The ongoing health care reforms are one of the most exposed to criticism among the long list of reforms currently conducted by the government. In fact, the reforms is a step in right direction, also the changes are sometimes painful and hard. A refusal to run the unpopular reforms means further degradation of health care system in Ukraine. However, the rush with some changes during the first phase in the reform process under conditions of limited human resources and funds causes inconveniences and risks for people without any noticeable improvement in quality of health care services. The key prerequisites for the reforms to continue and succeed are achieving public consensus on the reforms; widening opportunities for high-quality training of family practitioners and their true motivation and adequate financing of the reforms.
Business environment is the backbone for prosperity of every society. People that are able to run and develop their own businesses is the very capital, the very ‘engine’ which allows for modern countries moving forward and competing on international markets. That is why fostering of “entrepreneurial capital” should be an axiom for a wise statesman. Unfortunately, in Ukraine the authorities treat entrepreneurs as ‘grabbers’ and ‘bloodsuckers’ and that is why it is so difficult to create favorable business-climate at the country.
Business environment in Ukraine is very poor and tends to worsen further on. Improved business climate might change the country into new story of success. However, the reformators keep ignoring the fact that nominal upgrades without reforming the core of the “limited access order” only aggravate the situation. To make things worse, the bureaucracy once again was delegated to reform itself. As a result, the essence of reforms has been once again diluted.
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.
Many myths about social protection are circulating around in Ukraine what allows politicians to speculate about this topic. There is a belief that lack of money is the main problem of social protection. However, this is not true. When poor people receive only 30% of social funds, waste of public money is the main problem of social protection.
The social assistance reform is one of the most important technical reforms badly needed in Ukraine. Every year the government spends dozens of billions hryvnias for social protection, which is one of the largest spending items of the general budget. However, only 1/3 of those outlays effectively reach the poorest Ukrainians. The key reason for such wastefulness is the authorities’ reluctance to use means-testing for provision of privileges and other social assistance. As a result, it appears that in our country the richer your are the more “social protection” you have from public funds.
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.
Ukraine is balancing at the edge between limited and open access order. Although the country lacks rule of law and business is closely interlinked with politics, political competition is still present, civil society has been developing and some markets are competitive. The transition stance of Ukraine is unstable, burdensome and dangerous. Only implementation of real deep structural reforms can make the transformation to open system easier and quicker. However, Ukrainian authorities do not conduct such reforms, often substituting them with technical policy changes (improving only some mechanisms), or introducing only temporal economic policy measures (like ‘belt tightening’).
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”.