EIGHT STATE-BUILDING PRIORITIES FOR UKRAINE. CHALLENGES IN 2017

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І Eight state-building priorities for Ukraine. Challenges in 2017 І
EIGHT STATE-BUILDING
PRIORITIES FOR UKRAINE.
CHALLENGES IN 2017
iser.org.ua
vysnovky.com.ua
/iser.org.ua

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INTRODUCTION
We all came in 2017 with the feeling that the world is changing, and changing
dramatically. Our traditional understanding of the challenges that country is facing with,
thewaystoovercomethem,ofthosewhomweusedtorelyonandthoseagainstwhom
we used to fight – all of these become others. Everything becomes different and often
much faster than we realise this and get ready for action. Therefore, in the coming years,
we must realise, plan, and act faster. Only in this way, Ukraine as a state will remain the
subject of international relations and an active participant in global transformations.
In 2017 and the coming years, our success will depend on how accurately and
objectively we can identify the challenges facing us and how we will be able to turn them
into new opportunities for the country and its citizens.
We want to offer a dialogue to the public on formation of the agenda for Ukraine
for 2017 and the medium term, based on the analysis of the results of transformations
that have occurred and are occurring, global challenges and a number of critical issues
that must be resolved soon in order to prevent social, technological and environmental
shock.TheparticipantsofthedialogueshouldbecometheGovernment,Parliament,our
international partners, recognised experts and, of course, representatives of civil society.
WE PROPOSED TO DISCUSS THE EIGHT STATE-BUILDING PRIORITIES FOR 2017 AND THE MEDIUM TERM:
• FOREIGN POLICY AS A FACTOR OF NATIONAL SECURITY;
• EFFICIENT GOVERNANCE THROUGH THE CHANGES IN THE SYSTEM OF DECISION-MAKING;
• ACCELERATION OF ECONOMIC DEVELOPMENT;
• EFFICIENT PUBLIC FINANCE AND FISCAL TRANSPARENCY;
• DEVELOPMENT-ORIENTED REGIONAL POLICY;
• FAIR SOCIAL POLICY;
• MODERNISATION OF CONSTRUCTION AND THE NEW HOUSING POLICY: QUALITY AND
SAFETY;
• ENERGY SECURITY: INDEPENDENCE AND EFFICIENCY.
Why were these priorities chosen? Why there are absent many important
issues that are defined in the Coalition agreement, the Program of Action and the
draft of the medium-term plan of the Government or joint documents with EU and
international financial institutions?

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First. We tried to highlight the most important and crucial, then, taking it into
work, we might pull out the whole chain of problems and solve them.
Second.Priorities cannot be a large number. Eight is already too much. If they
are in excess, it is not the priorities but operational activity. Then there are not
enough resources on solving key issues, and therefore they will be unfulfilled. This
is what is happening today: much talk about reforms, but almost no results.
Third. Priorities that we proposed have a logical link between them, in which a
synergy laid: solving one problem creates an attempt to resolve the following and all
together. Thus, the ability to resolve the whole number of problems will build up from
the first step to last..
Of course, we see the greatest challenges in global trends. The fourth industrial
revolution, increasing waves of migration, destruction of established norms and
rules of global governance – these and other changes directly or indirectly affect
and will affect the internal situation in Ukraine. Accordingly, internal policies must
respondtothesechallenges,transformingUkraineintoacompetitive,economically
independent, and influential country.
Excessive enthusiasm for issues of financial stability, fiscal consolidation
and shock methods of their implementation can lead to social explosions that
will erase all financial and economic achievements and will create new risks
for sustainable development. Therefore, development of Ukraine should have a
balanced character, which is consistent with seventeen Sustainable Development
Goals, defined by the United Nations, which Ukraine undertook to implement in its
domestic policy and strategy.
Finally, what can be a driving force and a guarantee that the country can
overcome these challenges? This is belief and reliance on own strength, combined
with the efforts of our friends, partners, and investors worldwide. However, the
belief is the substance of things hoped so without small daily victories we cannot
achieve great accomplishments.
The Institute for Social and Economic Research (ISER, NGO) identified these
important priorities for its research and finding ways to implement them in 2017.
We hope that in cooperation with the Verkhovna Rada of Ukraine, the Cabinet of
Ministers, other research centres and think tanks we can find those solutions that
will unite all Ukrainian society about overcoming common challenges.
We do not offer a solution to all problems, we offer an agenda for Ukraine,
which will lead us to the common Victory!

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EIGHT STATE-BUILDING PRIORITIES FOR UKRAINE:
1.FOREIGN
POLICY
2.EFFICIENT
GOVERNANCE
3.ECONOMIC
DEVELOPMENT
4.PUBLIC
FINANCES
5.REGIONAL
POLICY
6.SOCIAL
POLICY
7.HOUSING
POLICY
8.ENERGY
SECURITY
EIGHT STATE
BUILDING
PRIORITIES
2017
a) Strategy of
Ukraine’s foreign
policy;
b) Confronting
the enemy
propaganda.
a)Effective system
of decision-
making in the
country;
b) Implementation
of e-governance;
c) State aid by the
EU standards.
a) Draft law on
energy security;
b) Energy Security
of Ukraine: a plan
of strengthening
to 2020.
a) Cheapening of
construction;
b) New housing
policy;
c) High-quality
housing
management.
a) The Policy
of Social
Pragmatism;
b) Ukraine without
boarding
institutions;
c) Social capacity
of communities;
d) E-governance in
social protection.
a) New regional
policy;
b) Successes and
challenges of the
decentralisation
reform;
c) National Strategy
for Regional
Development to
2020.
a) Export policy;
b) Strategy of
financial sector
reform;
c) Modern
instruments of
industrial policy.
a) Fiscal transparency;
b) Medium-term
budget planning;
c) Fiscal
decentralisation.

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І Eight state-building priorities for Ukraine. Challenges in 2017 І PRIORITY 1
1. EFFECTIVE FOREIGN POLICY
PRIORITIES IN FOREIGN POLICY:
• The impact on the international and regional context of international
relations to create favourable conditions for realisation of national
interests of Ukraine.
• Promoting the development of an effective regional security system
that will provide a balance of interests required to minimise external
threats to Ukraine.
KEY EVENTS OF 2016:
1Development of cooperation with the EU: a) suspension of the process of
ratification of the EU-Ukraine Association Agreement because of the referendum
in the Netherlands; b) delay the implementation of the visa-free regime between the
EU and Ukraine on the long term.
2The war with Russia: a) maintaining sanctions regard to Russia from the side
of Western countries and their allies; b) the interim findings of the investigation
of accident with flight MH-17, which confirmed that the plane was shot down by a
BUK missile system that was brought into Ukraine from Russia and then returned;
c) report of preliminary investigation of the prosecutor of the International Criminal
Court on the situation in Ukraine, where for the first time Russian actions in Ukraine
qualified as a military occupation with the subsequent annexation of Crimea; d) the
adoption of the UNGA resolution “Situation of human rights in the Autonomous
Republic of Crimea and the city of Sevastopol (Ukraine)”.
3Regional context: blocking by Poland and other European countries the
construction of the Nord Stream-2, bypassing Ukraine.
4Global context: a) D. Trump’s victory in the presidential elections in the US as
a complete surprise for Ukrainian diplomacy; b) diplomatic scandal on the
results of Ukraine’s voting at the UNSC for the resolution 2334 on the situation in
the Middle East.

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І Eight state-building priorities for Ukraine. Challenges in 2017 ІPRIORITY 1
THE PRICE OF INACTION
The currentinternationalsituationrequiresfromUkrainefast,sometimesproactive,
and effective strategies to reduce losses from the implementation of unfavourable
scenarios. Otherwise, Ukraine will face the following:
Achieving of agreements on the conflict in eastern Ukraine in the form of
US-Europe-Russia without considering Ukraine’s position. If the process of
such agreement is delayed, Russia increasing rate by escalating conflict in Ukraine.
As a result of the agreement above, the US and EU agree to Russian view
of Minsk-2 that envisages amending the Constitution of Ukraine, and
consequently could provoke an internal crisis in Ukraine. A direct result of this will
be early parliamentary and, possibly, presidential elections.
Without the development of preventive strategies, slacking of domestic
economic and social situation is waiting for Ukraine, which will be
complicated with tangible reduction of international financial assistance, and the
unfavourable situation on global commodity markets.
Without proper work towards international organisations, the risks of de
facto recognition of the affiliation of Crimea to Russia, removing sectoral
sanctions against it increase.

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ISER PROJECTS FOR 2017:
1
Development and presentation of Ukraine’s foreign policy
strategy, which is to combine a holistic vision of the new
geopolitical environment and set of steps to ensure the most
favourable conditions to the preservation of Ukrainian statehood,
sovereignty protection and restoration of the territorial integrity of
Ukraine.
Its subprojects are:
1) Research of new challenges and opportunities for regional
security;
2) Research of transformation of international relations and
the role of Ukraine.
2
Given the vulnerability of Ukraine to challenges of a hybrid
aggression, we will continue the project “Open Chair on urgent
issues of foreign policy, security and diplomacy”, highlighting
various aspects of hybrid war.

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Olena Snihyg,
Candidate of Political Sciences,
Chief of International Programs,
Expert on International Affairs,
snigyr@iser.org.ua
Mykola Kapitonenko,
Candidate of Political Sciences,
Conflictologist,
kapitonenko@iser.org.ua
Yulia Kurnyshova,
Candidate of Historical Sciences,
kurnishova@iser.org.ua

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2. EFFICIENT GOVERNANCE THROUGH THE CHANGES
IN THE SYSTEM OF DECISION-MAKING
PRIORITIES FOR THE IMPLEMENTATION OF EFFECTIVE GOVERNANCE:
• An effective system of decision-making in the country: a review of
decision-making in the country, improvement of Regulations of the
Verkhovna Rada of Ukraine.
• Wide application of e-government elements and information society:
the achievement of national priorities in the field of cyber-security;
development of electronic services; protection of state information
resources from unauthorised interference.
• High-quality communication of reforms: expert and public control
and monitoring reforms through analysis of draft decisions and
providing expert conclusions on draft laws; public consultation.
KEY EVENTS OF 2016:
1The strategy of public administration reform in Ukraine for 2016-2020 adopted
(24/06/2016).
2A new Law of Ukraine “On civil service” came into force on May 1, 2016, more
than 30 key regulations for its implementation were designed and approved.
3Commission on the senior civil service began to work, more than 60
competitions for filling positions of category “A” were announced.
4Ministry of Economic Development held and announced the competitive
selection for leadership positions of a number of state enterprises, including
SE “Ukrposhta”, JSC “Ukrzaliznytsia” and NPC “Ukrenergo”.
5A significant increase in funding for payment for civil servants provided in the
State Budget for 2017 (more than UAH 50 billion, compared with the 2016 year).
6In Parliament were intensified the process of amending the Regulation (draft
law 4696 and four drafts, alternative to it).

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THE PRICE OF INACTION:
Unattractive investment climate as a result of low quality and
accessibility to information and administrative services. In the future,
the country will feel the lack of investments, which are the basis of structural
changes and development.
Braking reforms as a result of ineffective communication and decision-
making system in the country: reforms are not being implemented, it
means that huge efforts and resources, directed at them, spent in vain.
Reduction of trust in the government as a result of the lack of reforms’
results. In a country where laws do not work, the whole legislative
process is meaningless.

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1
Research and
communication project
“Review of decision-
makingsysteminthestate”.
The project aims to draw
attention to the causes of the
failure of attempts at sector
reforms – existence of an
inert system of development
and decision-making by
the authorities, which
significantly complicates a
systematic development and
consistent implementation
of public policies at all levels
of public administration in
Ukraine. The beginning of a
broad expert discussion on
reformingthesystemofdecision-makingbypublicauthoritiesinUkraine,
development and advocacy of alternative algorithms for appropriate
legislative proposals are predicted.
2
Project “Control and advocacy of implementation process
of the national system of state aid modelled on the
European model”. The purpose of the project is support for
the implementation of an effective system for monitoring state aid
in Ukraine through consideration of agreed positions of the main
stakeholders in the analysis and preparation of proposals for draft
legal acts in the area of state aid. Expected results: raising awareness
of main stakeholders about new conditions for obtaining and control
of state aid in Ukraine; creation of an effective and transparent
system of state aid in Ukraine as a tool for economic growth within
the EU competition policy; formation of proposals on the public
policy for state aid in terms of feasibility for economic development.

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Svitlana Kovalivska,
Deputy Director,
kovalivska@iser.org.ua
Anatolii Maksiuta,
Candidate of Economic
Sciences, Honored
Economist of Ukraine,
Chairman of the Board,
maksiuta@iser.org.ua
Yuriy Mironenko,
Board Member,
mironenko@iser.org.ua
Anna Isichko,
Legal expert,
isichko@iser.org.ua
Viktor Mykhailiv,
Director,
mykhailiv@iser.org.ua

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3. ACCELERATION
OF ECONOMIC DEVELOPMENT
PRIORITIES IN ECONOMIC POLICY:
• Assistance to accelerate growth and sectoral distribution of
investment: simplify access of enterprises to “long” loans,
rationalisation of capital expenditures of the central and local
budgets, distribution of public-private partnership, encouraging
individual investment in the development of small business and
housing construction/modernization of housing.
• Promotion of exporters for compensation of deterioration of the
foreign trade balance: the construction of financial mechanisms of
export credit/insurance, informational and diplomatic support for the
promotion of domestic products to foreign markets.
• Encouraging the development of the medium, small and micro
business: further deregulation and informatization of regulatory
sphere, financial support to start own business, promoting the exit of
SMEs to foreign markets.
• Prevention the inflationary impact of an increase in nominal
income, with a maximum “unloading” of anti-inflationary monetary
instruments that can have a negative impact on economic growth,
competition policy, promotion of the development of a wholesale and
retail market.
KEY EVENTS OF 2016:
1Economic growth restoration and the end of the period of economic depression
that lasted in Ukraine for 14 quarters consecutively. GDP growth for 3 blocks of
2016 was 1.3%.
2Outrunning growth of capital investments
for 3 blocks of 2016 was 16.7%.
3The growth of commodity exports to the EU countries was 4.4% for 9 months
of 2016.

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Lack of proper attention to the export policy will make the economy much
more sensitive to the possible deterioration of the international situation;
the consequence will be a decline in export-oriented sectors, the deterioration of
the trade balance and hryvnia devaluation.
Without an appropriate structural policy, at the favourable situation
on global markets, there will be an involvement of economy in the un-
inclusive export-oriented model, which doesn’t create preconditions for economic
modernization, is ineffective in achieving the social impact of economic growth.
Without reforming the financial system, increasing inflationary risks will
encourage NBU to implement a tougher monetary policy that will have
inhibition effect to economic growth.
The absence of regulators and stimulators of structural changes in the
form of an adequate industrial policy may cause “damping” of capital
investments growth within the highly liquid industries, slower economic growth
and increased import dependence of the economy.
4Restoring of real income growth, wages in November 2016 was by 7.2% higher
(adjusted for inflation) than a year ago. Real disposable per capita income in
the third quarter of 2016 was by 7.3% more than a year ago.
5Restoring of macroeconomic stability: reducing inflation by almost 4 times
compared to 2015: from 43% to about 12% (forecast for the year); devaluation
rate does not exceed the rate of inflation.

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1
Formation of a vision of modern export policy, which contributes
to the implementation factor of economic growth and at the
same time directing its influence on the structural modernization
of the national economy.
2
Developing a strategy for reforming the financial system of
Ukraine: a capacity to concentrate resources on development,
to ensure appropriate factor returns to resource owners, organic
combination of macroeconomic balance objectives and ensuring
economic growth.
3
Determination of the modern tools of industrial policy that
can effectively influence the structural changes in the national
economy, without disrupting the competitive environment
and Ukraine’s commitments to international organisations (first of
all to the WTO), to create orientation on investment and innovation
development model.

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Svitlana Kovalivska,
Deputy Director,
kovalivska@iser.org.ua
Anatolii Maksiuta,
Candidate of Economic Sciences,
Honored Economist of Ukraine,
Kristina Avramchenko,
Deputy Director, Expert on
macroeconomic policy,
avramchenko@iser.org.ua
Yaroslav Zhalilo, Dr. Sc. (Econ.),
Honored Economist of Ukraine, Chief
of Economic Programs,
Zhalilo@iser.org.ua

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4. EFFICIENT PUBLIC FINANCE
AND FISCAL TRANSPARENCY
PRIORITIES IN THE FIELD OF PUBLIC FINANCE:
State finance. A key priority will remain the construction of a
transparent and effective system of state (public) funds, which will
be a quality mechanism for implementation of policy reforms on the
basis of trusted taxpayers to public institutions responsible for budget
spending. These are:
А. Fiscal and debt policy. The key priorities will remain: improving
overall budgetary discipline, the introduction of high-quality public
spending allocation mechanisms, based on the strategic priorities
of state development and standards of public services, ensure
quality planning and monitoring the use of public funds. One of the
main results should be a gradual decline in the share of public debt
(relative to GDP).
B. Tax and customs policy. A key priority remains the cooperation
between the regulatory (tax and customs) authorities and taxpayers.
This applies both to communication processes and improving the
administration of taxes, customs duties; reducing opportunities to
minimise tax liabilities, including in terms of transfer pricing and the
outflow of capital to jurisdictions with low taxation.
KEY EVENTS OF 2016:
1Declaring Governmental plans for implementing medium-term budget planning
since 2018, as well as reforming public finance management in general;
compliance with key requirements for keeping the budget deficit within acceptable
limits agreed with the IMF. Problems of compliance with an appropriate procedure
of adopting the state budget, its construction on well-defined General directions of
budget policy (the Parliament did not consider the document), the use of the practice
of “manual” management of the budget process, the growth of rates of public debt
and so on remain unresolved.
2Increasing openness in public finance: a full introduction of a public system of
e-procurement ProZorro (celebrating it with World Procurement Awards 2016);
active work on the implementation of public finance portal (e-data.gov.ua) and a
single government open data portal (data.gov.ua).

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Continuing the practice of “manual” budget allocation with violation of
procedures, without a sufficient prior planning and forecasting results.
Further inefficient use of budget funds will reduce public trust in reforms,
particularly in the fiscal sector, and maintain a high share of the shadow
economy.
The subsequent uncontrolled growth of public and publicly guaranteed
debt as a result of an increase in the budget state deficit and cover by
the expense of public borrowing of a deficit of not the budget sector of public
administration.
3Reforming of the customs system in the context of that the “Single Window”
service was created, inter-regional customs, interagency mobile groups to
prevent and detect violations of customs legislation.
4Creating a foundation for the implementation of anti-corruption tax reform. It
may be an additional factor for improving Ukraine’s position as a country with a
clear and transparent tax system (e.g., in the ranking of ease of paying taxes “Paying
Taxes” Ukraine took the 84 place among 190 countries).
5Practical implementation of fiscal decentralisation, which began in 2015. As a
result, according to some estimates, a resource of local budgets in 11 months
of 2016 increased by UAH 44.6 billion (compared with the corresponding period of
2015).

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1
Fiscal transparency.
Conducting expert
monitoring of the budget
process, efficiency and
transparencyofspendingofthe
State Budget 2017, monitoring
of VAT reimbursement
and efficiency of the tax
reform, carried out in 2016,
making recommendations
for improvement and
simplification of tax
administration and customs
duties, DFS reform, etc.
Participation in reforming
customs, prepare proposals
on the improvement of
customs legislation, improving
the institutional capacity of
customs.
2
Medium-term budget planning. Interaction with government
bodies and international organisations in the practical
implementation of the proposals set out in the comprehensive
study “Budget Policy: pragmatic approaches to strategic decisions”
(strategic vision of the implementation process and develop proposals
for draft regulations), participation in relevant working groups under
the government bodies, etc. Promoting MTEF since the draft budget
for 2018.
3
Fiscal decentralisation. Joint projects with regional authorities
and local communities for more efficient use of budgetary funds
received in the process of decentralisation, quality of drafting
local development strategies and budgets.

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Antonina Deshko,
Expert on financial policy,
deshko@iser.org.ua
Yuriy Fedchyshyn,
Expert on tax policy,
fedchyshyn@iser.org.ua
Anatolii Maksiuta,

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5. DEVELOPMENT-ORIENTED
REGIONAL POLICY
REGIONAL POLICY PRIORITIES:
• Provision of a stimulating role of decentralisation (the definition of own
development priorities of communities; integration of economic and
social policies around a common strategy for development within the
region).
• Deepening the reform of regional policy (amending the National
Strategy for Regional Development to 2020 and bringing it into line
with the new format of relations of the state with the regions and
communities).
• Strengthening the management capacity of local authorities in the
decentralisation process (review of the principles of planning regions’,
districts’, and communities’ development; optimisation of budgeting
procedures in strict accordance with the parameters of the forecast of
socio-economic development).
• Promoting an increase in investments in community development
(possibilities to attract extra-budgetary resources; the use of temporary
free local budgets for investment in commercial projects of local
importance and development of infrastructure, etc.).
KEY EVENTS OF 2016:
1Continuation of decentralisation and a significant expansion of the financial base
of local government: a financial resource of local budgets increased by 15% in
2016.
2A new vision of the community and its place in public administration is gradually
formed. At the same time, the new vision of the community is necessary to build
in the overall logic of the regional policy of Ukraine.
3Communities received additional powers, but serious doubts about providing
them with adequate incentives for development are still present.

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Deepening of disproportionality in the provision of local budgets with own
revenues, which will create additional obstacles for the amalgamation of
communities.
The further distancing of the state from the management of territorial
development, with simultaneous growth of the burden on the state budget.
Loss of administrative levers of influence at the regional level and the
“blurring” of the regional level.
Failure to achieve the multiplier effect of decentralisation, further
autonomization of communities, a decrease of the motivation of
communitiesforself-developmentandstrengtheningofpaternalisticexpectations.

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1
«ThenewregionalpolicyforthenewUkraine».Acomprehensive
study on the formation of outlines and fundamental principles of
the state regional policy in Ukraine in the context of the reforms
initiated.
2
A series of materials «Successes and challenges of the
decentralisation reform». Assessment on the course of reform,
the effects of combining communities, analysis of the financial
security of communities. Improving the planning and use of local
budgets.
3
«National Strategy for Regional Development to 2020».
Developingproposalsforchangestothedocumentinaccordance
with the current situation, updated priorities of national security
and economic policy and reforms initiated.

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Yaroslav Zhalilo, Dr. Sc. (Econ.),
Chief of Economic Programs,
Zhalilo@iser.org.ua
Kristina Avramchenko,
Deputy Director, Expert on
macroeconomic policy,
avramchenko@iser.org.ua
Viacheslav Zhuk,
Expert on regional policy,
zhuk@iser.org.ua

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6. FAIR SOCIAL POLICY
PRIORITIES IN SOCIAL POLICY:
• In the field of social protection. Pension system: ensuring social
justice in solidarity level, introducing an accumulation system;
demonopolization of the market of social services; the efficient
social welfare by the place of residence; monetization of benefits,
including subsidies; better coordination of reforms with the process
of decentralisation in the social sphere, healthcare and education.
• In the field of education. Legislative support of reforming the
necessarily general secondary education, realising the transition
from the acquisition of knowledge to master the competencies
and compulsory inclusive education; modernising approaches and
formats of vocational education on the basis of a strategic vision of
regional development and the Ukraine in general.
• In the field of health care. Autonomization of institutions, the
introduction of health insurance, improving emergency medical care
KEY EVENTS OF 2016:
1Social policy: taxation of pensions, the amount of which does not exceed UAH
10,740, was abolished; measures for the verification and monitoring of the
reliability of the information submitted by individuals for charging and receiving
social payments, benefits, subsidies, pensions and other payoffs were introduced;
a number of important standards of social services were approved; a new version
of the Convention on the Rights of Persons with Disabilities, ratified by Ukraine,
was adopted; the Decree of the President of Ukraine “On measures to ensure
the observance of the rights of persons with disabilities”, which outlines the first
comprehensive guidelines and mechanisms to ensure a decent life for people with
disabilities, was approved.
2Education: 137 supporting schools were created; the draft law “On education”
was adopted in the first reading; Government approved a Policy proposal on
the reform of general secondary education “New Ukrainian School”; the Cabinet of
Ministers decision to terminate recruitment of students in preparatory classes and
the first special classes of special secondary schools (boarding schools) for children
with mental retardation from September 1, 2017.

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The increase in the number of people receiving social support from the
state, deepening poverty. The growth of negative social trends in society
(sending children to boarding schools, homeless people, disability, deterioration
of health, etc.).
Pension system: the growth of the Pension Fund deficit, reducing the welfare
of pensioners, rising unemployment among people of pre-retirement age.
Education: discredit the idea of inclusive education because of
unpreparedness of schools to accept children with special educational
needs; inhibition of secondary education reform; deepening crisis in the system of
vocational education, leading to a lack of skilled workers in the labour market and
the inability to provide services in demand for services.
Healthcare: deterioration in the quality of health services, acceleration of
the outflow of skilled health workers abroad due to the lack of financial
incentives, along with the deepening of European integration.
3Healthcare: a significant improvement in procurement and supply of
medications; Concept of reform of health care financing and the Concept
of development of public health system were adopted.

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1Development and presentation of analytical study «The Policy of Social
Pragmatism». For the first time in the history of Ukraine, it will demonstrate
a comprehensive approach for radical change in public policy to create the
conditions for a decent and happy life in Ukraine and reform proposals in 15 areas
of social, education, healthcare and culture policy, including: social guarantees
and standards, social security, pensions, social services, benefits and subsidies,
employment, social dialogue and others.
2
Project «Ukraine without boarding institutions», dedicated to the
explanation of deinstitutionalisation reform to society. Since the education
of children in orphanages is a very sensitive social issue and can be used in
a populist and political manipulation, a key objective of the project is to establish
an effective communication between all participants of the reform – public
authorities, parents and society.
3
Communities’ social capacity development:
• Creating a model of proper social security in the United territorial
community, which is an algorithm of actions and a set of tools
that UTC heads, local bodies of social protection can use for
establishing effective quality work to fulfil community obligations
in the field of social protection;
• Development of a model of introduction inclusive education in
supporting schools of united local communities that UTC heads,
departments of education, school directors can use to organise an
inclusive educational environment;
• Developmentofmethodologicalbasisatalegislative,organisational
and legal level to create multifunctional medical and social centres,
or, in the terminology of many countries, nursing care centres,
which will optimally combine social and medical components in a
system of social services for the population.
4
Creating an architecture of unique component of e-government
“E-social protection” for the effective provision of services in the sphere
of social protection which, on the one hand, is the “single electronic
window” (a channel of two-way communication) for the interaction of
citizens with the state and with each other, and on the other – an electronic
database of all social actors (citizens receiving social support from the
state in the form of incentives, subsidies, social services, benefits etc.,
and providers of social support – social protection departments, CSSFCY,
therapeutic centres, NGOs, etc.)

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Marianna Onufryk,
Chief of Social Programs,
onufryk@iser.org.ua
Igor Yakovenko,
Scientific Consultant,
yakovenko@iser.org.ua
Yevhen Gorohovets,
Expert on employment
and socio-labor relations,
gorohovets@iser.org.ua

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7. MODERNISATION OF CONSTRUCTION AND
THE NEW HOUSING POLICY: QUALITY AND SAFETY
Up to 80% of the housing stock in Ukraine needs to overhaul or upgrade. Only
in Kyiv, 600 thousand families live in such houses. Further postponement of
overhauls, modernization, and reconstruction of residential buildings for owners
means a rise in the price of their maintenance and the danger of destruction (an
increase of accidents), increase in operating costs for utilities.
Citizens have not sufficient funds to repair buildings, the amount of which is
estimated at least UAH 20 thousand per person. There is a problem of review the
liberal state housing policy, strengthening the role of central and local authorities
in the housing provision of citizens in the medium and long term.
The problem manifested especially sharply in cities, massively built up in 1960-
1980, at city-forming enterprises. Preventing of mass destruction of the housing
stock of such human settlements requires state support.
The problem of public security has arisen.
PRIORITIES IN HOUSING POLICY:
• Preservation of existing multifamily housing stock: preventing
accelerated destruction of houses, the introduction of a component
of major repairs in the composition of the cost of housing services.
Development and implementation of local programs of inspection,
overhaul, modernization and reconstruction of residential buildings
and state program of financial support for settlements with a
particularly difficult situation.
• In the sphere of reforming property relations: the formation of
effective owners of residential buildings, able to acquire, maintain,
repair and operate apartments and homes.
• In the sphere of financial ensure of preservation and sustainable
housing reproduction of different ownership: based on the reform
of taxes and fees related to construction and real estate, creating a
fiscal mechanism for filling of local and state budget; introduction
and dissemination of new credit instruments based on the use of
immovable property for the revitalization of the housing market.

31
It is impossible to save funds on postponing overhauls and reducing the
normal cost of maintaining buildings. In the case of delay in solving this
problem, in the coming years, citizens will face with increased destruction of
buildings and related human victims, quality housing will speedily deteriorate,
housing stock will decrease, the need for repairs speedily accumulate and market
value of apartments will decline. Owners of apartments will become homeless.
Local authorities will face protests from residents of destroyed buildings, the
requirementsofrepairs,theneedforemergencyevacuation,therequirements
of financial aid and housing provision – at the organisational, legal and financial
unpreparedness to address these problems.
The state, according to the Constitution of Ukraine, will face with the need to
help in solving the housing problem of the majority of the population.
KEY EVENTS OF 2016
1Tariff policy: continued bringing prices of communal services to cost-recovery
levels and forming investment part for renewal of fixed assets of manufacturers
and suppliers. The growth of final tariffs, conditioned mainly by fiscal component,
exceeded the solvency of most of the population. On the other hand, lasted the
policy of mass provision of communal subsidies (more than UAH 40 billion). These
funds are ultimately coming to enterprises, natural monopolies, not encouraging
their energy and resource efficiency, as well as transit through taxes to the budget.
2Continuation of liberal policy in the housing sector: actual curtailment of public
investment in housing construction, shifting all responsibility for the state
residential buildings on their co-owners (apartment owners), focus on the spread of
condominiums, management transition of communal buildings housing offices to
private management companies. Attention was not drawing, at the critical level of
the shabbiness of majority of apartment buildings and the scale of the accumulated
needs in mass capital repair (more than UAH 400 billion) with missing sources of
funding. As a result, the mechanism of accelerated destruction of the existing housing
stock and termination of the process of its steady reproduction as an integral part
of life benefits were formed. Private ownership of housing came into conflict with
the cost of operation of the building and the need to provide additional subsidies to
property owners.

32
1Further analysis, specification and finding
typical solutions to the problems of different
settlements: large, medium and small cities,
settlements, developing and depressed areas,
settlements destroyed in the area of ATO. The
Institutewillofferimplementationofpilotprograms
in different cities. We will recommend for the state
and localities the adoption of programs for the
preservation and renewal of housing stock and
help in their development..
2Solving the problem of housing, we will try
to improve institutional mechanisms and
eliminate weaknesses in related areas:
pricing in construction, openness and availability
of information, design, contractual relationships,
quality of construction, property management
methods.
3A separate area of our focus will be
improving the tax and financial mechanism
in the housing sector: the transformation of
taxation related to construction, land, housing and
real estate in housing into the market regulator
and the lever of state influence, balanced source
of renewal of housing stock and creation of a
powerful social housing segment. At the same
time, in contrast with solid private ownership of
housing, shortage of funds for its maintenance
and massive subsidies, we focused on the
distribution of mechanisms of financial turnover
of immovable property of citizens: hire, lease,
mortgage, reverse mortgage, distributed loan,
etc. Therefore, we will continue to develop recommendations and tools for
diversificationofpropertyrelationsinthehousingsector,thedevelopmentofsocial
housing, tenement houses, as well as combinations of communal ownership of
the house with private ownership of the apartment.
4We will develop an information and educational campaign for population,
managers of real estate sector, local authorities, and offer thematic TV and
radio programs, seminars, printed materials.

33
Vsevolod Nikolayev,
Dr. Sc. (Econ.), Full Professor,
Scientific Consultant,
nikolaev@iser.org.ua

34
8.ENERGY SECURITY:
INDEPENDENCE AND EFFICIENCY
PRIORITIES IN THE ENERGY SECTOR:
• Switching to energy-efficient and energy-saving use and
consumption of energy with the introduction of innovative
technologies.
• Increasing energy independence through increasing production of
own natural gas and oil; renewable and nuclear energy development;
diversification of sources and routes of energy supply.
• Synchronisation of Ukrainian and European energy systems,
competitiveness of the energy sector in the European energy market.
• Continuation of restructuring NJSC “Naftogaz of Ukraine” to
separate transportation and storage activities (pumping, screening)
of natural gas, natural gas market demonopolization.
• The launch of new markets of natural gas and electric power.
• Reform of the coal industry.
KEY EVENTS OF 2016:
1Verkhovna Rada of Ukraine adopted the next draft laws: “On the National
Commission for state regulation in the energy and utilities” (NKREKP); “On
Amendments to the Law of Ukraine “On the natural gas market” (on insurance
reserves of natural gas)”; draft law of Ukraine, developed by the Ministry of Energy
and Coal Industry of Ukraine, “On Electricity Market of Ukraine” was adopted at
the first reading.
2The Cabinet of Ministers of Ukraine approved: a decree “On the separation
of transportation and storage activities (pumping, screening) of natural gas”,
which defines a model of restructuring NJSC “Naftogaz of Ukraine”; the concept
of the “State target economic program for development of atomic-industrial
complex of Ukraine to 2020”; the concept of “Development of the gas production
industry of Ukraine”.

35
Loss of national sovereignty and ability to protect Ukraine’s energy interests
abroad, increasing dependence on imported energy resources, increasing
risk of delaying Euro-integration process in energy sphere (Ukraine imports about:
40% of gas; 30% of coal; 90% of oil and oil products; 85% of fuel for domestic NPPs.
Such dependence of Ukraine’s energy sector threatens the ability to ensure the
protection of vital interests of human and citizen, society and state).
The absence of a clear institutional mechanism for making decisions
concerning modern threats to energy security in the country, Ukraine is
losing the ability to quickly and effectively counter external and internal challenges,
which leads increasing the vulnerability of national security in general.
The absence of approved strategic vision for the development of fuel and
energy complex of Ukraine is causing an imbalance between different
types of energy and energy sources, makes it impossible to implement measures
on energy-efficiency of technological processes of Ukrainian producers than
weakens the competitiveness of the national economy and our state on the world
markets.
3Ukraine does not import natural gas from the Russian Federation already for
a year; gas market is liberalized for commercial customers (share of private
importers of natural gas in Ukraine has increased from 1% in 2014 to 26% in 2016);
NJSC “Naftogaz”, for the first time in many years, became profitable and did not
need financial injections from the state budget.

36
1
Drafting of the law on energy security: in the Ukrainian legislation energy
security outlined in the law “On the national security of Ukraine”. It is a
component of the economic and national security, but, given the new
challenges and threats, but we need a new document that will increasingly
consolidate in law the basic principles of state policy in the sphere of energy
security of Ukraine and determine the direct threats to the national security
of Ukraine in the energy sector, and the responsibility for failure of these
principles. It will enable to a clearer formulation of energy security policy and
program documents regulating the fuel and energy complex of the state, and
anticipation of possible future risks and threats during the implementation of
the Energy Strategy of Ukraine.
2
Preparing practical analytical study “Energy Security of Ukraine: a plan to
strengthen by 2020”, which will present short, medium, and long-term
priority tasks of the state policy to enhance energy security, and priority
tasks to protect the energy interests of Ukraine in the international arena.

37
Oksana Korotkevych,
Expert on energy,
korotkevich@iser.org.ua
Andrian Prokip,
Expert on energy,
prokip@iser.org.ua
Dmytro Chumak,
Expert on energy,
chumak@iser.org.ua

38
ABOUT ISER
NGO “Institute for Social and Economic Research” (ISER, NGO) is a non-governmental
think tank, the main activity of which is the state policy analysis.
Already in 2014, independent experts have begun to form a circle of like-minded
concerning the necessity of intellectual support for reforms in the country. The priority
was working out a strategic vision for the country, independent from the agenda
imposed from outside or by lobby groups.
Less than a month after the formal establishment of ISER (19/06/2015 – the date of
official registration), the first analytical product of Institute’s experts was presented -
The Policy of Economic Pragmatism became the basic paper and the brand of ISER’s
analytical studies. Under the auspices of “pragmatism” was started further studies of
ISER:
• Budget Policy: pragmatic approaches to strategic decisions;
• The Policy of Social Pragmatism;
• Housing and utilities: yesterday, today and tomorrow;
• The strategy of energy diplomacy and security.
THE MISSION OF ISER IS TO BE
AN INTELLECTUAL BRIDGE OF TRUST
BETWEEN GOVERNMENT, BUSINESS,
AND COMMUNITY..
TheteamofISERisanindependentexpertgroupthatunitesrepresentativesandleading
experts in different spheres and areas, who have an experience of the state policy
analysis and solutions development and implementation. Academics, representatives
of civil society and business, as well as former government officials involved in the work.
PRODUCTS AND ACTIVITY OF ISER:
• Drafts of normative legal acts;
• Conclusions to draft laws and recommendations to authorities;
• Studies in the field of the state policy;
• Analytical publications;
• Expert comments, presentations, briefings;
• Organisation of seminars, workshops and training for government officials,
MPs, representatives of local communities and businesses.

39
You can also support the activity of ISER by transferring funds to the Institute’s account.
Receiver: NGO “Institute for Social and Economic Research” (“ISER, NGO”).
EDRPOU: 39867470. Account 26007570403300, UAH, MFO 351005, PJSC “UkrSibbank”. The purpose
of Payment: Voluntary irretrievable financial support for the statutory activity
International organisations: European Union in Ukraine, UNDP, Council of Europe, OSCE, USAid,
UniversidaddeSivilia,IFC,DisabilityRightsInternational,HopeandHomesforChildren,Partnership
for every child, International Renaissance Foundation, Foundation “Auchan for Youth”, Eptisa.
Ukrainian organisations: Institute for Economics and Forecasting under the NASU, Research
Institute of Financial Law, Institute of Tax Reform (ITR NGO), “Rodyna” NGO, Ukrainian Catholic
University, project “One hope”, Reanimation Package of Reforms, “OPORA” Civil Network,
Association of Gas Producers of Ukraine, EIR Center, Ukrainian League promote Hospice
and Palliative Care, Association of Insurance Business, “MAMA-86” NGO, NGO “Bureau of
Environmental Investigations”, NGO “Research Institute on Legal Approximation”, International
Association “Environment-People-Law”, NGO “Let’s make Ukraine clean”, All-Ukrainian Public
Association “National Assembly of Persons with Disabilities”, Early Intervention Institute,
All-Ukrainian Coalition on the Rights Protection of Persons with Disabilities”, Construction
Chamber of Ukraine, TC 311 under the MERT, ACF “Right to Defense”, VostokSOS, KrymSOS,
DonbassSOS, NGO “Center for Social Action”, NGO “Center for Civic Education “Almenda”, NGO
“Center for Employment of free people”, CF “Rokada”, NGO “Crimean diaspora”, NGO “Center for
Civil Freedoms”, Donetsk regional organization of All-Ukrainian non-governmental organization
“Committee of Voters of Ukraine”, Human Rights Information Centre, Coalition of patriotic forces
of Donbass, Donetsk Press Club “Eidos”: Center of Political Studies and Analysis, Public initiative
of Lugansk, CF “Svoi”, Humanitarian headquarters for assistance to IDPs.
Financial
ISER COOPERATES WITH :
Informational
PARTNERS
ISAR
“Unity”
DLA PIPER EBRD
• “Dzerkalo Tyzhnia”
• “Den”
• “Livyi Bereg”
• “Delovaya Stolitsa”
• LIGA.net
• “Focus”
• “Ekonomichna
Pravda”
• “Evropeyska Pravda”
• “Novoye Vremia”
• “NV-Business”
• Delo.ua
• “Obozrevatel”
• Finance.ua
• UBR.ua
• Espreso.tv
• “Ukrinform”
• “Ukraina Komunalna”
• Vysnovky.com
• TSN.ua
• “1+1” TC
• “Ukraina Moloda”
• “Gamma” TV Channel
• “NewsOne” TV
Channel
• “Holos Stolytsi” (Voice
of the Capital) Radio
Station
• “Era” Radio Station
• “Novynarnia”
• Hromadske Radio
• “Business”
• “RIA-Novosti: Ukraina”
• “Business-Censor”
(biz.censor.net.ua)
• ZAXID.NET
• “Express”
• “ZiK” TV Channel
• “Interfax-Ukraine”
• “UNIAN”
• “Ekonomichnie
Izvestiya”
• “Segodnia”
• “OstroV’
• “24” TV Channel

Lesi Ukrainki Blvd., 26, 3rd floor, Kyiv, Ukraine
Тел.: +38 (044) 223-29-17
info@iser.org.ua
iser.org.ua

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