It is normal for all plans to be revised and improved. However, the recently approved “National action plan 2012” looks like a step back. It dilutes or postpones for the future crucial reforms, aimed at strengthening of competitive environment and property rights. Among diluted reforms appeared to be the issue of inspections, housing reform and the problem of agro-land market. Technical reforms have been distorted not that dramatically, however, still are delayed.

A year and a half have already passed since the start of Viktor Yanukovich reform. The ambitious transformation plan has showed noticeable progress on many directions. However, so far none, including the authorities’ representatives, can call the reformation efforts successful. Properly outlined priorities and action plan stumbled on financial and political interests of various influential groups, what, naturally, stipulated for a large-scale ‘correction’ of the reform plan. Apparently every plan needs to be updated with time. However, comparative analysis of the new reform action plan showed that ‘reformators’ have already skipped many initially positive initiatives.

Over the last two years Ukraine has implemented many policy changes outlined at the President Reform Program for 2010-2014. Despite the large number of bills and laws approved through 2010-2011, the program lags behind the outlined schedule and none of the reforming priorities has reached the declared goals. Some of the adopted regulations are quite positive; however, still the initiatives have quite limited effect due to existent practices for administrative pressure, corruption and poor confidence on judicial power. Large number of approved laws and regulations are simply technical, which means that the essence of the problems they addressed remains unchanged. Positive steps were observed in reformation of healthcare, education, and pension system, however, so far no fundamental changes happened at the areas. Some of the reform priorities remained untouched. For instance, in electricity sector and oil and gas sector, where business and political interests are closely interlinked, powerful business-groups simply blocked any reforms. In general, the reformation process is poorly transparent. Moreover, for many important directions the authorities ignore public opinion consulting with civil society players only formally.

Nobel Prize winner Douglass North defines two types of social order. The first one is the open access order, which stands on principles of openness and fair competition. The second one is the limited access order, which relies on selectiveness and privileges thus restricting both political and economic competition. In the first case the open system brings to success the most competitive players (those who can produce the best quality and the cheapest products and services). In case of limited access order the success depends only on how someone is close to the clan, family or caste. Ukraine, apparently, is a country with the limited access order. And it needs fundamental changes to pass to the openness. However, political elites as well as business elites face conflict of interests when it comes too close to real reforms since fundamental changes threaten their own rent-seeking schemes. In that case the only way (though a thorny one) is to build demand for real changes from “below”.

Huge production capacity of Ukrainian oil refineries for long has been underused. This led to the increase in import of oil products. Nowadays local producers became less price competitive because of unstable foreign exchange rate, which may only increase foreign fuel presence on the market.

Oct 31, 2008

Real Estate Review

Ukraine’s construction and real estate were among the first crisis-stricken sectors. Financial crisis ruined developers’ far-reaching plans – they are faced with financing problem. As a consequence, many construction sites are frozen; investments into real estate significantly shrank; and the number of development projects ‘for sale’ increased.

At this report we present an overview of the Ukrainian heating sector. It covers pipelines infrastructure and generation capacitites as well as tariffs policy and modernisation issues.

Global liquidity crisis has finally reached Ukraine real estate sector. Investors have stopped their aggressive plans for Ukraine while local developers are in desperate search for funds. Autumn business season could bring some increase in number of deals; however, insignificantly.


At the mid of summer residential market is facing stagnation and showing signs of possible housing drop. Despite the tendency, retail market keeps attracting foreign giants thus creating fundamentals for warehouse construction growth

International trends in energy trade exert constantly increasing influence on oil and gas prices in Ukraine. In his Article Viachaslau Herasimovich provides an overview of the world oil and gas markets. The article also gives details and reasons for growing international role of Gazprom. (In Russian)

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