PIIE Blog | RealTime Economic Issues Watch
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
Subscribe to RealTime Economic Issues Watch Search
RealTime Economic Issues Watch

How to Amend the Ukrainian Constitution

by | July 7th, 2014 | 04:32 pm
|

President Petro Poroshenko’s plan to amend the Ukrainian constitution is one of his top priorities. This makes sense, in part because of the broad consensus about the necessary changes. Regional governors should be elected, and regional administrations should be given more political and economic power. Russia’s demands for “federalization” of Ukraine should be seen as an attempt to undermine Ukraine’s national sovereignty and territorial integrity. Ukraine should also eliminate the constitution’s provisions on “social rights” and overhaul the justice system with the aim of purging corrupt judges.

The Constitution of Ukraine of December 2004 is one of the few remaining parliamentary-presidential charters in the post-communist world. Ukraine would benefit from a normal European parliamentary system, but that is not likely when the president is proposing amendments. In addition, the 2004 constitution proved to be overly detailed and contradictory, contributing to the chaos of the presidency of Viktor Yushchenko, who was defeated for reelection 2010.

The major challenge of balancing central power against regional powers concerns three issues: language, political power, and financial powers.

Language: The constitution is quite open and tolerant in this area. Article 10 states that the state language is “the Ukrainian language” but also that “the free development, use and protection of Russian, and other languages of national minorities of Ukraine, is guaranteed.” A more relevant question is over the number of schools and courses that offer Ukrainian, Russian, and other languages and what public services are available in what language. The regions should continue to decide these questions.

Political power: Article 118, which regulates the political powers of regions and districts, should be amended. At present, all power emanates from Kiev, and the article states that “heads of local state administration are appointed and dismissed by the President of Ukraine upon the submission of the Cabinet of Ministers,” to whom they are also accountable. These governors then form their state administrations. A broad Ukrainian consensus appears to have settled on the election of regional governors and a transfer of substantial powers to the regions. Alternatively, the elected regional councils could elect regional governors.

Financial power: This is a less discussed but vital issue. Ukraine maintains an absurd Soviet-style centralization of public finance. Article 95 calls for “any state expenditure for the needs of the entire society” to be “determined exclusively by the law on the State Budget of Ukraine.” The constitution should be revised to let both regional and local authorities determine their own budgets. In addition, state authorities are compelled to deliver virtually all revenues to the central treasury, which limits their incentive to collect them. The constitution should be adjusted to designate tax revenues for the central versus regional and local authorities. One model would be to follow the typical example of other countries: Foreign trade taxes, a value-added tax, social taxes, and natural resource taxes are central, while land and property taxes are local, and corporate profit taxes and personal income can be shared in different fashions (Shleifer and Treisman 2000, 118–20).

Ukrainian public expenditures are also absurdly centralized. A local university has to ask the central treasury for permission not only to buy pencils but also what kind of pencils to buy and what price to pay. Accordingly, expenditure mandates should also be divided between the central and local governments. The clearer and the more transparent these dividing lines are, the better the incentive to economize. Typical central government expenditures pertain to foreign policy and defense, pensions, unemployment benefits, higher education, and national infrastructure, while local infrastructure and primary and secondary education tend to be local expenditures, and the financing of health care varies. In addition, central transfers to poor regions are standard.

The Kremlin’s demands for federalization of Ukraine are objectionable for several reasons. First, Russia has no business interfering in another country’s internal affairs. Moreover, a strong Ukrainian majority wants to maintain a unitary state. No authoritative Russian proposal seems to exist, but two Kremlin aims are to raise the status of the Russian language and to reinforce regional political powers, which can be carried out through the decentralization that is under way. The Kremlin also wants Ukrainian regions to gain the right to hold referendums of independence, following the example in Crimea and the attempts in the Donetsk and Luhansk regions (which contradicts Article 73) to pursue their own foreign policy. These proposals must be understood simply as attempts to undermine Ukraine’s sovereignty and national integrity contrary to Russia’s commitments in the Helsinki Final Act, the UN Charter, the Treaty on the Dissolution of the Soviet Union of 1991, the Budapest Memorandum of 1994, and the Russian-Ukrainian Friendship Treaty of 1997.

Since the Federal Republic of Germany adopted its constitution in 1949, several European states and most the post-communist countries have included “social rights” in their constitutions. This is true also of Ukraine, whose constitution contains pages of “social rights.” These include Article 43 about “right to labor,” Article 46 about “right to social protection,” Article 47 about “right to housing,” Article 48 on the “right to sufficient standard of living,” Article 49 on “free medical care,” and Article 53 on “free higher education.” Ukraine does not fulfill these far-reaching statutory rights, and it will never have sufficient resources to do so. Worse, an activist constitutional court can invoke them to block redesign of the country’s social system. In recent years, such obstruction has happened in Greece, Latvia, Portugal, and Romania, where constitutional courts have nullified vital adjustments of public expenditures. No state should guarantee unaffordable public expenditures. Even less should a state guarantee unjustified public expenditures, such as generally free higher education.

One of the greatest problems of post-communist countries is how to purge corrupt judges. A reasonable assumption is that all judges in Ukraine are corrupt and should be replaced. The Articles 124–131 of the constitution establish the principle that “judges are independent and subject only to the law.” (Article 129) The constitution stipulates a high degree of independence of the appointment of judges through the High Council of Justice. This makes sense in a country characterized by law and order, but not in a country that wants to purge its courts from corruption.

In March 2014, a group of experts from the social movement “Reanimation of the Package of Reforms” started working on reform of the court system, mainly by removing people loyal to the family of the ousted president, Viktor Yanukovych. They rightly attempted to cleanse it from the top through its High Council of Justice, which appoints judges. But several of the institutions that are supposed to appoint members of the High Council are considered pervasively corrupted. For example, Yanukovych loyalists control the Congress of Representatives of Higher Legal Educational Establishments and Scientific Institutions, which appoints three of 20 member of the High Court of Justice. This Congress does not recognize dissident universities.

The Congress of Judges of Ukraine also appoints three members, and it is known to support corrupt judges. The National Association of Lawyers, with 36,000 members, is also dominated by Yanukovych loyalists. As a result, the current attempts to renew the court system looks like a soap opera.1 Corrupt lawyers and judges should not be allowed to reappoint one another. This chain of corruption must be broken once and for all. The institutions that appoint members of the High Court of Justice need to be purged or prevented from appointing judges.

To accomplish these goals, Ukraine needs assistance, which could be provided by the European Union, the Council of Europe, Canada, or the United States. Initially, the Higher Council of Justice could be composed exclusively of qualified Ukrainian-speaking lawyers, judges, and legal scholars from abroad. Canada, the United States, and probably also Europe harbor a sufficient number. These should appoint new judges from the top down, drawing on young Ukrainian lawyers not yet corrupted. After the corps of judges has been built up, the Higher Council of Justice could be composed anew on the lines of the current Constitution. In order to do so legally, Chapter VIII on Justice in the constitution could be suspended for perhaps five years.

Unfortunately, Western legal expertise often finds the need for purges and emergency legislation difficult to understand. Estonia’s radical reformer, former Prime Minister Mart Laar (2002, 315) complained that Estonia’s court reform was excessively “influenced by European liberalism that the state completely lost control over the activities of the judges and public opinion came to view the courts as distanced not only from law but also from justice.” Ukraine’s corrupt judges must not be allowed to repopulate their corrupt system.

References

Laar, Mart. 2002. Little Country That Could. London: Centre for Research into Post-Communist Economies.

Shleifer, Andrei, and Daniel Treisman. 2000. Without a Map: Political Tactics and Economic Reform in Russia. Cambridge, MA: MIT Press.

1 Anastasiya Ringus, “Bitva za mantiyu. Shans izmenit’ sudebnuyu sistemu, (Battle for the Robe. Chance to Change the Court System)” Ukrainskaya pravda, June 13, 2014.