A second policy briefing was organized in Kyiv by EU-STRAT’s local partner, the Ukrainian Institute for Public Policy (UIPP). The briefing, entitled “Political economy of EU legislation harmonization with Ukraine and other Eastern Partnership (EaP) countries” took place on 12 November 2018 on the premises of and in partnership with the National Academy for Public Administration of Ukraine. Panelists and keynote speakers were drawn from the Ukrainian research and business community: Natalia Palamarchuk, professor of the Ukrainian Academy of Public Administration, Svitlana Mykhailovska, Deputy Director of European Business Association, Dmytro Naumenko, analyst at Ukrainian Centre for European Policy, Taras Kachka, strategic advisor at International Renaissance Foundation, Klaudijus Maniokas, chairman of the ESTEP board and EU-STRAT partner, and Ildar Gazizullin from UIPP. Maxim Boroda, Director of UIPP, opened the briefing with a short presentation on EU-STRAT’s objectives and the briefing’s topic.
Here are some of the discussions that took place, with a full report to follow later this month in EU-STRAT’s newsletter…
How EaP countries balance costs and benefits of legal approximation
Klaudijus Maniokas presented some of the findings from EU-STRAT’s case studies on the legislation harmonization of the Association Agreement (AA) with the EU and selected EaP countries in the area of transport, energy, environment (TEE). While legal approximation in TEE contributues to increased connectivity (both in terms of trade and mobility), it is also associated with high costs, for example, related to safety standards. Therefore, countries often seek to reach a compromise to balance perceived costs and benefits of legal approximation, ensuring that the EU acquis are conducive to addressing their development needs as well. This is done by prioritization of the harmonization process, which involves limiting or even stopping process in areas with high approximation costs.
The progress with transposition and implementation in TEE in the EaP countries is uneven, but is arguably better than could be expected. An ongoing informal adjustment of the AA reduces the scope of the commitments taken, as in the case of road worthiness in Georgia, electricity unbundling in Ukraine and Moldova, as well as transport and environment in Ukraine. The EU conditionality, however, seems to be effective in Ukraine on a number of reforms that directly relate to Kyiv’s interests, such as reform of the gas sector, which reduces dependence on Russia.
The effects of interdependencies in Ukraine’s energy sector on domestic reforms
Ildar Gazizullin presented developments of Ukraine’s interdependence in the gas and electricity markets and how this has contributed to applying EU legislative norms in sectoral reforms. Complex interdependence between Russia and Ukraine in terms of transit and supply of gas has had a strong impact on security and economic relations between the countries. Ukraine implemented a number of polices to reduce its energy dependence, including steps to increase imports of gas from the EU and energy market reforms in line with the EU aquis. The role of the EU has increased, both as a blueprint for reforms, but also as a mediator in gas disputes with Moscow.
EU demands for greater transparency in the energy sector also target rent-seeking behaviour by business and political elites. Hence, increasing energy prices implies additional costs (or foregone benefits) for both citizens and elites in countries with a long tradition of heavily-subsidized prices. EU-induced energy reforms thus have important social implications and affect other public policies. The risk of alienating a large share of the population as energy poverty risks looms, on the one hand, and pressure from incumbent businesses to constrain competition in the sector, on the other hand, seems to be slowing down otherwise successful sectoral developments.
For more, stay posted for our January newsletter! You can also find information about the event (in Ukrainian) on the National Academy for Public Administration of Ukraine’s website: