estonian center of eastern partnership - eceap · tigran tshorokhyan views expressed in this report...

ISSN 2228-0391

Public Administration in EU Eastern Partners:Comparative Report 2014

Estonian Center of Eastern Partnership

December2014

19

Contents

I. Methodological notes and overview of indicators . . . . . . . . . . 10

II. Public Administration of the EU Eastern Partners in 2009-2014: Compliance with the European Principles . . . . . . . . . . . . . . . . . . . 15

A. Reliability and Predictability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

B. Openness and Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

C. Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

D. EfficiencyandEffectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

E. Consolidating Indicator “Public Institutions” . . . . . . . . . . . . . . . . . . . . 24

III. European Principles of Public Administration in the EU Eastern Partners: Country assessments 2009-2014 . . . . . . . . . . . . . . . . . . 25

Armenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Azerbaijan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Belarus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Moldova. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Ukraine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Biographical notes

Narmin Ibrahimova

Narmin Ibrahimova is a project manager at the Center for Economic and Social Development, an inde-pendent think tank in Baku, Azerbaijan. She is involved in economic and social research projects including public opinion surveys, training programmes and public relations activities. Narmin’s background includes also market research, content management and interpretation. Narmin holds an MBA from Azerbaijan State Economic University.

Irakli Kotetishvili

Irakli Kotetishvili is a public policy expert with 10 years of successful track record in the government of Georgia, NGOs and international organizations. Most recently he headed Civil Service Bureau of Geor-gia (2009-2013) where he championed implementation of civil service reform, good governance and anti-corruption projects. His professional career also includes working for the Ministry of Justice of Georgia as a Chief of Staff with a primary focus on criminal justice reform (2006-2009). In 2013 under his Directorship, the Civil Service Bureau of Georgia received United Nations Public Service Award for “Preventing and Combating Corruption in Public Service”. Irakli Kotetishvili was also awarded a Presidential Order of Excel-lence in July 2013. He holds Masters degree in Public Policy from the University of Oxford (2014) and LL.M. degree in International Criminal Law from the University of Sussex (2006) and BA in Public Law from Tbilisi State University.

Angela Secrieru

Angela Secrieru has been involved in the research and projects on economic and financial problems both at macro- and micro levels. She was working as a professional at the Agency for the restructuring of enterprises (ARIA). As expert on public finance she has collaborated with UNDP Moldova, Soros Foun-dation Moldova and LGI/OSI Budapest on financial decentralization and performance -based budgeting. Currently Angela is professor at the Academy of Economic Studies of Moldova and expert of IDIS „Viitorul”.

Alexei Sekarev

Alexei Sekarev holds a Ph.D. from Shevchenko University of Kiev. He has been engaged in academic research on transition economies in Eastern Europe, including as an Alexander-von-Humboldt research fellow. As team leader of several EU-funded projects, he has been rendering policy advice to Ukrainian, Armenian, and Georgian governments on WTO accession, administrative and legislative harmonisation with the EU. More recently, Alexei Sekarev has supported negotiations of Association Agreements including the Deep and Comprehensive Free Trade Agreements by Armenia and Georgia. Since 2012 he is the team leader of the Eastern Partnership Territorial Cooperation Support Programme and continues research at the Estonian Centre for Eastern Partnership..

Tigran Tshorokhyan

Tigran Tshorokhyan holds a Ph.D. in Political Science from Russian-Armenian (Slavonic) University, as well as Master’s and Bachelor’s Degrees in Political Science from Yerevan State University. Since 2007 Tigran has been lecturing Political Economy of Development at Yerevan State University and worked as institution building expert at the Armenian-European Policy and Legal Advice Centre. Since 2011 he has been Executive Director of Kanachastan NGO with a mission to improve quality of life in urban spaces. Tigran Tshorokhyan currently supports the National Assembly of Armenia on institutional development in the framework of international assistance project.

Volodymyr Kuprii

Volodymyr Kuprii holds a Ph.D. in public administration from the National Academy of Public Admin-istration of Ukraine (2007). He is currently Executive Director of the CCC Creative Centre, a Ukrainian CSO, and lecturer at the department of public policy at the National Academy of Public Administration. The areas of Volodymyr Kuprii’s expertise comprise policy analysis, policy evaluation, organisation development and programme evaluation, where he has been active since 2002. As an experienced trainer and facilitator, Volodymyr has designed and conducted evaluations of various development projects and programmes in the areas of small business development, children and youth, human rights, governance, regional strategic planning, elections, democratic development and gender equality and others. Volodymyr Kuprii is member to various international communities, including European Evaluation Society, American Evaluation Asso-ciation and International Program Evaluation Network (IPEN).

AcKNowledgemeNTS 5

Acknowledgements The Estonian Centre for Eastern Partnership highly appreciates the support rendered by the Estonian Ministry of Foreign Affairs for the preparation of this report.

Authors of the report

Narmin Ibrahimova Irakli KotetishviliVolodymyr KupriiAngela SecrieruAlexei Sekarev (ed.) Tigran Tshorokhyan

Views expressed in this report are those of the authors solely and can in no way be associated with any public institution in their respective countries or abroad.

List of Acronyms

AA Association AgreementCBC Cross-border cooperationCIB Comprehensive Institution Building ProgrammeCPI Corruption perception indexDCFTA Deep and Comprehensive Free Trade Agreement(s)EaP Eastern PartnershipECEAP Estonian Centre of Eastern PartnershipEEAS European External Action ServiceGCI Global Competitiveness IndexIT Information and communications technology IFC International Finance CorporationPAR Public Administration ReformSIGMA Support to Improvement in Governance and ManagementTI Transparency InternationalUNeGovDD UN e-Government Development DatabaseWEF World Economic ForumWGI Worldwide Governance IndicatorsWJP World Justice Project

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Executive SummaryThe Estonian Centre of Eastern Partnership pre-

sents the fourth Comparative Report about public administration in the EU Eastern Partners. The report continues the annual examination of pro-gress in the area of public administration reforms posted by Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. The key point of reference is the adherence of those reforms to the European principles of public administration – reliability and predictability, openness and transparency, account-ability, and efficiency and effectiveness. Corre-spondingly, the conclusions of the report focus on the perceived quality of public services rendered to citizens, the economy and different societal groups, against the background of standards common to the EU. Narrower aspects of public administration reform policies, such as changes to legislation and administrative procedures of governments and/or civil services, remain beyond the scope of analysis.

The fourth annual comparison in series cov-ers, with few exceptions, the period 2009-14. The lengthier the period of observation, the more meaningful are the medium-term conclusions under each principle about the trends in the region as a whole, about disparities across the region, i.e. different (sometimes even contradictory) develop-ments in the 6 countries, and finally about contrasts or similarities between the Eastern Partners and the EU itself, as represented by reference member states Estonia and Germany. However, the continuity of observation in this report suffers to some extent from the changes in underlying international meth-odologies.

Progress of public administration reform in Eastern Partnership region against the European principles of public administration

The main accomplishments in the reform of public administration of the EU Eastern Partners in 2014 are confined to strengthening the civil soci-ety sustainability and improving e-governance. As a rule, governments experienced more constraints in policymaking, owing to a higher accountability toward the civil society organisations, while efforts in the e-services contributed to more openness of the public administrations. Across the region, Georgia has been improving steadily since 2010, and the change of the government had no nega-tive implications on the reform policies. Most of the countries improved doing business rankings in

2014, while Moldova started to break the negative trend of the recent years in competition protection and judicial independence. Armenia, attested as a “silent reformer” for good progress made under the previous government, generally failed to move closer to the European standards, and the major political change in Ukraine still has to prove pro-European in the sense of radical reforms.

With the exception of Georgia, the EU Eastern partner countries generally did not succeed in 2014 in approximating the European principles of public administration. This conclusion has not changed over the recent three years of the comparative analysis. A general trend has been to less transpar-ency in policymaking affecting business, which cre-ates additional transaction costs for the economy. Likewise, fiscal authorities appeared more wasteful in public spending and less efficient in protecting competition on domestic markets. Favouritism in government decisions remained a common prac-tice, notably in Moldova and Ukraine, while judici-ary experienced heavy influences from the politics and cannot administrate justice impartially. As a result, in all countries except Georgia public insti-tutions as a whole were receiving less trust from the society and economy than a year ago.

Similarly to the previous year, the three South Caucasus countries in general were performing better than the immediate EU neighbours Belarus, Moldova and Ukraine. However, Armenia and Azerbaijan seem to have lost the reform momen-tum and posted – albeit in different national envi-ronments – a downward trend on many indicators, notably transparency of policymaking, the extent of market dominance and public institutions as a whole. Overall, lagging behind the EU standards remains pronounced in many aspects of public administration and in the most of the partner countries. Nevertheless, Georgia has clearly shown that catching up with the European principles is not a “mission impossible” under continuous reform policies. Implementation of the Association Agree-ments with the EU offers good policy guidance for the three EaP countries in the years to come.

Reliability and predictability (legal certainty)

Similar to the previous years, the EU Eastern Partners posted in 2014 a mixed performance regarding legal certainly. Georgia was more suc-cessful than other EU neighbours, owing to visible improvements on the constraints to the govern-

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ment powers, combatting the practice of favourit-ism in political decisions and especially irregular payments, where the country even outscored Esto-nia and Germany. Ukraine also showed progress on all three indicators, albeit at low comparable levels indicating the need of a new serious reform effort in the public administration at large. Moldova’s pre-vailing negative trends in the medium run indicate moving to more favouritism and, more generally, to less reliable public administration. In a broader sense, the three South Caucasus countries have been displaying higher scores than Belarus, Mol-dova and Ukraine.

Openness and transparencyEaP countries have been no exception in the

recent 2-3 years to an overall global trend toward less transparency in business-related policymak-ing, with marginal improvements registered only in Georgia and Ukraine. The three South Caucasus countries posted good progress in the area of e-gov-ernment, while corruption perception in the EaP region have been improving only insignificantly and at low comparative levels. In Armenia, busi-nesses have been experiencing growing difficulties in getting information about government decisions for the second consecutive year, which is a disap-pointing development given the good progress of 2010-12. Not surprisingly, Georgia stood much better in the EaP region on corruption perception and became the leader also on the transparency of policymaking. While Belarus managed to keep up its leading position on e-government, Arme-nia and Georgia are likely to overtake in the near future if the rapid improvements of the recent two years do not lose momentum. Despite the overall downward trend on transparency of policymaking the EaP countries retain their comparable levels with Estonia and Germany, and may keep up on e-government in the medium run.

AccountabilityAll EaP countries except Azerbaijan showed

progress on CSO sustainability in the recent year of observation (2013), making the public admin-istration more accountable to the civil society. At the same time, judiciary remains heavily dependent on political influence in most of the countries, and the reforms in this area have brought meaningful results only in Georgia. In view of the improve-ments registered by 2013 and especially the more

recent developments after the Euromaidan, Ukraine has a good chance to enhance the sustainability of the civil society organisations in the medium-term perspective. Georgia has made a big step toward an independent judiciary and remained at the leading position on streamlining target-oriented public spending, both against a stagnant or negative devel-opments in the rest of the EaP region. Overall, EaP countries have a long way ahead to approach the accountability standards of public administrations in the reference EU countries, whereas Georgia is the only exception to the rule almost matching Estonia’s level of restraining diversion of public funds.

Efficiency and effectivenessMost of the EaP economies improved their

doing business rankings in the recent year, which is an especially welcome development in Moldova and Ukraine in view of the long stagnation high-lighted in previous ECEAP reports. In contrast, public spending has been generally turning more wasteful in the observed economies, signalling a diminishing efficiency of the public administration. Only Moldova and Georgia managed to slightly reduce the extent of market dominance, whereas the other countries have failed to effectively protect competition on domestic markets. Ukraine displays the most wasteful government spending among the EaP countries, and this for the 6th consecutive year. Armenia’s competition policy became visibly less efficient in the recent year despite good progress in the earlier period. Only the three South Caucasus countries compare with the world average regard-ing wastefulness of public spending, while Georgia has been among world top reformers of business climate since 2007.

European Principles of Public Admin-istration in the EU Eastern Partners: Country assessments 2009-2014

Armenia

Reforms in Armenia toward the European prin-ciples of public administration seem to have slowed down, whereas this development needs to be proven in the medium-term perspective. Attested as a “silent reformer” in the recent two years, the country has found itself on a backward trend in several reform areas, notably transparency in policy

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making and wastefulness of government spending. The government change in spring 2014 resulted in stronger oligarch-focused economic policy to the detriment of SME sector and targeted social spend-ing. On a positive note, Armenia managed to post solid accomplishments in e-governance by expand-ing e-services, strengthening human resources and increasing e-participation of citizens.

AzerbaijanAzerbaijan did not succeed in any public

administration reform area in 2014. Public institu-tions operate in an environment of soft constraints from the judiciary, civil society, media and inter-national cooperation partners and hence remain broadly non-accountable for the public. Notably, institutions in charge of controlling functions, such as Anti-Corruption Administration under the Prosecutor General or the Chamber of Accounts, perform in an inefficient manner, compromising citizens’ trust in public bodies in general. Civil society organisations in 2014 were confronted with more administrative barriers and more repressive state policies compared to the previous years, and the conditions for doing business did not improve in any meaningful way. The country displayed nevertheless progress in the area of e-governance by offering more services to population on a one-window principle.

BelarusBelarus maintained previous-year accomplish-

ments in e-government development and posted improvements in simplification of tax paying regu-lations for businesses. Civil society has strength-ened its engagement in education and environment policies, however, the authorities continued to impede civil society involvement in political and democracy development issues. No progress has been registered in the observance of the rule of law in an environment of autocratic governance of President Lukashenka. Overall, the country’s public administration falls short of the European stand-ards of reliability and accountability, as has been the case over the last two decades.

GeorgiaGeorgia maintained its leading position within

EaP countries in terms of public sector reforms and democratic transition. The Association Agreement

with the European Union is a major milestone in the Georgia-EU relationship. AA is designed to guide Georgia through the process of getting closer to the European standards of public life, including but not limited to, rule of law, human rights, public administration and accountability, economy and immigration control. Georgia still has to improve its rule of law standings when it comes to poten-tially politically biased criminal charges against former government officials; striking right balance between electronic surveillance (including phone-tapping) by the police and protection of privacy; it also has to conquer nepotism and favouritism-driven decisions in the public service and enhance its fight against all types of irregular payments. The country needs to make public information, such as the data related to crime statistics and bonuses paid to public officials, more open and transpar-ent. Finally, Georgia needs to finalize civil service reform in order to get closer to the European stand-ards of efficiency and transparency while delivering public services.

MoldovaWith the pro-European outcome of the par-

liamentary elections in late November 2014, the Association Agreement with the EU is becoming the centrepiece of the reform agenda for Moldova in the years to come. The country still needs time to align its public administration reform with the European standards. So far however, the credibility that Moldovan society gives to the state institutions remains extremely low. Cases of political interference into the work of public authorities are unchange-ably frequent, and the overall quality of the public administration in the country has been deteriorat-ing throughout the observation period, reaching the lowest level in 2014. The general sentiment in the society is that by 2014 the work of the Parliament and the Cabinet of Ministers has become the least transparent since 2010. The non-transparent funding of the political parties generates political corruption penetrating the Parliament, and pre-electoral irregu-lar payments and bribes marred the general elections in November 2014. Moldovan judiciary stays open to political pressure and hence fails to administrate justice independently. Non-transparency is also the key feature of the public procurement system and execution of budget expenditures on the government itself. On a positive note, in 2014 Moldova managed to improve civil society sustainability and many administrative procedures in the business climate.

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Ukraine

For the third consecutive year, Ukraine has been generally moving away from the European principles of public administration, failing to show any meaningful progress in public administration reform. Nevertheless, compared to previous years, the situation has started to change for the better. The Revolution of Dignity of 2013-14 and entry into force of the Association Agreement with the EU create an opportunity for radical changes in public governance, widely supported in the soci-ety and international community. The country has managed to hold democratic elections of the President and Parliament, which now have to meet strong public demand for large-scale reforms, pri-marily in the area of combatting corruption and building up an efficient, professional and politically impartial civil service. The new authorities adopted in 2014 a number of anti-corruption laws and regu-lations including a medium-term anti-corruption strategy, while a new law on civil service has been under preparation in close cooperation with the civil society experts. Besides, the government has announced the start of decentralisation policy and judiciary reform, creating altogether a good plat-form for addressing the existing challenges. Despite the external threats, which demand restoration of the army on the basis of modern standards and continued fight against the foreign intervention in the East, Ukraine has a unique chance to succeed in comprehensive reforms, specifically in what con-cerns public administration and judiciary. The win-dow of opportunity will only stay open for a short period of time, hence the country needs resolute reform actions to finally break away from legacies of the past and move toward European standards of administration and governance.

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Public Administration of the eu eastern

Partners in 2009-2014: methodological Notes and an overview of Indicators

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Methodological notes1

The European principles of public administration

The European Union offers no acquis to guide the process of public administration reform – neither for member states, nor for acceding countries, nor for countries under different contractual relations with the EU. Public administrations are designed at national levels and reflect, to a big extent, long-standing traditions, experience and culture of the nation building. Nevertheless, the Madrid accession criterion stipulates that public administrations of countries acceding to the EU need to be able to:

• Prepare for membership, and• Implement the acquis communautaire

In the Eastern Partnership context, the approach to public administration reforms is broadly similar. The EU-Ukraine Association Agreement, initialled in 2012, reads:

Rule of law, good governance, the fight against corruption … are central to enhancing the relationship between the Parties

To underpin relations with the EU, partner countries are expected to align with the European standards and principles, which were developed by the OECD in late 1990s to assist the acceding countries in the Eastern enlargement of 2004, 2007 and subsequently 2013.2 For more reader-friendliness, we explain below each of the four principles:

1 For the detailed explanation of methodology, please refer to: Public Administration in EU Eastern Partner Countries: ECEAP Comparative Report 2011, http://www.eceap.eu/ul/Vordlev_Report_2011.pdf

2 Cf. Preparing Public Administrations for the European Administrative Space, SIGMA Papers, No. 23, OECD Pub-lishing, 1998; European Principles for Public Administration, SIGMA Papers, No. 27, 1999.

a. Reliability and predictability (legal certainty): public administration discharges its responsibilities in accordance with the law. General rules laid down in the law and interpretative criteria produced by courts are applied impartially and in non-discriminatory manner. Legal certainty attempts to eradicate arbitrariness in conduct of public affairs

b. Openness and transparency: the conduct of public administration is expected to allow for outside scrutiny and inquiries about the decisions by the affected legal and natural persons. It thus underpins the rule of law and makes public authorities accountable for their actions

c. Accountability: a public administration body is answerable for its actions. No authority should be exempt from scrutiny or review by the others

d. Efficiency (appropriate ratio between recourses allocated and results attained) and effectiveness (administrative bodies perform successfully in achieving goals set for them): both acquire specific importance with regard to production and delivery of public services in an environment of fiscal constraints

Changes in methodology 2014This year’s methodology adjustments were

confined to introducing a new indicator to measure the rule of law: Constraints to government powers originating from legislature, judiciary, external audit, and public checks. This indicator is a component of the RoL Index published by the World Justice Project.

The updated set of indicators is shown below.

European principles Indicators Source

A. Reliability and predictability (legal certainty)

A1. Rule of law: Constraints to government powersA2. Favouritism in government decisionsA3. Irregular payments and bribes

WJPGCIGCI

B. Openness and transparencyB1. Transparency in policy makingB2. Corruption perceptionB3. e-government

GCITIUNeGovDD

C. AccountabilityC1. CSO sustainability index C2. Judicial independence C3. Diversion of public funds

USAIDGCIGCI

D. Efficiency and effectivenessD1. The ease of doing business D2. Extent of market dominanceD3. Wastefulness of government spending

IFC / WBGCIGCI

Consolidating indicator E1. Public institutions GCI


Definition of indicators and interpretation of trends

The indicators used in this report to highlight public administration reforms in EaP countries against the European principles have the following definition. The overview rests on te respective international databases.

Indicator (Database) Absolute values (worst...best) Definition

A1. Rule of law: constraints to government powers 0...1

Government powers are (1) effectively limited by (i) legislature, (ii) judiciary, (iii) independent auditing and review, (2) sanctioned for misconduct, (3) subject to (iv) non-government checks and (v) the law. Scale from 0 (worst) to 1 (best)

A2. Favouritism in government decisions (GCI) 1…7

To what extent government officials show favouritism to well-connected firms and individuals when deciding upon policies and contracts: 1 – always; 7 – never

A3. Irregular payments and bribes (GCI) 1…7

How common it is for firms to make undocumented extra payments or bribes connected with (a) imports and exports; (b) public utilities; (c) annual tax payments; (d) awarding of public contracts and licenses; (e) obtaining favourable judicial decisions: 1 – irregular payments are very common; 7 – irregular payments never occur

B1. Transparency in policy making (GCI) 1…7

Easiness to obtain information about changes in government policies and regulations affecting business: 1 - impossible; 7 - extremely easy

B2. Corruption perception (TI) 1…100 The economy is 1 - highly corrupt; 100 - very clean

B3. E-government (UN) 0…1Availability of e-services, e-readiness (website assessment), human resource endowment, indexes of telecommunication & e-participation

C1. CSO Sustainability index (USAID) 7…1 CSO sustainability is (7-5) impeded, (5-3)

evolving, (3-1) enhanced

C2. Judicial independence (GCI) 1…7To what extent judiciary is independent from influences of officials, citizens or firms: 1 - heavily influenced; 7 - entirely independent

C3. Diversion of public funds (GCI) 1…7

How common is the diversion of public funds to companies, individuals or groups due to corruption: 1 - very common; 7 - never occurs

D1. Ease of doing business (IFC) 1…189 Simple rating of economies on business regulations as formulated by law and practiced

D2.Extent of market dominance (GCI) 1…7 Corporate activity is: 1 – dominated by a few

business groups; 7 – spread among many firms

D3. Wastefulness of government spending (GCI) 1…7

How efficient is the government spending in providing necessary public goods and services: 1-extremely wasteful; 7-very efficient

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Indicators of quality of public governance rest overwhelmingly on its perceptions by the various stakeholders – economic agents (domestic companies / households and foreign investors), international partners (governments and IFIs), academic community, NGO and media. Because perceptions by their nature reflect individual or corporate experiences, indicators are prone to disputes, albeit to a varying extent from one indicator to another. Internationally renowned sources used in this report apply methodologies, which capture possible risks of misinterpretation and ensure acceptable level of confidence of overall results.

Nevertheless, international indicators of quality of governance and respective ranking of an economy convey only indications rather than final judgements. The interpretation of those indications should be therefore careful and imply

comparisons against a broader background as well as understanding of different country- and region-specific contexts. For example, non-transparent government decision-making would outweigh an advantage of high PC density in judging the overall quality of governance in an economy, as would fragile regional security constrain the efficiency of government spending on sustainable economic growth. With these observations in mind, ECEAP believes that the report offers a meaningful comparison of the public administration reform process in the EU Eastern neighbourhood.

2014 saw further improvements in the stages of development monitored by the World Economic Forum (WEF) in its Global Competitiveness Index (GCI). Armenia returned to the group of “efficiency-driven” economies, while Estonia qualified for the “innovation-driven” group. Table below shows changes over the four years of observation.

CSO sustainability GCI Corruption

perception E-government Doing business

Absolute values by indicator(worst ... best)

7…1 1...7 1...10 0...1 n.a.

Regularity annual annual annual bi-annual annual

Number of observed economies in 2014 (in brackets: previous year)

29 (29) 144(144)

177(176)

193(193)

189(185)

Of which EaP 6 5 6 6 6

Categories 2011 2012 2013 2014

Stage I: Factor-driven Moldova Moldova – –

Transition from stage I to stage II

Armenia, Azerbaijan,

Georgia, Ukraine

AzerbaijanArmenia,

Azerbaijan, Moldova

Azerbaijan, Moldova

Stage II: Efficiency-driven – Armenia, Georgia, Ukraine

Georgia, Ukraine

Armenia, Georgia, Ukraine

Transition from stage II to stage III Estonia Estonia Estonia –

Stage III: Innovation-driven Germany Germany Germany Estonia, Germany

The overview below summarises indicators values, regularity and scope of observation applied by the international methodologies.

Source: The World Economic Forum Global Competitiveness Report, respective years.


The WEF Global competitiveness report assigns a key role to efficiency enhancers (such as higher education and training, markets’ efficiency and size, technological readiness) for the competitiveness of efficiency-driven economies. In turn, factor-driven economies rely mainly on basic requirements (institutions, infrastructure, macroeconomic stability, health and primary education).

Change to the bi-annual reporting from the next edition

The next edition of the Comparative report on public administration reforms in EaP countries will appear in 2016 and follow every other year onwards. By introducing bi-annual editions, the Estonian Centre of Eastern Partnership intends to raise the quality of conclusions, enhance comprehensiveness of data and take stronger account of the changing political environment in the relations between the EU and its Eastern Neighbourhood. Below are the main elements of the new approach.

Reference to the changing policy framework

In November 2014 a high-level conference in Brussels introduced European Commission’s reinforced approach to public administration reform in the enlargement process and presented the principles of public administration developed jointly by the European Commission and OECD/SIGMA. The new framework further develops the European Principles of Public administration of 1999, which have been used in the methodology of this report since the first edition of 2011.

Even though the EaP countries stay beyond the enlargement exercise, public administration reforms in the European context bear similar features, laid down in bilateral agreements with the EU, in particular the Association Agreements with Georgia, Moldova and Ukraine. The methodology will stronger take in account the main elements of the reinforced approach in relation to all six Eastern partner countries. Through those elements, the report will conclude on the quality of public services and the perception of the activities of public administrations by the economy and society.

Revision of indicatorsThe current set of indicators used in the ECEAP

comparative report will be respectively revised to (i) ensure a more comprehensive coverage of all six countries, (ii) better match the Commission’s

reinforced approach, and (iii) avoid possible duplication of conclusions. For example, the reliance on the global competitiveness indicators, which do not cover Belarus in the database, will be limited to cases where no other reference can be found to illustrate an important aspect of the European principles of public administration reform. Similarly, the new set of indicators will include the so-called “distance to frontier” instead of the Doing business ranking of the economies. Distance to frontier is an indication of the extent, to which overall business climate in an economy is conducive to enterprises. It allows measuring the countries by their overall success in facilitating business activities and avoiding comparisons as to “who is better”, which have gained unnecessary political connotations in the recent years. Importantly, distance to frontier allows a five to six years retrospective analysis, which has not been possible with simple global rankings.

Public consultations on the revised methodology

ECEAP intends to present the main elements of the new methodology at the Public Administration Reform Panel in the first semester of 2015. In parallel, the methodology will be publicised on the ECEAP website allowing online posting of comments and propositions. The results of the consultations will be taken into consideration before starting the analyses of databases and preparation of the 2016 edition of the comparative report.

EU Eastern Partnership: GNI per capita at current US-$

2009 2011 2013

Armenia 3180 3490 3790

Azerbaijan 4800 5530 7350

Belarus 5590 6130 6720

Georgia 2540 2850 3750

Moldova 1570 1990 2460

Ukraine 2840 3140 3960

Memorandum items:

Estonia 14400 15700 17370

Germany 42550 44670 46100

Source: The World Bank Atlas 2013

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Source: The World Bank Atlas 2013

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Public Administration of the eu eastern Partners in 2009-2014: compliance

with the european Principles

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This chapter examines the overall trends in the public administration reforms in the EaP region in the sense of adherence to the European principles of reliability and predictability, openness and transparency, accountability, and efficiency and effectiveness.

A. Reliability and Predictability (Legal Certainty)

A1: Rule of law / Constraints to government powers

Government powers are (1) effectively limited by (i) legislature, (ii) judiciary, (iii) independent auditing and review, (2) sanctioned for misconduct, (3) subject to (iv) non-government checks and (v) the law. Scale from 0 (worst) to 1 (best)

Source: The World Justice Project, RoL Index reports 2012-2014, http://worldjusticeproject.org

A2: Favouritism in government decisions

To what extent do government officials in your country show favouritism to well-connected firms and individuals when deciding upon policies and contracts? 1 – always; 7 – never

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

3,053,26 3,44

2,262,50

4,10

4,67

3,20

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,92014

2013

2012

DEEEUAMDGEBYAZAM

0,34

0,53

0,43 0,41

0,800,83


A3: Irregular payments and bribes

How common it is for firms to make undocumented extra payments or bribes connected with (a) imports and exports; (b) public utilities; (c) annual tax payments; (d) awarding of public contracts and licenses; (e) obtaining favourable judicial decisions? 1 –

irregular payments are very common; 7 – irregular payments never occur

• Overall trends in the EaP region:• In 2014, EU Eastern Partners posted a mixed performance regarding legal certainly year on year, and

the same can be said about longer-term developments since 2010

• In a broader sense, the three South Caucasus countries have been displaying higher scores than Belarus, Moldova and Ukraine

• Country by country highlights:• Owing to visible improvements on the constraints to the government powers, combatting the prac-

tice of favouritism in political decisions and especially irregular payments, Georgia has made good progress toward a more reliable and predictable public administration

• Ukraine has shown progress on all three indicators, albeit at low comparable levels indicating the need of a new serious reform effort in the public administration at large

• Among the other EaP countries, Moldova’s prevailing negative trends in the medium run indicate moving to more favouritism and, more generally, to less reliable public administration

• Comparison with the EU Member States:• Georgia outscored Estonia and Germany on elimination of irregular payments, and there is plenty of

evidence from the economy to underpin the prevalent positive trend

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

3,81 3,65

5,99

2,97 2,96

5,77 5,66

4,1


B. Openness and Transparency

B1: Transparency in policy making

How easy is it for businesses in your country to obtain information about changes in government policies and regulations affecting their activities? 1 – impossible; 7 – extremely easy

B2: Corruption perception

1 - the economy is highly corrupt; 100 - the economy is very clean

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

4,46 4,274,7

3,973,64

4,97 4,77

4

0

10

20

30

40

50

60

70

802014

2013

2012

2011

2010

DEEEUAMDGEBYAZAM

37

29 31

52

35

26

69

79


B3: E-government

Availability of e-services, e-readiness based on website assessment, human resource endowment, index of the telecommunication and index of e-participation. Scale from 0 (worst) to 1 (best)

• Trends in the region:• EaP countries have been no exception in the recent 2-3 years to an overall global trend toward less

transparency in business-related policymaking, with marginal improvements registered only in Georgia and Ukraine

• The three South Caucasus countries posted good progress in the area of e-government, while corrup-tion perception in the EaP region have been improving only insignificantly and at low comparative levels

• Disparities in the region: • In Armenia, businesses have been experiencing growing difficulties in getting information about

government decisions for the second consecutive year, which is a disappointing development given the good progress of 2010-12

• Not surprisingly, Georgia stood much better in the EaP region on corruption perception and became the leader also on the transparency of policymaking

• While Belarus keeps its top position on e-government, Armenia and Georgia are likely to overtake in the near future if the rapid improvements of the recent two years keep on momentum

• Comparison with EU member states:• Despite the overall downward trend on transparency of policymaking the EaP countries retain their

comparable levels with Estonia and Germany, and may keep up on e-government in the medium run

• On corruption perception, the lagging behind remains pronounced, except in the case of Georgia

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

2014201220102008

DEEEUAMDGEBYAZAM

0,590,55

0,61 0,60,56

0,5

0,82 0,79


C. Accountability

C1: Civil society sustainability

CSO sustainability is (7-5) impeded, (5-3) evolving, (3-1) enhanced

C2: Judicial independence

1 – judiciary is heavily influenced by government, citizens or firms; 7 – judiciary is entirely independent

1 3 5 7

UA

MD

GE

BY

AZ

AM

EE

2013

2012

2011

2010

2009

2008

3,9

4,7

5,7

4,1

4,0

3,4

2,0

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

2,923,16

3,84

1,95 2,02

5,67 5,88

3,9


C3: Diversion of public funds

1 – diversion of public funds due to corruption is very common; 7 – such diversion never occurs

• Trends in the region:• All EaP countries except Azerbaijan showed progress on CSO sustainability in the recent year of

observation (2013), making the public administration more accountable to the civil society

• As a general rule, judiciary remains heavily dependent on political influence, and the reforms in this area have brought meaningful results only in Georgia

• Disparities in the region: • In view of the improvements registered by 2013 and especially the more recent developments after

the Euromaidan, Ukraine has a good chance to enhance the sustainability of the civil society organi-sations in the medium-term perspective

• Georgia has made a big step toward an independent judiciary and remained at the leading position on streamlining target-oriented public spending, both against a stagnant or negative developments in the rest of the EaP region

• Comparison with EU member states:• Overall, EaP countries have a long way ahead to approach the accountability standards of public

administrations in the reference EU countries, as reflected by the above trends. On corruption per-ception, the lagging behind remains pronounced, except in the case of Georgia

• The only exception to the rule is Georgia, which almost matches Estonia’s level of restraining diver-sion of public funds

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

3,46 3,473,33

2,37 2,35

4,72

5,31

3,5


D. Efficiency and Effectiveness

D1: The ease of doing business

Countries’ simple ranking among the economies observed by the IFC (189 economies for 2015 index)

D2: Extent of market dominance

The corporate activity in the economy is 1 – dominated by a few business groups, 7 – spread among many firms

0

30

60

90

120

150

180 20152014

DEEEUAMDGEBYAZAM

49 45

8880

57 57

14 15

82

63

112

96

19 21 18 20

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

3,46 3,473,33

3,1 2,96

4,06

5,65

3,8


D3. Wastefulness of government spending

1 – government spending in providing necessary public goods and services is extremely wasteful; 7 – government spending is very efficient

• Trends in the region in 2009-2013:• Most of the EaP economies improved their doing business rankings in the recent year, which is an

especially welcome development in Moldova and Ukraine in view of the long stagnation highlighted in previous ECEAP reports

• In contrast, public spending has been generally turning more wasteful in the observed economies, signalling a diminishing efficiency of the public administration

• Regional disparities: • Only Moldova and Georgia managed to slightly reduce the extent of market dominance, whereas the

other countries have failed to effectively protect competition on domestic markets

• Ukraine displays the most wasteful government spending among the EaP countries, and this for the 6th consecutive year

• Armenia’s competition policy has become visibly less efficient in the recent year despite good pro-gress in the earlier period; whether this development is attributable to the country’s integration in Russia-led customs union, is too early to judge

• Comparison with the EU: • Only the three South Caucasus countries compare with the world average regarding wastefulness of

public spending, while Georgia has been among world top reformers of business climate since 2007

• Generally however, Estonia and Germany remain far ahead of the EaP region regarding efficiency and effectiveness of public administration

1

2

3

4

5

6

72014

2013

2012

2011

2010

meanDEEEUAMDGEAZAM

3,01 3,46 3,2

2,58

1,93

4,29 4,18

3,2


E. Consolidating indicator

E1: Public institutions

SynopsisWith the exception of Georgia, the EU Eastern partner countries generally did not succeed in 2014 in

approximating the European principles of public administration. This conclusion has not changed over the recent three years of the comparative analysis. A general trend has been to less transparency in policymaking affecting business, which creates additional transaction costs for the economy. Likewise, fiscal authorities appeared more wasteful in public spending and less efficient in protecting competition on domestic markets. Favouritism in government decisions remained a common practice, notably in Moldova and Ukraine, while judiciary experienced heavy influences from the politics and cannot administrate justice impartially. As a result, in all countries except Georgia public institutions as a whole were receiving less trust from the society and economy than a year ago.

Similarly to the previous year, the three South Caucasus in general were performing better than the immediate EU neighbours Belarus, Moldova and Ukraine. However, Armenia and Azerbaijan seem to have lost the reform momentum and posted – albeit in different national environments – a downward trend on many indicators, notably transparency of policymaking, the extent of market dominance and public institu-tions as a whole.

0

1

2

3

4

5

62014

2013

2012

2011

2010

DEEEUAMDGEAZAM

3,7 3,9 4,2

3 2,8

55,2

III - euroPeAN PrINcIPleS of PuBlIc AdmINISTrATIoN IN The eu eASTerN PArTNerS: couNTry ASSeSSmeNTS 2009-2014 25

III

european Principles of Public Administration

in the eu eastern Partners: country assessments

2009-2014

III - euroPeAN PrINcIPleS of PuBlIc AdmINISTrATIoN IN The eu eASTerN PArTNerS: couNTry ASSeSSmeNTS 2009-201426

EUROPEAN PRINCIPLES OF PUBLIC ADMINISTRATION IN ARMENIA3

A: Public administration in Armenia: Reliability and predictability4

A2: Favouritism in government decisions, A3: Irregular payments and bribes

A2: 1 - government officials always show favouritism; 7 - government officials never show favouritismA3: 1 - irregular payments are very common; 7 - irregular payments never occur

3 All graphs in this chapter show country’s performance over the recent years on the left-hand side; on the right-hand side, the Eastern Partnership region’s top score as well as reference numbers for Estonia and Germany are given.

4 Armenia is not in the database of the World Justice Project, hence the report omits indicator A1 “Rule of Law: Constraints to government powers” for this country.

1

2

3

4

5

6

7

Irregular payments and bribesFavouritism in government decisions

DE'14EE'14GE'14AM'14AM'13AM'12AM'11AM'10

2,84 2,85 2,99 3,10 3,05

3,44

4,10

4,67

3,293,47

3,69 3,80 3,81

5,995,77 5,66

Armenia has maintained, broadly, its previous-year levels of restraining favouritism in government decisions and combatting irregular payments and bribes. At the same time, the moderate trend towards more reliable and predictable public administration, observed in 2011-13, seems to have subdued. Overall, vested interests between economy and politics remain dominant in the country, as manifested by a limited number of business holdings controlling around 95 per cent of national output. The system has established itself over the last two decades, resting on a complex balance of interests among oligarchs, leading politicians and influential diaspora. It has produced some stability in the society, however, much to the detriment of economic diversification and social welfare. Not surprisingly, Armenia lags behind its immediate

neighbour and the regional leader, Georgia, in raising reliability of public administration.

In April 2014 Prime Minister Tigran Sargsyan resigned with his team and was replaced by Hovik Abrahamyan, former Speaker of the National Assembly. In contrast to the latter and his team of oligarchs appointed to the positions of ministers, the former Prime Minister had been quite active in pursuing reforms toward more transparency and accountability, adoption of advanced and effec-tive approaches to management and governance, engagement of young generation in high positions. The new government has shown lack of success in a number of important reforms inherited from the predecessors, owing to improper planning and absence of any policy programme or concept with


cost-effectiveness and cost-benefit analyses. This relates to the 2nd phase of the pension reform, community consolidation process, amendments to the turnover tax Law and to the Law on temporary unemployment ben-efit. Lack of public support to the government in carrying out these reforms, owing to weak communication policies, also contributed to the unsuccessful policy performance. In addition, the new Armenian government failed to take up efforts of the predecessors for a stronger social protection and eliminated the luxury tax. In a broader sense, the new government is tarnished for its pro-oligarchic behaviour: in another extremely unpop-ular move it adopted a decision – contrary to previous policies – to release more water from the Sevan lake for irrigation purposes in Ararat valley, where the water reservoirs are used by Hovik Abrahamyan himself, his colleagues in the government and close business surrounding for privately run fresh-water fish breeding. A public protest against that decision collected more than 1200 signatures from broad public and civil society organisations.5

B: Public administration in Armenia: Openness and transparency

B1: Transparency in policymaking

Easiness to obtain information about changes in government policies and regulations affecting businesses: 1 - impossible; 7 - extremely easy

Having reached the region’s top position in 2012, Armenia, surprisingly, has reversed the trend and fell even under its own level of 2010. Economic agents experience more difficulties in getting information about changes in government business-related policies than two years ago. The mentioned decisions regarding pension reform and on the Sevan lake have not been discussed with the public and business community in any comprehensive way. Having replaced the compulsory pension contributions with “pension tax”, authorities received an instru-ment to distribute tax privileges, which were promptly assigned to the businesses run by one well-known oligarch and one adviser to the president.6 A rise in electricity tariff for households was likewise adopted in a clandestine way, without submitting any rationale to the population. The trend to less transparency in decision making will obviously have a strong negative effect for the economy in the medium run.

5 Open letter to Hovik Abrahamyan on lake Sevan collected 1233 signatures. http://www.ecolur.org/en/news/sevan/open-letter-on-lake-sevan-addressed-to-hovik-abrahamyan-collected-1233-signatures/6102/ retrieved 04.11.2024.

6 Haykakan Zhamanak (“Armenian Time”): Hovik Abrahamyan’s first 100 days in the office (23.07.2017), http://www.tert.am/en/news/2014/07/23/hz2/ retrieved 05.11.2014.

1 2 3 4 5 6

Transparency in policymaking

AM'09

AM'10

AM'11

AM'12

AM'13

AM'14

GE'14

EE'14

DE'14

4,81

4,96

4,46

5,21

4,54

4,20

4,77

4,97

4,7




1

10

19

28

37

46

55

64

73

82

91Corruption perception in Armenia


27 26

36

68

26

34

49

78

Armenia remained on the positive, albeit moderate trend toward a cleaner, corruption-free economy. The government declared tackling shadow income of companies one of its main policy priorities. How-ever the evidence provided so far is limited to pub-lic revelation of small and medium businesses for hiding real income. Real shadow earnings, which are estimated at 51.7% of GDP,7 remain largely untouched. It is estimated8 that the regulatory bur-den on financial and product markets in Armenia – like in other emerging economies of South Cau-

7 Armenia is the country with the world’s 18th largest shadow economy, according to Business Week / Bloomberg. Cf. http://images.businessweek.com/ss/10/07/0729_worlds_biggest_shadow_economy/19.htm retrieved 06.11.2014.

8 Yasser Abdih and Leandro Medina. Measuring the Infor-mal Economy in the Caucasus and Central Asia. IMF Working Paper WP/13/137, p. 17.

casus and Central Asia – contributes most to hiding the income in the shadow.

The government of Armenia introduced amend-ments to a package of tax laws aimed at decreasing shadow trade and services. The objective of the ini-tiative is to make the large businesses work trans-parent and declare the real income. The implement-ing provisions stipulate mandatory submission of documentation for all activities of an enterprise. This regulation effectively hits SME sector, which receives supplies from monopoly producers and monopoly importers of goods. In case the latter fail to submit mandatory information, in particular about distribution of produce or imports on the domestic market, tax authorities will unavoidably fine smaller businesses for inability to prove the origin of their supplies.


B3: E-government


0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

E-government

AM'08

AM'10

AM'12

AM'14

BY'14

EE'14

DE'14

0,42

0,40

0,59

0,50

0,79

0,82

0,61

E-government is the reform area, where Armenia boasts considerable improvements over the recent four years. None of the EaP countries could post that rapid development of e-services and infrastructure in the same period. Armenia has invested much into IT-related human resource development and reached an above-average level in the EaP region (0.77 in 2014). The country has also a strong position regarding e-services (0.61) and e-participation (0.53). Nevertheless, the IT infrastructure nationwide remains less developed (0.39). This can be witnessed by low-quality internet penetration and density, notably in the regions. Many communities are still not equipped with the necessary techniques and the network signal is quite distant. Nevertheless, according to official sources, all 1420 schools in the country are endowed with computers and internet access.9

The IT sector is one of the most rapidly growing in the economy, with an average 22-% year-on-year increase in 2008-13.10 The sector counts around

9 National Center of Educational Technologies (http://eng.ktak.am/news.php). Report of the 3rd quarter 2014 (in Arme-nian), downloadable from and http://lib.armedu.am/

10 Armenia: IT boom bolsters economic prospects (19.06.2014), http://www.eurasianet.org/node/68691 retrieved 13.11.2014.

400 enterprises, most of which are outlets of the international companies, employs close to 10,000 computer programmers and software engineers and contributes 3.8% to the country’s GDP (2013). Yerevan State University, Engineering University and three other high schools in the country educate around 6000 students in IT disciplines annually. Armenian IT enterprises focus on client-specific software services and inward processing. The sector offers good opportunities for technology transfer in the medium run, depending on how successfully it integrates in the international markets of high technology. Most promising in the country are the following IT products and services:11

• Internet of services, software and virtualisation• Digital libraries and digital preservation• Computing systems• Intelligent information management• Language-based interaction• Technology-enhanced learning

11 FuE-Potentialanalyse Armenien (Analysis of Armenia’s R&D Potential), Regensburg, March 2013.


C: Public administration in Armenia: Accountability


CSO sustainability is (7…5) impeded, (5…3) evolving, (3…1) enhanced

1

2

3

4

5

6

7CSO sustainability in Armenia

EE'13UA'13AM'13AM'12AM'11AM'10AM'09AM'08

4,0 4,0 4,0 4,0 3,9 3,9

3,4

2,0

According to the USAID index, in 2013 Armenia kept the same level of the evolving civil society sustainability. An improvement was registered with regard to advocacy of the civil society in the coun-try, which is the second best in the EaP region after Ukraine. Armenian civil society operates in a stable legal environment, enjoys strong public image and good operational capacity, and maintains a devel-oped infrastructure: all these indicators stood in the country above the region average. Typically for the overall situation in the EU Eastern Partners, Armenian civil society remains financially week and strongly depends on foreign grants.

Against the positive background, the most recent developments related to the new law on CSOs give grounds for concern. Initially, a new draft law has been developed in an intensive dialogue between the authorities and civil society organisations. Widely seen as a step forward in consolidating the civil society and modernising the legal framework on the basis of the international best practices, the

new law was however stopped by the new govern-ment on its way to the National Assembly for adop-tion. Authorities reversed the process and proposed to re-start discussions by going back to square one. Internal sources indicate that Russia has been pressing the government on not providing too many rights to the civil society and amending the law in force correspondingly.12 It is likely that those amendments would restrict civil society engage-ment, as is the case in Russia itself and nearly hap-pened in Ukraine in January 2014, shortly before the former president fled the country. Ukraine’s developments of fall 2013 find themselves mirrored in Armenia also in the sense that civil society has stopped the dialogue with the government in a pro-test move against suspension of the new law.

12 Noteworthy in this regard is the interview of Russian ambassador Volynkin, who advised to “neutrlise” CSOs attempting to “disturb” Russian-Armenian relations. See Ara-vot daily, 10.05.2014, http://ru.aravot.am/2014/05/10/179319/; Noyan Tapan bi-weekly, No. 12 2014, http://www.noev-kov-cheg.ru/mag/2014-12/4582.html retrieved 13.11.2014.


C2: Judicial independence, C3: Diversion of public funds

C2: 1 – judiciary is heavily influenced by government, citizens or firms; 7 – judiciary is entirely independentC3: 1 – diversion of public funds due to corruption is very common; 7 – such diversion never occurs

1

2

3

4

5

6

7

Diversion of public fundsJudicial independence

DE'14EE'14GE'14AM'14AM'13AM'12AM'11AM'10AM'09

3,84

5,675,88

4,524,72

5,31

2,302,62

2,80

2,40

2,95 2,922,80 2,702,85 3,01 3,06 3,03

Apart from marginal improvements over the obser-vation period, Armenia did not manage to achieve any meaningful breakthrough in strengthening judicial independence and streamlining public spending. Among the five EaP countries (except Belarus), the country, in 2014, stood ahead of only Moldova and Ukraine on both indicators. More often than not, Armenian courts experience pres-sure from the public bodies to rule in favour of the vested interest groups. Judiciary thus acts as a war-rant for the overall governance system of oligarchs and public administration. Similarly, the govern-ment is not subject to any serious constraints in fol-lowing the expenditure priorities of annual budget laws, so that diversion of public funds due to cor-ruption and hardly predictable changes of policy priorities remain quite common. In result, Arme-nian public administration generally falls short of the European standards of accountability.

The National Assembly of Armenia adopted in summer 2014 amendments to the Judicial Code and a number of laws aimed at strengthening the independence and accountability of the judiciary. In particular, the package envisions

• a more precise definition of functions of the Chairman of the Council of Court and the General Meeting of Judges,

• a clear separation of functions of investigation and adjudication in disciplinary proceedings against a judge: only Ethics and Disciplinary Commission, a judicial self-government body elected from among judges in a secret ballot, can now initiate such proceedings,

• introducing the system of evaluation of judges: this decision enters into force in 2018, when transparent and objective evaluation criteria are elaborated and adopted.

The Venice Commission positively evaluated the package with regard to the limitation of terms of office of court presidents.13 At the same time the Commis-sion criticised as too radical the intention to dismiss all sitting court presidents by 01.01.2015, as it would – if implemented at such short notice – threaten the principle of legal certainty, compromise independ-ence of the judiciary and the effective administration of justice. Seen in a broader context of major policy change in the country with the new government and suspension of the European integration in September 2013, the replacement of court presidents is likely to be used as an instrument to consolidate the emerging autocratic regime in the country.

13 Opinion 768/2014 of 16.06.2014, http://www.venice.coe.int/webforms/documents/default.aspx?pdffile=CDL-AD%282014%29021-e retrieved 14.11.2014.


To streamline spending, Armenia attempts to introduce programme classification to the state budget and replace the old system of budgeting state and related institutions. The reform will cre-ate an opportunity to evaluate the effectiveness of the spending of public funds. Whereas the time-line for the transfer is 2018, it currently staggers at inadequate coordination on the government side, insufficient technical knowledge in the ministries, and scarce information flows across the govern-ment bodies. Specifically, the staff of the Ministry

of Finance is not trained properly to develop budget programmes with key performance indicators (indicators of achievement, quality indicators as well as timing in the quantity indicators) and means of measurement. For the moment, the existing government development programmes, as a rule, are not underpinned by any adequate financing in the medium run. The mentioned shortcomings are seen also in the National Assembly, which oversees the process.

D: Public administration in Armenia: Efficiency and effectiveness

D1: Ease of doing business

0

30

60

90

120

150

180 Ease of doing business in Armenia

DE'15EE'15GE'15AM'15AM'14

49 45

1715 14

According to the Doing Business 2015 report Armenia improved its ranking by 4 positions due to advanced environment for starting a business, dealing with construction permits, getting electricity, paying taxes and trading across borders. Nevertheless the country recorded step backwards in getting credit, protecting minority investors as well as resolving insolvency.

The business climate for SMEs worsened in 2014 owing to a new regulation, which imposed mandatory submission of documentation for the overall turnover (for details please see “B2.

Corruption perception”). The turnover tax was eliminated for family businesses, however they have to bear the higher business costs like all other entrepreneurs. The regulation is expected to have a minimal effect on revenue effort but will most certainly restrain business activity in the country and hence further narrow the tax base. The oligarchic structure of the economy has typically prevented Armenian policymakers from taking an economy-of-scale approach to regulating business climate. As a result, the country has been losing so far many business opportunities and competitiveness gains.



D3: Wastefulness of government spending

D2: Corporate activity is 1 – dominated by a few business groups; 7 – spread among many firmsD3: Government spending in providing necessary public goods and services is 1 – extremely wasteful; 7 – very efficient

1

2

3

4

5

6

7

Wastefulness of government spendingMarket dominance

DE'14EE'14AZ'14AM'14AM'13AM'12AM'11AM'10AM'09

2,76 2,76 2,74

3,413,74

3,46 3,47

3,92

5,77

3,40 3,43 3,51 3,613,36

3,01

3,46

4,29 4,18

Most recent observations display a reverted trend to more market dominance and a more wasteful public spending. The latter has been quite pronounced and holds over the second consecutive year. Over the observation period, the government has been quite unconcerned in accumulating public and publicly guaranteed debt in an environment of a limited rev-enue effort and diminishing returns from exports.14 The country was on track with poverty reduction

14 IMF Country Report Armenia, No 14/89, March 2014.

policies but could hold fiscal deficits at planned lev-els only at the expense of under-spending for capital investment projects. Improvement of the composi-tion of public spending remains a serious task in the medium-term perspective, combined with upgrad-ing fiscal institutions to better target expenditure policy and fiscal risks. In 2014 Armenia yielded its top-runner position in the EaP region on market diversification.


E: Public administration in Armenia: consolidating indicator


Scale from 1 (worst) to 7 (best)

Synopsis

Reforms in Armenia toward the European principles of public administration seem to have slowed down, whereas this development needs to be proven in the medium-term perspective. Attested as a “silent reformer” in the recent two years, the country has found itself on a backward trend in several reform areas, notably transparency in policy making and wastefulness of government spending. The government change in spring 2014 resulted in stronger oligarch-focused economic policy to the detriment of SME sector and targeted social spending. On a positive note, Armenia managed to post solid accomplishments in e-governance by expanding e-services, strengthening human resources and increasing e-participation of citizens.

1

2

3

4

5

6

7Public institutions


3,49 3,643,91 3,94

3,70

4,20

5,005,20


EUROPEAN PRINCIPLES OF PUBLIC ADMINISTRATION IN AZERBAIJAN

A: Public administration in Azerbaijan: Reliability and predictability15

A2: Favouritism in government decisions A3: Irregular payments and bribes


15 Azerbaijan is not in the database of the World Justice Project, hence the report omits indicator A1 “Rule of Law: Constraints to government powers” for this country.

1

2

3

4

5

6

7


DE'14EE'14GE'14AZ'14AZ'13AZ'12AZ'11AZ'10

3,10 3,15

3,59 3,613,26

3,44

4,10

4,67

3,333,02

3,20

3,63 3,65

5,995,77 5,66

The chart shows that on both indicators Azerbaijan is behind the reference countries, notably on eradi-cating irregular payments and bribes. Favouritism in government decisions decreased in 2014, while irregular payments and bribes became more com-mon compared to the previous year. It should be noted that, usually, procurement tenders announced by the government are not open to public, and there is never any accountability how or on which indica-tors the winner has been chosen. It is the common practice to award contracts to businesses that are close to the government, which can be considered

as a clear manifestation of favouritism in govern-ment decisions.

The state programme on e-government was launched in 2014. It covers a number of public ser-vices, which are implemented electronically, closing the opportunity of any “facilitation payments”. The novelty has not been visible in the chart so far, and it seems unlikely that the e-government programme brings any serious improvements in this regard in the medium run.


B: Public administration in Azerbaijan: Openness and transparency


Easiness to obtain information about changes in government policies and regulations affecting businesses: 1 - impossible; 7 - extremely easy

1 2 3 4 5 6


AZ'10

AZ'11

AZ'12

AZ'13

AZ'14

GE'14

EE'14

DE'14

4,28

4,5

4,27

4,51

4,45

4,77

4,97

4,7

As a rule, state agencies are not open to public and reluctant in providing information. Procedures for getting official data from the government agencies are very cumbersome and there is no any guaran-tee requests for information will be ever answered. The Parliament has adopted several rulings in order to improve relations between the state bodies and broad public. Nevertheless, not all government insti-tutions are keen to follow these legal acts. However, there are exceptions to the rule: Azerbaijani Minis-try of Taxes, for instance, is very open to public and

places much information online. Another example is “ASAN service” centre created in 2012 under the State Agency for Public Service and Social Innova-tions under the President of Azerbaijan Republic. Its main objective is to establish trust between the broad public and state institutions. Capitalising on its image of a transparent, punctual and responsible state agency, “ASAN service” renders many public services on a “one stop shop” principle allowing time and administrative cost savings to citizens.




1

10

19

28

37

46

55

64

73

82

91

Corruption perception in Azerbaijan


23 2428

68

2427

49

78

The graph illustrates that corruption perception in Azerbaijan has been broadly stagnant, with only mar-ginal improvements, over the last five years. The year 2012 saw more intensive efforts of the authorities to combat corruption, however, those efforts have failed to bring any visible results and subsided in the subsequent years. The society in Azerbaijan has always been suffer-ing from corruption, and its manifestations are felt at any instance of communication between the citizens and authorities. The main anti-corruption govern-

ment institution in Azerbaijan is the Anti-Corruption Administration under the Prosecutor General, which works under the relevant legislation adopted by the Par-liament. The agency has failed to reach any satisfactory result so far. There is no accountability and transpar-ency for public spending, spending of domestic invest-ments, implementation of the regional projects etc. The mentioned “ASAN Service” is perhaps the only popular with the public exactly for being one of the most trans-parent state agencies in the country.

B3: E-government


0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9


AZ'08

AZ'10

AZ'12

AZ'14

BY'14

EE'14

DE'14

0,46

0,46

0,55

0,50

0,79

0,82

0,61


In the recent years, Azerbaijani government adopted new legislation acts and a state programme in order to underpin the implementation and development of the e-government. The government programme, designed according to the international experience, envisions provision of information and electronic services to all legal entities and individuals in the country. The document plans to raise the quality of the public services by the government, ensure transparency and facilitate public access to these services.

As indicated in the chart, there is slight increase in the implementation of e-government in the last four years. The United Nations Public Administration Country Studies (2014) attested a decently high level of IT-related human resources. With a score of 0.75 Azerbaijan ranks above average in regional (Asia) and sub-regional (Western Asia) comparisons. At the same time Azerbaijan scores below average on the tel-ecommunication infrastructure sub-index (0.46), the level of e-services (0.43) and, generally, e-participation (0.43).16 This situation calls for more efforts in capitalising on human resource potential by investing into IT infrastructure and e-services in the medium run, particularly in remote areas of the country.

C: Public administration in Azerbaijan: Accountability


CSO sustainability is (7-5) impeded, (5-3) evolving, (3-1) enhanced

In 2013, the government took steps to render more support to NGOs. A “Law on Public Participation”, which is considered to increase the accountability of the government in front of the public, was adopted. By the law, civil society representatives may have representation at state agencies, which is very important in terms of involvement in the decision-making process. Also, in 2013 non-government organizations for the first time were implementing government-ordered social assignments. Besides, the development of civil society was included in the “Azerbaijan 2020: Looking into the future” Development Concept, and the Centre for Support to NGOs under the President had several meetings with the civil society representatives to discuss approaches and proposals to the document.

16 http://unpan3.un.org/egovkb/en-us/Data/Country-Information/id/11-Azerbaijan retrieved 20.11.2014.

1

2

3

4

5

6

7 CSO sustainability in Azerbaijan

EE'13UA'13AZ'13AZ'12AZ'11AZ'10AZ'09AZ'08

4,8

3,4

4,7 4,7 4,7 4,7 4,7

2,0


Generally, civil society in Azerbaijan faced the same challenges and obstacles as in previous years: cum-bersome and lengthy registration process, weak financial position and non-diversified activities, increasing fines for non-observance of regulations, weak relations with the private sector and weak organizational capacities. Besides, in 2014 CSOs faced more administrative barriers compared to

previous years. Changes to the laws on grants, reg-istration and the Code of Administrative Offences of November 2014 created new technical obstacles regarding registration of branches of foreign CSOs and sub-granting. CSOs are expected to bring their documentation into compliance with the new leg-islation.



1

2

3

4

5

6

7


DE'14EE'14GE'14AZ'14AZ'13AZ'12AZ'11AZ'10AZ'09

3,90

3,32 3,43 3,40 3,28 3,16

3,84

5,675,88

3,80

3,022,79

2,94 3,08 3,14

4,524,72

5,31

The chart indicates that the judiciary in Azerbaijan is not entirely independent, specifically regarding administration of justice, which is attributable to the established political environment. Azerbaijan has been lagging behind the regional leader Georgia over the whole period of observation. Government administrative control of judiciary is common, hampering a higher efficiency of judiciary. Logically, ordinary citizens sense the negative implications of the system and can never be sure that individual rights and freedoms would be duly enforced.

High corruption levels necessarily lead to the poor performance of Azerbaijan with regard to diversion of public funds. Decisions about budget execution are often taken irrespectively of the annual budget laws, depending on the current developments with oil production and price. Non-oil sectors of the economy normally suffer under this practice (although the government intends to support diversification of production), as do the state social programmes. Not surprisingly, Azerbaijan lags far behind the regional leader Georgia on this indicator.


D: Public administration in Azerbaijan: Efficiency and effectiveness

D1: Ease of doing business global rank

0

30

60

90

120

150

180 Ease of doing business in Azerbaijan

DE'15EE'15GE'15AZ'15AZ'14

8880

1715 14

Azerbaijan improved its position in 2014 owing to the facilitation of taxation procedures and issuance of construction permits. E-services development has likewise produced positive effect on business.

The country nevertheless ranks second worst in the EaP region, which is attributable mainly to quite high business costs related to corruption, favouritism and vested interests. Especially the areas of international trade, access to credit and resolving insolvency belong to the least advanced in Azerbaijan. For example, Azerbaijani customs is effectively blocking the cross-border trade with the neighbouring Georgia, notably regarding seasonal agricultural produce and petrol. In addition, trad-ers in cross-border transportation are being treated differently depending on their citizenship and place of residence, with privileges given to Azerbaijani

nationals. The rationale behind these restrictions is, on the one hand, to preserve the existing domestic market situation in Azerbaijan, with unreasonably high prices for vegetables and fruits and low petrol costs, whereas the Georgian market has, broadly, the reversed situation. Besides, the price build-ing at the domestic market in Azerbaijan is one of the sources of illegal earnings of the officials at all levels, so there is no inclination to introduce any changes to customs procedures, nor to investigate opportunity costs for a different or adjusted trade policy. To remind, the described practice at the bor-der is taking place in an environment of a free trade agreement between the two countries of 1996.17

17 See http://www.wipo.int/wipolex/en/treaties/text.jsp?file_id=239273; http://www.mfa.gov.ge/index.php?lang_id=ENG&sec_id=265 retrieved 20.11.2014.



D3: Wastefulness of government spending

D2: Corporate activity is: 1 – dominated by a few business groups; 7 – spread among many firmsD3: 1 – government spending in providing necessary public goods and services is extremely wasteful;

7 – government spending is very efficient

1

2

3

4

5

6

7


DE'14EE'14AZ'14AZ'14AZ'13AZ'12AZ'11AZ'10AZ'09

3,35 3,243,50

3,793,58 3,47 3,47

3,92

5,77

3,603,38

3,223,42

3,673,46 3,46

4,29 4,18

As there is a dependency from the oil sector the gov-ernment has been trying to develop non-oil sectors in order to diversify income sources in the national economy. A “State Programme on the development of the regions” was implemented in 2003-13 in two five-year terms and the succeeding programme was adopted for 2014-18 by a presidential decree. The programmes work as investment plans and are geared toward creation of new employment oppor-tunities and opening of production sites across the whole country. Two-digit growth rates in the recent decade have been attributable however more to the oil sector boom rather than new non-oil production.

Nevertheless, Azerbaijan recorded in 2014 the EaP-best statistical scores (even if closely followed by

other countries) on overcoming market dominance and wastefulness of public spending. On the lat-ter, independent specific analyses are hardly able to come to meaningful conclusions, since public authorities are, in fact, non-accountable for spend-ing. The main revenue source of the state budget are the transfers from the State Oil Fund, while expen-ditures are controlled by the Chamber of Accounts, which is the state control body in the public finance. The Chamber publishes annual reports only,18 which give no clue of whether and to what extent public spending have been efficient in the reporting periods.

18 The most recent report is available for 2012 under http://www.ach.gov.az/?/en/content/452/ (retrieved on 20.11.2014).


E: Public administration in Azerbaijan: consolidating indicator


1

2

3

4

5

6

7 Public institutions


3,79 3,76 3,93 4,01 3,904,20

5,005,20

Overall, Azerbaijani public institutions, with few exceptions, do not enjoy trust among the public, mainly for lengthy and non-transparent procedures on any public service (business and CSO registra-tion, citizens’ affairs etc.). Some transparency gains have taken place with the expansion of e-services, however, access to those services remains limited. In an environment of low constraints, state agen-cies often feel free to delay implementation of the adopted legislation. Sporadically, the government renders institution and capacity building support to public administration bodies; sometimes necessary support from the government side is done to the public institutions, but citizens and economy only rarely sense the results. A communication policy of public administration is another area, which may raise trust of the broad public toward Azerbaijani public administration.

SynopsisAzerbaijan did not succeed in any public

administration reform area in 2014. Public institu-tions operate in an environment of soft constraints from the judiciary, civil society, media and inter-national cooperation partners and hence remain broadly non-accountable for the public. Notably, institutions in charge of controlling functions, such as Anti-Corruption Administration under the Prosecutor General or the Chamber of Accounts, perform in an inefficient manner, compromising citizens’ trust in public bodies in general. Civil society organisations in 2014 were confronted with more administrative barriers and more repressive state policies compared to the previous years, and the conditions for doing business did not improve in any meaningful way. The country displayed nevertheless progress in the area of e-governance by offering more services to population on a one-window principle.


EUROPEAN PRINCIPLES OF PUBLIC ADMINISTRATION IN BELARUS19

A: Public administration in Belarus: Reliability and predictability

A1: Rule of law / Constraints to government powers

Constraints to government powers through judiciary, legislature, independent auditing, controls by the society;misconduct is punished. Scale from 0 (worst) to 1 (best)

Belarus has been stagnant in the recent two years with regard to the observance of the rule of law. As witnessed by the World Justice Project, the country ranks worst among the three eastern EU neighbours and Georgia (see Chapter II). The public administration of Belarus effectively controls the judiciary and easily ignores criticism from outside, both domestic and international. Constraints to government powers originate exclusively from President Lukashenka himself, as can be judged from regular “exposures” of business leaders and public offi-cials for misuse of their powers. In the annual address to the nation the president enumerated around 20 revela-tions of CEOs, judges and public officials and demanded – with reference to the catastrophic consequences of corruption in the neighbouring Ukraine – strengthening anticorruption policies.20

Following Council’s Conclusions on Belarus of 15.10.2012, the EU pursues a policy of “critical engagement” with the country, attempting to support institution building and consolidate civic movement towards more democracy and rule of law. Other focal points of EU engagement are education, environment and sustainable development, including at regional level. At the same time, every year the Council of the European Union reviews the existing restrictions against companies and individuals from Belarus. The sanctions comprise an arms embargo, an embargo on equipment for internal repression as well as asset freezes and travel bans against persons responsible for human rights violations. The most recent extension of sanctions took place on 30.10.2014,21 whereas restrictions were lifted for 24 persons and 7 entities.

19 Since WEF Global competitiveness Indicators do not cover Belarus, this country section omits indicators A2, A3, B1, C2, C3, D2, D3 and E1

20 Poslanie Prezidenta belorusskomu narodu i Natsionalnomu sobraniu (President’s address to Belarusian people and National assembly) of 22.04.2014: http://president.gov.by/ru/news_ru/view/aleksandr-lukashenko-obraschaetsja-s-ezhegodnym-poslaniem-k-belorusskomu-narodu-i-natsionalnomu-sobraniju-8549/ retrieved 11.11.2014

21 EU extends and updates restrictive measures against Belarus, http://eeas.europa.eu/delegations/belarus/press_corner/all_news/news/2014/2014_10_30_en.htm retrieved on 05.11.2014.

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

Rule of law: constraints to government powers

DE'14EE'14GE'14BY'14BY'13

0,34 0,34

0,53

0,800,83


B: Public administration in Belarus: Openness and transparency



1

10

19

28

37

46

55

64

73

82

91Corruption perception in Belarus

DE'14EE'14GE'14BY'13BY'12BY'11BY'10BY'09

24 2429

68

24

31

49

78

Corruption in Belarus remains widespread despite the demands of the president to strengthen anti-corruption policies. In 2013, corruption perception in the country worsened following an improve-ment of the previous year. Belarus ranked 123rd of the 177 economies observed by Transparency International in 2013. Of the EU Eastern partners, the country finds itself behind Georgia (score 49), Moldova (35) and Armenia (36) but ahead of Azer-baijan (28) and Ukraine (25). The perceived level of corruption in Belarus is incomparably higher than in regional leader Georgia and reference economies Estonia and Germany.

The new draft “Law on fighting corruption” has been under public consultations in the country in fall 2014. The act envisions, among other measures, introduction or streamlining transparent public procedures, which would close the existing win-dows of opportunity for embezzlement or diversion of public funds. At the same time the anti-corrup-tion practice applied by law enforcement bodies requires a stronger role of judiciary and public relations, lest the investigation of corruption cases

becomes a monopoly of state security and internal police. Likewise, the new law will require a serious adaptation of internal legislation. Currently, the “Regulation on the implementation in the Republic of Belarus measures to pardon convicts, exempt from criminal liability persons that contributed to the detection and elimination of the consequences of crime” envisions a possibility of relief from criminal liability for those charged for corruption in case they display penitence to the president and repay the damage and penalties.22 President him-self even encouraged this way of acting at a press conference on 23.12.2013. According to Belarusian media, several criminals have already used this opportunity,23 which in fact violates the principle of equality before the law.

22 V. Fedorovitch, Korruptsiya v Belarusi: pokayalsya pered prezidentim i na svobudu (Corruption in Belarus: released upon repentance to President), http://naviny.by/rubrics/soci-ety/2013/06/05/ic_articles_116_181964/ retrieved 14.11.2014.

23 Cf. ibid., http://naviny.by/rubrics/society/2011/12/23/ic_news_116_383411/ retrieved 14.11.2014.


B3: E-government

Availability of e-services, e-readiness based on website assessment, human resource endowment,index of the telecommunication and index of e-participation. Scale from 0 (worst) to 1 (best)

0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

E-government

BY'08

BY'10

BY'12

BY'14

BY'14

EE'14

DE'14

0,52

0,49

0,61

0,61

0,79

0,82

0,61

Belarus stands as the top-runner among the EU Eastern Partners on this indicator, albeit all coun-tries have managed to improve their scores in 2012-14. The UNPACS, United Nations Public Administration Country Studies, highlighted in 2014 an extraordinarily high IT-related human capital index, where Belarus had a score of 0.89 compared to 0.96 of the European leader Ireland. With an over-average performance against the tel-ecommunication infrastructure sub-index (0.61), the country displays, nevertheless, a disappoint-ingly low level of e-services (0.32) and, generally, e-participation (0.35).

Among the EaP countries, Armenia has a comparable level of human resources (0.77), less developed IT infrastructure (0.39) but stands much higher than Belarus with regard to e-services (0.61) and e-participation (0.53). Different IT develop-ment policies may lead to a different positioning of EaP countries in the short- to medium-term perspective, with implications on economic devel-opment, investment attractiveness and openness of public administration.

E-government development in Belarus staggers not so much at technology issues, but rather needs an adequate policy and legal framework to organ-

ise the process of electronic interaction between citizens and government. This framework should comprise an integrated e-government concept with emphasis on providing services to citizens, adequate regulatory framework and participatory elements (public expertise and monitoring) based on international practices and with due attention to qualitative characteristics of e-government.

According to the National Centre of Legal Information of Belarus, a presentation of the com-prehensive e-government is expected in late 2014.24 The e-government product will offer a wide range of e-services to the citizens, as practiced in more advanced countries. A major obstacle to introduc-tion of e-government has been the development of electronic registry of population and respective modernisation of personal documents. E-govern-ment developers in Belarus have capitalised on the experience of the neighbouring Poland as well as Sweden and Georgia. The country sees a lively on-line discussion and information sharing on these issues, as witnessed by the national web portal e-gov.by.

24 http://www.pravo.by/main.aspx?guid=126933


C: Public administration in Belarus: Accountability

C1: CSO sustainability

Civil society sustainability is (7…5) impeded, (5…3) evolving, (3...1) enhanced

1

2

3

4

5

6

7 CSO sustainability in Belarus

EE'13UA'13BY'13BY'12BY'11BY'10BY'09BY'08

3,4

2,0

6,0 5,9 5,9 5,9 5,8 5,7

In 2013, Belarusian civil society organisation recorded modest improvements on financial viabil-ity, advocacy, provision of services and infrastruc-ture. These improvements translated into a better overall performance, for the second consecutive year. Nevertheless, Belarus remains the only EaP country, where the civil society sustainability is cat-egorised as impeded.

Belarusian civil society operates in an environ-ment of confrontation rather than dialogue, even at embryonic stage, with the state authorities. The principal controversy is the issue of human rights, including release of political prisoners, repressions against the representatives of opposition, independ-ence of media, which civil society organisations believe the authorities are unable and unwilling to protect. A monitoring of on-line statements by the national CSO focusing on the country’s European

affairs shows that in 2014 this issue remained the centrepiece of the CSO activities’ agenda.25 The petty harassment of civil society activists and the oppression of regime critics continue unabated in Belarus, whilst sustainable non-state organisa-tions with a proven policy analysis capacity have to operate from abroad to avoid persecution. Owing to the state of relations Belarus – EU and govern-ment – civil society, the Belarusian National plat-form of EaP Civil Society Forum in expanding its role and activities. Nevertheless, many civil society organisations see cooperation with the EU in all possible formats as a promising opportunity to pursue reforms and sustainable development in the country.

25 Cf. newsline of the International consortium Europelarus at http://eurobelarus.info/news/?NewsRazdelID=1


D: Public administration in Belarus: Efficiency and effectiveness


0

30

60

90

120

150

180 Ease of doing business in Belarus

DE'15EE'15GE'15BY'15BY'14

57 57

1715 14

Belarus ranked 57th in 2014-15 among the 189 economies assessed by the World Bank Doing Busi-ness report. In the EaP region the country finds itself on the third-best position behind Georgia and Armenia. Belarus is among top performers with regard to enforcing contracts, starting a business and registering property. In contrast, trade regula-tions, access to credits and protection of minority investors are among impediments to doing busi-ness, so that the economy cannot improve its posi-tion in the overall rating substantially.

A noteworthy recent change for positive has been the simplification of taxation procedures, where businesses need to make only seven payments per year. Filing requirements for corporate income tax and VAT have been simplified. The country also streamlined the application of electronic system for filing and paying obligatory contributions to the insurance of work-related accidents. As a result, Belarus jumped from 107th to 60th position in the global ranking of paying taxes.26 The total tax rate (52% of profit) is however much higher than the average across Europe and Central Asia (34.9%) and OECD (41.3%).

26 World Bank press release 29.10.2014, http://www.world-bank.org/en/news/press-release/2014/10/29/doing-business-in-belarus-paying-taxes-easier-for-companies-but-the-pace-of-regulatory-reform-is-insufficient, retrieved 06.11.2014.

Foreign investments in Belarus in 2013 grew modestly by 4.5% year on year. The main foreign investor is Russia (48.5% of total) followed by UK (21.4%), Cyprus, the Netherlands and Austria. The main sectors preferred by the foreign investors are retail trade, transport and industry. Web page http://www.belarus.by/en/business offers compre-hensive data for foreign investors in Belarus.

SynopsisBelarus maintained previous-year accomplish-

ments in e-government development and posted improvements in simplification of tax paying regu-lations for businesses. Civil society has strength-ened its engagement in education and environment policies, however, the authorities continued to impede civil society involvement in political and democracy development issues. No progress has been registered in observance of the rule of law in an environment of autocratic governance of President Lukashenka. Overall, the country’s public administration falls short of the European stand-ards of reliability and accountability, as has been the case over the last two decades.


EUROPEAN PRINCIPLES OF PUBLIC ADMINISTRATION IN GEORGIA

A. Public administration in Georgia: Reliability and predictability

A1: Rule of Law / Justice System

Rule of law: Constraints to government powers through judiciary, legislature, independent auditing, controls by the society; misconduct is punished. Scale from 0 (worst) to 1 (best). Source: World Justice Project (WJP)

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9Rule of law: constraints to government powers

DE'14EE'14GE'14GE'14GE'13

0,480,53 0,53

0,800,83

This year Georgia has signed27 Association Agree-ment (AA) with the European Union. This agree-ment seeks to help Georgia get closer to the Euro-pean standards of the rule of law, human rights, public service, accountability and transparency etc. The AA is a major milestone for Georgia on its road to joining the European family and becoming a truly European state. In November 2014 EU Par-liament called for a speed-up in introducing visa-free regime for the Georgians. 2012 Parliamentary elections, which resulted in an exemplary peaceful transfer of power in Georgia, have brought to the government new political coalition headed by the Georgian tycoon Bidzina Ivanishvili. The coalition consists of members of different parties/ideologies. Recently Georgian government has experienced a major overhaul,28 which resulted in the resignation of the Minister of Defence, the Minster of Foreign

27 http://opiniojuris.org/2014/06/28/eu-signs-association-agreements-ukraine-moldova-georgia/

28 http://www.rferl.org/content/alasania-panjikidze-tbilisi-georgian-dream-resignation-crisis/26675249.html

Relations and the Minister of Euro-Atlantic Inte-gration.29 According to these ministers, Georgian government’s European aspirations are question-able and they were “punished” for their pro-Euro-pean choice.30

2014 indicators reflect clear progress on the path of improving the rule of law in Georgia, which by and large is a result of a clearer separation of pow-ers, the absence of which has always been a major drawback in the past, according to Transparency International.31 At the same time there are several shortcomings in the rule of law situation in Geor-gia. Firstly, several credible institutions such as the European Union32 and the US Government33

29 All of these three ministers were coming from a single political party.

30 http://www.nytimes.com/2014/11/06/world/europe/pro-west-party-quits-georgias-governing-coalition.html?_r=0

31 http://www.transparency.org/country#GEO

32 http://www.epp.eu/georgia-epp-vp-saryusz-wolski-expresses-strong-concern-over-arrest-gigi-ugulava

33 http://www.state.gov/r/pa/prs/ps/2014/07/229917.htm


have been systematically expressing their concern over the criminal charges brought against former mem-bers of Saakashvili government. For example, President Saakashvili, who fled the country right before his presidential term expired in 2013, is now facing several charges and his two former ministers and the mayor of Tbilisi are imprisoned. Apart from this high profile cases, the new government has been also criticized for launching investigations against hundreds of member of the previous central and local governments.34 The new government in Tbilisi has to make sure that this major concerns expressed by the European institutions are heard and taken into account, otherwise this will further damage country’s reputation and the situation with regards to rule of law in Georgia.


A2: To what extent government officials show favoritism to well-connected firms and individuals when deciding upon policies and contracts: 1 - government officials always show favouritism; 7 - government officials never show favouritism

A3: How common are irregular payments in the economy: 1 - very common; 7 - never occur

Georgia has made a tangible progress in the recent years in terms of fighting corruption in the public ser-vices. Anti-corruption reform started by the third President M. Saakashvili a decade ago proved generally successful. The country is a leader not only in the region but also is ahead of many EU member countries in terms of public perception of corruption.35 The survey shows that less people pay bribers in Georgia than even in Estonia or in Denmark.

There have been two high profile corruption cases during last two years when high-ranking officials in the Ministry of Agriculture36 and in the Ministry of Defence37 have been arrested with corruption charges. Although several commentators underline that both of these cases had some political biases, it still serves as a good example that corruption is not tolerated also within the new government.

Favouritism in the government decision-making is a real problem in Georgia. This is particularly vis-ible when it comes to hiring policies in the civil service. There are numerous allegations against current members of central as well as the local self-government that they hire their relatives and friends in the civil service. The pitfall has been widely analysed by many NGOs and still remains unresolved.38

34 http://www.state.gov/r/pa/prs/ps/2014/07/229917.htm

35 http://www.traceinternational.org/trace-matrix/

36 http://dfwatch.net/agricultural-minister-resigns-amidst-fraud-scandal-46652

37 http://www.reuters.com/article/2014/11/05/us-georgia-government-idUSKBN0IP0VV20141105

38 http://transparency.ge/en/blog/signs-nepotism-chkhorotsku-municipality

1

2

3

4

5

6

7


DE'14EE'14GE'14GE'14GE'13GE'12GE'11GE'10

3,023,25 3,36 3,37 3,44 3,44

4,10

4,674,88

5,295,56 5,47

5,99 5,995,77 5,66


B. Public administration in Georgia: Openness and Transparency


How easy is it for businesses in your country to obtain information about changes in governmentpolicies and regulations affecting their activities?

1 – impossible; 7 – extremely easy

1 2 3 4 5 6


GE'09

GE'10

GE'11

GE'12

GE'13

GE'14

GE'14

EE'14

DE'14

4,66

4,78

4,78

4,89

4,60

4,77

4,97

4,70

4,70

Despite the high level of transparency, availability of certain information – such as crime statistics and bonuses paid to the government officials – still remains limited. Although the government in 2013 adopted regulations mandating pro-active publica-tion of public information, these guidelines still remain largely unfulfilled due to the lack of trans-parency in the information regarding bonuses and crime statistics. The first, crime statistics data, are effectively closed for CSOs and media and hence for any independent analysis. Ministry of Internal Affairs has been constantly denying requests from outside. As a result, public perception of safety and physical security deteriorated.

The other type of information, regarding bonuses to officials, is likewise hard to obtain. In 2014 the government has adopted a new regulation,39 which sets clear guidelines as to how bonuses shall be awarded. Despite those changes, some agencies such as Tbilisi City hall, adopted their own rules of awarding bonuses, which has been widely criticized by the Georgian CSOs.

The new government should fulfil its obligations under the Open Government Partnership, which amongst many others entail creating monitoring

39 http://transparency.ge/en/node/4532

mechanism of asset declarations. Establishment of this system will shed more light on the income and bonuses of public officials as well as other types of wealth variation. Georgia also lacks strong whistle-blower’s protection legislation, which would encourage individuals to speak-up about any wrongdoing. Although there is currently a law on whistle-blower’s protection, it is still very weak and civil servants do not feel safeguarded against biased dismissal and prosecutions.40

2014 saw a harsh debate on reforming phone-tap-ping legislation in Georgia. The government, hold-ing the “key” to all the electronic data stored within the mobile and internet providers, has immensely resisted CSO-lead reform, which envisioned intro-duction of “checks and balances” mechanism to pre-vent abuse of this power by the Ministry of Interior. The reform is essential as Georgia has a very heavy legacy of uncontrolled government surveillance in the past. If the Georgian government wishes to establish truly European standards of transparency it has to limit the uncontrolled secret surveillance powers of the police and introduce some structures of verifications and checks.

40 http://transparency.ge/en/blog/georgia-improves-whistleblower-provisions-more-changes-needed




Georgia still remains as a leader within the EaP region in terms of corruption perception. Georgia’s score from last year is three points lower than in 2012. One of the main reasons for this decrease seems to be the fact that the new government has not really implemented any new preventive mechanisms in the public sector and it is still largely dependent on a solid anti-corruption legacy inherited from the previous govern-ment.

B3: E-government

Availability of e-services, e-readiness based on website assessment, human resource endowment, index of the telecommunication and index of e-participation. Scale from 0 (worst) to 1 (best).

1

10

19

28

37

46

55

64

73

82

91Corruption perception in Georgia


41 41

49

68

38

5249

78

0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

E-government

GE'08

GE'10

GE'12

GE'14

BY'14

EE'14

DE'14

0,46

0,42

0,60

0,56

0,79

0,82

0,61


Availability of E-governance tools is crucial in the modern society. Georgia has made a significant progress in the recent years in terms of introducing electronic governance in almost all sectors of public life start-ing from signing-up for the kindergarten to applying for land cadastre registrations. The most successful E-governed institutions still remain Public Service Hall, Ministry of Finance’s Revenue Service and Tbilisi City Hall.

The country ranks second best in the EaP region slightly behind of Belarus. The UN E-government report of 2014 witnessed a high level of e-participation (0.59) in Georgia, which rests on above average IT-related human resources (0.79) and online services (0.60). Policies in IT sector should focus on IT infrastructure development (0.43), in particular internet penetration and equipment accessibility countrywide.

C. Public administration in Georgia: Accountability

C1: CSO sustainability in Georgia

The sustainability of civil society organisations is (7-5) impeded, (5-3) evolving, (3-1) enhanced

CSO sustainability in Georgia

EE'13UA'13GE'13GE'12GE'11GE'10GE'09GE'08

3,4

2,0

4,2 4,2 4,2 4,2 4,2 4,1

1

2

3

4

5

6

7

Civil society organizations play a vital role in shap-ing public opinion in Georgia. Amongst the most influential ones are Transparency International Georgia, Georgian Young Lawyers Association and foundations, such as the Open Society and Eurasia Partnership Foundations. After the 2012 parliamentary elections many former officials and government members, who had significant expe-rience in public policy and management, have moved to the NGO sector. They are now mostly focused on enhancing good governance and closely monitoring government activity. It should be also mentioned that the former prime minister and a

leader of the ruling coalition, Bidzina Ivanishvili, has now founded an NGO “Citizen”,41 which claims to become the most well-funded CSO in Georgia in the months to come. The recent-year developments, as highlighted by the USAID CSO sustainability index, comprise a stronger advocacy stance and, logically, an improved public image of the Georgian civil society. Generally, the country is moving closer to an enhanced CSO sustainability, notably on the respective legal environment.

41 http://mokalake.ge




Unlike other EaP countries, judicial independence in 2014 witnessed a meaningful improvement in the recent year in Georgia. Judges, who were mainly appointed by the previous government, have no affiliation with the current coalition. Although the judiciary by and large is independent from the other branches of the government, there are still some allegations against certain judges involved in high profile cases. These allegations mainly involve criminal cases against former government officials. There are unconfirmed accounts that the government (prosecution service) has been illegally approaching the same judges in the cases of former Mayor of Tbilisi, Gigi Ugulava and former Minister of Police Vano Merabishvili to render favourable decisions.42

D. Public administration in Georgia: Efficiency and Effectiveness


Country’s worldwide ranking among 189 economies (2014-15)

42 http://dfwatch.net/court-rejects-appeal-from-ex-mayor-43841

1

2

3

4

5

6

7


DE'14EE'14GE'14GE'14GE'13GE'12GE'11GE'10GE'09

3,84

5,675,88

4,524,72

5,31

2,702,93

3,18 3,18 3,31

3,844,20 4,13

4,484,71

4,50 4,52

Ease of doing business in Georgia

DE'15EE'15GE'15GE'15GE'14

171515 1414

0

30

60

90

120

150

180


As witnessed by the graph, Georgia remains the leader in the region and beyond in terms of creating business-friendly environment. With 15th place in the world ranking, Georgia is way ahead the most EaP countries and EU member states. In the easi-ness to register real estate property Georgia firmly holds the world’s top position during last two years and third best in dealing with construction permits. Likewise, the country is among the world leaders with regard to market entry and access to credits.

The profound improvements were possible to achieve only as a result of set of reforms in taxation, licensing, anti-corruption, budgetary discipline,

e-governance, state procurement, transparency of government spending etc. Nevertheless, Georgia is still lagging behind top performers in what concerns enforcing contracts, resolving insolvency as well as paying taxes. To illustrate, market exit procedures are perhaps the most problematic field in the busi-ness environment. Although some improvements have taken place in the recent year, the legal and administrative framework of insolvency requires further strengthening in order to speed up proce-dures, reduce costs and raise the property recovery ratio.

D2: Extent of market dominance, D3: Wastefulness of government spending

D2: Corporate activity is 1 – dominated by a few business groups; 7 – spread among many firmsD3: 1 – government spending in providing necessary public goods and services is extremely wasteful;


1

2

3

4

5

6

7


DE'14EE'14AZ'14GE'14GE'13GE'12GE'11GE'10GE'09

3,27 3,15 3,16 3,21 3,33 3,47

3,92

5,77

3,50 3,44 3,47 3,373,16

3,473,20

3,46

4,29 4,18

Georgia has a solid free market foundation fol-lowing the reforms carried out by the pervious administration in 2004-2012. Simplification of doing business seems to be the priority for the new government as well. One of the current govern-ment’s pre-election promises was to open up 100 new factories within 1 year. Government has failed to deliver on this promise and instead launched “Manufacture in Georgia” project, which envisages cheap government loans for business start-ups. As a result, several such projects have already been suc-cessfully launched.

On the other hand, recently the government has adopted a new law,43 which banned selling agricultural land plots to foreigners. Later, this law has been found unconstitutional44 by the Constitu-tional Court of Georgia as it contradicted the con-stitutional guarantees of the property rights.

43 http://transparency.ge/en/blog/ban-land-acquisition-foreigners-breach-constitution-and-its-adverse-impact-investment

44 http://transparency.ge/en/node/4410


E. Public administration in Georgia: consolidating indicator



1

2

3

4

5

6



3,84 3,92 3,93 3,954,2 4,20

5,005,20

Current as well as previous governments, have announced public service reform as their top pri-ority. However, none of them succeeded to adopt a new Civil Service Code, which would reform the current system and bring in the European stand-ards of accountability and efficiency. For example, several legal amendments, such as introduction of job descriptions in public institutions, annual appraisals and assessments as well as several other innovations, have been systematically rejected by the legislature.45 It is important that Georgia is reforming the public service as per its obligations under the OGP and several other action plans signed by the government. This reform is also vital in the context of AA and the most recent challenges faced by the country.

SynopsisGeorgia maintained its leading position within

EaP countries in terms of public sector reforms and democratic transition. In 2014 year Georgia signed Association Agreement with the European Union. This is major milestone in the Georgia-EU relation-ship. AA is designed to guide Georgia through the process of getting closer to the European standards of public life, including but not limited to, rule of law, human rights, public administration and account-

45 http://csb.gov.ge/en/reform-in-civil-service

ability, economy and immigration control. Georgia still has to improve its rule of law standings when it comes to potentially politically biased criminal charges against former government officials; it also has to conquer nepotism and favoritism-driven decisions in the public service and enhance its fight against all types of irregular payments. The coun-try needs to make public information, such as the data related to crime statistics and bonuses paid to public officials, more open and transparent. Finally, Georgia needs to finalize public service reform in order to get closer to the European standards of efficiency and transparency.


EUROPEAN PRINCIPLES OF PUBLIC ADMINISTRATION IN MOLDOVA

A: Public administration in Moldova: Reliability and predictability

A1: Rule of law / Public institutions

Rule of law: Constraints to government powers through judiciary, legislature, independent auditing, controls by the society; misconduct is punished. Scale from 0 (worst) to 1 (best). Source: World Justice Project (WJP)

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9


DE'14EE'14GE'14MD'14MD'13

0,43 0,43

0,53

0,800,83

According to the Barometer of public opinion of April 2014,46 improving the mechanism for law enforcement is the key measure for the improve-ment of the social and economic situation in the Republic of Moldova (23 per cent of respondents). The level of Moldovan society’s trust in state institu-tions remains however extremely low: of the total number of respondents 76 per cent express distrust toward the parliament, 74 per cent toward judiciary, 73 toward the president, and 72 per cent – toward the government.

As shown in the graph, the World Justice Project (WJP) sub-index “constraints to government pow-ers” testified “sanctions for official misconduct”, “limits by judiciary” and “independent auditing” as the most evident drawbacks for observance of the rule of law in Moldova. This assessment result finds itself mirrored in the National Integrity Sys-tem Assessment by Transparency International

46 http://www.ipp.md/public/files/Barometru/Brosura_BOP_04.2014_prima_parte_final-rg.pdf

Moldova 2014,47 that the government has been only “sporadically and selectively” accountable to the Parliament. The current legal framework is silent with regard to the accountability of ministries. The year 2014 saw numerous cases of political influence over the public authorities. Legal provisions regard-ing code of conduct and integrity are enforced and supervised only sporadically. Respectively, an ex-post assessment by Transparency International Moldova recorded a very low degree of transpar-ency and accountability in implementing the rec-ommendations of the Court of Auditors’ decisions addressed to the authorities audited.48 The Associa-tion Agreement between the EU and Moldova, in force since September 1, 2014, needs to become the guideline for the respect of the rule of law and fun-damental freedoms in the country.

47 http://www.transparency.org/whatwedo/publication/moldova_national_integrity_system_assessment_2014

48 http://www.transparency.md/Docs/PR_politica%20Ges-tiunea%20Finantelor%20Publice_Soros.pdf




1

2

3

4

5

6

7


DE'14EE'14GE'14MD'14MD'13MD'12MD'11MD'10

2,70 2,55 2,462,30 2,26

3,44

4,10

4,67

3,33 3,32 3,363,16

2,97

5,995,77 5,66

Several bills adopted by the Parliament and gov-ernment regulations of the last months of 2014 are characterized by low quality for non-coordination with the overall legal framework. Besides, some of the new legal acts did not undergo anti-corruption expertise and introduce privileges for specific companies or interest groups. President of the Parliamentary Commission on Economy, Budget and Finance, Veaceslav Ioniţă, accused the govern-ment of Prime Minister Leancă for bringing in legal drafts, which enable schemes of embezzlement of public funds through companies falling within the ambit of the former Prime Minister Filat. A Rise Project journalistic investigation shows that 9 out of 21 members of the Government of Leancă have businesses that have not been declared.49

Bribery continues to be one of the most threat-ening scourges for the Moldovan society. Its pro-portion was estimated in September 2014 in an interview with the US Ambassador to Moldova,

49 http://www.rise.md/articol/ministri-cu-afaceri-secrete-2/

William H. Moser,50 who pointed out that the level of corruption in Moldova is “unusually high” and that “without bribes one cannot accomplish any-thing in your country.” 2014 saw an unprecedented expansion of electoral bribery. A Promo-LEX association, which monitored the parliamentary elections of 30 November 2014, found and made public vast evidence of bribery among the parties, individual candidates and vis-à-vis the voters.51

These developments explain the negative evo-lution of the Republic of Moldova in 2014 on the indicators „Favouritism in government decisions” (place 130 out of 144 according to The Global Competitiveness Report 2014–2015) and „Irregular payments and bribes” (place 116 out of 148). The country lags much behind respective levels posted by Georgia, Estonia and Germany.

50 http://pan.md/paper/Interviyu/Uiliyam-Mozer-Problem-s-korruptsiey-eshie-predostatochno-/51853

51 http://www.promolex.md/upload/publications/ro/doc_1413464915.pdf


B: Public administration in Moldova: Openness and transparency


Easiness to obtain information about changes in government policies and regulations affecting businesses: 1 - impossible;7 - extremely easy

1 2 3 4 5 6


MD'09

MD'10

MD'11

MD'12

MD'13

MD'14

GE'14

EE'14

DE'14

4,01

4,37

4,30

4,30

4,77

4,97

4,70

3,97

Transparency International Moldova attested recently a low level of transparency in the activities of the Parliament.52 Cases of non-coordination of legislation initiatives with the government have been quite frequent. Both the Moldovan NGOs Council and the National Participation Council highlighted in 2014 inadequate transparency in the work of Parliament and the Cabinet of Ministers,53 deficiencies in organizing public information about elaboration of new legislation as well as activities of political parties in the parliamentary committees and at plenary sessions. In this context the civil society representatives recommend that policy makers ensure easy access to: legal acts on the website of the Parliament including the revision of acts after each reading; agendas and minutes, audio and video recordings of plenary sessions and


53 http://www.consiliulong.md/declaratie-de-sustinere-a-accesului-direct-al-presei-la-sedintele-parlamentului/

parliamentary committees’ work; information on each MP’s vote on the bills being under adoption. All these procedures are normal practice in more developed democratic political systems.

The decreasing level of transparency of political decisions in 2014 compared to 2013 is largely attributable to a lower quality of independent media. According to the Foreign Policy Association,54 the information about the real owners of media is rarely disclosed. Most media are also financially dependent on businesses with non-transparent political and economic interests, which results in a biased coverage to the “favour” of the owners’ own influence and credibility in the society. Lastly, Moldovan media are evidently imbalanced by and in favour of Russia’s information policies. The problem has aggravated along with the crisis in Ukraine and hence bears a serious risk for the society as a whole.

54 http://2014.europa.md/images/dox4download/soci-etatea_civila/2014/2014-09_Starea_Presei_RO.pdf




With the score of 35, the Republic of Moldova ranks 102nd out of 177 economies in the 2013 Transparency International Corruption Perception Index. It registered a slight decline year on year and lags behind the levels recorded by Georgia, Estonia and Germany.

The lack of transparency in funding political parties generates political corruption, which inevitably penetrates the national Parliament. Moguls that went into business and made great fortunes in an uneven competition environment exert influence on the Parliament and try to control the judiciary. In 2013, several corruption cases against high-profile officials were publicly disclosed. Nevertheless, these cases were effec-tively suspended for political reasons, and the officials in question never brought to court. Understandably, citizens would not perceive those disclosures as any real progress in fighting corruption.

B3: E-government


1

10

19

28

37

46

55

64

73

82

91Corruption perception in Moldova


3329

35

68

29

36

49

78

0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

E-government

MD'08

MD'10

MD'12

MD'14

BY'14

EE'14

DE'14

0,46

0,45

0,56

0,56

0,79

0,82

0,61


C: Public administration in Moldova: Accountability

C1: CSO sustainability

Sustainability of the civil society in the country is: 7…5 impeded, 5…3 evolving, 3…1 enhanced

Within the framework of the Strategy for civil society development for the years 2012-2015 in 2013 civil society organizations (CSOs) intensified the dialogue with the authorities providing feedback on draft leg-islation and policy initiatives. In 2013 the organizational capacity of CSOs continued to improve, owing mostly to a stronger engagement of international donors with the Moldovan civil society. Although financial viability remains the weakest dimension of sustainability of CSOs, in 2013 efforts were made to diversify the sources of financing, especially through local fundraising and corporate donations.

The UN E-Government Survey 2014 places the Republic of Moldova 66th in the global ranking of 193 countries with a score of 0.5571 on the E-Gov-ernment Development Index (EGDI).

In October 2013, Moldovan Government approved the National Strategy for Information Society Development “Digital Moldova 2020” aimed at creating favourable conditions for the development and widespread use of the potential of information technology and electronic communi-cation by public institutions, business and society. Increasing online information services, stronger IT penetration to all social groups and remote regions, raising (even if modestly) transparency of public governance already manifest the impact of the strategy implementation.

Within the framework of Moldova ICT Summit 2014, the Ministry of Information Technology and Communications has presented the IT industry

competitiveness package containing measures to increase the competitiveness of information tech-nology industry in Moldova. Among other things the ministry proposed creation of virtual parks in IT industry and establishment of centres of excel-lence for providing the IT sector with highly quali-fied specialists.

At the same time, compared to 2012 Moldova has registered some decline according to EGDI value (0.5626 in 2012). Out of the three compo-nents of EGDI two have evolved positively in 2012-14, namely online services and telecommunication infrastructure. In contrast, human capital sub-index was on a downward trend in the same period. Moldova’s position in 2014 is below the European average (0.6936) and the score posted by Estonia, Germany and Belarus. However, the country stood above the world average (0.4712).

CSO sustainability in Moldova

EE'13UA'13MD'13MD'12MD'11MD'10MD'09MD'08

3,4

2,0

4,2 4,3 4,2 4,1 4,1 4,0

1

2

3

4

5

6

7


Events in 2013 highlighted the importance of civil society and its impact on the country’s development. Noteworthy are the seventh edition of the NGO Forum and the 5th meeting of the national Civil Soci-ety Forum within the framework of the Eastern Partnership. In Transnistria the CSO sustainability didn’t change significantly in 2013, however, the local civil society organisations put forward a number of impor-tant initiatives, such as a flash mob against the state liquidation of Internet forums and publishing a report on human rights. On the other hand, Transnistria’s CSOs experienced more pressure and harassment by the authorities in Tiraspol.

Against this background Moldova managed to improve its position in 2013 USAID report „The 2013 CSO Sustainability Index for Central and Eastern Europe and Eurasia”. The report highlights specifically better organisational capacity, improved financial position, stronger advocacy, infrastructure and service provision. At the same time, Transparency International-Moldova55 speaks of the low capacity of NGOs to mobilize society for a public dialogue and cooperation with state institutions in combatting corruption. There are frequent cases when NGOs are biased due to political commitments. In the regulatory framework for CSOs provisions on prevention of corruption, conflicts of interest, code of conduct and intellectual property need particular strengthening.



Monitoring in 2014 the judiciary system Transparency International Moldova56 has found that the legal framework for accountability of judges remains imperfect. There are cases when the representatives of the judiciary system are involved in a takeover activity. Administration of justice is not sufficiently transparent. The real independence of Public Prosecution Office is not ensured and the respective reform is delayed. In turn, monitoring of the implementation in 2014 of the action plan under the Strategy for Justice Sector Reform by Promo-LEX association57 classified the progress as very slow.

In 2014 the government took a move to raise public administration accountability by initiating a new law on disciplinary responsibility of judges. The law however envisions a very intricate mechanism for inves-tigating the cases of misconduct. Although the Venice Commission and OSCE/ODIHR have given their


56 http://www.transparency.md/files/docs/SNI-2014.pdf

57 http://www.promolex.md/upload/publications/en/doc_1408460384.pdf

1

2

3

4

5

6

7Diversion of public fundsJudicial independence


3,84

5,675,88

4,524,72

5,31

2,27 2,19 2,081,92 1,95

2,81 2,742,58

2,38 2,37


opinions on this bill, none of the recommendations were taken into account. In 2014 the judiciary’s budget has increased by 44% compared to 2013. Although the salaries of judges have considerably increased in 2013-2014, they continue to enjoy most of the old benefits.58

Regarding diversion of public funds, Transparency International Moldova found in 2004:59

• only a part of public funds goes through the public procurement process, most purchases are made through small value procedures, being fragmented to avoid following the steps stipulated by law;

• public procurement planning process is not transparent in half of the authorities monitored• results of the public procurement contract awards are partially transparent• management of state enterprises and state representation in commercial companies is not sufficiently

transparent• there are deficiencies in managing the resources allocated to the State Chancellery.

Compared to the previous year, Moldova has recorded only marginal changes under the two indicators. The country stands far behind the levels shown by Germany, Estonia and Georgia.

D: Public administration in Moldova: Efficiency and effectiveness


According to the Doing Business 2015, Moldova improved visibly by jumping 15 positions up the global rating. The report attests the most prominent accomplishments of Moldova in the recent year – simplification of the access to credit, streamlining tax payments, facilitating market exit in the case of insolvency. The country’s accomplishments do not instantly imply however that the economy is becoming more attractive to investors. Corruption, hurdles to contracts enforcement under an unstable legislation, and lack of modern infrastructure remain on the reform agenda for a better business climate. In the EaP regional comparison, Moldova stands better than Ukraine and Azerbaijan but lags behind the remaining countries, notably Georgia.

58 http://crjm.org/wp-content/uploads/2014/09/Studiu-reforma-justitiei-web.pdf

59 http://www.transparency.md/Docs/PR_politica%20Gestiunea%20Finantelor%20Publice_Soros.pdf

Ease of doing business in Moldova

DE'15EE'15GE'15MD'15MD'14

1715

63

14

82

0

30

60

90

120

150

180



D2: Corporate activity in the economy is: 1 – dominated by a few business groups;7 – spread among many firmsD3: 1 – government spending in providing necessary public goods and services is extremely wasteful;


1

2

3

4

5

6

7Wastefulness of government spendingMarket dominance

DE'14EE'14AZ'14MD'14MD'13MD'12MD'11MD'10MD'09

3,27 3,15 3,16 3,21 3,33 3,47

3,92

5,77

3,50 3,44 3,47 3,373,16

3,473,20

3,46

4,29 4,18

According to the Global Competitiveness Report, the Republic of Moldova recorded a slight improve-ment on dismantling the market dominance in 2014. A better competition protection and anti-monopoly policies would not however hit the ground. Lucrative domestic markets, such as petrol, pharmaceuticals, insurance and communication services, are in the hands of state-controlled com-panies, while the vested interests effectively block any diversification efforts.

The five-year trend on the wastefulness of the government spending has been stagnant to nega-tive, reflecting the weakness of public institutions in Moldova in this respect. According to the IMF projections,60 a significant deterioration in the fiscal position is likely in a short run (2014-15), owing to a significant wage and pension increases (in addition to those granted in 2013 in the midst

60 Republic of Moldova: 2014 Article IV Consultation and First Post-Program Monitoring Discussions. Country Report Moldova, July 2014, http://www.imf.org/external/pubs/ft/scr/2014/cr14190.pdf

of the political crisis), the cost of new ad hoc tax benefits, and weaker economic activity. An easier fiscal stance can be partly attributed to pre-election political pressures, however, a longer-term policy of expenditure consolidation, e.g. on the basis of a efficient performance-based budgeting, seems missing.

In 2014, Transparency International Moldova found that one third of the monitored central pub-lic administration authorities have not been subject to any internal audit,61 owing either to the lack of appropriately trained staff or to non-adoption of the necessary regulations. Most public authorities that have been internally audited do not disclose information on the impact of internal audit. Only one third of the public bodies have published on their webpages the information on budget planning and budget execution.

61 http://www.transparency.md/Docs/PR_politica%20Ges-tiunea%20Finantelor%20Publice_Soros.pdf


E: Public administration in Moldova: consolidating indicator



1

2

3

4

5

6



3,33 3,28 3,26 3,09 3,00

4,20

5,005,20

SynopsisWith the pro-European outcome of the par-

liamentary elections in late November 2014, the Association Agreement with the EU is becoming the centrepiece of the reform agenda for Moldova in the years to come. The country still needs time to align its public administration reform with the European standards. So far however, the credibility that Moldovan society gives to the state institu-tions remains extremely low. Cases of political interference into the work of public authorities are unchangeably frequent. The graph above illustrates that the overall quality of the public administration in the country has been deteriorating throughout the observation period, reaching the lowest level in 2014. The general sentiment in the society is that by 2014 the work of the Parliament and the Cabinet of Ministers has become the least transparent since 2010. The non-transparent funding of the political parties generates political corruption penetrating into Parliament, and pre-electoral irregular pay-ments and bribes marred the general elections in

November 2014. Moldovan judiciary stays open to political pressure and hence fails to administrate justice independently. Non-transparency is also the key feature of the public procurement system and execution of budget expenditures on the govern-ment itself. On a positive note, in 2014 Moldova managed to improve civil society sustainability and many administrative procedures in the business climate.


EUROPEAN PRINCIPLES OF PUBLIC ADMINISTRATION IN UKRAINE

A: Public administration in Ukraine: Reliability and predictability

A1: Rule of law: constraints to government powers

Source: World Justice Project. Constraints to government powers through judiciary, legislature, independent auditing,controls by the society; misconduct is punished. Scale from 0 (worst) till 1 (best)

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9


DE'14EE'14GE'14UA'14UA'13UA'12

0,330,36

0,41

0,53

0,800,83

With the Revolution of Dignity of November 2013, also known as Euromaidan, Ukraine has started its pronounced movement toward the EU. The pro-European policies have been formed in an extremely difficult domestic environment of Russia’s invasion, and the country has seen major instabilities in the social and political fields. The developments had a profound impact on the performance of all branches of the government. The Euromaidan brought the country back to the parliamentary-presidential political system, which implies a stronger role of the government formed by the majority coalition in the parliament, which itself is based on the outcome of the general elections. However, the issue of checks and balances remains pressing and needs to be addressed. The newly elected President of Ukraine has initiated even more changes to the Constitu-tion with the objective to strengthen the rights of local self-government and respectively adapt the powers of the President and the Parliament. At the same time, Ukraine’s judiciary has not gained the necessary independence to judge the performance of the executive. Even in the new political environ-

ment an increasing number of the top level officials facing criminal charges managed to escape pros-ecution and flee from the country, in the same way as the former President. This said, the presidential and parliamentary elections of 2014 took place in a more democratic environment with much lower administrative pressure than previously. The coun-try’s new legislative and executive powers of the government were formed legitimately and recog-nized as such by the international community.

Important novelties in 2014 were the expansion of the powers of Chamber of Accounts to super-vise the execution of revenues and expenditures of the state budget and introduction of performance auditing in government agencies. Yet the lack of appropriately trained staff and delays with the adoption of necessary regulations hamper an effi-cient deployment of performance auditing.

At the same time Ukraine has introduced favourable conditions for an independent control over the performance of the executive authorities by civil society organisations. The government has approved a procedure for conducting a public


expert review of the performance of the govern-ment agencies. So far 38 public expert reviews have been completed and their findings have been made open to the public. There is an effective procedure in place to ensure free access of citizens to public information. Civic councils are formed under the government agencies to perform a number of super-visory functions. For instance, a volunteer council was established under the umbrella of the Ministry of Defence to ensure public control over the utili-zation of charitable contributions in support of the

army. The National Anti-Corruption Strategy was approved. The strategy provides more possibilities to the civil society to ensure an independent con-trol over the performance of public officials and the process of public procurement.

But the issue of a more effective checks and bal-ances system still needs to be addressed, notably in what concerns raising the independence, efficiency and impartiality of the judiciary. The Reform Agenda initiated by the new government takes these issues in due account.


A2: To what extent do government officials in your country show favouritism to well-connected firmsand individuals when deciding upon policies and contracts? 1 – always; 7 – never

A3: How common is it for firms to make undocumented extra payments or bribes connected with (a) imports and exports; (b) public utilities; (c) annual tax payments; (d) awarding of public contracts and licenses; (e) obtaining favourable judicial decisions?

1 – irregular payments are very common; 7 – irregular payments never occur

1

2

3

4

5

6

7


DE'14EE'14GE'14UA'14UA'13UA'12UA'11UA'10

2,322,65 2,50

2,252,50

3,44

4,10

4,67

2,802,65 2,69 2,80 2,96

5,995,77 5,66

The latest indicators show a modest progress in over-coming favouritism in government decisions, although the country lags far behind the regional leader Georgia and the EU levels. The post-Euromaidan government has introduced a different practice of decision-mak-ing compared with its predecessors but the legacy of favouritism is heavy. The deeply-rooted communica-tion patterns established among the stakeholders of the decision making process, which fall outside or vio-late the legislation are still common and have a nota-ble impact. The interaction of stakeholders is largely driven by own interests or interests of individuals and business groups they represent. Ukraine’s system of vested interests, where public officials execute full control over the major financial flows in the economy

and oligarchic clans are involved in large-scale corrup-tion schemes, has been shaken after the Euromaidan, but, obviously, is dying hard.

To illustrate, the new authorities have not addressed so far the issue of separation of business and politics. On political and financial corruption, a sub-index of the Corruption Perception Index (see B2), Ukraine lost 10 points in 2014 compared to the previous year. The Country Risk Guide by Political Risk Services International highlights an excessive selective protectionism and suspiciously close ties between politics and business in Ukraine. Irregular payments and bribes by the officials remain com-mon in the economy, even if Ukraine’s position has recently slightly improved.


A public initiative “Chesno” has identified 37 per-sons elected to the Ukrainian parliament in October 2014 that had been earlier revealed as corrupt in journalistic anti-corruption investigations.62 Gener-ally, Ukrainian oligarchs have played a strong role in financing and supporting selected political par-ties that participated in the parliamentary elections. Financial expenses of election participants have not been made transparent, which raised suspicion that some parliamentary factions would remain depend-ent on representatives of large business. Similarly, representatives of business with little of no experi-ence in public governance were appointed to senior positions in the Presidential Administration. The public met those appointments with mixed feelings, as it remains unclear whether or not the new politi-cians will pursue the needed reforms.

Civil society organisations documented in 2014 numerous cases of favouritism and nepotism in the public procurement, notable in the spheres of defence and health care. Embezzlement schemes, as

62 http://chesno.org/news/2035/

shown by the Center for Political Studies and Anal-ysis in Kyiv, rest on political corruption at the award of procurement contracts, which lead, among other things, to the creation of artificial monopolies. Despite the attempts to introduce more transpar-ency to tendering process, shadow arrangements still have plenty of room to reproduce themselves – based for example on a recent government regula-tion that significantly complicated the procedure of free publication of tender information on the Pub-lic Procurement web portal.

A number of laws on combatting corruption counteraction were approved in 2014 and the Anti-Corruption Strategy adopted. The new legislation and policy initiatives give hope that the issue of corruption becomes as important to the authorities and the whole society in the short- and medium-term perspective as counteraction to the external aggression and liberation of the occupied territories in the East of Ukraine.

B: Public administration in Ukraine: Openness and transparency


How easy is it for businesses in your country to obtain information about changes in government policies and regulations affecting their activities? 1 – impossible; 7 – extremely easy

1 2 3 4 5 6


UA'09

UA'10

UA'11

UA'12

UA'13

UA'14

GE'14

EE'14

DE'14

3,47

3,64

3,67

3,70

3,60

4,77

4,97

4,70

3,64


Ukraine has improved its position as regards trans-parency in policymaking if compared to the previ-ous year but has been broadly stagnant over the observation period. According to the World Eco-nomic Forum’s Executive Opinion Survey, Ukraine ranks 104th out of 144 countries in terms of trans-parency in policymaking, lagging far behind the best performers.

The government has been implementing an Open Government Initiative along with the law on access to public information. A branch of the government website called Civil Society and the Government (http://civic.kmu.gov.ua) acts as the unified resource that provides access to draft laws and regulations for citizens. The new version of the website makes it easier for people to discuss draft decisions, which are of paramount importance to the society, and the activities of the government and its agencies in the field of communication with the public. There is a good practice of close interaction of the government, the Parliament and the President of Ukraine with the civil initiatives when it comes to adoption of reform-oriented laws. Noteworthy are the activities of the civil platform to put together the “Reanimation Package of Reforms” comprising 17 laws, which have been approved to underpin the accomplishments of Euromaidan with overdue domestic reforms.63

63 http://platforma-reform.org/?page_id=448

Positive developments prevailed in the imple-mentation of the law on access to public informa-tion. According to the government data, during 2013 the government agencies received 57,269 requests for information, of which 37 per cent via e-mail, which demonstrates an easier access to information by the citizens. In compliance with the law, the administrators of public information shall publish draft decisions that are up to discussion. In the same year, the government agencies published 9,886 draft decisions, including 1,803 draft deci-sions that were submitted to the consideration of ministries, 3,131 to the consideration of other cen-tral authorities and 4,952 to the consideration of the local executive authorities.64

Notwithstanding these improvements, there are instances when the decisions are not made in a transparent fashion and are accompanied by various violations of the approval procedure. For instance, the voting of the law on a special status of territories of the Eastern Donbas occupied by militants by the parlia-ment was widely criticised. This law was adopted at the closed session of the parliament, it was not prop-erly discussed and it voted in a manner that violated the voting procedure. However, the frequency of such cases has been diminishing in 2014, in an environ-ment of a closer public monitoring of observance of decision making procedures by the government.

64 http://www.kmu.gov.ua/control/uk/publish/article?art_id=247003378&cat_id=245633708


1- the economy is highly corrupt; 100 - the economy is very clean

1

10

19

28

37

46

55

64

73

82

91Corruption perception in Ukraine


22 23 25

68

24 26

49

78


The results of a new Corruption Perception Index 2013 (CPI) of Transparency International show that overall conditions for conducting long-term busi-ness in Ukraine have significantly deteriorated. The basic reasons are corrupt protectionism and fusion of political and business interests. Ukraine ranked 144th of 177 countries, covered by the survey and stood in the group of “high-risk” economies.

Typical drawbacks of the country’s business cli-mate, as outlined in many research projects, result from the corruption and comprise price and market sharing agreements between the oligarchic clans to the detriment of sound competition, exemptions and privileges that those clans enjoy, biased proce-dures of receiving various business permits, which almost in every case of contacts between business-men and regulatory authorities require “facilitation payments”, capturing of financial flows by public authorities.

In 2014, Ukrainian authorities have been taking efforts to enhance anti-corruption policy. Under

the public pressure, the government approved the Anticorruption Strategy for 2014-2017 and established the National Anticorruption Bureau. Changes were introduced to the Law of Ukraine On Fundamental Principles for Corruption Prevention and Counteraction. In line with the Law a special authority for the anticorruption policy shall be made responsible for coordinating the implemen-tation of the approved anticorruption strategy. It is however questionable if the new authority would be able to work efficiently, judging from the failure of similar attempts in the past.

The public demand for effective actions of the country’s leadership in the field of corruption coun-teraction is rather high. The new parliamentary coalition has signalled that these issues are a prior-ity of its action plan. Ukraine has a unique chance to make a rapid progress in overcoming corruption, which was the core reason behind the public stand-off of 2013-2014..

B3: E-government


0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

E-government

UA'08

UA'10

UA'12

UA'14

BY'14

EE'14

DE'14

0,52

0,57

0,50

0,57

0,79

0,82

0,61

Unlike other EaP countries, Ukraine demonstrated a lower level of e-government in 2014 compared to 2012, while the development over the recent 6 years has been mixed. With the e-participation index on 0.43 in 2014, the country ranks worst among the EU Eastern Partners, owing to an extremely low online services level (0.28) and underdeveloped

telecommunication infrastructure (0.38). This is especially disappointing against the background of above-average level of IT-related human resources in the country (0.86).

The findings of the study completed by the Razumkov Center in September 2014 showed that 40 per cent of Ukrainians welcome the development


of e-government and 24 per cent would like to have a possibility to use internet as a tool of communi-cation with public authorities on practical policy issues. Results of the survey clearly indicate that citizens now have a strong interest in e-government tools.

The main legal provisions enabling public authorities to use communication technologies are in place, in particular, the Laws of Ukraine On Electronic Communication Development, Electronic Document Circulation and Electronic Digital Signature, the Strategy for the Informa-tion System Development for 2007-2015, and the e-Government Concept. However, implementing provisions of the mentioned legal acts need urgently to be enhanced. A State Agency for e-Government was created per government decision to implement the state policy in the field of IT penetration, elec-tronic government, development and utilisation of national information resources and development

of the information society. A web portal www.data.gov.ua operates to simplify access to information of public interest to the citizens.

Public access to information currently operates in a one-way pattern, with very rare possibilities for interactivity. This explains the backward score of the country on e-services. An urgent task is hence to give citizens the possibility of receiving public services online. A pilot project on e-services in the area of construction envisions a possibility of notification about the start of the preparatory or construction works on e-dabi.gov.ua website avoid-ing the need to get permissions from regulatory authorities. The State Agency for e-Government elaborated and presented to the general public a national “Digital Agenda” for 2015. Although the mentioned efforts demonstrate the growing impor-tance of e-government in Ukraine, the country should capitalise on international best practices.

C: Public administration in Ukraine: Accountability


Sustainability of civil society organisations is 7…5 impeded, 5…3 evolving, 3…1 enhanced

CSO sustainability in Ukraine

EE'13UA'13UA'13UA'12UA'11UA'10UA'09UA'08

3,4

2,0

3,6 3,5 3,5 3,5 3,4 3,4

1

2

3

4

5

6

7

The Ukrainian civil society has passed a test on its capacity to be an influential player in the process of transformation of the statehood. Although the overall level of the sustainability of the Ukrainian civil society organizations has not changed that much, certain positive changes in the development of the legal framework, financial sustainability,

advocacy and public image took place. The new laws that regulate the activities of non-governmen-tal and charity organizations came into force in 2014. As a result, it has become easier to start and legalize public associations and foundations, and many new organisations were registered. Ukrainian CSOs also managed to improve their capacity in the


field of financial management and more actively participate in advocacy campaigns at the national and local levels. The civil society played crucial role in the public protests at the end of 2013 and the beginning of 2014 and became a stronger opinion leader, as manifested by a higher interest of media toward CSOs’ activities. A number of leading socio-logical companies and think tanks, in particular, the Democratic Initiatives Foundation and the Razum-kov Center have commented that CSOs enjoyed increasingly higher level of trust among the public.

The parliamentary elections of 2014 have demon-strated again substantial representation of CSOs leaders and activists in the party lists. As a result, a big number of the newly elected members of the parliament are civil activists. Various civil platforms of CSOs like Reanimation Package of Reforms and the New Country Initiative, take an active part in the development and lobbying of landmark laws to enable the implementation of comprehensive reforms. That just shows how the impact of CSOs on public policy making is growing.



1

2

3

4

5

6

7Diversion of public fundsJudicial independence

DE'14EE'14GE'14UA'14UA'13UA'12UA'11UA'10UA'09

3,84

5,675,88

4,524,72

5,31

2,302,00 2,08

2,512,22

2,502,17 2,29

2,542,39

2,022,35

Independence of judiciary is crucial for Ukraine, as the country shows the worst performance across the EaP region. Moreover, in the last three years of Yanukovych regime the situation has been unvary-ingly deteriorating.

Effectively, Ukraine’s judicial system fails to administrate justice the way it should. Three key determinants can be outlined in this regard. First and foremost, it is a strong political impact on the appointment of members of the key judicial bod-ies, in particular, the High Council of Justice and the Constitutional Court. The lack of impartial and transparent election criteria for these bodies only aggravates the situation. Second, it is the lack of a full-fledged judicial self-government. And finally, the judges’ corps remains of low quality and com-petence since the judges are not yet ready to take responsibility for the internal purge. In spring 2014 a law on rebuilding trust in judiciary was adopted.

This law is often called the law on judges’ lustration by media. However, the mechanisms envisaged by the law are far from being able to effectively lustrate the system. The law does not stipulate overall purge of the judicial corps in line with the lustration cri-teria, limiting “lustration” measures to introduction of mechanisms that would help judges to conduct internal purge themselves. The law enables the judges to elect heads of the courts themselves thus breaking the hierarchal dependence of the judges on the executive authorities; it also introduces direct elections to the judges’ self-government bodies and a mechanism for monitoring the abidance by the oath by judges assigned to the Provisional Ad Hoc Committee for judges monitoring The heads of the High Council of Justice and the High Qualification Committee of Judges, who have been exerting pres-sure on judges, shall be dismissed by law. Obviously, the Law On Rebuilding Trust fails so far to meet the


society’s expectations since the judges themselves are not ready to change the system that had effectively turned them into hostages of the executive. More than two thirds of the judges re-elected as heads of courts were the same people who, during the Yanu-kovych times, had been appointed with the blessing of the High Council of Justice, the body controlled by the former president himself.

Difficulties with initiating profound reforms of judiciary originate from the depth of the corrup-tion in the system. To produce the desired result, the reform should therefore envision more radical changes that would come from outside of judici-ary. This reform is crucial also in the context of the Ukraine’s obligations under the EU-Ukraine Asso-ciation Agreement.

D: Public administration in Ukraine: Efficiency and effectiveness


Ease of doing business in Ukraine

DE'15EE'15GE'15UA'15UA'14

1715

96

14

112

0

30

60

90

120

150

180

Ukraine managed to improve its rank by 16 points and move up the list of the 189 economies to 96th position. A positive trend has been observed in the last six years, but the most recent improvement appears more radical. The breakthrough should be attributed to streamlined taxation procedures (improvement by 49 points), owing to the introduc-tion of a simplified electronic reporting for regis-tered companies. Furthermore, the number of tax payments was reduced from 28 to 5 and the time associated with their processing was shortened from 390 to 350 hours. Besides, improvements were registered in the registry of property rights (improvement by 29 points) thanks to simplifica-tion of the real estate registration and deregulation of the registration system. In particular, the require-ment to have a state certificate of ownership for a purchased land plot was cancelled. The State Centre

of Land Cadastre improved the quality of services by enhancing online access and digital processing of land property documents. Consequently, that reduced the time necessary to issue certified copies of entries.

Despite these positive developments the busi-ness has not experienced much positive changes. Ukraine remains one of the European countries with the most difficult business climate. For instance, starting up a business in Ukraine takes twice as much time than in any OECD country, and the amount of unofficial payments to the officials when doing investments is also incomparably high.



D2: Corporate activity is: 1 – dominated by a few business groups; 7 – spread among many firmsD3: 1 – government spending in providing necessary public goods and services is extremely wasteful;


1

2

3

4

5

6

7Wastefulness of government spendingMarket dominance

DE'14EE'14AZ'14UA'14UA'13UA'12UA'11UA'10UA'09

3,33

2,85 2,90 3,01 2,96

3,47

3,92

5,77

2,60

2,15 2,281,89

3,25

2,251,93

3,46

4,29 4,18

Ukraine has been displaying a downward trend on market dominance over the recent 3 years, demonstrating an effective failure of the state antimonopoly policy and competition protection. The former government had been building up the oligarchic type of the economy, under which even whole sectors would belong virtually to a single person or to a small group of people. This is particularly true for the chemical, metallurgical and power sectors. A share of main sectors controlled by oligarchs such as metallurgy and chemical industry in the corporate income tax is almost five times smaller than their contribution to the economy gross income. In contrast, the share of small companies is estimated to have stayed even below 15% of GDP ever since the independence. And this is far less than the similar indicator in the developed economies.

The new government of Arseniy Yatsenyuk has clearly declared its policy for de-monopolisation

of the economy and fight against oligarchy. Taking into consideration the results of the Parliamentary elections held in October 2014 the policy has all chances to be continued.

The country has not managed to reduce the wastefulness of government spending over the last three years either. According to independent assessments, the Chamber of Accounts of Ukraine has been unable to achieve more economical execution of budget expenditures. In 2013, the State Financial Inspectorate measured about 1.5bn UAH of illegal misuse of public funds and assets by altogether 2,300 budget institutions and organisations. Wasteful public spending undermines macroeconomic stability, which is especially dangerous at times of military conflict in the East of the country, and calls for overall reduction of costs for public administration.


E: Public administration in Ukraine: consolidating indicator



1

2

3

4

5

6



2,84 2,86 3,032,84 2,80

4,20

5,005,20

SynopsisFor the third consecutive year, Ukraine has

been generally moving away from the European principles of public administration, failing to show any meaningful progress in public administration reform. Nevertheless, compared to previous years, the situation has started to change for the better. The Revolution of Dignity of 2013-14 and entry into force of the Association Agreement with the EU create an opportunity for radical changes in public governance, widely supported in the soci-ety and international community. The country has managed to hold democratic elections of the President and Parliament, which now have to meet strong public demand for large-scale reforms, pri-marily in the area of combatting corruption and building up an efficient, professional and politically impartial civil service. The new authorities adopted in 2014 a number of anti-corruption laws and regu-lations including a medium-term anti-corruption strategy, while a new law on civil service has been

under preparation in close cooperation with the civil society experts. Besides, the government has announced the start of decentralisation policy and judiciary reform, creating altogether good platform for addressing the existing challenges. Despite the external threats, which demand restoration of the army on the basis of modern standards and con-tinued fight against the foreign intervention in the East, Ukraine has a unique chance to succeed in comprehensive reforms, specifically in what con-cerns public administration and judiciary. The win-dow of opportunity will only stay open for a short period of time, hence the country needs resolute reform actions to finally break away from legacies of the past and move toward European standards of administration and governance.

This document has been financed by the development cooperation funds of the estonian ministry of foreign Affairs. estonian mfA does not necessarily share the views expressed in this material. responsibility for its contents rests entirely with the authors.

copyright notice: © Text: Narmin Ibrahimova, Irakli Kotetishvili,

Volodymyr Kuprii, Angela Secrieru, Alexei Sekarev, Tigran Tshorokhyan design and layout: Bloom oü.All rights reserved. Through the eceAP web site the publication can be accessed, downloaded, saved and printed free-of-charge for individual, educational and public use. Any commercial use of this publication, including distribution for commercial purposes, is prohibited. Non-commercial distribution without reference to the eceAP web site is prohibited.

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