security, the consolidation of legislation at the national level and its harmonization with the EU, are just as important. The case studies of Germany, France, Poland and Canada show the contrast in how thorough the separation of executive functions is in mature democracies.
In short, the main obstacle to all reforms in Ukraine today is the unreformed, unaccountable civil service. The civil service itself has not changed since the Brezhnev era: it has only been liberalized. Civil servants are not engaged in the reform process; they are unable to translate policy into procedure; and they are not the intellectual avant-garde of reform. The government machine has no capacity to transform policy decisions into a public activity involving voters in the reform process and allowing all interest groups to express their needs, to influence decisions and to be ready to support them. Policy decisions, the reasons for adopting them, the documents that explain these policies and make clear what is being done, what problems need solving, and what the cost of inaction is, are not available to voters.
The only working model of democratic, market-oriented institutional transformation is the EU acquis-based accession process, which includes five principles of effective legislation. Those principles, which undermine totalitarian systems and the rule of power, are indispensable for the rule of law, because:
• they expose violations and establish penalties for them,
• they prohibit bureaucrats from making decisions at their discretion,
• they enshrine the independence of oversight bodies from those being supervised,
• and finally, they require regular inspections, audits and monitoring of public organizations, procedures and standards.
