EUROPEAN
COMMISSION

Brussels, 8.11.2023
SWD(2023) 699 final

COMMISSION STAFF WORKING DOCUMENT
Ukraine 2023 Report
Accompanying the document
Communication from the Commission to the European Parliament, the Council, theEuropean Economic and Social Committee and the Committee of the Regions
2023 Communication on EU Enlargement policy{COM(2023) 690 final} - {SWD(2023) 690 final} - {SWD(2023) 691 final} {SWD(2023) 692 final} - {SWD(2023) 693 final} - {SWD(2023) 694 final} {SWD(2023) 695 final} - {SWD(2023) 696 final} - {SWD(2023) 697 final} {SWD(2023) 698 final}

EN

EN

1.

INTRODUCTION............................................................................................................................... 3
CONTEXT ................................................................................................................................. 3
SUMMARY OF THE REPORT ...................................................................................................... 3
ASSESSMENT OF THE IMPLEMENTATION OF THE SEVEN STEPS OF THE COMMISSION'SOPINION ............................................................................................................................................... 9
1.1.
1.2.
1.3.

2.

CLUSTER 1: THE FUNDAMENTALS OF THE ACCESSION PROCESS ......................... 122.1. FUNCTIONING OF DEMOCRATIC INSTITUTIONS AND PUBLIC ADMINISTRATION REFORM .... 12
2.1.1. Democracy....................................................................................................................................... 122.1.2. Public administration reform........................................................................................................ 16
2.2. RULE OF LAW AND FUNDAMENTAL RIGHTS .......................................................................... 19
2.2.1. Chapter 23: Judiciary and fundamental rights ........................................................................ 19
2.2.2. Chapter 24: Justice, freedom and security ............................................................................... 54
2.3. ECONOMIC CRITERIA ............................................................................................................. 70
2.3.1. The existence of a functioning market economy ..................................................................... 70
2.3.2. The capacity to cope with competitive pressure and market forces within the Union ...... 78
2.4. PUBLIC PROCUREMENT, STATISTICS, FINANCIAL CONTROL ....................................................... 81
Chapter 5 – Public procurement ............................................................................................................. 81
Chapter 18 – Statistics .............................................................................................................................. 82
Chapter 32 – Financial control ................................................................................................................ 84

3.

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION..................... 86

4.

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP...................................... 88
CLUSTER 2: INTERNAL MARKET ....................................................................................................... 88
Chapter 1 – Free movement of goods .................................................................................................... 89
Chapter 2 – Freedom of movement for workers................................................................................... 91
Chapter 3 – Right of establishment and freedom to provide services ............................................... 92
Chapter 4 – Free movement of capital................................................................................................... 93
Chapter 6 – Company law ........................................................................................................................ 95
Chapter 7 – Intellectual property law..................................................................................................... 96
Chapter 8 – Competition policy ............................................................................................................... 97
Chapter 9 – Financial services ................................................................................................................. 98
Chapter 28 – Consumer and health protection................................................................................... 100
CLUSTER 3: COMPETITIVENESS AND INCLUSIVE GROWTH ............................................................. 103
Chapter 10 - Digital transformation and media ................................................................................. 103
Chapter 16 - Taxation ............................................................................................................................. 105
Chapter 17 – Economic and monetary policy...................................................................................... 107
Chapter 19 – Social policy and employment ....................................................................................... 108
Chapter 20 – Enterprise and industrial policy ..................................................................................... 111
Chapter 25 – Science and research ....................................................................................................... 113
Chapter 26 – Education and culture ..................................................................................................... 114
Chapter 29 – Customs union.................................................................................................................. 116
CLUSTER 4: THE GREEN AGENDA AND SUSTAINABLE CONNECTIVITY ........................................... 117
Chapter 14 – Transport .......................................................................................................................... 118
Chapter 15 – Energy ............................................................................................................................... 120
Chapter 21 – Trans-European networks .............................................................................................. 124
Chapter 27 – Environment and climate change ................................................................................. 125
CLUSTER 5: RESOURCES, AGRICULTURE AND COHESION ............................................................... 129
1

Chapter 11 – Agriculture and rural development ............................................................................... 130
Chapter 12 – Food safety, veterinary and phytosanitary policy....................................................... 131
Chapter 13 – Fisheries and aquaculture .............................................................................................. 133
Chapter 22 – Regional policy and coordination of structural instruments ..................................... 135
Chapter 33 – Financial and budgetary provisions .............................................................................. 137
CLUSTER 6: EXTERNAL RELATIONS ................................................................................................ 138
Chapter 30 – External relations............................................................................................................. 138
Chapter 31 – Foreign, security & defence policy ................................................................................ 139
ANNEX 1 - RELATIONS BETWEEN THE EU AND UKRAINE............................................................... 142

2

1.

INTRODUCTION
1.1. CONTEXT

On 28 February 2022, five days after Russia launched its unprovoked and unjustified
aggression, Ukraine submitted its application for EU membership. On 17 June 2022, theCommission issued its opinion1 and recommended to the Council that Ukraine should be given
the perspective to become a member of the EU and that the country be granted candidate statuson the understanding that seven steps, mainly in the rule of law area, are taken. On 23 June
2022, the European Council recognised the country’s European perspective and decided to
grant Ukraine the status of candidate country. The European Council invited the Commission
to report to the Council on the fulfilment of the seven steps as part of its regular enlargement
package. This report is the Commission’s first annual enlargement report on Ukraine replacing
the previous annual Association Implementation Reports. To complement its opinion on themembership application, the Commission published the analytical report2 on the acquisalignment of Ukraine in February 2023.
Russia’s war of aggression is still ongoing, causing the loss of tens of thousands of lives,
livelihoods, millions of refugees and internally displaced persons, deportation and transfer of
Ukrainian citizens, including children, to Russia and Belarus, massive destruction of physicalinfrastructure and further occupation of Ukrainian territory by Russia. Faced with thisaggression, the Ukrainian government has shown a remarkable level of institutional strength,
determination and ability to function. Since the beginning of the full-scale invasion and war of
aggression, the EU has been supporting Ukraine diplomatically, financially, economically andmilitarily and through humanitarian aid on an unprecedented scale, amounting to EUR 82.6
billion. It has also issued 11 packages of sanctions against Russia. EU Member States host alarge number of Ukrainians, of which close to 4 million are registered for temporary protection
under the Temporary Protection Directive. The EU and its Member States have also supported
efforts to ensure full accountability for war crimes and the other violations of international law
committed in connection with Russia’s war of aggression. To support Ukraine’s repair,recovery and reconstruction process, the Commission, together with Ukraine and G7 partners,
has set up the Multi-agency Donor Coordination Platform. The repair, recovery andreconstruction process is firmly embedded in Ukraine’s EU accession path, ensuring
investments go hand in hand with accession-related reforms. In June 2023, the European
Commission proposed a dedicated medium-term financing instrument that will provide
Ukraine with coherent, predictable and flexible support for the period 2024-2027. The new
Ukraine Facility will support efforts to sustain macro-financial stability and promote recovery.
The plan is for the Facility to be endowed with EUR 50 billion in grants and loans. The EU
will continue to support Ukraine as long as it takes.
Despite the war and its impact on all levels of Ukrainian society and the martial law in place,the Ukrainian government and Parliament showed determination to carry out the necessaryreforms required by the EU accession process, in particular the seven steps mentioned in theopinion. Support for future EU accession is higher than ever before. According to various
recent opinion polls around 90% of Ukrainians support EU membership.
1.2. SUMMARY OF THE REPORT3
Despite Russia’s full-scale invasion in February 2022 and its brutal war of aggression, Ukraine1

COM(2022) 407 final
SWD(2023) 30 final
3
This report covers the period from June 2022 to June 2023. It is based on input from a variety of sources,
including contributions from the government of Ukraine, the EU Member States, European Parliament reports
23

has continued to progress on democratic and rule of law reforms. The granting of candidate
status for EU accession to Ukraine in June 2022 has further accelerated reform efforts.
During the reporting period, no elections took place. Overall, the legal framework remains
conducive to the organisation of democratic elections. Reform of the electoral legal framework
should be continued to address outstanding recommendations by the OSCE Office for
Democratic Institutions and Human Rights (ODIHR).
The work of the Parliament (Verkhovna Rada) continues to be marked by extraordinary
circumstances related to the Russian military aggression. However, legislative tasks are carriedout systematically, laying the ground for an uninterrupted democratic decision-making process.
Key decisions, especially on defence/security questions, were adopted by clear cross-party
majorities. Considerable attention was paid to legislation related to EU integration. The Rada
performed important symbolic functions, while concerns were raised about limited
transparency on security grounds and weakened oversight of the executive.
Ukraine has some level of preparation in the area of public administration reform, withlimited progress made during the reporting period. While the Ukrainian public administration
has proved its resilience during the full-scale invasion, reform has slowed or stopped in a
number of sectors, in particular in merit-based recruitment and selection, job classification andsalary reform, as well as the roll-out of the human resources management information system.
The digitalisation of service delivery has reached a high level.
On multi-level governance, the achievements of decentralisation reform continued, withmunicipalities acting as a pillar of Ukrainian resilience. Overall, following the successful
finalisation of the territorial part of decentralisation, other elements of the reform still need tobe completed. Local self-government in the liberated territories and those near the frontlines
should be gradually restored where the security situation allows it. The newly established
Ministry of Restoration should synergise infrastructure and the regional development portfolio
to stimulate locally driven recovery and reconstruction based on the systematic involvement oflocal authorities and associations. The local fiscal base needs to be strengthened.
On the functioning of the judiciary, Ukraine has some level of preparation and must continue
its efforts. Despite the Russian war of aggression, Ukraine continued to deliver justice services
and made good progress on the implementation of the 2021 reform of the judicial governancebodies focused on integrity and professionalism. The High Council of Justice and the High
Qualification Commission of Judges were re-established following a transparent process withthe meaningful involvement of independent experts. It will allow the government to start filling
more than 2 000 judicial vacancies again and evaluating (vetting) the qualification of some
1 900 sitting judges, which was suspended in 2019. Despite significant challenges, theUkrainian institutions showed remarkable resilience and introduced the necessary legislativeand organisational measures that allow it to continue to provide justice services to citizens andcompanies during the war. In 2022, most courts maintained a clearance rate (ratio of the numberof resolved cases over the number of incoming cases in a given year) of 100% or even higher.
and information from various international and non-governmental organisations. It also includes the results ofcomparative assessments and indices produced by other stakeholders, in particular in the area of rule of law.
The report uses the following assessment scale to describe the state of play: early stage, some level of preparation,
moderately prepared, good level of preparation and well advanced. To describe progress made during the reporting
period, it uses the following scale: backsliding, no progress, limited progress, some progress, good progress andvery good progress. Where appropriate, interim steps have also been used.

4In August 2023, Ukraine enacted legislation enabling a transparent and merit-basedpreselection of judges of the Constitutional Court in line with the Council of Europe’s Venice
Commission recommendations, and started the implementation process by establishing theAdvisory Group of Experts and announcing the competitions to the Constitutional Court.
Legislation on the selection of judges should still be improved, and a more transparent
procedure needs to be introduced for the selection of management-level prosecutors. In Augustand September 2023, Ukraine adopted two laws for resuming disciplinary proceedings against
judges and for establishing an independent service of disciplinary inspectors on the basis of atransparent and meritocratic selection procedure with a meaningful involvement ofinternationally-nominated experts. A new administrative court to handle cases involving thecentral government bodies and staffed by properly-vetted judges needs to be established,following the abolition of the Kyiv District Administrative Court. Legislative and institutionalchanges are needed to ensure stronger disciplinary system for prosecutors. To increasetransparency, efficiency and access to justice, Ukraine should also continue its efforts on
digitalisation of the judiciary. Systemic measures still need to be taken to advance the reformof enforcement of court decisions, including the enforcement of decisions of the European
Court of Human Rights. To ensure the sustainability of rule of law consolidation efforts,
Ukraine should continue legal education reform.
Since the start of the full-scale invasion, Ukraine has been confronted with an unprecedented
number of atrocities committed by the Russian military. The Ukrainian institutions madeconsiderable efforts to address this and bring the perpetrators of international crimes to justice.
Multiple law enforcement agencies, following the guidance of the Office of the Prosecutor
General, started investigating these complex crimes. Specialised investigation and prosecuting
departments were established for this purpose. As a result, 107 951 incidents related to various
atrocity crimes have been officially registered. 267 people have been indicted and 63 people
convicted for war crimes by Ukrainian courts. There has been close international cooperation,
including with the International Criminal Court and its Office of the Prosecutor, Eurojust,Europol and numerous EU Member States. To improve the effectiveness of investigation ofinternational crimes and cooperation with the International Criminal Court, Ukraine should
further harmonise its legal framework with the applicable international standards.
On the fight against corruption, Ukraine has some level of preparation. Some progress wasmade during the reporting period, in particular with the establishment and consolidation of acomprehensive anti-corruption institutional framework and the gradual building of a trackrecord in investigating, prosecuting and adjudicating high-level corruption cases. Ukraine
stepped up reforms in this area after receiving EU candidate status. New legislative, strategic
and institutional improvements were pursued, including the adoption of the national anticorruption strategy, accompanied by a comprehensive state programme for its implementation.
The new Heads of the Specialised Anti-Corruption Prosecutor’s Office (SAPO) and the
National Anti-Corruption Bureau of Ukraine (NABU) were appointed in July 2022 and March2023 respectively, following transparent and meritocratic selection procedures with the
involvement of independent experts. Since their appointment, NABU and SAPO haveincreased their cooperation and stepped up investigations into high-level corruption cases. The
e-asset declaration system, suspended after the introduction of martial law, was restored andopened to the public, albeit with some potential weaknesses related to the verification powersof the National Agency on Corruption Prevention (NACP) and the data to be verified. The
Parliament has also adopted a law that would weaken administrative liability related to e-asset
declarations, but the President has not signed this law into effect. To ensure the impact andsustainability of anti-corruption efforts, Ukraine should continue building a credible trackrecord of investigations, prosecutions and final court decisions in high-level corruption cases,5

including the seizure and confiscation of criminal assets. Timely and steady implementation of
the 2023-2025 state anti-corruption programme should also be pursued. Efforts are also needed
to further streamline and improve substantive and procedural criminal law. To cope withincreasing workloads, the number of NABU staff, SAPO prosecutors and High AntiCorruption Court judges should be increased. Furthermore, SAPO should be further protectedfrom possible undue interference by improving the selection procedures for the Head of SAPO
and its key officials, increasing its organisational and procedural autonomy, and improving its
accountability framework.
Ukraine has some level of preparation in the area of the fight against organised crime. Some
progress was made. Ukraine has a dedicated strategic and institutional framework to fightorganised crime and a good level of international cooperation. There is an increasing numberof joint operations with EU Member States. Measures are being taken to tackle the illicit flowof firearms, human trafficking and cybercrime. The development of the e-case management
system in the criminal justice chain was launched. The national asset recovery strategy was
adopted. Russia’s war of aggression had a profound impact on the institutional capacity to fightorganised crime, but relevant institutions demonstrated resilience and continued their work.
However, the legal framework and operational capacity to fight organised crime remain weak.
Procedural gaps, jurisdictional overlaps, widespread corruption and underdeveloped IT
infrastructure are also hampering the effective fight against organised crime. Inter-agency
coordination needs to be strengthened further. Ukraine should also launch the national seriousorganised crime threat assessment in line with EU standards and build the capacity to
implement it. The legal framework and institutional capacity still need to be improved asregards financial investigations, asset recovery and management. Transparent and merit-based
selection of management and staff, along with a strong accountability system should be
introduced in the Bureau of Economic Security, a key agency tasked to fight economic crime.
On fundamental rights, Ukraine complies overall with international human rights instruments
and has ratified most international conventions on the protection of fundamental rights.
Citizens suffered severely from the large-scale violations of fundamental rights by Russia,
which Ukrainian authorities and civil society have sought to remedy since February 2022. At
the start of the full-scale invasion, Ukraine introduced martial law, which led to some
restrictions of rights and freedoms, but these have so far remained largely in proportion to theactual needs and have been applied with caution. The number of registered discrimination
against minorities, including against LGBTIQ persons and national minorities as well as
antisemitic acts, has strongly decreased. On the rights of persons belonging to national
minorities, Ukraine needs to address the remaining recommendations of the Venice
Commission Opinion of June 2023 and the follow-up Opinion of October 2023. Further efforts
are also needed to ensure that persons with disabilities can enjoy their rights as per the UN
Convention on the rights of persons with disabilities.
At the same time, important reforms have been introduced and adopted, such as the new media
law. Ukraine also ratified the Istanbul Convention on preventing and combating violenceagainst women and domestic violence in July 2022 and adopted the 2030 state strategy on
ensuring equal rights between men and women, which should now be implemented. Only
limited progress was made in the field of prevention of torture and ill treatment in prisons andother forms of detention, where a cultural change within state authorities needs to materialize
and further measures are required to prevent and ensure accountability for such acts. A law on
personal data protection, aligned with the EU acquis, should be adopted. The situation ofchildren (but also of older persons) in care institutions as well as persons with disabilities
remains difficult, but commitments on the deinstitutionalisation of childcare and to rebuilding
6

Ukraine in a barrier-free manner are promising and need to be implemented as a priority.
Similarly, support for the Roma4 community needs to be stepped up with a concrete andtargeted action plan.
Given the breadth of issues concerning fundamental rights, in particular the numerous
violations by Russia, the Ukrainian Parliament Commissioner for Human Rights faces serious
challenges with its existing capacity to address the entire range of its responsibilities in ameaningful manner.
Despite the context of a full-scale war, Ukraine is in between some and moderate level of
preparation in the area of freedom of expression. Good progress was made in the reporting
period with the adoption of the media law in December 2022 and despite the war-time
restrictions in access for media and journalists introduced. Ukrainian citizens enjoy freedom of
expression, with critical media reporting available. However, media concentration has been
observed due the collapse of the media and advertising market, particularly in the television
segment. This has reduced people’s access to pluralistic media in Ukraine. The situation ofjournalists remains precarious, both economically and – since the start of the full-scale invasion– physically. Ukraine needs to envisage new ways to ensure a post-war structure for pluralistic
and independent non-online media (in particular television), including the long-term outlookof the public broadcaster and independence of the national regulator.
Due to the impacts of Russia’s ongoing full-scale invasion as well as the pre-existing structural
economic challenges, the Ukrainian economy is between an early stage and some level of
preparation towards establishing a functioning market economy. Since the full-scaleinvasion by Russia, the conduct of monetary policy, overall economic governance and theinstitutional and regulatory environment have faced considerable difficulties. Despite thesechallenges, the Ukrainian authorities have responded swiftly and with overall stability in mind,
although the circumstances have also brought about some temporary setbacks on several
important elements of a functioning market economy. In 2022, the economy contracted by
29.1%, showing more resilience than first expected. To contribute to financial stability andstrengthen confidence in the domestic currency, the National Bank of Ukraine suspended thehitherto successfully managed inflation-targeting framework, fixed and devalued the exchange
rate and raised its main refinancing rate. The banking sector remained fully operational andstable with ample liquidity, also thanks to previous reforms and supervisory forbearance
measures. The state of public finances has deteriorated markedly due to the duration and costof the war and its impact on the economic activity. This has undone the considerable fiscal
consolidation and corresponding reduction in the debt stock that had been achieved in previous
years before the pandemic. The significant internal and external population displacements,
together with significant capital destruction, profoundly affected the labour market.
Due to the impacts of Russia’s ongoing full-scale invasion as well as the pre-existing structural
economic challenges, Ukraine is at an early stage of preparation in terms of its capacity tocope with the competitive pressure and market forces within the EU. The war has severely
damaged Ukraine’s capital infrastructure and triggered a massive human exodus that has
deeply affected the economy. Investment in research and innovation has been low, andeducational outcomes have not met the needs of the labour market, despite rather high spending
and relatively high formal levels of educational achievement. The structure of the Ukrainian
economy remained concentrated in sectors with low added value. While trade integration with
the EU has been advancing recently, including thanks to the implementation of the Deep and4

In line with the terminology of European institutions the umbrella term ‘Roma’ is used here to refer to a numberof different groups, without denying the specificities of these groups.

7Comprehensive Free Trade Area, it remains rather low. At the same time, the international
response in support of Ukraine has been massive over the last year, and future reconstruction
could also help support modernisation, in which Ukraine specialises in higher value-added
chains, and help strengthen its competitiveness.
On good neighbourly relations and regional cooperation, Ukraine maintains good bilateralrelations with other enlargement countries and with neighbouring EU Member States. These
have been strengthened amidst Russia’s war of aggression leading to further deepening
cooperation with many of those countries, marked by a number of high-level visits andconsiderable humanitarian, military and financial support.
On Ukraine’s ability to assume the obligation of EU membership, the country continued towork on alignment with the acquis in many areas.
The internal market cluster is key to Ukraine’s preparations for the requirements of the EUinternal market and is of high relevance for the implementation of the Deep and Comprehensive
Free Trade Area. Some/good progress was made in the area of free movement of capital andintellectual property law. Some progress was achieved in several areas, particularly in financial
services, free movement of goods, right of establishment and freedom to provide services, andcompany law. Progress was limited in the area of competition policy as well as consumer andhealth protection, with no progress in the area of freedom of movement for workers due to
Russia’s full-scale invasion of Ukraine.
The competitiveness and inclusive growth cluster and the related reforms are closely linked
to the ability and capacity for recovery and reconstruction. This requires increasing
competitiveness and building a sustainable and inclusive economy. Good progress wasachieved in digital transformation and media and in the customs union. Some progress wasmade on taxation and education and culture. Limited progress was made in social policy andemployment, enterprise and industrial policy, and science and research. No progress could bemade – due Russia’s full scale invasion which demanded extraordinary economic policy
measures – on economic and monetary policy.
The Green Agenda and sustainable connectivity cluster and the related reforms are also
intricately linked to Ukraine’s reconstruction during and after the war. Russia’s war of
aggression against Ukraine has been highly detrimental to the transport infrastructure,environment and climate. Progress was achieved in several areas within the cluster, with good
progress on environment, some progress on energy and Trans-European networks, while
progress was limited in the area of climate change and transport policy.
In the areas covered by the cluster on resources, agriculture and cohesion, progress wasachieved in particular in three areas, namely some progress in agriculture and ruraldevelopment, food safety and veterinary (SPS) and phytosanitary policy as well as in the areaof fisheries and aquaculture. Progress was limited in regional policy and the coordination of
structural instruments and financial and budgetary provisions.
In the external relations cluster, Ukraine has good level of preparation. As regards the foreign,
security and defence policy, Ukraine has made good progress, as it has increased the alignment
rate with relevant EU decisions and declarations of the EU’s common foreign and security
policy to 93% (2022). Progress was limited in alignment with the EU’s trade policy.

8

1.3. ASSESSMENT OF THE IMPLEMENTATIONCOMMISSION'S OPINION

OF THE SEVEN STEPS OF THE

Step 1 - enact and implement legislation on a selection procedure for judges of theConstitutional Court of Ukraine, including a pre-selection process based on evaluation of theirintegrity and professional skills, in line with Venice Commission recommendations.
In December and July, Ukraine adopted the necessary legislation that introduced a pre-selection
process for the Constitutional Court judges on the basis of integrity and professionalism
criteria, in line with the Venice Commission recommendations. Internationally-nominatedmembers of the pre-selection body – the Advisory Group of Experts – obtained a temporary
but decisive role in this body. Ukraine launched the implementation process. The Parliament
and the Council of Judges announced competitions to fill the available vacancies in theConstitutional Court. The President and the Council of Judges appointed their members andsubstitutes to the Advisory Group of Experts, while the Parliament is continuing theappointment procedure. In September, the Venice Commission and the international donors,
including the EU, submitted their nominations of members and substitutes of the Advisory
Group of Experts. In October, the Cabinet of Ministers formally appointed them. With fiveappointed members and five substitutes, the Advisory Group of Experts became operational.
This step is completed.
Step 2 - finalise the integrity vetting of the candidates for the High Council of Justice membersby the Ethics Council and the selection of candidate to establish the High Qualification
Commission of Judges of Ukraine.
The Ethics Council completed the integrity vetting of the candidates for open positions in theHigh Council of Justice (HCJ). The HCJ became fully operational in January 2023 when it
reached its quorum of 15 members. In June 2023, the renewed HCJ appointed 16 new membersof the High Qualification Commission of Judges (HQCJ) out of a shortlist of 32 candidates
proposed by the HQCJ Selection Commission, following a transparent and merit-based
process, including an integrity and professionalism check. This step is completed.
Step 3 - further strengthen the fight against corruption, in particular at high level, throughproactive and efficient investigations, and a credible track record of prosecutions andconvictions; complete the appointment of a new head of the Specialised Anti-Corruption
Prosecutor’s Office through certifying the identified winner of the competition and launch andcomplete the selection process and appointment for a new Director of the National AntiCorruption Bureau of Ukraine.
Ukraine has further developed its track record in fighting corruption. Until the end of
September 2023, 82 indictments against 203 persons were sent to court; should this trend
continue, the number of indictments would double in 2023 compared to previous years. The
High Anti-Corruption Court (HACC), until the end of September 2023, has significantly
increased its overall performance and delivered 48 verdicts against 64 defendants in first
instance, and 26 verdicts against 32 defendants in second instance. The cases investigated andadjudicated concerned prominent high-level public officials including former deputy ministers,
former parliamentarians and high-level judges, e.g. the serving President of the Supreme Court.
Ukraine appointed the heads of the Specialised Anti-Corruption Prosecutor’s Office (SAPO)
and the National Anti-Corruption Bureau of Ukraine (NABU). Ukraine adopted acomprehensive State Anti-Corruption Programme in March 2023 and launched the IT system
for monitoring its implementation, as well as the Unified Portal for Whistle-blower Reports.
The e-asset declaration system, suspended after the introduction of martial law, was restored9and opened to the public, albeit with some potential weaknesses related to the verification
powers of the National Agency on Corruption Prevention (NACP) and the data to be verified.
The Parliament has also adopted a law that would weaken administrative liability related to easset declarations, but the President has not signed this law into effect.
Draft legislation was developed and registered in the Parliament that enhances theindependence of SAPO and the effectiveness of the Criminal and Criminal Procedure Codes in
the fight against high-level corruption. Also, a draft law increasing the staffing cap for NABU
was registered in the Parliament.
Ukraine should still enact a law raising the legislative staffing cap for the NABU and remove
from the law on corruption prevention the provisions restricting the NACP’s powers tocontinued verification of assets that have already undergone the verification process andlimiting NACP’s powers to verify property acquired by declarants before joining the public
service, without prejudice to the rules applying to national security during wartime.
Step 4 - ensure that anti-money laundering legislation is in compliance with the standards ofthe Financial Action Task Force (FATF); adopt an overarching strategic plan for the reformof the entire law enforcement sector as part of Ukraine’s security environment.
In September 2022, the Parliament adopted a new law on ultimate beneficial ownership, while
the Government subsequently adopted the necessary implementing legislation on theregistration and verification of beneficial ownership information, identification of the ultimate
beneficial owners and liability for violations. The Government has adopted a bylaw regulating
the supervision of non-financial businesses and professions. Ukraine has also developed andregistered a new draft law on targeted financial sanctions and adopted a bylaw on theevidentiary standards for listing of individuals and entities on the terrorist sanctions lists. The
Office of the Prosecutor General issued instructions and methodological guidance to all
regional prosecution offices on the investigation of money laundering offences and theapplication of financial investigations in proceeds-generating crimes, thus clarifying theregulatory framework on financial investigations. Furthermore, a new draft law on virtual
assets has been prepared and is undergoing an approval procedure within the Government.
In May 2023, the President approved the comprehensive strategic plan for the reform of thelaw enforcement sector.
Ukraine further advanced the alignment of its anti-money laundering legislation with the FATF
standards. In October 2023, the Parliament adopted a law removing a three-year time limitation
and reverting to a risk-based approach for former holders of prominent public functions to bequalified as politically exposed persons to restore a FATF-compliant definition of politically
exposed persons. The Commission can accept the definition of PEP’s however the Commission
encourages the Ukrainian supervisor (the NBU) to issue guidance making clear to obliged
entities that the national list of PEPs is indicative and not exhaustive.
This step is completed. However, the Commission assessment cannot prejudge in any way the
future assessment of Moneyval.
Step 5 - implement the Anti-Oligarch law to limit the excessive influence of oligarchs ineconomic, political, and public life; this should be done in a legally sound manner, taking into
account the forthcoming opinion of the Venice Commission on the relevant legislation.
Ukraine has prioritised systemic measures against oligarchs, in line with the Venice
Commission recommendations issued in June 2023. Ukraine updated and continued to
implement its Action Plan to reduce the influence of oligarchs, which includes systemic
10reforms in key areas affected by the vested interests. Beside the reform of the judicial
governance bodies and the Constitutional Court, adoption of a new media law, implementationof the state anti-corruption programme and the finalisation of the legal framework on theultimate beneficial ownership, Ukraine has adopted and signed into effect legislation
strengthening the Anti-Monopoly Committee of Ukraine and restoring the financial reportingof political parties and the verification functions of the relevant institutions.
Ukraine is also developing a comprehensive law on lobbying in consultation with international
experts; public consultations have been planned. The Government also decided to postpone theimplementation of the law on oligarchs that was criticised by the Venice Commission by
amending the Government’s Anti-Oligarch Action Plan and to prepare amendments to it within
three months after the end of the martial law, taking into account the recommendations of the
Venice Commission.
Furthermore, Ukraine should still enact a law regulating lobbying in line with European
standards, as part of the anti-oligarch action plan.
Step 6 - tackle the influence of vested interests by adopting a media law that aligns Ukraine’s
legislation with the EU audio-visual media services directive and empowers the independent
media regulator.
Ukraine adopted the new media law in December 2022. In May 2023, it adopted further
amendments to the advertising law to align its law with EU audio-visual media services
directive and to address outstanding issues in its media law related to blacklisting and hatespeech. The step is completed.
Step 7 - finalise the reform of the legal framework for national minorities currently underpreparation as recommended by the Venice Commission, and adopt immediate and effective
implementation mechanisms.
The law on national minorities (communities) was adopted in December 2022 and amended in
September 2023, following the Venice Commission Opinion recommendations of June 2023
on that law. The follow-up Venice Commission Opinion adopted on 6 October 2023
acknowledges progress made, but also identifies a number of remaining issues where previous
recommendations were not or only partially addressed.
Certain implementation mechanisms were adopted, among them the State Programme “Unity
in Diversity”, which are to be complemented by additional implementation measures, inparticular a resolution on the methodology for language use in traditional settlements of persons
belonging to national minorities or where they make up a significant part of the population.
In addition to that, in June 2023, Ukraine adopted a law extending the transition period for
education in minority languages by one year for pupils who started their education before 1
September 2018 and, in October, registered a draft law in the Parliament to permanently
exempt these pupils from the obligations of the Education Law. The Cabinet of Ministers is
obliged, according to the final provisions of the revised Law on national minorities(communities), to prepare and submit to Parliament, within six months after the entry into forceof the law, a draft law to revise the education law, the State language law and the media law.
Ukraine should still enact a law addressing the remaining Venice Commission
recommendations from June 2023 and October 2023 linked to the Law on national minorities,
also addressing the Venice Commission recommendations linked to the laws on State language,
media and education.
11

2.

CLUSTER 1: THE FUNDAMENTALS OF THE ACCESSION PROCESS
2.1. FUNCTIONING OF DEMOCRATIC INSTITUTIONS AND PUBLIC ADMINISTRATIONREFORMDue to the Russian war of aggression, Ukraine temporarily invoked martial law on 24
February 2022, by Presidential decree and approved by Parliament. It has been extended eighttimes, with the current extension in place until 15 November 2023. Martial law authorises themilitary command and military administrations either independently or with the Ministry ofInternal Affairs of Ukraine, other executive bodies and local self-government authorities, tointroduce various restrictions on rights and freedoms of individuals as well as rights and legal
interests of legal entities. The application of martial law has overall been proportionate.
While martial law is in place, elections are prohibited, as is amending the Constitution of
Ukraine. Regular parliamentary elections due in October 2023 had therefore to be postponed.
2.1.1. Democracy
Despite Russia’s full-scale invasion in February 2022 and ongoing war of aggression, Ukraine
has continued to make progress on democratic and rule of law reforms. The granting of EU
candidate status to Ukraine in June 2022 has led to a further acceleration of reform efforts.
Currently, a martial law is in place.
Elections
During the reporting period, no elections took place. Overall, the legal framework remains
conducive to the organisation of democratic elections. The reform of the electoral legal
framework should be continued to address outstanding OSCE/ODIHR recommendations.
Key recommendations in the latest OSCE/ODIHR election observation mission reports wereaddressed. The electoral code adopted in 2019 harmonised all electoral procedures. It
introduced, among other things, an open-list proportional representation system andenfranchised internally displaced persons.
Following the 2020 local elections, work on a comprehensive revision of the electoral code has
been ongoing, and the process has been transparent and inclusive.
Parliament
The work of the Parliament (Verkhovna Rada) continues to be marked by extraordinary
circumstances related to the Russia’s war of aggression. However, legislative tasks are carriedout systematically, laying the ground for an uninterrupted democratic decision-making process.
Key decisions, especially on defence/security questions, were adopted by clear cross-party
majorities. Considerable attention was paid to legislation related to EU integration. The Rada
performed important symbolic functions, while concerns were raised about limited
transparency on security grounds and weakened oversight of the executive. Use of the urgent
procedure to pass legislation is relatively limited. Comprehensive impact assessments ofproposed legislation and legislative oversight of the executive, including monitoring theimplementation of legislation, need to be strengthened.
On 23 February 2022, the Parliament endorsed the President’s decision to introduce martial
law due to the full-scale Russian military aggression. Despite the circumstances during thereporting period, the Verkhovna Rada conducts systematic legislative activity (including
plenary sessions and committee meetings), taking an active part in the overall reform process.
12The Parliament’s rules of procedure are in place and are being amended successively in linewith its roadmap for internal reform and capacity building. The code of conduct for membersof parliament has not been adopted yet. The majority of rules related to integrity and preventionof corruption are regulated by anti-corruption legislation. In this regard, the obligation formembers of Parliament to submit an electronic asset declaration each year has been suspended
in connection with martial law.
There are currently 23 committees in the Parliament. All committees are responsible for bothlegislative and oversight/control functions. Ministerial reports, the consideration ofinterpellations as well as the assessment of candidates for public offices were carried out during
online meetings. At the same time, overall parliamentary scrutiny, including the monitoringand implementation of legislation, should be strengthened.
The Parliament’s rules of procedure do not regulate the issue of gender balance. At the sametime, according to the government’s rules of procedure, gender legal expertise is mandatory
for all draft laws drafted by government. The percentage of female members of Parliament iscurrently at a historic high of 21%.
The Russian invasion and subsequent introduction of martial law had an impact on thetransparency of parliamentary activities. At present, the sessions are not livestreamed on the
TV channel Rada. Journalists are not authorised to attend the plenary meetings, while
parliamentary requests, as well as requests for public information and by-name voting, are notavailable on the parliamentary website. Furthermore, due to security reasons there is noschedule of plenary meetings – they are to be called by the Chairman of the Parliament basedon needs. Reinstating public consultations and scrutiny is crucial after martial law has been
lifted.
As of January 2022, there were 370 registered political parties in Ukraine. In May 2022, thelaw prohibiting the activity of pro-Russian parties entered into force. Since then, 16 parties
have been prohibited by court.
In 2020, an amended version of the law on political parties was prepared in a broad consultationand on the basis of a joint OSCE/ODIHR and Venice Commission Opinion. Work on the draft
law was suspended after February 2022 and resumed in September 2022. OSCE/ODIHR
provided legal expertise in the process.
The Law on restoration of financial reporting of political parties was adopted by the Parliament
on 23 August and signed by President on 26 September. GovernanceOn multi-level governance, the achievements of decentralisation reform continue to beevidenced, with municipalities acting as a pillar of state resilience in mobilising bottom-up
support, resetting basic social services, helping organise voluntary territorial defence andreceiving large numbers of internally displaced persons.
At the same time, martial law gave rise to the creation of a large number of militaryadministrations at local level. Ukraine should clarify, by law, the criteria for establishing themand for restoring local self-government in the liberated territories and those near the frontlines,
where the security situation allows democratically elected bodies to perform their tasks.
Overall, following the successful finalisation of the territorial part of decentralisation, otherelements of the reform still need to be completed. Draft constitutional amendments inparticular, aimed at ensuring that decentralisation reform is sustainable and irreversible, have
not yet been taken forward due to the ban on constitutional revisions during martial law. There
was also limited progress in key legislative files aimed at clarifying the role of the tiers of local
administration (regional, district, municipal) to delineate powers between central and local
13

levels and to put in place appropriate internal structures for municipal administrations. The
rules of supervision of local authorities’ activities, in line with the European Charter of Local
Self-Government, have not yet been set up. Work should also continue on granting legal
personality to municipalities under public law, based on European practice. The recently
adopted Law on service in local self-government is likely to bring fairer and more transparent
rules on the employment of officials at local level.
In institutional terms, the Ministry of Restoration was set up to merge previous infrastructure
and regional development ministries. As a way forward, the new office should synergise both
portfolios and organise resources accordingly, including via the Agency of Restoration, with aview to stimulate locally driven recovery and reconstruction. This will also require more
systematic involvement of local authorities and associations in policy design andimplementation, based on a formally embedded coordination mechanism. The Congress ofLocal and Regional Authorities, with its permanent office, is an advisory body under the
President of Ukraine that has no such mandate established by law. Ukraine should refrain fromenacting the law on urban planning in its current form as it creates integrity risks resulting fromdelegating excessive control powers in urban planning control from public to private entities,
and leads to the disempowerment of local authorities in this sphere.
Fiscal decentralisation was maintained, with 64% of personal income tax (PIT), and PIT fromthe military staff allocated to municipalities in 2023. In parallel, certain local subsidies fordelegated tasks decreased, and centrally established exemptions in local taxes were notcompensated. The solid local fiscal base therefore needs to be ensured to avoid adisproportionate financial vulnerability of municipalities. This can be done through a fair
distribution of PIT to municipalities where the taxpayers actually reside and a necessary
extension of sources of local taxation.
Civil society
Ukraine’s vibrant civil society remains engaged in reform processes and in the response to theimpact of Russia’s aggression. Volunteer movements and informal civil society groups often
act as the backbone of humanitarian action across the country, including in the liberated and in
temporarily occupied territories of Ukraine. In many respects they are key to the country’s
resilience.
The legal framework continues to guarantee the rights of freedoms of association, expression
and peaceful assembly. An ambitious multi-year civil society development strategy is in place,providing for more meaningful engagement with civil society. However, the impact of its full
implementation is yet to be assessed, while the government should consider adapting it withrespect to the ongoing war and an envisaged post-war recovery. The government should further
expand its public funding programmes for civil society organisations and work on improving
the dialogue and consultations with them. A draft law on public consultation that has passed
first reading in the Verkhovna Rada already in 2021, should be adopted. Additional efforts arealso needed to address and investigate the cases of pressure and threats against civic activists.
Measures were taken to support the registration of civil society organisations and simplify rules
on reporting and taxation, for instance the amendments to the Law on volunteering.
An empowered civil society is a crucial component of any democratic system and is recognised
and treated as such by state institutions. Civil society remains a key element of Ukrainian
democracy, maintaining social bonds and fabrics, and contributing to the resilience of society
at large. Volunteer movements and informal civil society groups often act as the backbone ofhumanitarian action across the country, including in temporarily occupied territories or newly
liberated regions, while many of its members now also serve in Ukraine’s armed forces.
14

The expertise of Ukrainian civil society organisations on key sector reforms has made them animportant partner for the government as well as for Ukraine’s international partners. Since thestart of Russia’s war of aggression, Ukraine’s civil society has not only maintained its criticalwatchdog function but has also stepped up its efforts in terms of service provision,
volunteering, humanitarian and human rights action, complementing the work of public
administration and government. COVID-19 restrictions introduced since 2020 and martial law
since 2022 have not significantly restricted the activities of civil society organisations, but have
limited their possibilities to monitor the work of public administration.
Ukraine has several strategic documents to foster civil society engagement, including the 20212026 national strategy for promoting civil society development of September 2021, the national
barrier-free strategy, and the national human rights strategy. These documents have continued
to be implemented despite the impact of Russia’s war of aggression and martial law. The action
plan for the implementation of the national civil society strategy until 2024 was approved in
February 2023 and contains 43 tasks across all four specific objectives of the strategy, which
aim at improving the system for public participation in government policy making, creating an
enabling environment for civil society development and promote participation of CSOs in thesocial and economic development of Ukraine and strengthen intersectoral cooperation. As partof human rights strategy implementation, work is ongoing to improve the anti-bullying
legislation.
The existing legal framework guarantees the rights to the freedoms of expression, peacefulassembly and association. Measures have been put in place to ensure a three-day registration
for non-governmental organisations and one-day registration for charities. The non-profit
status exempts civil society organisations from the obligation to pay 18% corporate income
tax. Charitable and volunteer donations are also tax-exempt.
Public funding for civil society organisations in Ukraine is mandated by a respective
governmental decree. This provides a mechanism to allocate public funding at both national
and local level, and a number of calls for proposals have been launched by several ministries
and state funds, especially since the launch of online contest-based public funding for projects
via the e-governance platform VzaemoDiia in 2021, which facilitated CSO access to publicfunding while increasing the transparency of the procedure. However, since the start ofRussia’s war of aggression, levels of public funding for CSOs have been reduced and no new
CSO institutional support mechanism has been established. The allocation of public funding
via VzaemoDiia was suspended on 24 February 2022 and was only partially resumed in
September 2022. Since then, 8 online contests have been held. Both the Ukrainian CulturalFund and the Ukrainian Institute reported funding cuts for their activities.
As a result of Russia's full-scale invasion, a high number of people fleeing the war beyond
Ukraine's borders, act as volunteers from abroad, extending range of volunteer movements bycivil society. The law on volunteering, amended in 2022, improved for instance the legal
standing of volunteers in relation to their hosting organisations. Continued improvements areneeded to implement Ukraine’s civil society development strategy for 2021-2026, which
includes points to further develop the legal framework and expand the state programme ofvolunteering, also to cover social needs.
CSOs have been expanding their cooperation with public institutions, including on
humanitarian response, assistance to internally displaced persons as well as mental health andpsychosocial support services. The recently adopted anti-corruption strategy for 2021-2025 isa good example of interactions and consultation with CSOs and proper consideration of their
inputs. The legal framework for public consultations requires further standardisation andconsolidation to ensure equal and fair access to public policy making for all stakeholders. The
15

final adoption of the draft law on public consultation, which passed first reading in Parliamentin March 2021, is still pending.
While there is an open and active civic space largely respected by Ukrainian authorities, there
are still examples of pressure and threats against local civic activists in particular, in some cases
leading to violence. The authorities should continue to condemn such attacks, and effective
investigations should ensure that there is no impunity for such crimes. and that such practices
will not become widespread as in the past. Incidents of past pressure and attacks against civilsociety representatives, before the full-scale invasion of February 2022, still need to be fully
investigated and prosecuted. In the territories temporarily occupied by Russia, only volunteers
and informal civil society groups and activists are able to operate due to restricted access. In
order to maintain crucial links with the Ukrainian state and people of Ukraine for mutual
support, these volunteers and informal civil society groups often face high risks to their safety.
2.1.2. Public administration reform
Ukraine has some level of preparation in the area of public administration reform (PAR), withlimited progress made during the reporting period. While Ukrainian public administration has
proved to be resilient during Russia’s war of aggression against Ukraine, reform has slowed or
stopped in a number of sectors, in particular in merit-based recruitment and selection, jobclassification and salary reform, as well as the roll-out of the Human Resources Management
Information System. The digitalisation of service delivery has reached a high level.
In the coming year, Ukraine should in particular:→ ensure timely alignment of existing legislation with the Law on administrative procedures
in all sectors covered by its scope;→ restore merit-based recruitment and the selection process, as well as implement jobclassification as a precondition for comprehensive salary reform;→ make progress in the country-wide roll-out of the Human Resources Management
Information System.
Strategic framework for public administration reform
The 2022-2025 PAR strategy and its action plan were amended in December 2022 to take into
account Ukraine’s EU candidate status and requirements under martial law. Both the strategy
and the action plan continued to be monitored via a PAR Coordination Council (advisory bodythat includes representatives of the government, Parliament, civil society and PAR experts’
network), albeit less often (one meeting in 2022). Under martial law, PAR financial
sustainability has been deprioritised, and public financing largely relies on donor support.
Political support for PAR remains uneven. While it has been demonstrated in digitalisationand service delivery, in other areas, in particular the civil service and salary reform, thepractical measures fall short of the declared objectives.
Policy development and coordination
The policy-making system is well established. The Secretariat of the Cabinet of Ministers
conducts quality assurance and coordination of draft documents at the final stages of theprocess. However, the actual capacity of the government in terms of evidence-based policymaking remains insufficient. The explanatory notes that accompany legislative proposals do
not often meet required standards. Line ministries rarely estimate the cost of draft policy
documents and legal acts (in 2022, only two out of 28 policy documents approved by the
Cabinet of Ministers included information on the implementation costs). The creation of policy
16

directorates in ministries and recruitment to fill reform support posts intended to address thesegaps and provide technical support in implementing priority reforms - is incomplete. By theend of 2022, less than 750 reform support posts had been filled out of 3 000 planned posts,
with a declining trend in 2023.
Parliament shares the right of legislative initiative with the government. In practice, over 80%
of legislation originates from Parliament. The drafts submitted by parliamentarians often lackproper explanatory notes and/or impact assessments, which affects the quality of laws.
There are no formal requirements or systematic practices for monitoring the implementationof policies and legislation. Monitoring of the mid-term action plan and of the annual action
plan by the Secretariat of the Cabinet of Ministers is mostly conducted on an ad hoc basis, withno outcome or impact indicators. It is necessary to ensure proper standards for both ex ante andex post regulatory impact assessments, in particular to prepare a framework for tackling thechallenges related to recovery.
Planning and coordination mechanisms for Ukraine’s European integration process are inplace. However, the Government Office for Coordination on European and Euro-Atlantic
Integration lacks resources to manage the process effectively from within the Cabinet of
Ministers, while the capacities of line ministries vary. A functional framework to ensure that
the European integration framework is incorporated into an improved national decision-making
process is yet to be established.
Public financial management (PFM)
The current PFM reform strategy and action plan for 2022-2025 is broadly aligned with otherstrategic documents, including the 2022-2025 PAR strategy, and is subject to regularmonitoring.
The legal basis and institutional architecture within the Ministry of Finance to support fiscal
risk monitoring and management has been established. However, capacity tools need to be
developed further and practically implemented. The legislative basis for implementation of a
medium-term budgetary framework is in place. The medium-term budget declaration (20222024) was put on hold due to the war. The government remains committed to a medium-termbudgetary framework; it has made an agreement with the IMF to present the 2025 budget witha comprehensive framework for 2026-2028, which must be preceded by a risk analysis in thenext year. A public investment management diagnostic assessment was finalised in late 2022.
It flagged a number of issues to be addressed, including strengthening the role for the Ministryof Finance as a gatekeeper of public investments.
Budget transparency and openness in budgeting are limited in Ukraine, as reported by theOpen Budget Index, and worsened under martial law. It should be gradually restored where
possible. The capacity of Parliament and the Accounting Chamber to oversee the budget
process should be improved as a matter of priority.
On digitalisation, efforts are being made to digitalise public internal financial control
procedures as well as the budgetary planning process. Good progress has been made on thedigitalisation of tax and customs administration (e.g. New Computerised Transit System Phase
4 was introduced in customs in autumn 2022; call centre, e-cash register and Single Tax
Account in tax), and security of data has been improved.
Public services and human resources management
Overall, the Law on civil service provides a sound regulation framework, although martial law
has affected it significantly. The merit-based recruitment and selection procedure was17suspended (which was also the case under COVID-19 measures from March 2020 to April
2021). Long periods with a lack of procedures to safeguard a professional and depoliticised
civil service, in combination with the widespread use of non-transparent direct appointments,
has undermined the civil service’ competitiveness and independence.
Gender representation in the civil service continues to be unbalanced. By the end of 2022,
senior management comprised 70% men and 30% women, middle management 33% men and
67% women, and at the executive level 22% men and 78% women.
Digitalisation of the human resources framework remains insufficient. Development and useof the Human Resource Management Information System (HRMIS) – aiming to provide a
digital platform for all HR transactions across government institutions for the purpose ofpolicymaking, transparency and accountability – has progressed very unevenly since 2017.
HRMIS, including its payroll module, has been launched as the main HRM IT system by only
a limited number of institutions and currently provides information on around 15% of posts.
The current job classification model only covers responsibility based on the civil servant’s
place in the administrative and institutional hierarchy. A professional job classification model
piloted by the National Agency on Civil Service (NACS) had no systematic follow-up. The
remuneration system remains non-transparent and unequal. As a result, the ability to offer acompetitive position varies across institutions. Overall, senior management turnover isconsiderable, which results in a lack of staff stability. Systematic efforts are needed to attract,
recruit and develop highly professional and non-partisan senior management.
Regarding professional development, civil servants are obliged to undergo training each year.
NACS adjusted the training programme under martial law. The Higher School of Public
Administration was established in October 2022 as a state in-service training institution
reporting to NACS, based on the Ukrainian school of governance. It is tasked with training
civil servants, heads of local state administrations, their first deputies and deputies, local selfgovernment officials and deputies of local councils.
Accountability of the administration
Parliament scrutinises the Cabinet of Ministers in line with the models operating in EU Member
States (approval process of the government’s political programme, annual reporting, regular
Q&A sessions, member of parliament requests, etc.). Public administration is also scrutinisedby the Ombudsman and the Accounting Chamber. However, the Accounting Chamber has not
fulfilled its oversight functions according to international standards, given the lack of a registryof recommendations and in turn the lack of a monitoring framework.
A key development in the service delivery area was the enactment of the Law on administrative
procedure in May 2022, which is essential for developing the right to good administration.
The law unifies currently fragmented administrative procedures across various sectors. The
government is also preparing amendments to sectoral laws and implementing legislation,internal rules and procedures, and working processes. Certain institutions have recently asked
to be exempted from the application of the law. Ukraine should refrain from introducing new
exemptions from application of the law (e.g. Tax Service) as it would drastically reduce its
overall impact.
The constitutional right to fair trial has been maintained under martial law. Administrative
courts have been operating on a regular basis, with some adjustments due to security
considerations. However, following the abolition of the Kyiv district administrative court,
access to justice in cases involving central government bodies is undermined, since the new
court is not yet established while the temporary court is overwhelmed. The Ministry of Justice18

suspended the operation of state-run registers and databases. Access to public information has
also been restricted for security reasons and granted on a case-by-case basis. A number ofmeasures have been taken to make public registers secure, for example storing certain data on
servers outside the country. The right to compensation is provided for in the legislation andapplied.
Service delivery to citizens and businesses
The institutional and legal frameworks for public service delivery are in place to ensure a useroriented public administration. A broad network of offline administrative service centres
established locally have continued to perform well, despite war damage, thanks to their offices,
remote workplaces and mobile centres.
Transforming digital service delivery (‘State in a smartphone’), followed by the creation of
the Ministry of Digital Transformation, continued to produce positive effects. The online portal
for digital services (Diia portal) and the mobile application, currently provide more mature
digital services. They are based on a remote qualified electronic signature and the full validityof digital documents and credentials. Both the Diia portal and Diia mobile application (17.3
million users) have played a crucial role in continuing to provide the public with access toextended number of digital services, including to internally displaced persons and Ukrainian
refugees.
2.2. RULE OF LAW AND FUNDAMENTAL RIGHTS
2.2.1.

Chapter 23: Judiciary and fundamental rights

The EU’s founding values include the rule of law and respect for human rights. An effective(independent, high-quality and efficient) judicial system and an effective fight against
corruption are of paramount importance, as is the respect for fundamental rights in law andin practice.
Ukraine has some level of preparation in implementing the EU acquis and European standards
in the area of the judiciary, fight against corruption and fundamental rights. Despite Russia’s
war of aggression, good progress was made in this area and the relevant institutions continued
operations, the delivery of vital services to citizens and reform efforts, demonstrating
remarkable resilience. The efforts in the area of the judiciary, anti-corruption and fundamental
rights need to continue and be further consolidated.
Functioning of the judiciary
Ukraine has some level of preparation in the functioning of the judiciary. Despite the Russian
war of aggression, good progress was made with the implementation of the 2021 reform of
the judicial governance bodies during the reporting period. The High Council of Justice (HCJ)
and the High Qualification Commission of Judges (HQCJ) were re-established following atransparent and meritocratic process with the meaningful involvement of independent experts.
It enables the government to start filling more than 2 000 judicial vacancies and to resume thequalification evaluation (vetting) of sitting judges. Ukraine also adopted the law on atransparent and merit-based preselection of judges of the Constitutional Court, in line with the
Venice Commission recommendations, and started implementing it. Legislation was adopted
to establish a strong service of disciplinary inspectors and to resume disciplinary proceedings
against judges. The new administrative court to handle cases involving the central government
bodies and staffed by properly-vetted judges needs to be established following the abolition of
the Kyiv District Administrative Court.
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In the coming year, Ukraine should in particular:→ fill the open vacancies in the Constitutional Court of Ukraine in line with the adopted
legislation; relaunch the selection of ordinary judges on the basis of the improved legal
framework, including clear integrity and professionalism criteria and the strong role of the
Public Integrity Council; resume the evaluation of the qualification of judges (vetting),
which was suspended in 2019; introduce a transparent and merit-based selection ofmanagement-level prosecutors by amending the legal framework and taking the necessary
institutional measures;→ establish the service of disciplinary inspectors following a transparent and meritocratic
selection process and resume the handling of disciplinary proceedings against judges
prioritising high-profile cases and cases nearing the statute of limitation; take effective
measures to address corruption risks in the Supreme Court; strengthen the disciplinary
system for prosecutors by improving the existing legal and institutional framework;→ complete a comprehensive IT audit, including the existing IT systems, business processes
and organisational structure, and based on the audit results, adopt and start implementing aroadmap to modernise IT in the judiciary, including the development of the new casemanagement system.
Russia’s military aggression against Ukraine has posed major challenges to Ukraine’s judicial
system. By the end of April 2023, 12 members of its judicial staff were killed, 114 court
buildings (15% of the total) were either destroyed or damaged by the hostilities, and a large
number of case files were lost. The material losses suffered by the courts are estimated at
EUR 47 million. The Prosecution Service has also suffered severe damage. 6 staff members
were killed, 64 buildings of the prosecutor’s offices were either fully or partially destroyed,
while 173 buildings remain in the temporarily occupied territories of Ukraine. The material
damage exceeds EUR 22 million. The administration of justice has been affected by air strikes,
air raid alerts and frequent power outages. Parties to court proceedings were displacedinternally or abroad, which disrupted the handling of cases. More than 80 000 cases related to
war crimes, crimes against humanity and other war-related offences were opened, thereby
shifting the work priorities and placing an additional burden on the criminal justice system.
Administering justice in areas of active hostilities and temporarily occupied territories has
become impossible. Despite these significant challenges, the Ukrainian judicial, prosecution
and other justice institutions showed remarkable resilience by continuing to provide justiceservices to citizens and companies, while also implementing reforms. The necessary
legislative, organisational and technical measures were taken to allow courts to swiftly adapt
their work to the new martial law realities and protect court users, while providing continuous
access to justice. In particular, legislation was adopted that allowed the territorial jurisdictionof courts to be changed and court cases to be relocated to other parts of the country if it became
impossible to administer justice in a certain territory, along with the secondment of judges toother courts.
The reform of the two key judicial governance bodies – the HCJ and the HQCJ – wascompleted. This reform was triggered by insufficient independence of the judiciary from theexecutive and legislative branches, low public trust in the judiciary, high levels of corruption
and the strong influence of vested interests in the work of courts. The reform started in July
2021 with the adoption of ambitious legislation that introduced robust integrity vetting for the
HCJ sitting and candidate members, as well as integrity and professionalism checks of HQCJ
candidates. The legislation envisaged a temporary yet decisive role for independent experts
nominated by international donors, including the EU, in the respective selection and vetting
bodies. The reform was fully aligned with the relevant Venice Commission recommendations,20

focusing on strengthening integrity and public trust in the judiciary. By law, the HCJ is
composed of 21 members. At the start of the reform, the HCJ had 15 members and 10 of them
stepped down, leaving the HCJ with only five members, including the Head of the Supreme
Court as the ex officio member. The Ethics Council, composed of three national and threeinternational experts, completed the integrity check of four appointed HCJ members in May
2022, declaring one HCJ member as non-compliant. It then proceeded with the integrity checkof the HCJ candidates. By January 2023, 11 new HCJ members – duly vetted by the Ethics
Council – were appointed by the relevant appointing bodies. With these appointments, therenewed HCJ reached 15 members and became operational again. By June 2023, two more
duly vetted HCJ members were appointed, increasing the HCJ’s composition to 17 members.
The integrity and professionalism check of 301 HQCJ candidates by the Selection Commission,
composed of three national and three international experts, was completed in March 2023. The
competition included a thorough background check of candidates and an interview with the 64
best candidates. Based on the results of this second stage of the competition, the Selection
Commission formed a shortlist of 32 candidates for further consideration by the HCJ. In June
2023, the HCJ appointed 16 new HQCJ members proposed by the Selection Commission,
following a transparent interview and individual voting procedure, making the HQCJ fully
operational.
The reform of the judicial governance bodies was finalised against the backdrop of a high-level
corruption case involving the Head of the Supreme Court. This case became public in midMay, when the National Anti-Corruption Bureau claimed to have uncovered an organised
crime group that allegedly received a bribe equivalent to EUR 2 500 000 to influence Supreme
Court decisions favouring a particular oligarch. The Head of the Supreme Court was dismissed
and put into custody while the investigation was ongoing.
This corruption case highlighted on the one hand the robustness of the specialised anticorruption institutions established with strong EU support after the 2014 Revolution of Dignity,and on the other the need to pursue reforms in the justice, law enforcement and wider public
sector to address the existing corruption challenges and irreversibly consolidate integrity,
efficiency and professionalism, while striking the right balance between independence andaccountability. Effective integrity tools should be used to address corruption in the Supreme
Court and other courts, including through the verification of integrity and asset declarations ofjudges, disciplinary framework and improved selection procedures with a strong focus on
integrity and professional ethics. These measures should help in building public trust in the
judiciary, which remains very low. Based on opinion surveys, public trust has been growing inrecent years (in 2021, 15.5% of respondents trusted the judiciary, while in 2023 it was 24.8%).
Foreign business associations continue to cite problems with the judiciary and the prevalenceof corruption as some of the main obstacles to doing business in Ukraine.
Good progress was achieved with the reform of the Constitutional Court of Ukraine (CCU).
In December 2022, Ukraine adopted a law to reform the selection procedure for future CCU
judges. It was not fully compliant with the Venice Commission recommendations issued in
December 2022. The internationally nominated members of the CCU pre-selection body – theAdvisory Group of Experts – were not provided a temporary yet decisive role in the preselection procedure. This was recommended by the Venice Commission to restore trust in the
CCU, whose reputation was damaged by corruption allegations against its judges and several
controversial CCU decisions. In July 2023, Ukraine adopted amendments to the CCU Law,
which implemented the outstanding Venice Commission recommendations contained in its
Opinions on CCU reform from December 2022 and June 2023. Following the adoption of theseamendments, the CCU selection reform has started to be implemented. The Parliament and the21Council of Judges announced competitions to fill the available vacancies in the Constitutional
Court. The President and the Council of Judges appointed their members and substitutes to theAdvisory Group of Experts, while the Parliament is continuing the appointment procedure. In
September, upon the formal request of the Government, the Venice Commission and theinternational donors, including the EU, submitted their nominations of members and substitutesof the Advisory Group of Experts. In October, the Cabinet of Ministers formally appointed
them. With five appointed members and five substitutes, the Advisory Group of Experts
became operational and can proceed with the pre-selection of candidates to the position of theConstitutional Court. The reform of the CCU should continue with the adoption of a law on
the constitutional procedure, in line with Venice Commission recommendations, to improvetransparency and accountability in the work of the CCU and make the constitutional procedure
more efficient.
In December 2022, the Parliament adopted a law abolishing the Kyiv district administrative
court (KDAC), which handled disputes involving the central government bodies. Some KDAC
judges were subject to numerous controversies and corruption investigations. Under the
adopted law, KDAC was abolished and obliged to transfer its cases to the Kyiv region
administrative court until a new Kyiv city administrative court is established. Delays in thetransfer of cases and in the establishment of the new court, along with limited capacities of the
Kyiv region administrative court to assume new obligations, undermined access to justice. The
law did not regulate the status of former KDAC judges. Under the general rules, KDAC judges
may be transferred to a court of the same level without the need for a competition. Before any
such transfer, KDAC judges should complete the qualification evaluation procedure, including
integrity vetting. The renewed HQCJ and HCJ must launch the establishment of a newadministrative court to handle cases involving the central government bodies ensuring that thiscourt is staffed with duly vetted judges. This will enable an efficient and fair handling ofadministrative disputes involving central government.
Strategic documents
The 2021-2023 strategy for the development of the justice system and constitutional judiciary
identified the main reform areas in the justice sector, including the reorganisation of local
courts, reform of the key judicial governance bodies, consolidation of the Supreme Court key
function to guarantee uniformity of jurisprudence, development of alternative dispute
resolution, selection of new judges, prosecutorial reform, as well as the reform of theConstitutional Court. Part of the reform measures contained in the strategy were duly
implemented, in particular the reform of judicial governance bodies and the selection of CCU
judges. No formal assessment of the implementation of the strategy was carried out. A newstrategy for the reform of the justice system to respond to the challenges of wartime still needs
to be developed, in a transparent and inclusive manner, and adopted.
In May 2023, the President of Ukraine approved a comprehensive strategic plan for the reformof law enforcement bodies for 2023-2027. Among other measures, it provides broad reform
guidance for the prosecution service, including the strengthening of its coordination role overthe law enforcement agencies and raising legal certainty and uniformity of practice in criminal
procedures. An action plan, that will define the expected results, tasks and performanceindicators for the strategic plan, is being finalised by the inter-agency working group and with
the involvement of the EU experts. Its speedy adoption and steady and consequent
implementation should lead to concluding the reform process in the area.
Management bodies

22Several governance and self-governance bodies with different functions are responsible formanaging the judicial system and prosecution service. In the judiciary, the HCJ is the key
judicial governance body that appoints and dismisses judges, handles disciplinary cases againstthem and oversees the work of the State Judicial Administration, a body in charge of the dailyadministration of court resources. The HCJ had no quorum between February 2022 and January2023, following the resignation en masse of 10 out of 15 of its members ahead of their vettingby the Ethics Council. The HQCJ, another important judicial governance body, deals with theselection and qualification evaluation (vetting) of judges. The HQCJ had not been operational
since autumn 2019, when a judicial reform law dismissing all its members entered into force.
It resumed its functions only in June 2023 when the HCJ approved its new composition. The
Congress of Judges and the Council of Judges are the self-governance bodies that are composedof judges and that represent their interests. The Council of Judges is in charge of organising
the Congress of Judges sessions and implementing its decisions. They take part in the formationof the HCJ and the HQCJ, while the Congress of Judges is also an appointing authority for
Constitutional Court judges (together with the President and the Parliament). Considering theinstitutional complexity, functional overlaps, severe shortage of funding, the large number ofvacancies and the challenges stemming from the war, the judicial governance system shouldbe improved and optimised on the basis of an independent and professional functional audit.
In the prosecution service, the National Conference of Prosecutors is the highest selfgovernance body. It appoints some of the members of the prosecutorial governance bodies –the Council of Prosecutors and the Qualification and Disciplinary Commission of Prosecutors(QDCP) and approves their regulations. The Council of Prosecutors operates on a part-time,
unpaid basis and deals with the appointment of prosecutors to administrative (managerial)
positions and with the protection of prosecutorial independence, whereas the QDCP is
responsible for selecting, promoting and dismissing prosecutors as well as conducting
disciplinary proceedings. Given the scope of its competences and in view of the European
standards and good practices, the Council of Prosecutors should become a full-time body withautonomous resources. The renewed Training Centre of Prosecutors deals with initiation andin-service training of prosecutors. The HCJ reviews complaints against the disciplinary
decisions of the QDCP, a competence that could in the future be transferred to the Council ofProsecutors. The activities of the National Conference of Prosecutors and the Council ofProsecutors are financed by the Office of the Prosecutor General.
Independence and impartiality
The constitutional and legal framework guarantees the independence of the judiciary fromthe legislative and executive branches. The Parliament and the President retain the prerogative
to make limited appointments to judicial and prosecuting bodies, such as the Constitutional
Court and the HCJ. Judges are appointed by the President upon submission of the HCJ
according to the procedure prescribed by law. The allocation of cases to judges within a court
is based on a random (automatic) system based on objective criteria established by procedural
law which, in theory, cannot be influenced by a court president or other judges. However, due
to the structural deficiencies of the judicial system, including limited resources, and the impactof the war of aggression, the automatic allocation of cases is not functioning properly.
The possibility that a judge, addressed by a request for their recusal, can still contribute to thereview of such a request, remains an issue of concern. To ensure objectivity and impartiality inthe decision-making process, decisions on the removal of a judge from a court proceeding
should be taken without their participation and be subject to appeal.
The legislation provides prosecutors with a sufficient degree of independence and autonomy.
However, the self-governance and governance bodies are still largely dependent on the Office23

of the Prosecutor General, in particular for financing and organisational support, which should
be addressed in line with the European standards. A random allocation of cases to individual
prosecutors based on strict and objective criteria, including specialisation, and appropriate
controls and safeguards against manipulation still needs to be introduced, along with aneffective appeal mechanism for decisions on the disqualification of a prosecutor.
Despite the legal and institutional guarantees, the risks of undue internal and externalinterference in the work of the judiciary and the prosecution service persist, and further efforts
by the competent institutions are needed to effectively reduce them.
Accountability and ethics
Codes of professional ethics and conduct exist for both judges and prosecutors. In November
2022, the Council of Prosecutors approved and published its commentary on the code ofprofessional ethics of prosecutors. Both judges and prosecutors are obliged to submit anelectronic asset declaration each year for the previous year and provide updates whennecessary.
Following the 2014 Revolution of Dignity, Ukraine launched an extraordinary and generalised
qualification evaluation (vetting) of judges based on professional competence, professional
ethics and integrity requirements. Failure to pass the vetting represents grounds for dismissal.
Some 2 500 sitting judges underwent this procedure, before it was suspended in the autumn of
2019, when the HQCJ was dissolved by law. Some 2 000 judges must still complete the vetting
based on a transparent procedure, clear assessment criteria and with the proper involvement of
the Public Integrity Council.
The key function of the HCJ – the handling of disciplinary cases against judges – wassuspended in August 2021 with the entry into force of new legislation. The function previously
held by HCJ inspectors has been transferred to a new service of disciplinary inspectors. The
service was not established within the legislative deadline. There is also legal uncertainty as tothe statutory limitation deadlines in relation to disciplinary complaints received by the previous
HCJ composition. Some 11 500 disciplinary cases are currently pending with the HCJ. In
August and September 2023, Ukraine adopted two laws for resuming disciplinary proceedings
against judges and for establishing an independent service of disciplinary inspectors on thebasis of a transparent and meritocratic selection procedure with a meaningful involvement ofinternationally-nominated experts. The disciplinary offences relating to judges’ conduct shouldstill be clarified and developed. The service of disciplinary inspectors should be urgently
established to enable an effective and impartial handling of disciplinary cases.
In recent years, Ukraine has implemented prosecutorial reform. It includes the attestation ofprosecutors – where all prosecutors in office are vetted by the HR commissions on the basisof integrity and professionalism criteria. Since 2019, out of 11 278 prosecutors who expressed
their intention to pass the attestation, 8 351 prosecutors passed, while more than 2 700 failed
and were dismissed. By August 2023, 2 754 lawsuits were brought to courts by prosecutors
challenging various aspects of the attestation reform. The courts considered 2 082 lawsuits; 1426 lawsuits were refused (including 713 by the Supreme Court) and 523 lawsuits weresatisfied (including 218 by the Supreme Court). Even if a court satisfies a lawsuit, it cannot
reinstate a prosecutor to their position – based on the legislative changes adopted at the end of2021, such a prosecutor still has to complete the attestation. The system of disciplinary
responsibility of prosecutors should be further improved, as aimed for by the stateanti-corruption programme for 2023-2025. In particular, it is necessary to clarify thedisciplinary offences to extend the range of disciplinary sanctions and the statute of limitation,
as well as ensure that disciplinary proceedings can be launched ex officio by the Council of24

Prosecutors and the heads of prosecution offices. The QDCP’s capacities, as well as its humanand financial resources, should also be strengthened.
Professionalism and competence
Following the Revolution of Dignity, Ukraine has reformed its rules on the selection of judges,
introducing more transparency and meritocratic elements. However, the relevant legal
framework requires further refinement, in particular in view of the length and complexity ofthe selection process. The stages of selection and mandatory training should be optimised. At
present, more than 2 000 judicial vacancies still need to be filled urgently. The renewed HQCJ
should refine the judicial selection and qualification evaluation rules, including by developing
and publishing clear integrity assessment criteria and a scoring methodology. Given the lowlevel of public trust in the judiciary and recurrent judicial corruption cases, the sustained
involvement of the Public Integrity Council (PIC) in both qualification evaluation and judicial
selection procedures remains of critical importance. The PIC is tasked to provide reasoned
opinions to the HQCJ on the integrity of sitting judges undergoing the qualification evaluation,
as well as judicial candidates to higher-level courts. The new PIC, composed of 20 lawyers,
journalists and civil society representatives specialised in anti-corruption and justice sector
reforms, was formed in August 2023. It should help the renewed HQCJ to complete thequalification evaluation of sitting judges and to select new judges of high integrity. The newlaw improving the selection of judges was prepared in the Parliament’s Legal Policy
Committee and registered. Following the legislative changes, the HQCJ will have to adjust its
own rules and procedures.
Since the introduction of new transparent and meritocratic rules on the selection and careeradvancement of prosecutors during the interim two-year prosecutorial reform period in 20192021, several rounds of external recruitments of junior prosecutors took place following theimproved rules, which included multiple tests of legal and practical knowledge, general skills
as well as integrity checks. As a result, 114 new prosecutors were appointed in the Office of
the Prosecutor General, and 492 in district prosecution offices.
Moreover, during the interim reform period, a transparent selection procedure, including
integrity, professionalism and leadership checks, was successfully piloted for managementlevel prosecutors. However, since the re-establishment of the Council of Prosecutors in autumn
2021, these positive practices have not been continued. The procedures for the selection ofmanagement-level prosecutors remain inadequate as they lack transparency and credible
integrity, professionalism and leadership checks. The resources and capacities of the Councilof Prosecutors to carry out its mandate in this area remain limited. These shortcomings should
be addressed.
The rules governing the appointment and dismissal of the Prosecutor General make the position
vulnerable to political and other undue interferences, creating risks linked to independence,
integrity and ultimately public trust. In line with European standards and good practices, theselection procedure for the Prosecutor General should be made more transparent, objective andmeritocratic, and the dismissal procedure should be depoliticised. In particular, the grounds for
dismissal of the Prosecutor General should be exhaustive and clearly defined by law, while thedismissal procedure should be more transparent and credible.
The periodic performance evaluation of judges and prosecutors on the basis of clear rules andassessment criteria still needs to be established by the relevant judicial and prosecuting bodies.
The use of performance evaluations would improve human resources management in courts
and public prosecution offices.
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The National School of Judges continued to provide training to judges of all instances. Despite
war-related challenges and a drop in funding, it provided training to 10 158 people in 2022, inareas ranging from EU law to court management and IT skills. The school should strengthen
its managerial and operational capacities, introduce comprehensive training needs assessment
and training evaluation, modernise the training curricula and teaching methods, including
trainings on judgecraft, ethics and integrity and improve international cooperation andconnections with judicial training networks. The collaboration of the National School of Judges
and the Prosecutorial Training Centre with the EU judicial training providers to address warrelated training needs help to enhance institutional capacity and should continue.
High-quality and corruption-free legal education and training of justice and law enforcement
professionals are key to consolidating the rule of law and fulfilling EU membership obligations.
In recent years, Ukraine has taken a number of measures to improve legal education. Legal
education standards were adopted and upgraded, standardised exams for entering law schools
and master’s degree programmes were introduced, and an institutional system for quality
assurance was developed. However, progress has been uneven and further reform efforts arestill needed, in particular for creating a clear institutional delineation of legal education andlaw enforcement training, strengthening the law school admission and licencing standards,
ensuring a transparent and merit-based allocation of public funds for training future legal
professionals, modernising curricula with a focus on ethics, practical training, EU law andinternational exchanges, implementing a unified state qualifications exam, and fighting against
corruption and plagiarism.
Quality of justice
The judiciary is suffering from severe underfunding, which is further exacerbated by the warof aggression and its impact on public finances. The financial resources allocated to the
judiciary met 63.4% of overall funding needs in 2022 and only 51.4% in 2023. In particular,
non-judge staff in courts are heavily underfunded, which causes their outflow and disrupts theoperation of courts. During the 2022 mid-year review, there were considerable revisions to thebudget allocation for the judiciary. Costs for all local and appellate courts were cut by morethan 10%, while cuts to other judicial institutions amounted to 15-20% compared with theinitial allocations for 2022. The 2022 budgetary allocation for the judiciary, including theSupreme Court, local, appeal and specialised courts, was about EUR 491 million, comparedwith around EUR 656 million in 2021 (based on the exchange rate at the end of 2022). Oncethe public finance situation stabilises, the government should restore funding to the judiciary,
while pursuing a carefully planned optimisation of the expenditures and the court network.
At the end of 2022, there were 4 643 judges in Ukraine, averaging 11 judges per 100 000
inhabitants, compared to the European average of 22.2 judges per 100 000 inhabitants thatsame year. In the last few years, a number of courts of first instance stopped hearing cases dueto the severe shortage of judges and the absence of the HQCJ. More than 100 courts in Ukraine
operated at a 50% staffing level or even lower. Significant differences in workload remain
between the courts across the country. In some cases, the workload of judges within the same
instance and jurisdiction can differ multiple times. The government plans to address thisproblem by optimising the court network. However, amendments to the Law on the judiciaryfrom December 2022 postponed optimisation to 1 year after the end of martial law. The judicial
governance bodies should continue applying other measures, including the recruitment of new
judges and secondments, to balance workloads.
There were some 9 500 prosecutors or 23 prosecutors per 100 000 inhabitants in Ukraine at theend of 2022, compared with the European average of 11.8 prosecutors per 100 000 inhabitantsin 2020.
26

The Ukrainian courts use a unified judicial information telecommunications system. It includes
case management, case allocation, electronic delivery and video conferencing functionality.
Over the last few years, the State Judicial Administration has made efforts to interconnect thee-judiciary subsystems with the government electronic services portal Diia, the unified registerof convicts, the social information system and others. An IT service for automatic notificationsof court summons was also introduced, saving on postal costs. However, the system is largely
outdated and underfunded. Its hardware, software and network infrastructure, along with the
ICT management system, are in need of a thorough overhaul. To guide the development of a
new e-judiciary system, an independent IT audit was launched in spring 2023. Based on the
results of the audit, the e-judiciary system is expected to be upgraded to make the judiciary
more efficient and transparent, as well as save costs and improve access to justice services for
citizens and businesses.
After thorough preparation, including business process analysis, the prosecution service, withthe support of the EU, has launched the development of a modern e-case management system
named SMEREKA. Over the course of several years, it will digitalise the analysis andprocessing of criminal cases, starting with cases related to international crimes. This will boost
efficiency, transparency and integrity in the criminal justice system.
In November 2021, the Parliament adopted a modern law on mediation. It lays the groundworkfor mainstreaming mediation in civil, commercial and administrative disputes and in criminal
procedures. Despite the war, implementation of the law continued and good progress wasachieved. The government adopted legislation to ensure the provision of mediation services by
free legal aid centres, while the Ministry of Justice approved an order for a register of mediators
engaged in secondary legal aid and launched the first competitions for such mediators. Various
mediation organisations and justice sector institutions continued to promote mediation services
via training, online resources and awareness raising activities. The implementation of the law
on mediation through adoption of additional sub-legislation, institutional capacity building andawareness raising among relevant target groups should continue.
An independent, professional and accountable Bar is a key prerequisite for access to justice
and a functioning market economy. The Bar in Ukraine is in need of reform. The Law on the
Bar should be aligned with the Constitution, applicable European standards and good practices.
In particular, the self-governance system and resource management of the Bar should be
improved and made more transparent and accountable. The qualification and disciplinary
procedures for lawyers require significant improvements in law and in practice. The process
for admission to the profession remains weak and prone to corruption risks, which undermines
the credibility and independence of the profession.
In recent years, the Ukrainian judiciary has made major efforts to ensure the uniformity of court
practice, which is a key element of the rule of law and legal certainty. Several procedural filters
were introduced in the Supreme Court, and the Grand Chamber of the Supreme Court became
operational. In addition to the existing register of judicial decisions, an electronic database oflegal positions of the Supreme Court was created, to facilitate the identification of relevant
guidance from the Supreme Court on the interpretation and application of specific legal norms.
However, more efforts are needed in this area as divergent court practice, including within thesame court, persists. Access to the Grand Chamber still requires the approval of the relevant
Cassation Court, which undermines unification efforts. Further legal and institutional reform
measures should be carefully calibrated and be based on a thorough assessment and inclusive
consultations involving judges and subject matter experts.
Efficiency
27

Despite the war-related funding and staffing challenges, most courts in Ukraine maintained
100% or even higher clearance rates in 2022. At first instance, the clearance rate was 105.5%
in civil cases, 97.6% in commercial cases, 111.7% in administrative cases and 99.5% in
criminal cases. At the appeal level, similar clearance rates are reported: 101% in civil cases,
103% in commercial cases, 99% in administrative cases, 98.9% in criminal cases. The generalclearance rate of the Supreme Court was 107.9% in 2022. The clearance rate at theConstitutional Court was 68% in 2022. As for the number of pending cases at first instancecourts, there were 231 177 civil cases pending at the end of 2022, including 59 856 unresolvedfor over a year, 34 168 commercial cases pending, including 10 417 unresolved for over a year,
119 471 administrative cases pending, including 25 544 unresolved for over a year, and
110 637 criminal cases pending, including 47 544 unresolved for over a year. At the appeal
courts, there were 23 218 civil cases pending, including 3 716 unresolved for over a year, 6 446
commercial cases pending, including 379 unresolved for over a year, 32 487 administrative
cases pending, including 1 305 unresolved for over a year, and 12 377 criminal cases pending,including 3 223 unresolved for over a year. At the Supreme Court, the total backlog of cases in
2022 was 19 252.
As for the disposition time (time needed for a case to be resolved in days), according to thelatest CEPEJ statistics including 2021 data, it took 165 days to resolve a civil and commercial
case (129 days in 2018, 122 days in 2020) and 52 days for a criminal case (271 days in 2018,298 days in 2020).
Given the war-related challenges, including displacement of the population and businesses,
deterioration of the economic situation and travel safety concerns, Ukraine should adopt
legislation that formally introduces remote hearings and regulates the procedural aspects ofsuch hearings, in full respect of the procedural rights of the parties. This would boost theefficiency of court proceedings and facilitate access to justice, including in times of war.
Ukraine has a high number of judgments of the European Court of Human Rights (ECtHR)
pending execution among the parties to the European Convention of Human Rights. In
particular, execution is pending for a significant period of time and structural reform measures
are still required for the ECtHR judgments related to non-enforcement of domestic court
decisions against state entities, judicial independence, unreasonable length of court
proceedings, poor prison conditions and inefficiency of ill treatment investigations. These cases
are subject to the supervision procedure before the Committee of Ministers of the Council ofEurope. Despite several war-related challenges, the Ukrainian authorities have cooperated
closely with the relevant Council of Europe bodies and made efforts to enforce outstanding
ECtHR judgments during the reporting period.
To deal with the systemic problem of non-enforcement of domestic court decisions, thegovernment adopted a special strategy in September 2020 and an action plan to implement thisstrategy in March 2021. The action plan envisaged among other things a revision of socialoriented legislation, additional enforcement mechanisms related to state-owned enterprises
protected by moratoria, the improvement of legislation on bankruptcy, the introduction ofefficient judicial control over the enforcement of court decisions, the improvement ofenforcement procedures and expansion of powers of private bailiffs, and the creation of aregister of court decisions rendered against state entities. Most measures in the action plan stillneed to be carried out.
In 2022, the number of new enforcement cases fell by more than half due to the war – from
4.1 million to 1.7 million. In June 2022, the Parliament adopted a law that prohibited
enforcement cases from being opened in the temporarily occupied territories and in the war
zone. In April 2023, another law was adopted to introduce a minimal protected amount on
28

debtors’ bank accounts. This therefore improves the protection of fundamental rights during
the enforcement procedure. It also duly addressed other war-related challenges, such as thetransfer of enforcement cases and replacement of bailiffs, as well as enforcement proceedingsthat involve Russian residents.
The draft law to streamline the enforcement of court decisions and improve the status of private
bailiffs has been pending a second reading since July 2021. Russia’s war of aggression andsharp deterioration in public finances have slowed down reforms in this area. The government
should resume these efforts where possible under the current context, as an effective
enforcement system is not only a key pillar of the market economy and the rule of law, but also
an indispensable prerequisite for swift economic recovery.
Ukraine took large-scale legal, institutional and practical measures to ensure the security ofcourt premises and the safety of judges and staff. The only courts where security cannot be
guaranteed by the Court Security Service are those that are located in the territories of Ukraine
temporarily occupied by Russia. The Court Security Service should continue building its
capacities to ensure effective security of the courts and their staff, including through improved
risk assessments and risk response, and the deployment of security equipment and othermeasures.
Domestic handling of atrocity crimes
Ukrainian authorities have been confronted with the unprecedented scope and gravity of
atrocities committed by the Russian Army. This has led to an increased need to strengthen thecapacities and provide expertise to investigate, prosecute and adjudicate core international
crimes (also called atrocity crimes), while building on the experience that Ukraine had alreadygained since 2014. As a result, Ukraine started taking significant measures to advance its
comprehensive framework for addressing atrocity crimes at domestic level.
Since Russia’s full-scale invasion and war of aggression, a total of 107 951 incidents related tovarious atrocity crimes have been officially registered. 267 people have been indicted and 63
convicted for war crimes by Ukrainian courts. Due to the large number of crime scenes, several
law enforcement agencies and authorities are involved in domestic investigations. The National
Police of Ukraine and the Security Service of Ukraine created specialist units to investigate
atrocity crimes and strengthen interinstitutional cooperation; the Interagency Working Groupon Investigating War Crimes was established. The Office of the Prosecutor General also
adjusted its institutional strategy and structures for prosecuting such crimes by restructuring its
War Crimes Department and establishing nine regional war crime units within its service aswell as the Conflict Related Sexual Violence Unit and Specialised Environmental Prosecutor’s
Office. Cases involving children are being investigated by the Department for the Protectionof Children’s Interest and Combating Domestic Violence. There are currently 2 944 criminal
proceedings involving children as victims of various war crimes, including cases of forced
deportation, recruitment of child soldiers, killings and sexual violence. The War Crimes
Department developed and applied operational strategies and institutional synergies, aimed at
improving the efficiency of investigations into crimes committed in territories of Ukraine
occupied by Russia, after their liberation. The very high number of cases creates an intense
workload and great amount of data recorded in criminal proceedings, thus raising risks ofduplication. To address this problem, the Office of the Prosecutor General started creating amodern e-case management system (see ‘Quality of justice’ section above).
A dedicated war crimes prosecution strategy has been adopted and additional resources put inplace with the support of international assistance providers, including the European Union
Advisory Mission Ukraine, to improve investigations into such crimes. Ukraine cooperates
29

effectively with the Atrocity Crimes Advisory Group, a large multilateral initiative establishedby the EU, the US and the UK in May 2022 to provide strategic advice and operational
assistance to the Office of the Prosecutor General in investigating and prosecuting international
crimes in Ukraine. Relevant Ukrainian authorities advanced their coordination with the civilsociety organisations involved in documenting such crimes.
The Ukrainian domestic legal framework for criminal accountability for core international
crimes needs to be adapted to international standards. As a matter of urgency, the Criminal
Code of Ukraine should be amended to expand on the elements of core international crimes,
incorporate criminal liability for committing crimes against humanity and criminal liability forcommanders and other superiors for international crimes committed by the forces under theireffective command and control as one of the essential means for prosecuting such crimes.
Ukraine has not yet ratified the Rome Statute.
Ukraine cooperates closely with stakeholders at international level for bringing perpetrators of
atrocity crimes to justice, in compliance with the principle of complementarity. Following thefiling of two ad hoc declarations by the Government of Ukraine accepting the jurisdiction of
the International Criminal Court (ICC), Ukraine proactively collaborates with and supports the
ICC’s Office of the Prosecutor (ICC OTP). This cooperation resulted in high-level
investigations and arrest warrants being issued on 17 March 2023 by Pre-Trial Chamber IIagainst the President of Russia Vladimir Putin and the Presidential Commissioner forChildren’s Rights Maria Lvova-Belova for the war crime of unlawful deportation of population(children) and that of unlawful transfer of population (children) from occupied territories of
Ukraine to Russia. In March 2023, the ICC and Ukraine signed a memorandum of
understanding to establish an ICC country office in Ukraine to further strengthen theircooperation. Ukraine also closely cooperates with the independent International Commissionof Inquiry on Ukraine. It was established by the UN Human Rights Council in March 2022 toreport on all alleged violations and abuses of human rights, violations of international
humanitarian law and related crimes in the context of the Russian war of aggression against
Ukraine.
Together with Poland and Lithuania, Ukraine is a founding member of the Joint Investigation
Team (JIT) that was set up in March 2022 to enable the exchange of information and facilitate
investigations into core international crimes committed in Ukraine. Estonia, Latvia, Slovakia
and Romania also became JIT members, and the US Department of Justice signed amemorandum of understanding to improve coordination between the JIT partner countries andthe US authorities in their respective investigations in connection with the war in Ukraine.
Furthermore, the ICC OTP became a participant in the JIT. Europol received an official
invitation to join the JIT in mid-August 2023 and discussions are ongoing about the UK signinga memorandum of understanding like the US.
In July 2023, the International Centre for the Prosecution of the Crime of Aggression against
Ukraine (ICPA) was launched in The Hague, to support international efforts to secure evidence
for the prosecution of the crime of aggression and facilitate the process of case building. The
ICPA constitutes a standing structure to improve coordination on the collection, retention andanalysis of evidence between JIT members investigating the crime of aggression under theirrespective national laws. As part of the ICPA, Ukrainian senior prosecutors work side by sidewith prosecutors from the EU and US, in close coordination with the ICC OTP. In midSeptember 2023, a Register of Damage Caused by the Russian Federation Against Ukraine wasformally established, as per a resolution of the Council of Europe (May 2023). The Register ofDamage will receive and process information on claims of damage and evidence; categorise,classify and organise such claims, assess and determine the eligibility of claims for inclusion30

in the Register and record the eligible claims for the purposes of their future examination andadjudication.
Ukraine co-chairs the work streams of the Ukraine Accountability Dialogue Group, aninternational effort aimed at promoting exchange and coherence across the range ofaccountability initiatives and related donor support. In November 2022, the European Network
for investigation and prosecution of genocide, crimes against humanity and war crimes(Genocide Network) invited Ukraine to attend its future open sessions as well as part of theclosed sessions upon specific interest of Ukraine and subject to agreement of all member states.
The Genocide Network also considered to grant Ukraine observer status on an ongoing basis.
Fight against corruption
Ukraine has some level of preparation in the prevention of and fight against corruption. Therewas some progress, in particular with establishing and consolidating a comprehensive anticorruption institutional framework and the gradual building of a steady track record ininvestigating, prosecuting and adjudicating corruption cases. This includes high-level
convictions and cases moving forward in the courts against officials previously considered‘untouchable’. Ukraine stepped up the implementation of reforms in the area of anti-corruption
and continued to strengthen the anti-corruption framework after receiving EU candidate status.
New legislative, strategic and institutional improvements were pursued, including the adoptionof the national anti-corruption strategy in June 2022, accompanied by a comprehensive state
programme for its implementation adopted in March 2023, as well as the restoration offinancial reporting of the political parties. Ukraine has also restored the system of electronic
asset declarations, along with the verification functions, taking into account the situation undermartial law. The adopted law included some provisions which potentially weaken theverification system, but their effects still need to be monitored in practice.
The work conducted in particular by the Specialised Anti-Corruption Prosecutor’s Office(SAPO) since its new head was appointed in July 2022, led to globally increased effectivenessof the anti-corruption institutions. The new head of the National Anti-Corruption Bureau of
Ukraine (NABU) was selected in early March 2023, after a transparent and merit-based
procedure.
The Ukrainian authorities are committed to making continued efforts to achieve steadyprogress, but its sustainability needs to be monitored and further supported. The main challenge
is to ensure that the outcome of the work of anti-corruption institutions is systemic andirrevocable, also in view of long-term reconstruction efforts and the need to ensure andmaintain safeguards for the accountable management of foreign funding and investment.
Efforts to strengthen the independence of key anti-corruption institutions and increase theircapacity need to continue, and further allocation of technical, financial and human resources
will be important. Sectors most vulnerable to corruption require targeted risk assessments anddedicated measures to ensure robust corruption prevention.
In the coming year, Ukraine should in particular:→ continue to further improve its track record on investigations, prosecutions and final court
decisions in high-level corruption cases, including the seizure and confiscation of criminal
assets, as well as ensure timely implementation of the 2023-2025 state anti-corruption
programme, including appropriate monitoring and allocation of relevant resources andremove undue legal restrictions on the verification powers of the National Agency for
Corruption Prevention (NACP), in order to ensure the effectiveness of the electronic asset
declaration system, without prejudice to the rules applying to national security during
wartime;31

→ revise the Criminal Procedure Code and the Criminal Code to enable higher efficiency andoutcomes in high-level corruption cases, e.g. by preventing procedural delays, introducing
reasonable time limits for pre-trial investigations, and improving the regulation of plea
bargain agreements; increase the number of judges of the High Anti-Corruption Court byreactivating the Public Council of International Experts and enable the court to adjudicate
certain cases in single judge composition;→ enact legislation to improve the selection procedures for the SAPO head and key officials,
to strengthen the institutional independence of SAPO by transforming it into a separate
legal entity, and to increase its level of procedural autonomy as well as establish robust
mechanisms for external and internal control and discipline.
Track record
Ukraine has introduced some reform measures and stepped up efforts to build a credible trackrecord of investigations, prosecutions and convictions of high-level corruption cases, and tosome extent the seizure and confiscation of criminal assets. The country continued to pursue arigorous reform path to facilitate the effective functioning of key anti-corruption institutions
for ensuring sound operational capacities.
In 2022, NABU, responsible for the investigation of high-level corruption, initiated a total of456 criminal proceedings (2021: 633; 2020: 792). By the end of September 2023, NABU
started 501 proceedings. Based on the results of its investigations, and under the procedural
guidance of SAPO, 54 indictments for corruption offences against 132 people were sent tocourt in 2022, which constitutes a stable number also compared with previous years (2021: 57
indictments against 127 people; 2020: 67 indictments against 106 people). By the end
September 2023, 82 indictments against 203 persons were sent to court and it can be anticipatedthat the track-record will significantly increase, with the number of indictments likely being
doubled in 2023 compared to previous years.
The High Anti-Corruption Court (HACC) was launched in September 2019 as the main court
for adjudicating high-level corruption cases investigated and prosecuted by NABU and SAPO.
It became operational following a transparent selection procedure of 39 judges for the courtwith the involvement of international experts (Public Council of International Experts). The
court functions as a court of first and second instance and is independent from the ordinary
judiciary in Ukraine, although the Supreme Court has the competence to hear cassation caseson verdicts delivered by the HACC. In February 2023, the judges selected a new president of
the court.
The HACC has continuously increased its overall operational performance and output since its
launch. In 2022, it delivered 37 verdicts against 56 defendants in first instance and 22 verdicts
against 27 defendants in second instance, which constitutes an increase over previous years(2021: 34 verdicts against 41 defendants in first instance, and 25 verdicts against 29 defendants
in second instance; 2020: 22 verdicts against 25 defendants in first instance, and 8 verdicts
against 10 defendants in second instance). By the end of September 2023, the HACC hassignificantly increased its overall performance and delivered 48 verdicts against 64 defendants
in first instance, and 26 verdicts against 32 defendants in second instance. To enable the court
to cope with the increased caseload, which is also caused by its mandate being extended to e.g.
civil confiscations, its capacity should be strengthened by selecting and appointing new judges
in 2024, with the involvement of the Public Council of International Experts. Furthermore, theCriminal Procedure Code should be amended to allow certain cases to be adjudicated in single
judge composition.
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The cases investigated and adjudicated by the anti-corruption institutions concerned prominent
high-level public officials including former deputy ministers, former parliamentarians andhigh-level judges, e.g. the serving President of the Supreme Court who was arrested in May
2023 for bribery. Similarly, in 2022, NABU and SAPO uncovered suspected high-level
embezzlement, including in the management of PrivatBank, Ukrnafta, Ukrgazbank, the StateFiscal Service of Ukraine, as well as Naftogaz in 2023.
The Asset Recovery and Management Agency processed a total of 4 401 requests in 2022 on
the finding and tracing of assets that can be seized and confiscated in criminal proceedings
received from relevant authorities. A total of EUR 864 364 in equivalent revenues weretransferred to the State Budget of Ukraine from the management of seized assets and
EUR 24 361 679 in equivalent revenues from the sale of seized assets. The HACC applied
special confiscation in 10 criminal proceedings in 2022 for a total of approximately
EUR 1 million.
During the first half of 2023, the NACP sent 26 cases to courts for administrative offences
involving the violation of conflict of interest rules (2022: 72; 2021: 937; 2020: 239). The
overall percentage of persons against whom an administrative fine was imposed was 14%
during the first half in 2023 (3 people), compared to 18% in 2022 (11 people), 2% in 2021 (4people), and 7% in 2020 (4 people). During the first half of 2023, the NACP did not conduct
comprehensive verifications of asset declarations due to the suspension of this task, mandated
by the application of martial law in March 2022. However, a total of 1 610 comprehensive
verifications of asset declarations were completed in previous years (2022: 124; 2021: 1 043;
2020: 443), and the agency detected 220 cases of administrative offences (2022: 18; 2021: 171;2020: 31), 253 cases of criminal offences (in 2022: 38; 2021: 119; 2020: 96), including 12
cases of unfounded assets (2022: 2; 2021: 10; 2020: 0) and 1 case of illicit enrichment thatwere transferred to courts and relevant law enforcement agencies. A total of 24 people (2022:
5, 2021: 17, 2020: 0) were found guilty of committing an administrative offence; 7 people(2022: 5, 2021: 2, 2020: 0) were found guilty of committing a criminal offence in the first halfof 2023. The Constitutional Court issued a decision in 2020 partially rendering unconstitutional
the provisions on control and full verification of declarations as well as the criminal
responsibility related to false declaration. The immediate result was that a large number ofcriminal cases had to be terminated. Despite the subsequent restoration of the powers of the
NACP and the Criminal Code article on false declaration by the Parliament in accordance with
Venice Commission recommendations, the non-retroactive effect of criminal law provisions
caused an accountability gap.
The NACP granted 16 whistle-blowers and their close relatives protection out of 27
applications. A total of 46 criminal proceedings for corruption and corruption-related offenceswere registered and carried out based on the reports of whistle-blowers, including for highlevel corruption.
Findings from sociological surveys show a significant decrease in recent years in the share of
citizens who have directly experienced corruption (in 2013, the share was 60%, in early 2020
not more than 40%). There has been a gradual increase in comparative corruption level indexes
for Ukraine. In 2013-2022, Ukraine’s performance in the Corruption Perceptions Index (CPI)
increased from 25 to 33 points (maximum score is 100). The result in 2022 is the highest since
the updated CPI methodology was launched and Ukraine now ranks 116 out of 180 countries
in the CPI.
According to the survey ‘Corruption in Ukraine: understanding, perception, prevalence’
conducted each year by the NACP, in 2022, 29% (42% in 2021) believe that corruption has
increased, while 16% (6% in 2021) believe it has decreased. Among business representatives,33

46% believe corruption has decreased and only 16% that it has increased in 2022. There is anincrease in the share of the population with a negative attitude towards corruption – in 2021,
the share was 49% and in 2022 57%. More are willing to report corruption cases than inprevious years. Also, the share of the population and business representatives that support theactivities of whistle-blowers has increased – 65% of the population and 86% of business
representatives support these activities.
Institutional framework
Prevention measures
The National Agency on Corruption Prevention (NACP) is the special agency responsible forthe prevention of corruption in Ukraine. The maximum number of NACP employees is 408,
but the actual number of employees in employment relationships remains significantly lower(approximately 85% of this figure). Its main mandate is anti-corruption policy, financial control(asset declarations), compliance review of political party financing, whistle-blower protection
and conflict of interest resolution. The most relevant functions of the agency were suspended
with the application of martial law in March 2022 due to national security concerns, including
the verification of e-asset declarations and political party financing compliance review.
Three years after a full restructuring and change of governance model under the new head of
the agency, selected by an international selection commission, the agency has delivered goodresults and there are strong signs of its growing independence from political and vested
interests. The agency has also started to engage in addressing possible corruption risks linked
to the large-scale reconstruction of the country. The term of the agency’s head will expire in
January 2024 and the credible and transparent selection of a new head by an international
selection commission, as required by law, will be an important priority for Ukraine.
An independent external assessment of the effectiveness of the NACP’s activity in 2020-2021
was conducted by an expert commission composed of three international experts appointed by
the Cabinet of Ministers based on a proposal by international donors, as required by law. In its
final assessment report published in July 2023, the commission concluded that the agency waseffective and independent overall but made a set of recommendations to strengthen it further.
The agency and other relevant stakeholders should implement these recommendations swiftly.
The advanced electronic asset declaration system has proved to be a key tool for preventing
corruption. However, the obligation for public officials to submit asset declarations was fully
suspended with the application of martial law in March 2022, together with other restrictions
on access to a number of state registers, in order to address security concerns and protect
sensitive information during wartime. In September, the Parliament adopted a law restoring thee-asset declaration system and its verification functions by the NACP. The adopted law
included some provisions that limited the verification powers of the NACP and closed the easset declarations to the public. The President vetoed the adopted law as regards the publicaccess to the declarations. At the end of September, the Parliament re-adopted the law
addressing the President’s request, while maintaining the other provisions that could create
potential weaknesses. In September, the Parliament also adopted a law that weakened theadministrative liability for non-submission/false information in the e-asset declaration, but the
President has not signed it into effect. Deficiencies in the rules of the automated verification of
the e-asset declarations continue to exist and should be addressed by the NACP in the medium
term.
Effective implementation of procurement rules in all sectors and full use of the related
electronic procurement system should help in further preventing corruption in the public
services sphere.
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Ukraine has made progress in strengthening its comprehensive framework for the protection ofwhistle-blowers. Some outstanding issues include further increasing its effectiveness, moreawareness raising about the essential role of whistle-blowers, and launching a unified portal
for their reports.
Corruption risk management in public institutions is proactively handled by the NACP. It
applies a detailed model methodology and provides guidance in developing institutional anticorruption programmes. Corruption risks in draft laws and sectors vulnerable to corruption are
successfully assessed and addressed. However, further targeted streamlining and simplificationof applied processes and methodologies would increase effectiveness. To strengthen theinstitutional ownership and effectiveness of the corruption risk management system, approvalof the institutional anti-corruption programmes could be transferred from the NACP to theheads of the relevant state institutions.
Ukraine’s conflict of interest framework is comprehensive and largely aligned withinternational anti-corruption standards. The NACP is well positioned to conduct monitoring
and control over compliance with conflicts of interest legislation. It is also tasked withguidance, consultations, training and awareness raising. To strengthen the conflict of interest
framework, the NACP should improve internal proceedings and take measures to further
increase transparency and outreach of its work, including by reporting systematically to the
public. More public awareness raising about the importance of the conflict of interest
framework in detecting and preventing corruption is needed. Strong engagement with civilsociety and independent media in Ukraine is key. The legislative framework should be further
improved to also cover apparent conflicts of interest.
Several legislative proposals on lobbying regulations were registered but not adopted yet. The
NACP has launched the process of preparation of a new law on lobbying. The anti-corruption
strategy and state anti-corruption programme require drafting and the approval of lobbying
regulations by April 2024. To build up mutual trust of stakeholders and reach consensus on thebest approach on a lobbying regulation framework for Ukraine, an open and participatory
discussion should be pursued, including a wide stakeholders’ engagement (in particular, civilsociety groups) and extensive public consultations. It will be important to ensure that lobbying
regulations do not preclude or limit legitimate activities of civil society or put adisproportionate administrative burden on them.
The Council of Europe’s Group of States against Corruption issued its interim compliancereport in March 2023, where it assessed the measures taken by Ukrainian authorities toimplement the 31 recommendations of the Fourth Round Evaluation Report on corruption
prevention in respect of members of parliament, judges and prosecutors. Overall, 15
recommendations have been implemented; nine have been partially implemented satisfactorily;and seven recommendations remain unimplemented. Ukraine should swiftly act on theoutstanding recommendations in order to ensure further progress.
Law enforcement
Key anti-corruption institutions responsible for investigating and prosecuting high-level
corruption have remained fully operational despite the war. However, limited budget
allocations have caused challenges to their operations. Structural issues with the legal
framework, overall capabilities and functioning remain, with a continuous need to further
strengthen their independence and operational autonomy. The deployed electronic casemanagement system for NABU, SAPO and HACC has been put into practice but still requires
full integration with the unified register of pre-trial investigations and the unified judicial
information and telecommunication system. Specialised high-quality training is available to35the staff of anti-corruption institutions, including through international technical assistanceproviders.
In July 2022, the new head of SAPO was appointed by the Prosecutor General following thefinalisation of a selection process that was largely transparent and merit-based, but which lasted
more than 18 months. After the appointment, the office stepped up inter-agency cooperation
with NABU and reactivated high-profile cases. Despite significant progress, SAPO still needs
to further strengthen its political and administrative independence from the Office of theProsecutor General and other institutions. Particularly outstanding issues: improve theselection procedure for SAPO head and key administrative positions of SAPO by aligning itwith the procedures applicable to NABU/NACP, strengthen SAPO’s institutional
independence, and increase its procedural autonomy as well as establish robust mechanisms
for external and internal control and discipline. In early 2023, a draft law to address these issues
was registered in the Parliament, but was rejected by the responsible parliamentary committee
without substantive discussions in February 2023 due to the lack of political consensus. In
September, several new draft laws strengthening the SAPO’s autonomy were registered in the
Parliament.
The new Director of NABU was appointed in March 2023 by the Cabinet of Ministers
following a merit-based and transparent selection process conducted with the participation ofinternational members in the selection commission. NABU has been successfully leading
complex high-level investigations and is among the most trusted law enforcement agencies in
Ukraine. It urgently needs additional staff to work on investigations (detectives, analysts,
technicians), with staffing issues being particularly acute in the three regional offices. A draft
law has been registered in the Parliament to increase the number of NABU staff from 700 to 1000. Another reform priority should focus on the reform of the forensic services, to ensure that
NABU has a timely and uncompromised access to forensic expertise in its high-level corruption
investigations. Similarly, NABU should be able to conduct wiretapping without the need torely on the Security Service of Ukraine for its practical implementation.
Among other law enforcement agencies, the National Police of Ukraine and the State Bureau
of Investigation (SBI) were given powers related to corruption investigation. The Bureau of
Economic Security (BES) does not handle corruption cases as such, but its activities aimed at
protecting the economic security of the state are closely related. SBI is responsible forinvestigating corruption involving public officials unless the pre-trial investigation of thecrimes falls under the jurisdiction of NABU. BES was created to succeed the tax police (branchof the State Fiscal Service) in protecting the economic security of the Ukrainian state andinvestigating sophisticated financial crimes, including potentially touching on corruption. At
the same time, the Security Service of Ukraine (SSU) has almost unlimited powers, including
those related to the investigation of corruption cases. The problems of SBI, BES and SSU
include limited public supervision and accountability, lack of inter-agency cooperation as wellas the fact that staff is selected in processes that lack integrity control and transparency.
Delineation of investigative competences is often disregarded or interfered with in practice byhaving criminal cases investigated by SBI and the Security Service of Ukraine that fall within
the exclusive investigative powers of NABU. It will be important to introduce legal safeguards
that will prevent interference in the exclusive investigative powers of NABU by other law
enforcement agencies and, in this context, also progress with the SSU reform in line with EU’s
recommendations.
Legal framework
Ukraine has ratified the most important international treaties to prevent and combat corruption,
including the UN Convention against Corruption and the Council of Europe Criminal and Civil
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Law Conventions on Combating Corruption. As part of its aspirations to become a member of
the OECD, in February 2023 the OECD Council agreed on the proposal of the Working Groupon Bribery in International Business Transactions (WGB), to invite Ukraine to become aParticipant to the WGB so as to facilitate its accession to the OECD Anti-Bribery Convention.
Corresponding amendments to the Criminal Code, Criminal Procedure Code and Tax Code,and to other legislative acts are being prepared for the full implementation of the norms of theOECD Anti-Bribery Convention and the recommendations of the OECD Council.
The domestic legal framework is broadly aligned with international standards and allows
Ukraine to conduct complex criminal investigations into corruption cases. However, theCriminal Procedure Code and the Criminal Code should be further improved to enable higher
efficiency and better outcomes. The amendments should be aimed at preventing proceduraldelays, increasing time limits for pre-trial investigations and improving the grounds andprocedures for concluding plea bargain agreements. The legal framework on whistle-blower
protection should be completed and fully aligned with the EU acquis.
To reduce the influence of oligarchs on politics, in September 2021 the Parliament passed theLaw on prevention of threats to national security associated with the excessive influence ofpeople with significant economic and political weight in public life (oligarchs). The adoptionof the law and the announced preparation of the register of oligarchs led some of those possibly
affected giving up ownership of certain assets to avoid meeting the criteria for being identified
as an oligarch under the law. Moreover, the war has disrupted economic activity, with oligarchowned businesses being particularly affected. This has led to a decrease in profitability andresources, which has limited their ability to influence the political and media spheres. Similarly,
martial law has resulted in restrictions on the media and with it, the ability of oligarchs to shapepublic opinion and exercise traditional influence through the media channels they control orcontrolled.
While being in force since May 2022, the law on oligarchs has not been implemented. In June
2023, the Venice Commission, in its Opinion on the law on oligarchs, assessed the personal
approach of the law on oligarchs as difficult to reconcile with the principles of politicalpluralism and the rule of law and thus recommended postponing its implementation andreassessing its necessity after the end of the war. It recommended that Ukraine addresses deoligarchisation through a systemic approach in relevant areas, such as media, competition,
financing of political parties, taxation, anti-corruption and anti-money laundering.
Ukraine has duly prioritised systemic measures against oligarchs, in line with the Venice
Commission recommendations from June 2023. In particular, on the basis of the Government’s
anti-oligarch action plan, Ukraine pursued the reforms of the judicial governance bodies andthe Constitutional Court, adopted a new media law, continued to implement the state anticorruption programme and finalised the legal framework on the ultimate beneficial ownership.
In addition, in August, legislation strengthening the Anti-Monopoly Committee of Ukraine andrestoring the financial reporting of political parties and the verification functions was adopted
and later signed into effect. In September, the Government revised its anti-oligarch action plan
to postpone the implementation of the law on oligarchs and to prepare amendments to the law
within three months after the end of the martial law, taking into account the recommendationsof the Venice Commission.
Strategic framework
The Parliament approved the anti-corruption strategy for 2021–2025 in June 2022, 2 years after
the NACP, responsible for developing it, submitted the document. The adopted strategy
outlines highly relevant anti-corruption reforms across sectors and will also play an important37

role in ensuring transparent and accountable reconstruction efforts in Ukraine. Furthermore,
the implementation of these reform measures is likely to increase Ukraine’s track record on
prosecutions and convictions of high-level corruption cases over time. The delay in the
adoption of the strategy at the level of the Parliament significantly blocked an effective policy
framework and the monitoring of the implementation of anti-corruption reforms. The need forhaving the strategy adopted as a national law should be reconsidered.
On the basis of the strategy, the NACP developed the state anti-corruption programme (SACP),
adopted in March 2023 by the Cabinet of Ministers. The programme contains detailed,actionable measures across sectors and also provides a strategic framework for strengthening
the key anti-corruption institutions. It includes clear key performance indicators for eachgovernment body. In drafting the strategy and action plan, the NACP carefully considered thefindings of sociological surveys and other research, including recommendations and analysis
by Ukrainian and international non-governmental organisations. The NACP also consulted
independent experts and the public.
The NACP is the agency responsible for coordinating, monitoring and evaluating theeffectiveness of the implementation of the anti-corruption strategy and the SACP. It is tasked
with monitoring the implementation of measures provided in the programme each quarter.
Based on the outcomes, it then provides quarterly information to relevant Ukrainian
stakeholders. The current level of implementation of the programme is reasonable, in particular
the development and full operationalisation of the open access information system formonitoring the implementation of the SACP is well advanced.
Fundamental rights
Ukraine generally complies with international human rights instruments and has ratified mostinternational conventions on the protection of fundamental rights. The government has madecontinued efforts and progress, despite the war, on aligning its legislation with international
standards and the EU acquis. The reporting period was marked by the Russian invasion of
Ukraine, resulting in major violations of fundamental rights by Russia in Ukraine. Dealing withthe consequences of these massive violations and devoting attention to mitigating measures
was at the centre of the work of the Ukrainian authorities and human rights civil society
organisations over the reporting period and will represent a challenge for Ukraine’s
prosecution, judiciary and society in the years to come.
The introduction of martial law and other measures in the interests of national security led to alimited number of restrictions of rights and freedoms. Their full re-establishment at the end ofmartial law in transparent and pluralistic structures (including for the media), and in accordancewith European standards, should already be envisaged while military operations are stillongoing.
The new media law as well as the Law on national minorities (communities) of Ukraine wereadopted in December 2022. Ukraine ratified the Istanbul Convention and adopted an updated
national action plan on the implementation of United Nations Security Council Resolution
1325. It also adopted the 2030 state strategy on ensuring equal rights between men and women.
In, the coming year, Ukraine should in particular:→ adopt legislation to transpose and to implement the provisions of the Istanbul Convention;→ finalise the review of existing legislation on the rights of persons belonging to national
minorities, including in education, media and on the use of state language’ and in the law
on national minorities in line with the recommendations of the Venice Commission
Opinion of June 2023 and of its follow-up opinion of 6 October 2023;
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→ introduce annual public reporting to the Parliament on the work of the Prosecutor General’s
Office and the State Bureau of Investigation in investigating acts of torture and protecting
victims, and organise a review of the performance of the National Preventive Mechanism;→ ensure application of the legislation on the rights of persons with disabilities and that
restored and reconstructed infrastructure is compliant with barrier-free environment
standards.
Ukraine has ratified most international human rights instruments. Human and fundamental
rights are generally respected in Ukraine, and the government has shown commitment toprotecting them. In July 2022, the country ratified the Istanbul Convention. Ukraine has yet toaccede to the Rome Statute of the International Criminal Court and the International
Convention on the Protection of the Rights of All Migrant Workers and Members of Their
Families and to the Protocol amending the Convention for the Protection of Individuals withregard to Automatic Processing of Personal Data of the Council of Europe (Convention 108+).
However, the Russian invasion of Ukraine has had a negative impact on the enjoyment offundamental rights by many Ukrainian citizens, in particular those in areas of active hostilities,
in territories temporarily occupied by Russian forces or in their proximity. At the same time,
the government has maintained its respect of human and fundamental rights and has showncommitment to protecting them and further aligning them with the EU acquis.
Considering Russia’s full-scale invasion, Ukraine has achieved considerable progress in
implementing the 2021-2023 national human rights strategy and its action plan. The
introduction of martial law in February 2022 and its ongoing extension has not led to anincreased level of violations of fundamental rights, and is handled cautiously by Ukrainian
authorities. At the same time, the details for a return to the full application of all fundamental
rights still need to be worked out. It should take place in consultation with civil society andshould aim at strengthening the freedoms of Ukrainian citizens and re-establishing thepluralism and openness of Ukrainian society – specifically after the restrictions stemming fromthe COVID-19 pandemic and Russia’s full-scale invasion – while closing the remaining gaps
with European standards and rules. The reintegration of territories currently not under
government control will also require careful attention in terms of the application of
fundamental rights, especially on the reintegration of those territories under Russian occupation
since 2014. This should be done in the form of an update to the national human rights strategy
and its action plan.
As a result of Russia’s blatant violations of international humanitarian law and international
human rights law, many Ukrainian citizens were exposed to deliberate targeting andindiscriminate shelling by Russia. This has resulted in killings, together with the loss of homes
and basic services such as heating, light, water and sanitation. Many Ukrainians were victimsof extrajudicial executions, torture and mistreatment, as well as with sexual and gender-based
violence committed by the Russian military. Millions of Ukrainians were displaced. Many
civilians, including children, were forcibly transferred to areas temporarily under the controlof Russian armed forces or deported to the Russian Federation and Belarus. Human rights
violations and abuses by Russia and its proxies in temporarily occupied territories of Ukraine
continued unabated amid the lack of independent international actors on the ground. The large
number of international crimes, war crimes and human rights violations committed by Russia
poses an enormous challenge for Ukraine’s institutions to ensure effective investigations andprosecutions across the entire country. At the same time, additional mechanisms (also nonjudicial) will be needed to overcome the consequences of Russia’s brutal war and restore justicein all Ukrainian territories.
39

Ukrainian authorities have devoted significant efforts to ensuring full accountability for war
crimes and the other most serious crimes committed by Russia, including the crime ofaggression. At the same time, Ukraine has yet to ratify and implement some relevantinternational laws and conventions, such as the Rome Statute of the International Criminal
Court.
In June 2023, there were 9 656 applications pending before the European Court for Human
Rights. The Court delivered judgments on 356 applications and found breaches of theEuropean Convention on Human Rights in 151 out of 154 cases, relating mainly to the right torespect for private and family life, the right to a fair trial, the right to liberty and security of
person and the prohibition of torture and inhumane or degrading treatment or punishment. In
the reporting period, there were 1 901 new applications allocated to a decision body. There are
currently 580 cases under enhanced supervision by the Committee of Ministers.
Civil society organisations highlight problems with implementing the decisions of theEuropean Court of Human Rights adopted in favour of applicants living in Ukrainian territories
temporarily occupied by Russia. Applicants are effectively unable to provide the Ministry ofJustice of Ukraine with duly certified powers of attorney given their lack of access to thegovernment-controlled territory, institutions and legal representatives.
On the promotion and enforcement of human rights, the Ukrainian ParliamentCommissioner for Human Rights is designated as the national human rights institution andaccredited by the Global Alliance of National Human Rights Institutions with ‘A’ status(largely compliant with the Paris Principles). In 2022, the Commissioner’s office received
42 485 petitions, including 562 collective petitions from 7 779 people and 41 923 individual
petitions. Its staff conducted 2 031 monitoring visits and processed 3 784 draft legal andnormative acts. Parliament appointed on 1 July 2022 Dmytro Lubinets, previously Chair of the
Parliamentary Committee on Human Rights, to the post of the Parliament Commissioner for
Human Rights. In the reporting period, the institution of the Parliamentary Commissioner has
shown an active and independent approach, with efforts to adapt the institution to its existing
responsibilities by organising it around 9 fundamental fields of work, including issues
associated with the war of aggression (war crimes, release of prisoners of war, return of
Ukrainian children) and extending its presence to Ukraine’s regions.
On the prevention of torture and ill treatment, in 2022 Ukraine amended relevant legislationby changing approaches to the use of forced feeding of convicts and detainees, strengthening
responsibility for acts of torture and introducing a mechanism for the conditional early releasefor people sentenced to life imprisonment. Despite these legal improvements, torture and illtreatment remains a systemic feature of Ukraine’s prison system. In addition, the main
recommendations of the European Committee for the Prevention of Torture issued in its 2020
report have not been addressed. These covered among others poor material conditions ofdetention and the need to transfer medical care in prison to the general health system and should
be addressed.
A Human Rights Monitoring Department was established within the National Police under the
Ministry of Internal Affairs. The aim among other things is to monitor observance of humanrights and fundamental freedoms by the police in relation to police conduct. In addition, thepilot project Custody Records is being implemented in police units to improve standards ofprotection of the rights of those in police custody and ensuring detainees’ rights. At the sametime, cooperation between the State Bureau of Investigation, prosecuting authorities and prison
authorities remains weak, and the ill treatment investigation mechanism during the pre-trial
and prison sentence stage suffers from a lack of efficiency. There are still limited operationaland human resources capacities and limited operational independence of the State Bureau of40

Investigation to investigate ill treatment allegations, despite the establishment of a dedicateddepartment in 2019. The ineffective investigation into allegations of torture and cases ofobstruction of justice are rooted among others in a general culture of mutual protection of law
enforcement officers within the criminal justice system.
As to statistics on cases of ill treatment or torture, 30 criminal proceedings with allegations of
torture and 990 with allegations of abuse of power by a law enforcement officer were registeredin 2022; 11 and 94 people respectively were notified of suspicion, and 6 and 58 criminal
proceedings respectively were forwarded to the court. At the same time, the Office of theProsecutor General reports that 484 criminal proceedings with direct allegations of torture were
initiated in 2018-2022, with 60 people found guilty, but only 15 receiving a prison sentence.
This highlights how criminal courts do not follow through on the seriousness of the practice of
torture and thereby contribute to an atmosphere of impunity enjoyed by law enforcement andprison staff. A permanent body needs to be established that involves civil society organisations
and the Human Rights Commissioner to consistently monitor and follow up on alleged torturein the prison system.
To implement the Optional Protocol to the UN Convention against Torture in Ukraine, legal
amendments made in 2012 assigned the Ukrainian Parliament’s Human Rights Commissioner
the functions of the National Preventive Mechanism. This is based on the Ombudsman+ model,
with a strong focus on joint work with civil society organisations. In 2022, the Human Rights
Commissioner delivered 141 mandates to the representatives of civil society to conduct visits
to detention places. However, an inadequate methodology for prison visits and the delayed
publication of reports raises questions over the effectiveness and performance of the National
Preventive Mechanism. The mechanism continues to suffer from limited financial resources
and limited capacities of the Human Rights Commissioner’s office.
The prison system and detention centres remain an issue of concern. The prison population
has fallen sharply in recent years, from 60 621 in 2017 to 42 694 in December 2022. Despite
this positive trend, most of the long-standing problems identified by the European Court of
Human Rights, the Council of Europe’s Committee of Ministers and the European Committee
for the Prevention of Torture remain. The issues are primarily linked to the material conditionsof detention, very poor healthcare services, the use of detainees for prison duties and thewidespread use of violence by guards. The penitentiary system was already under-resourced
before Russia’s war of aggression and since many facilities have been badly damaged and somecompletely destroyed, complicating also the provision of basic services. Despite the national
strategy on human rights of 2021 and the multi-annual strategy for reforming the prison systemof 2022, the key challenges facing it have not been addressed. The poor detention conditions
in Ukraine have at times served as grounds for foreign courts to refuse extradition requests
from Ukrainian institutions. This undermines Ukraine’s fight against serious crime, including
corruption and organised crime.
Medical care in places of detention is under the responsibility of the Ministry of Justice.
Numerous recommendations by the European Committee for the Prevention of Torture totransfer responsibility for prison healthcare to the Ministry of Health have not been addressed.
Probation was introduced in 2015-2016. In 2022, 110 000 people were under probation. It isavailable through the country, with 600 offices and 3 000 probation officers. Remotemonitoring was recently introduced for certain cases. There is a special probation infrastructure
for juveniles, separate from adult probation. Together with conditional early release, probationis the main alternative to detention.

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As a result of Russia’s war of aggression against Ukraine, the Office of the High Commissioner
for Human Rights and non-governmental organisations documented around 1 000 cases ofarbitrary detention of civilians perpetrated by Russia and close to 100 cases of arbitrary
detentions by Ukraine. So far, there is no designated body or institution responsible foraddressing this issue in Ukraine.
On personal data protection, Ukraine continued working on alignment with the EU acquis.
The current key legislative act that regulates data protection is the Law on personal dataprotection of 2010. It lacks sufficient detail and is not sufficiently enforced. Ukraine has ratified
ILO Convention 108 on the Protection of Individuals with regard to Automatic Processing of
Personal Data. The Ukrainian Parliament Commissioner for Human Rights is the authority incharge of checking compliance with data protection legislation, but lacks the appropriate
resources to do this effectively. A draft law on personal data protection was introduced in
Parliament on 7 September 2022 and should be adopted to meet the requirements of both
Convention 108+ (not yet signed and ratified by Ukraine) and the General Data Protection
Regulation.
The Constitution of Ukraine as well as related legislation and policies provide for the right tofreedom of religion and belief. In general, Ukrainian public authorities enforce these norms,
and incidents of hate speech and intimidation due to religion are infrequent. Religions are
represented among others in the Ukrainian Council of Churches and Religious Organizations
and are in dialogue with public administration mainly via the State Service for Ethnic Affairs
and Freedom of Conscience. Representatives of religions are effectively collaborating with the
Ukrainian administration to support Ukrainians during the war and fight disinformation
campaigns that have the objectives to incite inter-ethnic and inter-religious conflict. At thesame time, a number of issues are not yet fully regulated in Ukraine, such as the restitution andredistribution of church property, and the establishment of principles of relations between state
and religious organisations in the spheres of education, social work and humanitarian activities.
The creation of the new Ukrainian Autocephalous Orthodox Church at the beginning in 2019
did not lead to significantly heightened tensions among Orthodox churches and communities,
but to a large part of orthodox believers moving away from the Moscow Patriarchate, which isstill ongoing. Since Russia’s invasion, and as a consequence of its full support by the Moscow
Patriarchate of the Russian Orthodox Church, Ukraine has taken legal measures sinceNovember 2022 against the Moscow-affiliated Ukrainian Orthodox Church. This includes
sanctions against some members of the church hierarchy accused of supporting Russia’s warof aggression and conducting searches of various church premises in application of legal
standards and practices. With these measures, Ukraine aims to prevent foreign interference
from Russia through a religious entity, while not targeting ordinary followers of the church.
Regarding the fight against antisemitism, in September 2021, Ukraine adopted a law on theprevention and countering of antisemitism, which defines antisemitism, prohibits anti-Jewish
acts and adds civil liability. Despite stereotypes widely spread by pro-Russian disinformation,
antisemitism in Ukraine is significantly less widespread and has been falling continuously insurveys for the last decade. In 2022, the lowest number of acts of antisemitic vandalism wasrecorded in 20 years of monitoring, with no cases of antisemitic violence. As stated by Jewish
representatives in June 2023, previously existing low levels of antisemitism have beenpractically non-existent in Ukraine since the start of Russia’s fully-scale invasion. Concrete
efforts have been made regarding Holocaust education and remembrance. Activities to preserve
Ukraine’s Jewish cultural life and heritage are supported by the state and civil society and areincreasing. Ukraine is not a member of the International Holocaust Remembrance Alliance andhas not adopted its definition of antisemitism. Ukraine has not appointed a national coordinator42

on combating antisemitism. Progress has been made regarding the restitutions of properties
confiscated by the Soviet regime.
---------------------------------------------------------------------------------------------------------------Freedom of expression
Ukraine is in between some and moderate level of preparation in the area of freedom of
expression. Overall, it made good progress in strengthening its legal framework during thereporting period, in particular with the adoption of the Law on media. This is a notableachievement in the challenging context of Russia’s full-scale invasion, in particular due to its
vibrant public civic space and diversity of media outlets, including at regional level. According
to the Reporters without Borders global ranking of freedom of media, Ukraine improved its
position 27 places from 106th to 79th place.
Before the beginning of the Russia’s war of aggression against Ukraine, the general context
was favourable to media freedom and allowed for critical media reporting. In the current
challenging context of martial law, Ukraine has taken some decisions on restricting access formedia and journalists in specific areas and spheres but applied these generally with restraint.
A significant drop in advertising revenue has also had an impact on the media market in the
country and led to the concentration in particular of TV programmes and decrease the accessto pluralistic media.
In the coming year, Ukraine should:→ develop, together with the community of journalists, simplified rules for reporting from thecombat zone and adjacent areas, taking into account the security concerns;→ ensure the independence of the national regulator by providing adequate funding, including
for necessary adjustments to its structure in line with the new Law on media.
→ develop a roadmap to support the re-establishment of a pluralistic, transparent andindependent post-war media landscape.
Intimidation of journalists
There have been a limited number of reports on instances of obstructing work and attacks onjournalists by individuals. The most recent was on journalists covering victory daycommemorations in Poltava and reporting from the Kyiv-Pechersky monastery, both withadequate follow-up by law enforcement. Incidents from previous years are generally being
followed up as well. However, the past general practice of intimidating journalists is still to befound, in particular in local and regional contexts. Historical cases such as the murders ofGeorgiy Gongadze in 2000 and Pavlo Sheremet in 2016 have been followed up with renewed
efforts in recent years, but still need to be concluded. A special police unit was established in2019 to investigate attacks on journalists.
Since March 2023, officers from the Security Service of Ukraine (SSU) have repeatedly
questioned journalists seeking military accreditation. The awarding of accreditation is notconsidered to follow fully transparent procedures, but no arbitrary arrests of journalists havebeen reported. In the same period, new rules on reporting from the combat zone and adjacentareas have been introduced, but rules are not sufficiently simple or are applied on an
indiscriminatory basis. Independent journalism in the temporarily occupied territories of
Ukraine is only possible with severe risks to life at the hands of Russian forces and will need
to be re-established once the Russian occupation is ended. In addition, eight journalists have43

been killed by the Russian Army while performing their professional duties and 42 have died
due to shelling by the Russian Army or in detention while not working.
Ukraine has taken some steps to align with the Commission’s recommendation on theprotection, safety and empowerment of journalists. Media Center Ukraine was established at
the start of Russia’s full-scale invasion to support foreign journalists, together with a hotline
for legal advice to journalists and media. In March 2023, the action plan for implementation of
the information security strategy was adopted to clarify among others the rules on access anduse of information as well as the protection of journalists’ rights. The Parliament resolution ofMarch 2022 on the value of freedom of speech, guarantees of activities of journalists and mass
media underlined the importance of independent journalism for public authorities in Ukraine.
Legislative environment
The main achievement in the area of freedom of expression was the adoption of the Law on
media in December 2022, which modernised the regulation of the entire sector and made animportant step towards alignment Ukrainian legislation with the EU’s Audiovisual Media
Services Directive. It established the detailed rights of journalists for accreditation and obliges
the public authorities to facilitate and support the work of journalists. It also empowered the
independent media regulator, which will now need sufficient resources to ensure its
independence and sufficient capacities.
In March 2022, in the context of martial law, the President signed a decree on a unified
information policy by merging the programming of all national TV channels into a single
information platform. This decision led to an expansion of government control overbroadcasting and some restrictions. Some media outlets consider these restrictions
disproportionate. Similarly, the exclusion of three private (opposition-affiliated) TV channels
from terrestrial broadcasting (while the channels continue working and remain available
through other means) has been criticised by the opposition on the same grounds. As regards
defamation and blasphemy, these are not criminal offences in Ukraine. National legislation, theLaw on media in particular, duly addresses the issue of hate speech. This ensures the free
expression of views, while prohibiting genuine and serious incitement to violence and hatred.
Implementation of legislation/institutions
The National Council of Television and Radio Broadcasting of Ukraine acts as an independent
media regulator in Ukraine. The Council is a permanent collegial body that acts on the basis of
the Constitution of Ukraine, the Law on media and other Ukrainian laws and regulates,
supervises and controls media. It consists of eight members – the Parliament and the President
each appoint half of the members for a five-year term. They are officials and work on apermanent basis. While performing their official duties, they cannot hold any other positions,
including on public grounds, in state and non-state bodies, organisations, institutions andcompanies, or engage in other paid or entrepreneurial activities. They also cannot hold arepresentative mandate and be a member of a political party.
The selection and appointment of candidates takes place on a competitive basis. The National
Council is financed exclusively from the state budget, which needs to be strengthened toaddress all aspects of its mandate and guarantee its independence. The Law on media
significantly changed and expanded the functions of the regulator, while the remuneration of
National Council members remains within the limits set by the previous law. Access to
information for journalists is regulated in the context of access to public information
legislation. The Ukrainian Parliament Commissioner for Human Rights is empowered to draw
up protocols and receive appeals on administrative violations of access to information.
However, this procedure is not effective enough and should be reformed.
44

Public service broadcaster
Since 2017, Ukraine has had an independent public service broadcaster, Suspilne, which has
three TV and three radio channels, regional networks and a digital broadcasting platform.
Suspilne adheres to the standards of independent journalism, has the highest trust ratings
among radio and television channels and is considered politically neutral and not subject topolitical influence. Its editorial standards are enshrined in the Editorial Charter, which ismonitored by two bodies – the Editorial Board and the Supervisory Board of Suspilne. The
broadcaster’s standards are enshrined in the Charter and the Code of Ethics, which aremonitored by the Supervisory Board and should ensure a clear separation between quality
standards and daily editorial and managerial decisions.
A significant factor that influences Suspilne is its funding, which comes from three sources:
the state budget, advertising revenues and donor funds. The main source is funding from thestate budget, which has so far fallen short of the amount prescribed by the law.
Economic factors
Ukrainian legislation does not include restrictions that limit or prevent the work of the media.
The Ukrainian media landscape of the past few years has been increasingly dynamic anddiverse, especially online media. Previously dominant media entities with non-transparent
media ownership have been gradually losing ground but still retain a strong position, inparticular in television. The onset of the Russian war of aggression has profoundly impacted
the media landscape and it should be a government priority to ensure the re-emergence of full
media pluralism and clear media ownership transparency, taking into account security
considerations. The state budget provides limited financial assistance to address specific issues
in media (children, young people, persons with disabilities, science, national minorities etc.),
also in form of financial assistance and economic support to media.
Internet
As regards internet freedom, since the beginning of martial law, the blocking of web resources
has been conducted by an extrajudicial order on the basis of recommendations issued toproviders of electronic communication networks and/or services of basic internet resources by
the National Centre for Operations and Technology Management of Telecommunications
Networks. In the context of Russia’s full-scale invasion and its hybrid warfare including
disinformation, these restrictions are legitimately rooted in national security concerns.
However, the Ukrainian government should provide a clear vision for the re-establishment ofprevious rights and freedoms after martial law ends.
Freedom of artistic expression
The freedom of artistic expression is not restricted and is guaranteed by the Ukrainian
constitution. This is repeated in the Law on culture as well as in other related legislation.
Intimidation of artists is rare and is followed up in general by Ukrainian authorities. Since 2014
and following further amendments of the Law on culture in June 2022, Ukrainian authorities
have implemented a ban on Russian cultural figures and their artistic work in Ukraine in
response to Russia’s war of aggression against Ukraine and occupation of the part of its
territory. The ban includes actors, musicians, writers and artists who do not condemn theaggression against Ukraine. The ban also applies to the use of symbols that represent Russia or
Russian propaganda.
Professional organisations and working conditions

45

Ukraine has a large number of journalism organisations that represent journalists, such as the
National Union of Journalists of Ukraine and the Independent Media Trade Union of Ukraine.
The latter is a member of the International Federation of Journalists and the European
Federation of Journalists. Members of the National Union of Journalists and Independent
Media Trade Union must adhere to standards of journalism – namely the Ethics Code of
Ukrainian Journalists. Both are financed by contributions and donations. Cases of violation of
the code are considered by the Commission on Journalism Ethics, a self-regulatory body ofjournalists and editorial offices in Ukraine. The Independent Media Council promotes highprofessional standards of journalism and self-regulation in the Ukrainian media sector byproviding expert opinions, advice and recommendations based on international standards,
national legislation and ethical standards of professional journalism. These professionalorganisations are involved in public councils that organise dialogue with the government andlocal authorities, for instance with Suspilne.
In general, the employment of journalists is precarious given the current wartime situation andis more difficult for freelance journalists. An amendment to the Law on state support of media,
guarantees of professional activity and social protection of journalists adopted in 2023 provides
for specific guarantees on the remuneration and social security for journalists, but does notinclude freelance journalists in its scope.
---------------------------------------------------------------------------------------------------------------The right to freedom of assembly and association is guaranteed by the Ukrainian constitution,and the government respects these rights. Existing legislation allows for a court to restrict theserights in the interests of national security and public order. A comprehensive law in line withinternational standards that would regulate the process of organising and conducting events tomake full use of the freedom of peaceful assembly in Ukraine is still missing. Restrictions onthese rights linked to COVID-19 are no longer in force. The introduction of martial law in
February 2022 allows the government to introduce temporary restrictions on the right topeaceful assembly, for instance curfews, but it applies them with restraint. The Ukrainian
constitution provides for the restriction of the freedom of association by judicial procedures forreasons of national security. On this basis, the government suspended by degree the activitiesof 11 political parties with claimed ties to the Russian government for the duration of martial
law. Major concerns remain over the freedom of assembly and association in the territories of
Ukraine that Russia temporarily militarily occupies, where Ukrainian citizens are deprived ofthese rights. These freedoms are to be restored by Ukrainian authorities after these territories
have been liberated.
Issues of labour and trade union rights are covered in Chapter 19 – Social policy andemployment.
On property rights, there has been a focus on modernising and strengthening these rights since2013. The State Register of Rights to Real Estate provides official recognition and confirmationby the state regarding the origin, transfer or termination of rights to property. However, it isestimated to be only 40% complete and does not include the majority of property rights thatwere acquired before its introduction and that are still stored in the State Land Cadastre (landregister), with a number of mismatches. The territories not under government control since2014 possess much more limited confirmed property rights given the wide-scale violations ofproperty rights by Russian-supported henchmen and their criminal activities. Before the fullscale invasion by Russia, progress had been made in revamping the State Property Fund,modernising the its procedures and also in continuing to privatise small and large assets. In
2022, the European Court of Human Rights adopted seven decisions against Ukraine, which46

was found to be in violation of Article 1 of Protocol No. 1 to the European Convention on
Human Rights. The government is following up on this.
Since the start of Russia’s full-scale invasion, property rights in government-controlled
territories have not been limited, apart from the possibilities for the Ukrainian armed forces torequisition property for their needs, in particular in areas near the frontline. The government
undertook a number of measures to ensure the legal continuity of property rights and take war
damages into account. In February 2023, Ukraine adopted among other things a real estate law
on compensation. This enables people to claim and receive compensation for property that has
been damaged or destroyed as a result of Russia’s full-scale invasion. To monitor property
damage and destruction, local military administrations provide reporting, the state digital
services platform Diia also allows for self-reporting, and the state registry of damaged anddestroyed property provides a loss reporting infrastructure for property rights. In February2022, the Criminal Code of Ukraine was amended to protect citizens from self-interested
property crimes during wartime.
In the area of non-discrimination, Ukrainian society remains open in general and tolerant
towards respecting persons in vulnerable situations. The Ukrainian constitution guarantees
protection against discrimination. The law on the principles of preventing and combating
discrimination in Ukraine prohibits discrimination on different grounds with race, colour,
political, religious and other beliefs, sex, age, disability, ethnic or social origin, family andproperty status, place of residence and language receiving explicit protection.
The Law on media adopted in December 2022 prohibits dissemination in the media and on
platforms of shared access to videos of statements that incite hatred towards people and groups
based on their national, racial or religious characteristics, as well as statements that incite
discrimination based on their ethnic and social origin, citizenship, race, religion and beliefs,
age, gender, sexual orientation, gender identity, disability or any other characteristic. The
National Council of Ukraine for Television and Radio Broadcasting currently formalises thecriteria for identifying such violations and has the authority to take response measures against
any media outlets that commit such violations.
Ukrainian criminal legislation provides for punishment of hate crimes and hate speech basedon three characteristics – race, nationality and religious beliefs – but does not cover sexual
orientation and gender identity, which is recommended by the European Commission against
Racism and Intolerance as a matter of priority. A draft law, prepared by the Ministry of Internal
Affairs to include these other protected grounds, was introduced to Parliament in 2021, still has
to be adopted. The National Police of Ukraine introduced a new data collection form toinvestigate hate crimes and offences as part of the reporting system. In the first 2 months of2023, it launched a pretrial investigation into 26 criminal offences based on hatred.
The Ukrainian Parliament’s Commissioner for Human Rights is the main holder of powers tocombat discrimination. It is an independent body, with powers equivalent to the mandate
typically attributed to national equality bodies. In 2022, it received 395 reports of
discrimination on various grounds and in general ensures follow-up by the authorities. The
capacities of police officers, prosecutors, judges and staff of the Ombudsperson of Ukraine
should be increased to tackle discrimination, hate speech and hate crime through suitabletraining. The legal aid system should be strengthened to implement the legislation and combat
discrimination, hate speech and hate crime effectively.
As regards gender equality, Ukraine has several laws in place, in particular the Law on
ensuring equal rights and opportunities of men and women of 2005, the Law on principles of
prevention and combating discrimination in Ukraine of 2012 and the Law on prevention of47

domestic violence of 2018. However, this legislation is generally declarative in nature andprovides only limited guidance to the application of these laws. The Cabinet of Ministers
adopted the 2030 state strategy on ensuring equal rights and opportunities for men and womenin August 2022. The strategy is a comprehensive document that addresses among others genderinequality and women’s participation in public institutions, economics and environmental
issues.
Institutionally, since 2017 the coordination of gender policy in the government has been
entrusted to the office of the Deputy Prime Minister for European and Euro-Atlantic
integration, where the Commission on Gender Policy was established in order to ensure theconcerted and coordinated involvement of all executive bodies, allowing for a more effective
horizontal approach on gender equality.
On 18 July 2022, Ukraine ratified the Council of Europe Convention on Preventing andCombating Violence Against Women and Domestic Violence (Istanbul Convention), which
entered into force on 1 November 2022. The effective implementation of the Convention isstill to be initiated in a situation of increased priority, as gender-based violence prevention has
suffered major setbacks in 2022 when local budget subventions were reduced due to budget
constraints, and social services being degraded near the frontline and in temporarily occupied
territories of Ukraine, as well as in regions experiencing massive influx of internally displaced
persons (IDPs). While the number of cases of gender-based violence documented by the police
has decreased by almost 50% in the first six months of 2022 (773 cases compared to 1 508
cases during the same period in 2021), the number of non-documented cases is unknown andis likely to have increased. The number of such cases linked to post traumatic stress are likely
to have increased as well, including in families of military personnel.
Conflict-related and gender-based sexual violence emerged as an important war-related issue
with hundreds of confirmed cases against both sexes of all ages and an estimated large numberof unreported cases. In the same period, Ukraine revised the National Action Plan on UN
Security Council Resolution 1325 on women, peace and security to address the changing
realities in the country and include measures on conflict-related sexual violence. To fully
implement the action plan, Ukraine needs to ensure the inclusion of women in the reconciliation
negotiation process and in the decision-making process conduct mandatory systematic trainingof law enforcement agencies and the military on women’s rights. It should also include thedetection of forms of violence against women in their respective institutions and capacitybuilding for police and armed forces as first respondents in cases of conflict-based sexual
violence.
Similarly, further steps are needed to ensure justice with a gender-sensitive approach, fulfil
obligations to prevent, investigate and punish sexual and gender-based crimes committed
during armed conflicts. This includes aligning the legal framework with international
standards. Ukrainian authorities have committed to establish a comprehensive response system,
including one-stop response centres in the regions to assist the victims, as well as theestablishment of investigation mechanisms. In May 2022, a memorandum of cooperation was
signed between the government and the UN on the prevention and counteraction of sexual
violence in wartime. Gender equality has also been defined among seven cross-cutting
priorities of the government’s recovery plan.
Since February 2022, all positions in the Ukrainian armed forces have been opened to women,
and in March 2023 more than 60 000 women were serving in the armed forces, a large partbeing on the frontline of combat operations. This is accompanied by increased acceptance ofequal rights for women soldiers in Ukrainian society. This implies the obligation to cater moreto the needs of women soldiers and veterans in terms of equipment, protection against sexual48

violence and harassment and medical support during and after combat, and reintegration
support to civilian life once they retire from the armed forces.
Ukraine ratified the UN Convention on the Rights of the Child, acceded to the three Optional
Protocols to the Convention and endorsed the Paris Commitments to protect children fromunlawful recruitment or use by armed groups. It also ratified the Council of Europe Convention
on the Protection of Children against Sexual Exploitation and Sexual Abuse (Lanzarote
Convention). Ukraine has furthermore signed the Safe Schools Declaration, which aims at
protecting children and ensuring their right to education in the context of conflict and war.
The last few years have seen progress, with legislation strengthening the social protection ofchildren and support for families with children, and introducing the notion of the best interestsof the child. There is however still a need to develop procedures and criteria to provide
guidance for determining the best interests of the child, including of children in need of careand protection, and giving the best interests of the child due weight as a primary consideration.
Similarly, there is room to strengthen integrated social services to prevent family separation,
support alternative family placements and reintegration of children from institutions intofamilies, including investing more resources into a minimum package of social services as thefirst steps towards meeting the provisions of the EU Child Guarantee and secure a social service
workforce trained in integrated social services and corresponding case management
approaches.
Since 2021, the state guarantees a right to all medical services, with equal funding and equal
access for children. Monetary benefits are provided for children, with higher rates for children
with disabilities. At the same time, remaining issues include a lack of available resources,
limited data collection and monitoring policies on child rights, which should be solved. Efforts
have been undertaken to protect children in civil and criminal proceedings, but further capacity
building to support cases involving children needs to be envisaged.
The existing difficulties in ensuring the rights of the child have been exacerbated since thebeginning of Russia full-scale invasion. According to OHCHR until 30 June 2023, 535 children
were killed and 1 095 injured. Research indicates that a high number of children show signs of
psychological trauma. In many cities, children cannot receive proper medical care due toconstant shelling by Russia and the systemic destruction of critical infrastructure. The war
limits access to education for children; 3 395 educational institutions have suffered frombombings and shelling and 363 have been completely destroyed. Many children depend on
online education, which is complicated by a lack of access to technology, internet connectivity
and electricity availability. The government established the Coordination Headquarters for theProtection of Children’s Rights under Martial Law to address these challenges in light of the
difficult wartime circumstances.
Before February 2022, Ukraine had the largest number of children in institutional care inEurope. These institutions are under-resourced and include outdated and inappropriate
boarding schools run by the Ministry of Education, baby homes run by the Ministry of Health,and institutions overseen by the Ministry of Social Policy for children deprived of parental careby the courts. The 2017 Law on education introduced protection with special educational needs.
Since then, the number of inclusive classes and accessibility of schools have increased
significantly.
Since the Russian invasion in February 2022, a number of large institutional care facilities havebeen evacuated to neighbouring countries under very difficult circumstances, including to anumber of EU Member States. Ukraine also asked host countries to keep groups of evacuatedchildren together. In February 2023, the President’s Office committed to the goal of zero49

children in institutional care and comprehensive childcare reform. UNICEF has an agreementwith the Ministry of Social Policy and the President’s Office to support them in thedeinstitutionalisation planning process, including the short-term ambition of reunifying or
placing all children who are in institutions as quickly as possible in safe, supported biologicalor foster families.
Since Russia’s full-scale invasion in February 2022 and even before in temporarily occupied
areas of the Donbas, Russia started to forcibly transfer and deport at least 19 000 children from
non-government-controlled territories of Ukraine, using the pretext of ‘evacuation’. Ukrainianand international non-governmental organisations (NGOs) report on the forced ‘russification’of Ukrainian children in Russian institutions and ‘summer camps’. In 2022, Russia introduced
legislative changes to allow Ukrainian orphans and children without guardianship to obtain
Russian citizenship in a simplified manner, enabling Ukrainian children to be adopted by
Russians. Ukrainian NGOs as well as the Office of the United Nations High Commissioner for
Human Rights note that there is currently no functioning mechanism for reunifying children
with their relatives in Ukraine. The identification and monitoring of missing children and theirfamilies also remains challenging.
In 2010, Ukraine ratified the UN Convention on the Rights of Persons with Disabilities and
its Optional Protocol. The Law on the basis of social protection of persons with disabilities in
Ukraine prohibits discrimination on the basis of disability and introduces quotas for companies.
However, integrating persons with disabilities into the workforce remains limited. The
application of the principle of reasonable accommodation for persons with disabilities remains
rare. The National Strategy for Barrier-free Environment in Ukraine, covering the period up to2030, was adopted in spring 2021. It provides a framework for empowering persons withdisabilities to fully participate in society and ensures their fundamental rights. It is being
implemented by way of annual action documents. This led to a number of actions in 2022, eventhough they were limited by the impact of the Russia’s full-scale invasion. In June 2023,
Ukraine adopted the action plan for 2023-2024. It provides for monitoring the barrier-freenature of the physical environment and transport, adapting them to the needs of persons with
reduced mobility, as well as introducing new and improved state construction norms andstandards. The government announced that all restored infrastructure should be compliant withbarrier-free environment standards by 2024. This now requires consistent implementation at
all levels of government.
As of 1 January 2020, 2.7 million persons with disabilities were registered in Ukraine, among
them 160 000 children. This number is expected to have risen dramatically because of Russia’s
war of aggression. It includes only persons who were able to register their disability. This leads
to barely relevant disaggregated data as Ukraine has not yet introduced the WHO’s
International Classification of Functioning, Disability and Health for the registration of persons
with disabilities. Furthermore, there is limited legal capacity in Ukraine to enable persons withdisabilities the opportunity to claim their rights. Persons with intellectual and psychosocial
disabilities remain highly vulnerable due to exceptionally high levels of institutionalisation,
including of children and infants, instead of family- and community-based alternative care.
Previous reform attempts have not led to a sufficient reduction in institutionalisation, also dueto the lack of capacity at local and regional level. This reform needs to be prioritised.
The situation for persons with disabilities remains very challenging as regards equal
participation and opportunities. There is a distinct lack of accessible transportation, healthcare,social services and public buildings. Legislation does not provide incentives for employing
persons with disabilities in the open labour market. Russia’s invasion led to additional strainson public services for persons with disabilities due to the growing number of war victims
50among veterans and civilians, the further extension of conflict-affected areas, as well as theforced displacement of persons with disabilities, their families and carers and the destructionof care infrastructure.
Overall, during the reporting period the general trend of increasing tolerance and acceptanceof lesbian, gay, bisexual, transgender, intersex and queer (LGBTIQ) persons in Ukrainiansociety over the last decade was sustained. The trend towards a decrease in the number ofattacks and hate crimes against LGBTIQ persons continues (–44% since 2020). Surveys
conducted in 2022 show that a majority is in favour of same-sex partnerships and equal rights
for LGBTIQ persons. The government clearly communicates its support for the rights of
LGBTIQ persons and against hate crimes and discrimination. In addition, Kyiv Pride was heldon 25 June 2023 in Warsaw together with the city’s Equality Parade, focusing on rights for
LGBTIQ persons as well as on the support for Ukraine.
Existing legislation, for instance the Labour Code, already provides some level of protection
against discrimination based on sexual orientation, and reforms to ensure equal rights are
currently under way. The media law, adopted on 15 December 2022, bans hate speech andincitement based on sexual orientation and gender identity in media. The National Human
Rights Action Plan 2021-2023 envisages progress in the status of LGBTIQ persons, forinstance by amending the Criminal Code of Ukraine to apply the notion of the term ‘bias’ asregards sexual orientation and gender identity. The plan also suggests drafting a law that would
provide for the elimination of discriminatory provisions that may violate the property and nonproperty rights of unmarried partners as well as the introduction of a registered civil
partnership. Amendments to the provisions of the Family Code which currently discriminates
same-sex couples compared with unmarried couples of the opposite sex are necessary. In
March 2023, a draft bill on legalisation of same-sex marriage was introduced by MPs to
Parliament and government has committed to approve the bill by the end of 2023. The
judgment by the European Court of Human Rights of 1 June 2023 reinforced the requirement
for the state to ensure the equal treatment of same-sex couples in Ukraine.
Procedural rights are outlined and protected among others in the Law on the judiciary andstatus of judges and in the Criminal Procedure Code. However, the implementation of existing
rules and procedures suffers from a lack of efficiency and capacity of the judicial system.
Ukraine’s legal system is not yet aligned with the EU acquis on procedural rights for suspects
and accused persons in criminal proceedings, but measures are being taken in this direction:
the presumption of innocence, the right to information about the main procedural rights, theright of access to a lawyer and the right to be present at the trial are provided. The Criminal
Procedure Code provides for the translation of legal documents and persons involved in thecriminal proceedings have the right for an interpreter at the expense of the State.
There are safeguards for children who are suspects and accused in criminal proceedings.
During the reporting period, the free legal aid system showed a high level of stability, whilelegal services quickly adapted to the new conditions. In 2022, the right to free secondary legal
aid was extended to people without documented Ukrainian citizenship, victims of criminal
offences during hostilities and armed conflict, and to those deprived of their liberty in thecontext of Russia’s war of aggression against Ukraine. The country’s legislation on victim
rights should be fully aligned with the Victims’ Rights Directive and Council Directive
2004/80/EC relating to compensation to victims of crime.
In 2022, the Ukrainian Parliament Commissioner for Human Rights received 5 105 reports on
violations of procedural rights, 790 on administrative and civil proceedings, 3 628 on criminal
proceedings and 687 on places of detention. They refer in particular to the violation of the right51

of access justice, of the right to a fair trial for excessive length of the proceedings as well as
violation of rights by law enforcement officials. The right to a fair trial is frequently violated,
as shown by 61 decisions delivered by the European Court of Human Rights in 2022 in cases
against Ukraine regarding violations of Article 6 of the European Convention on Human
Rights. These issues reflect structural problems with the practices of the judiciary and law
enforcement authorities. Recent law reforms have not yet led to a visible improvement in thesituation, in particular as the COVID-19 pandemic and Russia’s full-scale invasion have further
burdened the wide application of appropriate standards and rules in law enforcement and the
judiciary, in particular the rights of access to justice and the right to a fair trial within areasonable time. A draft Law on excessive length of proceedings was registered in September
2022. It proposes reducing the terms of consideration of civil, commercial and administrative
cases, introducing a protection mechanism and providing compensation for plaintiffs, but stillneeds to be adopted.
Regarding the respect for and protection of persons belonging to minorities, the wide rangeof national, ethnic, linguistic and religious identities in Ukraine continues to be an importantelement of Ukrainian society. Ukraine has been a party to the Council of Europe’s Framework
Convention for the Protection of National Minorities since 1998 and to the European Charterfor Regional and Minority Languages since 2005. Since 2017, the legal framework for national
minorities is being reformed but is not fully implemented yet. This was addressed by theCommission's opinion on Ukraine’s application for EU membership, which recommends thatUkraine ‘finalise the reform of the legal framework for national minorities currently underpreparation as recommended by the Venice Commission and adopt immediate and effective
implementation mechanisms.’
In general, the rights of persons belonging to ethnic, linguistic, religious or national minorities
are upheld in Ukraine. This is despite the efforts of the Russian regime to instrumentalise uses
the topic of the Russian minority in its disinformation campaign in order to justify its illegal
aggression against Ukraine. Civil society organisations and international organisations are very
concerned about this high politicisation of the topic, while the issues to be addressed revolve
mainly around those concerning the daily lives of persons belonging to national or linguistic
minorities, such as education, language use in public life, media, civic participation andrepresentation of national minorities.
On 13 December 2022, the Law on national minorities (communities) of Ukraine was adopted.
It replaced the Law on national minorities adopted in 1992 as the main act regulating the rights
of national minorities. It creates rules and structures for national minority rights in Ukraine. In
the preparatory process, efforts were made to also consult representatives of national
minorities. The adopted accompanying implementing measures address the structures ofregional centres of national minorities, financial support to public associations of national
minorities, the methodology for using minority languages and the creation of consultative
bodies on national minorities, as well as a state programme ‘Unity in Diversity’ for national
minorities, but the implementing bodies remain to be underfunded.
The Venice Commission Opinion of 10 June 2023 provided detailed guidance on the remaining
issues and recommended amending the Law on national minorities (communities) as regards
the use of minority languages in public life, administration, use of minority languages in media
and books to ensure that the law complies with European standards. As indicated in the Venice
Commission Opinion, Ukraine should also address earlier recommendations of the Venice
Commission on the Law on education and the Law on State language. On 11 June 2023,
Ukraine adopted a law extending the transition period for education in minority languages by
1 year for pupils starting their education before 2018. In October 2023, Ukraine registered a52

draft law in Parliament to exempt these pupils from the obligations of the education law. This
would allow Ukraine to reconsider the minority school system also in light of previous Venice
Commission recommendations to ensure equal opportunities for persons belonging to national
minorities, avoiding disproportionate interference with their rights. The amendment to the Law
on national minorities was adopted on 21 September to accommodate some of the Venice
Commission comments, in particular those directly relevant to the law on national minorities(communities). The Venice Commission follow-up Opinion of 6 October 2023 assessed theprogress of the amending law, but also identified those recommendations that remain to beaddressed. According to the final provisions of the revised law, within the six months following
its entry into force the Cabinet of Ministers has to prepare and submit to Parliament a draft law
to revise the education law, the State language law and the media law. These need to be in linewith the recommendations of the Venice Commission.
The impact of Russia’s war of aggression against Ukraine has severely affected national
minorities, leading to disruptions to their social fabric by displacements of their members,
challenges to guarantee education in minority languages as well as a general lack of statefunding to implement adopted reforms. In the medium term, in particular after the end of thewar, this will require a broad review of Ukraine’s policies to enable the full application of therights of persons belonging to national minorities.
The Roma minority remains one of the most marginalised communities in Ukraine andcontinues to face significant challenges. These include discrimination and antigypsyism,
economic and social exclusion, lack of access to ID documents, lack of adequate education,
continuing segregation in settlements, lack of poverty reduction and lack of adequate housing.
There is a continued need for empowering women, for family planning programmes, increased
protection of children’s rights and the prevention of teen pregnancies, misappropriation offunds designed for child support as well as discrimination by police. These existing challenges
were exacerbated by the impact of Russia’s full-scale invasion, which led to the displacementof a large part of the Roma minority within the country and abroad. At its beginning, Roma
faced additional obstacles in various regions, preventing an efficient evacuation. Instances ofmob violence against Roma targeting both settlements and individuals were recorded in recent
years. Civil society organisations point out that attention should be paid to the nondiscriminatory nature of aid delivery in order to reach citizens without a full set of ID
documents, as well as marginalised settlements, documentation procedures for Romaindividuals should be simplified and accelerated, and the legalisation of Roma settlements
should be ensured. Roma should also be included in the recovery and reconstruction efforts of
Ukraine.
In July 2021, Ukraine adopted the strategy promoting the realisation of the rights andopportunities of persons belonging to the Roma national minority in Ukrainian society up to2030. The strategy is being implemented only slowly and the related action plan, which needs
to be fully aligned with the EU Roma strategic framework, developed with the full involvementof the Roma community and be given sufficient resources for its implementation, has not yet
been adopted.
On 7 April 2023, the Ukrainian government adopted a state policy strategy on internal
displacement until 2025, together with an operational plan for 2023-2025. The strategy aims toproperly address all issues related to internally displaced persons, and this at all stages: fromthe decision to relocate these persons to the period when a person decides to return to theliberated and safe territory. Implementation of this strategy will heavily depend on thecapacities and financial resources of the Ukrainian government. According to the International
Organization for Migration (IOM), in June 2023, an estimated 5 088 000 were internally53

displaced. According to the United Nations High Commissioner for Refugees (UNHCR), in
June 2023, 6 303 500 people Ukrainians were registered as refugees. Across Ukraine, IOM
estimates that 4 757 000 people have returned to their place of habitual residence in Ukraine
following a period of displacement, 20% of whom returned from abroad. Income sources ofinternally displaced persons have been severely affected by the war. In addition, given theoverall priority given to winning the war and the scale of the social emergencies created by the
Russian war of aggression, increasing difficulties are reported in ensuring adequate state budget
allocations for social services. Significant and continued reliance on external assistance is
expected by relevant ministries in charge of social policies, with few plans at the moment interms of self-sustainability. IOM data indicates that around one in four internally displaced
persons (24%) that responded stated that monthly livelihood cash assistance was their primarysource of household income. The vast majority (72%) of internally displaced persons who rely
on social assistance reported a total monthly household income which – when divided by the
number of people in the household – was equal to or less than UAH 2 500 (EUR 55), thesubsistence minimum as of January 2023.
While cultural rights in Ukraine are respected and protected, also for national minorities asreiterated in the Law on national minorities (communities) of Ukraine, Russia systematicallyand purposefully carries out activities that violate the cultural rights of Ukrainians andspecifically national minorities in the temporarily occupied territories of Ukraine. This
concerns illegal archaeological excavations by Russia in Crimea, the looting of museums,archives, libraries and objects of movable cultural heritage in temporarily occupied territories,
the nationalisation of Ukrainian cultural property, as well as persecution of the Orthodox
Church of Ukraine in Crimea. It is very difficult for Ukrainian authorities to monitor and tracklooted objects as well as document cultural heritage and eventually reconstitute it after theliberation of temporarily occupied territories.
Russia continues its efforts to systematically destroy Ukrainian identity in the temporarily
occupied territories of Ukraine. Under the Russian Federal Law No 19 (as of 17 February2023), the four temporarily occupied territories of Kherson, Zaporizhzhia, Donetsk andLuhansk regions of Ukraine are to be integrated into Russia’s federal education system. This
includes clearing the educational space of anything Ukrainian (all school instructions are given
in Russian only and there are no subjects related to Ukraine), militarising education andinstilling Russian civic identity. Ukrainian authorities and citizens are currently unable toprotect Ukrainian children against these illegal acts, but will need to prepare measures toreintegrate this portion of its population into its national education system.
The citizen rights of Ukraine are governed by the Law on citizenship of Ukraine. Anyone bornto at least one Ukrainian parent automatically receives Ukrainian citizenship at birth, while
foreign nationals can be naturalised after living in the country for at least five years. While onlysole citizenship is permitted in Ukraine, in practice Ukrainian citizenship is not automaticallylost if foreign citizenship is acquired, resulting in an estimated large number of Ukrainians
possessing more than one citizenship, often with an additional EU citizenship.
2.2.2.

Chapter 24: Justice, freedom and security

The EU has common rules for border control, visas, external migration and asylum. Schengencooperation entails the lifting of border controls inside the EU. Member States also cooperatewith Ukraine in the fight against organised crime and terrorism, and on judicial, police andcustoms cooperation, all with the support of the EU justice and home affairs agencies.
Ukraine has some level of preparation in implementing the EU acquis in the area of justice,
freedom and security. Russia’s full-scale invasion of Ukraine and the martial law regime
54introduced in response have had a profound impact across the entire justice, freedom andsecurity area. Law enforcement agencies are heavily involved in defending the country andprotecting the population and critical infrastructure. Despite the war-related challenges,
including significant losses of personnel and equipment and reduced financing, the institutions
continue to demonstrate strong resilience and determination to deliver on their mandates.
However, multiple shortcomings persist, many of which predate Russia’s full-scale invasion.
The legal and strategic framework is underdeveloped. Integrity and accountability mechanisms
need further strengthening across the sector. Institutional cooperation and coordination remain
weak, in particular as regards the investigation of organised crime, but also migration andborder control. The smuggling of goods, including cigarette smuggling, is still not criminalised,despite being a low-risk and high-profit activity. Technical capacities for border control andsurveillance need improvement, along with the anti-corruption measures. Legislation on visa
policy and asylum is broadly aligned with the EU acquis. Limited progress was made in thereporting period. The overarching strategic plan for the law enforcement sector was adopted,
while the preparation of a credible implementation plan is underway.
In the coming year, Ukraine should in particular:→ adopt a time-bound and measurable action plan for the implementation of the overarchingstrategic plan on law enforcement reform, including a strong anti-corruption component,
taking the war-related context into account, and make tangible progress in implementingit;→ adopt and implement a context-adjusted migration policy strategy and revised integrated
border management strategy, and ensure that corresponding action plans have indicatorsthat allow for the proper assessment of implementation;→ adopt and start implementing legislation to criminalise the large-scale smuggling of goods,
including effective prison sentences for damage to the state budget above a certain
threshold.
Fight against organised crime
Ukraine has some level of preparation to implement the EU acquis in this area. The country
has a dedicated strategic and institutional framework to fight organised crime, along withreasonable knowledge and technical means, and a good level of international cooperation.
Russia’s full-scale invasion of Ukraine and the martial law regime have had a profound impact
on the institutional capacities to fight organised crime. Like other institutions in the homeaffairs sector, the institutions that fight organised crime are heavily involved in the country’s
defence and civil protection efforts, demonstrating remarkable resilience and operational
capabilities. There has also been a shift in priorities towards the investigation of international
crimes and offences committed by Russian entities. Overall, the legal framework andoperational capacities to fight organised crime remain weak. A number of legal and proceduralgaps, jurisdictional overlaps and institutional fragmentation, the prevalence of corruption, theinefficient use of resources, the uneven level of professionalism and underdeveloped IT
infrastructure are observed in this area. Strengthening inter-agency coordination remains
crucial. More efforts are needed in particular to combat serious forms of organised crime,
money laundering (including alignment with Directive (EU) 2018/1673 on combating money
laundering by criminal law) and other financial crimes. Despite the difficult context andexisting challenges, the outlook is positive as the country is determined to proceed with
implementing the strategic approach, including the revision of the legal framework and theputting in operational use the national serious organised crime threat assessment (SOCTA).
55

Some progress was made at operational level, in particular through participation in an
increasing number of joint operations with EU Member States and neighbouring countries.
Investigations were launched against the criminal authorities (‘thieves in law’). The number ofseized, confiscated and destroyed firearms and ammunition as well as convictions for
trafficking of small arms increased considerably. The Office of the Prosecutor General started
developing the e-case management system in the criminal justice chain.
In the coming year, Ukraine should in particular:→ develop and adopt the national SOCTA and strengthen the institutional capacities toimplement it, including intelligence-led policing, open-source intelligence, information
management and analysis, inter-agency cooperation; establish a permanent national
coordinator to fight organised crime;→ adopt and start implementing a credible action plan for the implementation of the 20232025 asset recovery strategy; improve the legal framework and institutional capacities forfinancial investigations, asset recovery and management;→ enact legislation enabling a competitive, transparent and merit-based selection, including acredible integrity check, of the new Head of the Bureau of Economic Security and otherstaff and carry out the selections based on the improved legislation, introduce a strong
integrity and accountability framework within the Bureau and start applying it;→ continue improving the legal framework related to firearms and other small arms and light
weapons (SALWs), conduct regular threat assessments and continue cooperation between
national law enforcement agencies and the military to prevent the illicit possession andtrafficking of firearms and other SALWs.
Institutional set-up and legal alignment
In 2022, the National Police of Ukraine had more than 110 000 police officers, whichcorresponded to approximately 270 police officers per 100 000 inhabitants, against an EU
average of 335 officers per 100 000 inhabitants (Eurostat, 2019-2021). An attempt to reformthe National Police was undertaken in 2019, aimed at increasing public trust in the police andstrengthening its ability to deal with organised crime. Specialised police units were put in place
to deal with terrorism, cybercrime and drugs.
Since late 2022, the Ministry of Internal Affairs has acted as a temporary national coordinatoron organised crime, in line with the strategy and action plan for combating organised crime. Itis critical to establish a permanent national coordination body to tackle organised crime andupgrade the inter-agency cooperation and coordination mechanisms, including businessprocesses and IT infrastructure.
The Bureau of Economic Security (BES) was established in November 2021 and started
operating in 2022. It was expected to become the central law enforcement and analytical bodyto fight financial crimes and protect the economic interests of Ukraine. However, its operational
capacities remain very limited. Its track record in the first few years of activity raises questions
about its effectiveness and coordination with other law enforcement agencies and institutions.
BES remains heavily understaffed, with less than 20% of its positions filled. The head of BES
was dismissed in April 2023. In May 2023, investigative media raised allegations of corruption
against the acting head of BES. Legislation should be amended to enable the selection of the
new head and other staff in a competitive, transparent, merit-based manner, including a credible
integrity check.
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The state financial monitoring service supervised by the Ministry of Finance performs the roleof a financial investigation unit, assisting the law enforcement agencies in anti-money
laundering investigations. The service prepares analytical reports and ensures data exchangewith other countries.
The national agency for finding, tracing and management of assets derived from corruption
and other crimes (ARMA) was established in February 2016. It is tasked with formulating andimplementing state policy on tracing assets that are subject to seizure and managing seized
assets in criminal proceedings. ARMA has access to a number of national and international
databases. It has established cooperation with foreign asset recovery and management agencies
and their networks. In January 2023, ARMA launched the unified state register of assets seizedin criminal proceedings. The agency had no permanent head for almost 4 years. The initialcompetition failed to identify a suitable candidate in August 2022. A new competition,
relaunched in late 2022, selected a suitable candidate. In June 2023, the Cabinet of Ministers
appointed her. However, civil society raised concerns about the selection and appointment
process and the integrity of the appointee. ARMA has been criticised for inefficiency andlimited capacity, and also faces corruption allegations against its previous management.
Ukraine has a dedicated legal framework to fight organised crime. The Law on organisational
and legal principles of combating organised crime was adopted in 1993, but is largely outdatedwith numerous shortcomings. An assessment of compliance of Ukrainian law with EU law andinternational standards in the area of organised crime is still pending. Legislation related toasset recovery and management remains deficient and in need of thorough revision. The
legislation for tackling the proliferation of illicit firearms needs further improvement, inparticular by expanding criminal liability for cross-border illicit trafficking of firearms andtheir parts/components within the meaning of the UN Protocol on Firearms. A new law on
firearms is pending adoption. Ukraine ratified the Budapest Convention on Cybercrime in2006, and its substantive law is largely in line with the Convention. Ukraine also ratified theFirst Additional Protocol to the Convention on Cybercrime and signed the Second Additional
Protocol on enhanced co-operation and disclosure of electronic evidence in November 2022; itstill needs to be ratified. In 2006, Ukraine made a reservation not to apply paragraph 1 of Article
6 of the Budapest Convention concerning the criminalisation of misuse of IT devices, including
computer programmes, which contradicts the efforts to tackle organised crime involved incybercrime. The national cybersecurity strategy of 2021 (its action plan was adopted in 2022)
has a cybercrime component. The Law on witness protection exists, but is largely outdated as
it was adopted in 1993.
A strategy and action plan on the fight against organised and serious crime are in place. The
strategy on combating organised crime was approved in September 2020, while the action planfor implementing the strategy was approved in September 2022. The key priorities of thestrategy include the renewal of legislation, setting priorities and strengthening analytical
capacities, operationalisation of SOCTA, a stronger focus on criminal networks, theinvolvement of the civil society and the establishment of a national coordinator – aninterdepartmental commission for combating organised crime. The overarching strategic plan
to reform the law enforcement sector for 2023-2027 was approved by the President in May
2023 as part of the pre-accession reform steps set out in the June 2022 Commission Opinion
on Ukraine’s membership application. The plan sets out six priorities that focus on increasing
the effectiveness of the law enforcement and prosecuting bodies, consistency of the criminal
policy, result-oriented management, digital transformation, as well as transparency,
accountability and independence. A relevant and credible action plan with time-bound andmeasurable deliverables should still be adopted to facilitate the implementation of the strategic
57

plan. A national strategy on asset recovery for 2023-2025 was adopted in August 2023, an
action plan for its implementation still needs to be developed. There is no formal government
strategy on firearms trafficking, but a draft action plan on firearms trafficking is prepared.
Cooperation between the Ukrainian authorities and the EU is continuing in this area. The
current war context as well as the emerging trends and threats linked to organised crime need
to be taken into account when developing and further updating the strategic framework.
As for the international legal framework, Ukraine signed and ratified the main international
agreements and regional conventions that directly or indirectly target organised crime. In
particular, Ukraine ratified the UN Convention against Transnational Organised Crime in 2004
and the UN Convention Against Corruption in 2009, as well as the Council of Europe (CoE)Conventions on Civil Law in 2005 and Criminal Law in 2009. It also ratified the CoE
Convention on Cybercrime in 2001 and the CoE Convention on Action Against Trafficking in
Human Beings in 2005. Ukraine has been a member of the CoE’s Group of States against
Corruption since 2006 and of the Group of Experts on Action against Trafficking in Human
Beings.
Ukraine should focus heavily on strengthening integrity and anti-corruption in the criminal
justice system, as corruption in the system undermines public trust and the fight against serious
crime, including organised crime. In particular, the transparent and merit-based selection ofmanagerial staff, including credible integrity checks, should be ensured in the institutions
fighting organised crime, along with strong disciplinary and anti-corruption frameworks
tailored to the local context and actual corruption risks. So far, these frameworks within thecriminal justice institutions have not been effective. Internal security and disciplinary bodies
are limited in their mandates, resources and independence.
Implementation and enforcement capacity
Ukraine is located at the crossroads of smuggling illegal goods to the EU, including arms, drugs
and cigarettes. Illegal logging is widespread, and despite efforts made in recent years, the illegal
trade in timber persists. Ukraine is a source, transit and destination country for humantrafficking. It is also a production and transit country for drugs. The Russian war of aggression
against Ukraine is changing the nature of organised crime, as it has affected international
criminal networks and the traditional trafficking routes. At the same time, it is creating new
risks that need to be addressed, in particular those linked to arms and human trafficking.
Considering the existing challenges and the evolving threat landscape related to the war, theinstitutional capacities to tackle organised crime remain limited. Ukrainian law enforcement
agencies are currently heavily focused on investigating international crimes. They also have tooperate with substantially reduced budgets and staff. Even before the war, a series of ad hoc
reforms, competition between law enforcement agencies and influence by political and vested
interests hampered progress in civilian security sector reforms. The unclear division andfragmentation of competences among law enforcement agencies undermines the fight againstcomplex forms of organised crime. The existing rules and court practice on the inadmissibilityof evidence gathered by a law enforcement agency that is not competent for a given case,coupled with the unclear division of competences, further complicate the fight againstorganised crime groups involved in diverse criminal activities, and open the door to corruption
and abuse. Inter-agency cooperation among Ukraine’s law enforcement, intelligence,
prosecuting and judicial bodies formally exists, but is not efficient and is marred by the absenceof a permanent coordinator and clear procedures. There is also fierce competition between law
enforcement agencies and a high degree of distrust. The absence of a modern e-casemanagement system in the criminal justice chain and limited access to the relevant registers,
databases and intelligence information, even within a single agency, remains a problem.
58

The Security Service of Ukraine (SSU) still retains a technical monopoly on intercepting
communications, even if the National Police of Ukraine (NPU) and the National AntiCorruption Bureau of Ukraine have been legally empowered to conduct interceptions on theirown since autumn 2019. The systemic problems within the judiciary, including a severe
shortage of staff, underfunding, corruption, the absence of a modern e-case management
system (see Chapter 23) as well as a lack of proper specialisation undermine the adjudicationof organised crime cases.
The number of criminal investigations into organised crime groups and criminalorganisations, although still relatively low overall, gradually increased to 499 cases in 2021
(2020: 377 cases; 2019: 293 cases) and remained at this level in 2022: 485 criminal proceedings
against organised crime groups were sent by the NPU to courts, 12 of them with transnationalties. Proactive measures are being taken to combat the subjects of increased criminal influence,
including the ‘thieves in law’, although tangible results in the form of convictions have yet to
be seen. The NPU continues to suffer from corruption, outdated equipment and limited capacity
overall, including the capacity to conduct financial investigations.
In 2022-2023, the SSU, as part of its work on organised crime, uncovered 123 organised crimegroups (of which 99 organised groups and 24 criminal organisations. 517 people were notified
of being suspected of committing criminal offences in organised forms of complicity. In
particular, 28 organised crime groups known as professional criminals were identified. 27
people were notified of being suspected of establishing or spreading criminal influence,organising, assisting in, conducting or participating in a criminal assembly, or applying for theuse of criminal influence. 12 people were convicted.
Despite the transfer of competences from the SSU to the Bureau of Economic Security in 2021
and the SSU’s increasing focus on its core activity – counterintelligence and national security– the SSU remains active as a criminal law enforcement agency. It causes institutional
fragmentation, jurisdictional overlaps and competition, and opens the door to corruption andabuse. Following international practice, the SSU’s pre-trial investigation functions should be
abolished. In the meantime, the prosecution service should strengthen its role as the leader of
pre-trial investigations and prevent jurisdictional tension and abuse, including occasional
breaches of the exclusive jurisdiction of the National Anti-Corruption Bureau of Ukraine andthe Specialised Anti-Corruption Prosecutor’s Office in high-level corruption cases.
As for Ukraine’s international police cooperation, it is well developed and is producing
positive results on the ground. Ukraine is a member of Interpol, and has a working arrangementin place with CEPOL, the European Union Agency for Law Enforcement Training, and an
operational and strategic agreement with Europol, the EU’s law enforcement agency. The law
enforcement agencies of Ukraine capitalised on all forms of capacity building provided by
CEPOL and this co-operation should continue. The Liaison Bureau of Ukraine in Europol was
opened in November 2017. A second liaison officer was deployed in 2023. Ukraine has accessto SIENA, the secure information exchange network application platform for EU law
enforcement. Since the start of the war, a strong international police and prosecutorial
cooperation framework has played a positive role in uncovering cross-border organised crime
activities.
Ukraine is an active participant in the European Multidisciplinary Platform Against Criminal
Threats (EMPACT). In 2022, Ukraine planned to participate in 174 out of 293 operational
actions, covering all 15 operational action plans under EMPACT. However, due to the war,
Ukraine had to scale back its participation, also in terms of the number of operational actions
it committed to in 2023 (122). Ukraine nevertheless acted as co-action leader in 2022 for an59

operational action on high-risk criminal networks and will continue doing so in 2023. It also
took part in three joint action days organised by the platform.
There has been limited progress in implementing intelligence-led policing. In recent years, the
NPU set up a new criminal analysis department and regional departments in every region.
These departments provide analytical support for criminal investigations. In 2022, they
produced more than 13 000 analytical studies. However, Ukraine should still establish unified
and up-to-date intelligence sharing tools and procedures for its law enforcement agencies. It
should also develop a common IT platform for facilitating inter-agency cooperation and forgathering, analysing and sharing information and intelligence between the relevant institutions.
The preparation of the national serious and organised threats assessments (SOCTA) has
been delayed since 2017. The absence of these national SOCTA undermines policymaking,priority-setting, operational work and coordination between agencies tasked with fightingorganised crime. In 2022, a government resolution on the introduction of SOCTA was adopted.
To relaunch preparations, an inter-agency working group was established in October 2022
under the lead of the Ministry of Internal Affairs. Regional groups to assess the threat oforganised crime were created throughout the country, but their level of activity is unclear.
Ukraine should develop and adopt SOCTA without further delays, and build the institutional
capacities to implement it, including intelligence-led policing, open-source intelligence,
information management and analysis, and inter-agency cooperation.
The state financial monitoring service (SFMS) continued its operations despite the challenging
operational environment. In 2022, it registered 52 123 suspicious financial transactions andsent 934 referrals to the law enforcement agencies. The agencies made use of SFMS referrals
in 349 criminal proceedings. In 2022, the SFMS also processed 1 242 international requests.
The absence of a bank account register of physical persons makes its work and financial
investigations difficult.
Financial investigations are not conducted in a consistent and sustainable manner. The Mutual2017 Evaluation Report issued by Moneyval, the Council of Europe’s Committee of Expertson the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, andthe follow-up reports point to a lack of understanding among law enforcement agencies as towhat is meant by financial investigations. To address these shortcomings, the Office of theProsecutor General issued instructions and methodological guidance to all regional prosecution
offices on the investigation of money laundering offences and the application of financial
investigations in proceeds-generating crimes. There is no legal obligation to apply them in allproceeds-generating offences, which undermines their consistent application wheninvestigating offences linked to organised crime. The concept of financial investigations should
be further embedded in the legal framework, in particular in secondary legislation, andsystematically enforced under the supervision of prosecutors. The institutional capacities to
conduct them should be further strengthened across the relevant institutions.
On asset confiscation, the legal and institutional framework is largely aligned withinternational standards. However, asset confiscation and recovery tools remain underused, anda credible track record of seizures and confiscations still needs to be established. Inter-agency
cooperation between the relevant law enforcement, prosecuting and judicial bodies, as well as
SFMS and ARMA and the institutional capacities of these bodies should be further
strengthened. The national asset recovery strategy, which could help develop a more effective
and efficient system of asset recovery, was adopted in August 2023, but not yet implemented.
A comprehensive technical analysis of the operational effectiveness and independence of
ARMA, including related asset recovery and management functions, was conducted. On thisbasis, comprehensive ARMA reform should be implemented, including a system for the60

transparent selection of ARMA’s head, fully fledged pre-seizure planning, prioritising the
seizure of assets by criminal courts, transparent procedures for the management, sale andevaluation of assets and unblocking the possibility to manage corporate property rights.
On trafficking in human beings (THB), the assessment of alignment of the Ukrainian law
with the EU acquis remains to be conducted. In 2022 the NPU stopped activities of fiveorganised groups involved in trafficking in human beings. 133 criminal offences of humantrafficking were registered and 93 people were notified of suspicion and 63 were indicted. 66
people were recognised as victims of human trafficking, including 36 women and 12 children.
In addition, the activities of 12 organised groups and criminal organisations were stopped,consisting of 40 people who smuggled people across the Ukrainian border.
In June 2023, the Cabinet of Ministers approved a targeted social programme for combating
human trafficking up to 2025. Following the start of Russia’s full-scale invasion and given themuch higher trafficking risks, Ukraine took a number of measures to prevent and combat
human trafficking. Information campaigns on the risks were conducted among citizens
travelling abroad and three nationwide operations were organised to combat child trafficking.
Migration police units participate in pan-European measures to combat human trafficking forthe purpose of sexual exploitation and forced begging, and to neutralise organised crimegroups. Close cooperation has been established with national and international civil society
organisations. The Ministry of Internal Affairs established permanent communication and theexchange of information with the EU Anti-Trafficking Coordinator. In addition, the NPU
cooperates closely with Europol and its counterparts in the EU Member States. Fourinternational anti-trafficking operations were conducted in the EU Member States.
On the trafficking of small arms and light weapons, following the start of the full-scaleinvasion of Ukraine, the number of registered criminal cases involving firearms increased
almost six-fold compared to 2021 (394 and 2 206 crimes, respectively). During this period, 517
offenders were notified of suspicion, 483 criminal proceedings were sent to the court with acharge. In addition, during 2022, law enforcement agencies (mainly the National Police) seized
1 939 firearms, 25 grenades and grenade launchers, 11 000 hand grenades and 202 924 roundsof ammunition. The number of firearms destroyed is not included in official reports. In Ukraine,each manufactured, imported or deactivated firearm of a certain category is marked according
to the special rules approved by the Ministry of Internal Affairs. In June 2023, the ministry
launched a unified register of firearms for civilians, streamlining the control, permission
management and other processes. When fully implemented, this register is expected to become
the central database of firearms for the authorities, allowing the control all civilian firearms
during their full life-cycle from manufacture to the destruction or export. Ukraine should
continue its active engagement with the international law enforcement community, including
Europol and EU Member States police forces, to address these risks.
Ukraine appointed the second liaison officer to Europol on cybercrime. In 2022, 14 948
criminal offences were detected, and suspicion announced in 7 296 criminal proceedings. 7 502
people were sent to court with indictments. Indictments were brought against 1 293 people.
Cyber police took part in six international operations to neutralise and document members of
hacker groups. The fight against cybercrime should remain a priority in the present war context
and in view of the fact that it forms part of Russian hybrid warfare.
Money laundering is criminalised. Prosecuting money laundering as a stand-alone crime ispossible under Ukrainian law. However, the capacities of law enforcement to investigate cases
and recover criminal assets are limited. In 2022, across all law enforcement agencies, 523
criminal proceedings on money laundering were registered. 117 indictments were sent to court
and 19 verdicts were issued. 16 people were convicted for money laundering offences.
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As for witness protection, the system is underdeveloped and fragmented among several
institutions. The level of training and technical equipment is low. The NPU, which is the mostadvanced institution in this area, is not ready to ensure a witness protection programme orwitness relocation due to the lack of relevant legislation and resources. On the implementationside, the NPU’s Witness Protection Unit was dismantled in late 2019, with all trained members
leaving. In March 2022, the NPU made the decision to re-establish it. In August 2022, seven
operators started to reorganise the unit. The lack of a strong witness protection system
undermines the fight against organised crime. Ukraine should speed up the adoption andimplementation of the new witness protection law that complies with international standards
and best practices.
Cooperation in the field of drugs
Institutional set-up and legal alignment
The legal framework for the fight against drugs in Ukraine is partly aligned with the EU acquis.
The national drug policy strategy for the period up to 2030 and its action plan for 2023-2025
is being prepared, but has not yet been adopted. The draft action plan envisages establishing anational early warning system on new psychoactive substances. Ukraine is a party to therelevant international narcotic drug control conventions, including the United Nations
Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
The Institute of Psychiatry, Forensic Psychiatric Examination and Drug Monitoring of the
Ministry of Health is responsible for drug monitoring at national level. It produces a report
each year on the drugs and alcohol situation in Ukraine and publishes it online in both
Ukrainian and English. The Centre for Public Health of the Ministry of Health is responsible
for harm reduction measures, social reintegration of former drug addicts and research. The
State Service for Medicines and Drug Control is the central executive body that implements
national policy on control over the circulation of narcotic drugs and combating their illegal
circulation. There is a certain amount of inter-agency cooperation, coordinated by the Ministryof Health. There is currently no national early warning system to exchange information on new
psychoactive substances.
The main body to prevent, detect and investigate drug trafficking is the NPU. The Security
Service of Ukraine is also authorised to investigate drug-related crimes. The State Border
Guards Service and the State Customs Service as well as other agencies provide detection andrelated support to investigations.
Implementation and enforcement capacity
Despite the war, the illicit production of synthetic drugs continues in Ukraine. As to its trackrecord, in 2022 there were 34 398 registered crimes linked to illicit drug trafficking, 22 678
notices of suspicion were sent, and 19 701 indictments were issued. In 2022, 2.4 tonnes ofnarcotic drugs and psychotropic substances, as well as 3 187 kg and 26 828 litres of precursors
for the production of narcotic drugs and psychotropic substances, were seized. Illegal drugtrafficking via the internet (dark net) with the use of cryptocurrency makes it harder to identify
drug dealers and beneficiaries.
A new working arrangement was signed between the European Monitoring Centre for Drugs
and Drug Addiction and the Ministry of Health in 2022. It updates and replaces the previous
memorandum of understanding signed in 2010. Drug monitoring efforts and the collection ofdata requested by the centre are difficult in the current security circumstances and are affectedby the war. This makes it impossible to analyse and report on some data.
62

Despite the impact of the war on health infrastructure, the Ministry of Health and its institutions
are partnering with a range of non-governmental organisations to ensure uninterrupted accessto drug-related health services.
Fight against terrorism
Institutional set-up and legal alignment
The Anti-Terrorism Centre of the Security Service of Ukraine is the inter-agency body tasked
with coordinating national efforts to fight terrorism. Its regional branches coordinate counterterrorism activities at local level. The centre monitors terrorist threat levels, gathers
intelligence, conducts drills at critical infrastructure facilities and carries out information
analysis on terrorism for the national security authorities.
Ukraine has comprehensive anti-terrorism legislation and is a party to the relevant UN andCouncil of Europe counter-terrorism conventions and protocols. The national security strategy
and the strategy of ensuring state security are in place, as well as the concept of combating
terrorism in Ukraine and its action plan. In 2022, Ukraine ratified the Additional Protocol to
the Council of Europe Convention on the Prevention of Terrorism and subsequently introduced
amendments to the Criminal and Criminal Procedure Codes, together with other legislative acts
to improve the fight against terrorism. The legal framework on the fight against terrorism has
not yet been assessed for compliance with the EU acquis and the principles of prevent, protect,pursue and respond. The 2021 Law on critical infrastructure is a part of the national security
legislation.
As to identifying and tracing financial flows that fund terrorism, the updated anti-money
laundering law was adopted in 2020. In 2022, the Ministry of Finance adopted relevant
secondary legislation on risk criteria that facilitates identification and prevention of terrorism
financing. The financial monitoring and intelligence system complies with recommendations
from the Financial Action Task Force. In 2022, Ukraine also adopted a law protecting thefinancial system from Russian influence and adapting legislation to specific Financial Action
Task Force standards and provisions of the EU Directive on the prevention of the use of thefinancial system for the purposes of money laundering or terrorist financing.
Implementation and enforcement capacity
Since the beginning of Russian aggression against Ukraine in 2014 and especially after the fullscale invasion in February 2022, counterterrorism activities have shifted to countering sabotage
activities by Russian intelligence and its proxies. In 2022, 287 criminal offences related toterrorism were registered, among which 95 criminal proceedings were initiated for acts ofterrorism, 1 for involvement in an act of terrorism, 2 for public incitement to commit an act ofterrorism, 148 for the creation of a terrorist group or terrorist organisation, 1 for facilitation tocommit an act of terrorism and 40 for financing terrorism.
As regards operational cooperation with European agencies on fighting terrorism,
cooperation takes place mainly on war crimes, where Europol supports investigations throughthe analysis project on core international crimes. The Security Service of Ukraine has accessand capacities for information exchange on counterterrorism issues with Europol through thesecure information exchange network application (SIENA). Future steps in counterterrorism
should include strengthening cooperation between the Security Service and Europol by
establishing a direct communication through CT SIENA and capacity building for Ukrainian
counter-terrorism authorities on modern law enforcement and intelligence collection methods.
Ukraine has also appointed a Eurojust contact point for terrorism-related matters to enhance
judicial cooperation against terrorism.
63On external influences, the terrorism threat in Ukraine is mostly perceived as originating from
Russian intelligence agencies and Russian-controlled terrorist groups, including private
military companies. Russia uses terrorism-type activities aimed at intimidating the Ukrainian
population as part of its aggression against Ukraine. The full-scale involvement of organised
crime groups is a specific characteristic of hybrid warfare waged by Russia against Ukraine.
This includes the use of organised crime groups and criminals in occupied territories as
mercenaries in warfare, organised crime groups and criminals controlled by Russian
intelligence all over Ukraine, and the weaponisation of corruption at local and central levels.
On terrorism prevention measures, the Security Service of Ukraine constantly monitors thesituation and is ready to respond to radicalisation. The threat of religious-based radicalisation
is low because religious communities, including Islamic ones, are considered part of Ukrainiansociety, which is also helped by a sense of community in resisting Russian aggression.
Judicial cooperation in civil and criminal matters
The current legal framework on judicial cooperation in civil and criminal matters iscomprehensive, appropriate and in line with EU standards. Ukraine has 87 bilateral treaties andagreements on cooperation in civil and criminal matters with 50 countries, Eurojust and theUN.
Ukraine has been a member of the Hague Conference on Private International Law since 2003
and is a contracting party to 12 conventions, including those on child abduction, childprotection and child support. Ukraine ratified the 2019 Hague Judgments Convention in August
2022, which came into force on 1 September 2023. Ukraine has also ratified on 24 April 2023
the 2005 Hague Convention on Choice of Court Agreements that entered into force on 1 August2023.
National legislation and bilateral and international agreements to which Ukraine is a party
contain rules on mutual legal assistance, extradition, conflicts of law, mutual recognition andthe enforcement of decisions and judgments, document service and evidence exchange, thetransfer of people sentenced to imprisonment, and the fight against terrorism and other formsof organised crime, including cybercrime. The specific provisions are partly aligned with the
EU acquis.
International prosecutorial cooperation in criminal matters is successfully managed by the
Office of the Prosecutor General. Ukraine has a liaison prosecutor in Eurojust and actively
participates in multiple joint investigation teams facilitated by Eurojust.
In 2022, the Ministry of Justice received and processed 2 560 requests for legal assistance in
civil and commercial matters as well as for the recognition and enforcement of judgments. It
processes requests within 30 days, and the average processing time by Ukrainian courts is
between 3 and 6 months.
As for judicial cooperation in criminal matters, the Ministry of Justice processed 974 requests
for international cooperation in 2022: 923 for international legal assistance, with the average
processing length from 6 to 8 months, and 51 for extradition, with the average processing timefrom 5 to 6 months.
There is well-established cooperation in criminal matters with Eurojust as a result of thecooperation agreement signed in 2016 and collaboration between the Ukrainian Liaison
Prosecutor and Eurojust, as well as between Ukraine and EU Member States. In 2022, Ukraine
was involved in 79 new cases opened at Eurojust. Eurojust set up a joint investigation team on
war crimes committed in Ukraine and hosts the International Centre for the Prosecution of the
Crime of Aggression against Ukraine.
64

The Ukrainian Office of the Prosecutor General signed a working arrangement with theEuropean Public Prosecutor’s Office (EPPO) in March 2022 aimed at facilitating judicial
cooperation in criminal matters and the exchange of information. A working arrangement
between the EPPO and the National Anti-Corruption Bureau of Ukraine (NABU) followed inJuly 2023. Both instruments rely on the European Convention on mutual legal assistance and
its Protocols for providing mutual legal assistance.
The participation of Ukrainian representatives in joint investigation teams is limited due tolegal constraints that need to be urgently addressed. The reimbursement of joint investigation
teams’ operating costs is impossible due to certain provisions of Ukrainian secondary
legislation.
Legal and irregular migration
Institutional set-up and legal alignment
Migration policy in Ukraine is developed and coordinated by the Ministry of Internal Affairs.
The State Migration Service of Ukraine is responsible for implementing state migration policy
as well as helping to develop it. The service shares responsibility for implementing the statemigration policy on border security and visa policy with the State Border Guard Service(SBGS) and the Ministry of Foreign Affairs. The Ministry of Social Policy is responsible fordeveloping labour migration policy and the Ministry of Economy is responsible for
implementing it. The Ministry of Education and Science determines the priority sectors for theprovision of educational services to foreigners and stateless persons. The government continues
to improve migration coordination, however, there is ample room for improvement.
The State Migration Service territorial departments, which are situated in direct proximity toborder areas or to areas with active hostilities, have been relocated, but continue to operate.
The service plans to reduce the number of territorial units and introduce the concept of mobile
ones. Citizens, foreigners and stateless persons can access administrative services in any of its
territorial departments.
The State Migration Policy Strategy for the period until 2025 is being updated. The Integrated
Border Management Strategy has been updated in July 2023 to reflect the context of Russia’s
war and Ukraine’s EU candidate status. The action plans for both strategies have expired andthe new ones have not yet been approved. The legislative framework is in place for a mass
influx of migrants. However, there is no approved implementation mechanism for inter-agency
coordination in the event of a migration crisis.
There is no specific legislation on long-term residence, nor a single procedure or single workor residency permits. Legislation on voluntary and forced return is in place, including therespect of the principle of non-refoulement. The procedure for voluntary return is rarely applied
due to a lack of funding. There are no rules on passenger information or visa verification
obligations of carriers that transport foreign nationals to Ukraine. Access to the labour market
for foreign students, asylum seekers and stateless persons was regulated in the reporting period.
The State Migration Service is responsible for the standard readmission procedure, while the
SBGS is in charge of the accelerated readmission procedure. An electronic readmission casemanagement system for the State Migration Service and the SBGS is in place and fully
operational for readmission cases with Poland.
The EU-Ukraine readmission agreement remains in force since 2007, though since thebeginning of the war it has been used with precaution by the EU Member States. Implementing
protocols between Ukraine and eight EU Member States (Austria, Czechia, Estonia, Poland
65

Lithuania and Benelux States) have entered into force. Ukraine approved implementing
protocols with Romania, Latvia, Spain and Hungary.
Readmission dialogue is at various stages with 12 EU Member States: Bulgaria, Croatia,
Cyprus, France, Germany, Greece, Italy, Malta, Portugal, Slovakia, Slovenia and Sweden. In
2022, the State Migration Service received 276 readmission requests, including 260 under theagreement between Ukraine and the EU, with 206 approved. It sent 13 readmission requests
during the year; two people were readmitted from Ukraine.
Ukraine also has readmission agreements in force with other third countries, such as
Switzerland, Denmark, Belarus, Georgia, Iceland, Republic of Moldova, Norway, the RussianFederation, Vietnam, Türkiye, Turkmenistan and Uzbekistan. However, the agreements with
the Russian Federation, Belarus and Vietnam are not applied in practice.
Implementation and enforcement capacity
In 2022, the SBGS detained 12 068 people for violation of immigration rules in Ukraine,
including 622 foreigners detained for illegal crossing or attempted illegal crossing of the stateborder. The majority of irregular migrants were detained at the border with EU countries. They
included citizens of Moldova, Russia, Türkiye, Pakistan, Nepal, Cuba and others.
In 2022, the SBGS issued 271 expulsion decisions against foreigners and stateless persons who
had illegally crossed or attempted to illegally cross the state border, with 192 forcible returns
and 79 forcible expulsions. The State Migration Service reports that the number of irregularmigrants decreased in 2022 (5 062) compared to 2021 (8 308).
The State Migration Service operates six special establishments that include three migrant
accommodation centres with overall capacity for 566 people and three temporary
accommodation centres for up to 421 foreigners and stateless persons. The staffing capacities
are sufficient, and all centres are adequately equipped. The Chernihiv migrant accommodation
centre was destroyed in the early phase of the war, with the migrants evacuated. The centre iscurrently being rebuilt and is not yet operational. The migrant accommodation centres in Volynand Mykolaiv are operational.
An integrated migration management information system is in place with automated businessprocess workflows and inter-agency cooperation, in particular between the State Migration
Service, the SBGS and the Ministry of Foreign Affairs. However, complementary legislationon the processing of biometric data is needed to fully use the system for biometric dataexchange.
The Department of Migration Police, which is part of the National Police of Ukraine,
cooperates with Europol’s European Migrant Smuggling Centre to identify and uncovercriminal schemes that involve irregular migration and human trafficking. In 2022, itparticipated in several large-scale operations run by Europol to combat human trafficking,including child trafficking, human trafficking for labour and sexual exploitation.
AsylumInstitutional set-up and legal alignment
The State Migration Service and its territorial bodies are responsible for handling applications
for international protection and asylum claims.
The legislation on asylum is broadly in line with the EU acquis, in particular on the time ittakes to process applications and on asylum applicants’ rights, such as the right to accessemployment, secondary education, family reunification and subsidiary protection.
66

Psychological and social aid are also covered in the legislation. However, limited support isavailable in practice due to the lack of capacity. Free legal assistance is available. The action
plan for refugee integration has been in preparation since 2021, but work has stalled becauseof the war. Procedural guarantees are available for the applications of unaccompanied minors.
Ukraine is a party to the relevant international conventions, including the 1951 Geneva Refugee
Convention and its 1967 Protocol.
In March 2023, amendments were introduced to the Law on refugees and persons in need ofadditional and temporary protection. In accordance with these amendments, the restriction is
imposed on the SBGS to accept applications submitted during the legal regime of martial law
for recognition as refugees or persons in need of additional protection in cases where theapplicant crosses the Ukrainian border directly from a country where there is no danger to life.
Implementation and enforcement capacity
In 2022, 205 applications for recognition as a refugee or a person in need of additional
protection were submitted. 20 foreigners and stateless persons were recognised as refugees,
and 26 as persons in need of additional protection. Interpretation is provided by the State
Migration Service territorial departments during the consideration procedures of asylum
applications. The national system for biometric verification and identification is operational
and used during border controls.
There are three temporary accommodation centres for applicants and people granted
international protection with a total reception capacity of 421 people. Staff levels seem to be
sufficient for the number of applications that Ukraine has had. Material conditions are
sufficient, however there is room for improvement with regards to integration and psychosocial support. The financial capacity to integrate recognised refugees is limited, as is thecapacity of the relevant local authorities.
Ukraine does not have a roadmap for bilateral cooperation with the European Union Agency
for Asylum.
Visa policy
Ukraine’s visa policy is broadly in line with the EU acquis on the processing of applications,the criteria for granting protection and the processes for issuing different visa types. However,the list of third countries with which Ukraine has visa-free regimes is not fully aligned with theEU’s visa policy. The following countries for which EU nationals require a visa are visaexempt for Ukraine: Armenia, Azerbaijan, Bahrain, Belarus, Ecuador, Kazakhstan, Kuwait,
Kyrgyzstan, Mongolia, Oman, Qatar, Saudi Arabia, Tajikistan, Türkiye and Uzbekistan.
The security features of visas and travel documents are broadly aligned with EU standards.
Ukraine has been issuing biometric passports since 2015. The last non-biometric passports
were issued in 2016, and the complete phasing out is planned for 2026 upon expiry. Ukraine
has an electronic national visa registration database that includes biometric identifiers.
Ukraine does not have agreements on consular and visa-issuing cooperation, joint locations or
representation agreements on the issuing of visas with other countries. Since 24 February 2022,
it has suspended issuing visas at the border.
Implementation of the visa-free regime with the EU, established in 2017, has been smooth.
The European Commission's sixth report on the Visa Suspension Mechanism5, published in
October 2023, concluded that Ukraine continues to meet the visa liberalisation benchmarks.
5

COM(2023)730 final67Thanks to tighter border controls and awareness-raising campaigns, unfounded asylum
applications from Ukrainian citizens in the EU and Schengen associated countries havedecreased. In 2020, the number of Ukrainian applicants for international protection in EU
Member States was 5 990, 37% less than in 2019. The recognition rate increased slightly from
10% in 2019 to 11% in 2020. In 2022, 26 715 Ukrainians applied for international protectionin Member States (compared to 6 460 in 2021) with a recognition rate of 90% (compared to
17% in 2021).
In 2022, Russia’s war of aggression led to an influx of millions of people seeking refuge in the
EU and in neighbouring countries. Following a Commission proposal to activate theTemporary Protection Directive for the first time, on 4 March 2022 the Council adopted theimplementing decision to grant temporary protection status to Ukrainian nationals and othercategories of people displaced from Ukraine on or after 24 February 2022. Furthermore, theCommission adopted operational guidelines for external border management to facilitate
border crossings at EU-Ukraine borders. There were over 21.5 million entries into the EU by
Ukrainian nationals between 24 February 2022 and 20 August from Ukraine and Moldova6.
Over 4.1 million active registrations for Temporary Protection are recorded by Member States,
Norway, Iceland, and Switzerland as of mid-August 2023, of which 4.03 million in the EU
Member States. Under these exceptional circumstances, the visa-free regime between the EU
and Ukraine has facilitated travel to and from Ukraine, in particular for those Ukrainian
nationals who decided not to take up residence in the EU and those who do not fall under thescope of the Temporary Protection Directive.
Schengen and external borders
Institutional set-up and legal alignment
The SBGS is responsible for managing Ukraine’s borders. An integrated border management
strategy for the period up to 2025 is in place and has been updated in light of new challenges
related among others to restoring border management in the liberated area of the state border.
The action plan for the implementation of the strategy for 2020-2022 has expired. The new
action plan for 2023-2025 has not yet been approved. Implementation of the action plan willneed better monitoring, as well as quantitative and concrete indicators to measure the progressof its implementation. There is no Schengen action plan in place yet.
The legislative framework for border control, in particular rules on checks and surveillance
and the strategic integrated border management framework are partly aligned with EU policy
and best practices. Ukraine has no legislation to request advanced passenger information (API)from airlines for flights entering or departing its territory. The API system was piloted at Kyiv
Boryspil international airport.
Implementation and enforcement capacity
The Inter-Agency Working Group for Integrated Border Management, chaired by the Deputy
Prime Minister for European Integration, was established in 2019 with a core task ofmonitoring implementation of the integrated border management strategy. In August 2023 it
has convened for the first time since the beginning of the war to discuss IBM Strategy and its
action plan.
The SBGS has a total staff of 60 000, including 52 000 military personnel. Due to the war,
more than half of its staff has rotated from regular border-related activities to deployments –6

The number of exits by Ukrainian nationals (including exits to Moldova) was nearly 18.7 million. Figuresindicate the number of cross-border movements and not single individuals.

68either on the frontline or at the border with Belarus. The capacities of integrated bordermanagement agencies at border crossing points are insufficient due to the lack of appropriate
infrastructure and technical equipment. Technical resources require a significant upgrade to
improve the quality of border checks, especially in relation to anti-smuggling. Border checks
meet minimum standards. However, additional equipment is needed to detect weapons andpeople hiding in large vehicles and containers. The implementation of Ukraine’s local border
traffic agreements with neighbouring countries is satisfactory. Border surveillance is not fully
effective. Risk analysis-based border surveillance mechanisms are satisfactory. In addition, asa result of the Russian war of aggression, 117 out of 234 border crossing points have beenclosed. Considerable infrastructure at border crossing points on the northern, eastern andsouthern sections of the border have been destroyed.
SBGS risk analysis aims to gradually comply with the common integrated risk analysis model.
The level of situational awareness and responsiveness at Ukraine’s borders could be improvedby strengthening operational inter-agency cooperation and information exchange. The SBGS
training curriculum is partly harmonised with the common core curricula of Frontex, theEuropean Border and Coast Guard Agency.
There is no national inter-agency cooperation centre in Ukraine. Instead, relevant bordermanagement agencies operate coordination centres in their respective organisational structures
to ensure intra-agency and partial inter-agency coordination and cooperation. In 2022, a virtual
analytical centre was established to improve inter-agency coordination. There is no structured
crisis response mechanism.
The SBGS has had a working arrangement with Frontex, the European Border and Coast Guard
Agency, since 2007. Cooperation includes information exchange, joint risk analysis,
participation in joint operations (as an observer or in operations without executive powers
exercised by European border guards on the territory of Ukraine) and staff training. A Frontex
liaison officer with a regional mandate for the Eastern Partnership has been deployed and iscurrently based in Moldova. The EU Border Assistance Mission to Moldova and Ukraine has
been supporting both countries since 2005 and has helped them improve integrated bordermanagement.
Ukraine systematically provides data on invalid, lost and stolen travel documents to Interpol.
However, only large border crossing points in Ukraine have access to Interpol’s stolen and lost
travel documents database and stolen vehicles database.
On border control, Ukraine uses the national system of biometric verification and citizen
identification that allows for an automatic check of all types of biometric documents. All 166
international and interstate border-crossing points are connected to Interpol databases.
On operational cooperation with neighbouring countries, Ukraine has a number ofagreements (with Poland, Slovakia, Hungary, Romania), including agreements on joint patrols,
joint cooperation centres and local border traffic management. Ukraine is currently negotiating
bilateral agreements on joint controls, in particular with Poland.
Some measures in place to fight border corruption consist of preventive and internal control
measures implemented by the SBGS and the State Customs Service. However, more effective
measures are needed to fight corruption, including preventive measures. In the reporting period,
the SBGS reported 1 449 inspections, 19 servicemen were detained for abuse of office and thefacilitation of illegal activities at the border. 15 border guards were found guilty of corruption
offences. The stiffest sentence was a restriction from service for 3 years and a prison sentenceof 6 months.
69

The smuggling of goods, including cigarettes, is currently decriminalised in Ukraine,constituting an administrative offence. The draft Law on the criminalisation of large-scale
smuggling is pending adoption. It also includes criminal responsibility for unintended mistakes
in customs declarations. Criminalisation increases the risk of abuse by law enforcement
agencies if adopted. Criminalising the smuggling of all goods is a crucial element in combating
cross-border crime.
2.3. ECONOMIC CRITERIA
Table 2.1:
Ukraine - Key economic figures

2014-19
average

2020

2021

2022

GDP per capita (% of EU-27 in PPS)1)
Real GDP growth
Economic activity rate of the population aged
15-70 (%), total
femalemale
Unemployment rate of the population aged 1564 (%), total
femalemale
Employment of the population aged 15-64(annual growth %)Nominal wages (annual growth %)Consumer price index (annual growth%)
Exchange rate against EUR
Current account balance (% of GDP)Net foreign direct investment, FDI(% of GDP)
General government balance (% ofGDP)
General government debt (% of GDP)

29
-0.8

30
-4.0

29
3.4

-29.1

62.5

62.1

61.8

N.A.

56.4
69.2

56.3
68.5

56.1
68.1

9.0

9.5

9.9

7.7
10.2

9.1
9.9

10.2
9.6

-3.3

-4.0

-1.9

N.A.

21.7

10.4

20.9

5.9

18.0

2.7

9.4

20.2

26.6
-1.8

30.8
3.4

32.3
-1.9

40.2
5.0

2.6

0.2

3.8

0.3

-2.3

-5.3

-3.4

-16.3

68.7

60.9

48.9

78.5

N.A.

In line with the conclusions of the European Council in Copenhagen in June 1993, EU
accession requires the existence of a functioning market economy and the capacity to cope withcompetitive pressure and market forces within the Union.
2.3.1.

The existence of a functioning market economy

Due to the impacts of Russia’s ongoing full-scale invasion as well as the pre-existing
structural economic challenges, the Ukrainian economy is between an early stage and somelevel of preparation towards establishing a functioning market economy. Since the full-scaleinvasion by Russia, the conduct of monetary policy, overall economic governance and theinstitutional and regulatory environment have faced exceptional difficulties. Despite theextraordinary challenges, the Ukrainian authorities have responded swiftly and appropriately,while showing remarkable resilience and adaptability to preserve macroeconomic andfinancial stability, although the authorities will need to continue their efforts to return
economic and monetary policy settings to those conducive to the smooth long-term
functioning of a market economy.
70Ukraine’s macroeconomic performance was somewhat muted before the full-scale invasion.
Low levels of investment, a declining working age population, reliance on low value-added
sectors all contributed to subdued economic growth (of around 3% per year in the four years
before the pandemic) and a persistent gap with the standards of living in the EU. In 2022, asa result of the war, the economy contracted by 29.1%.
Despite the war, the Ukrainian authorities ensured predictability, transparency and stabilityorientation in policy-making. In light of the wartime conditions, the National Bank of Ukraine(NBU) took decisive and appropriate actions to maintain financial stability and bolster
confidence in the domestic currency, particularly by suspending the inflation-targeting
framework, fixing and devaluing the exchange rate, and raising its main refinancing rate. In
addition, the banking sector remained fully operational and stable with ample liquidity, also
thanks to previous reforms and supervisory forbearance measures. Although the full impactof the war on the quality of assets in the financial sector remains to be seen, the ratio of nonperforming loans has been high and appears to have increased more recently.
The state of public finances has deteriorated substantially due to the duration and cost of the
war and its impact on economic activity, undoing the considerable fiscal consolidation andcorresponding reduction in the debt stock that had been achieved in previous years before the
COVID-19 pandemic. Tackling this, notably by introducing measures to increase the revenue
base, will be of key importance going forward. Furthermore, the state footprint on theeconomy, already high before the war, has increased. The significant internal and external
population displacements, together with capital destruction, affected the labour market,
which was characterised by a relatively low activity rate and somewhat higher unemployment
rate compared to the EU, already before the invasion. Despite progress, the functioning ofproduct markets continues to show a number of weaknesses, particularly related to
institutions, corruption, contract enforcement, and competitiveness, which are reflected in alarge informal economy. At the same time, this assessment also highlights the determinationand capability of the authorities to navigate through the exceptional challenges Ukraine isfacing.
In order to improve the functioning of the market economy, and taking into account theongoing war and ensuing reconstruction efforts, Ukraine should in particular:→ continue to implement prudent policies underpinning macroeconomic stability. Ensure
adequate resources to maintain core state functions, while ensuring the sustainability andimproving the transparency of public finances. Safeguard the stability of the financial
sector, including by addressing the growing presence of non-performing loans;→ take measures to improve the business environment with a view to prepare forreconstruction efforts, in particular by reducing regulatory and administrative burden,
addressing issues related to corruption and the rule of law and enhancing the antimonopoly framework. Take steps to enhance the management of State-Owned
Enterprises in line with OECD recommendations, while intensifying privatisations;→ develop and implement a strategy to attract and reintegrate displaced persons in the
Ukrainian labour market and those whose participation has been disrupted by the war aswell as to address structural labour market issues and, take steps to tackle informal
employment, and increase labour market participation.
Economic governance
The government has shown a strong commitment to implement much-needed reforms toencourage growth and financial stability. The authorities of Ukraine have demonstrated astrong commitment to pursue stability-oriented macroeconomic policies since the Maidan
71Revolution of Dignity in 2014. As part of the reform requirements outlined in successive IMF
programmes, important actions were taken to reinforce the stability of the banking sector,
including measures to enhance banking supervision and resolution mechanisms, as well asreforms to improve the independence of the National Bank of Ukraine. Ukraine has also taken
steps to bolster the transparency of public finances and institutions, in particular by publishingbudgetary information, improving the public procurement system and introducing asset
reporting requirements for public officials. Additional reforms are needed to further guarantee
the transparency of public finances, as well as prevent interference from vested interests, fightcorruption, strengthen the rule of law, and improve the business environment.
The policy and regulatory response to the exceptional war situation was overall
appropriate, although it has had an impact on the application of market principles andgovernment involvement in the economy. Throughout Russia’s full-scale invasion, theUkrainian authorities demonstrated commendable resilience and adaptability in implementing
policies to maintain macroeconomic and financial stability. Nevertheless, the current context
has inevitably led to some centralisation of power and a reduction in the independence ofinstitutions responsible for economic policy. The central bank appropriately suspended theinflation-targeting framework, moved to a fixed exchange rate regime and introduced
supervisory and regulatory forbearance measures (all of which helped safeguard financial
stability and bolstered confidence in the domestic currency)7. In addition, the NBU directly
financed about one third of the government’s funding needs in 2022, although this practiceceased in early 2023, reducing risks for price and external stability. The government also
introduced price controls on essential goods and communal services, and many taxes were
temporarily reduced. Support schemes to households and businesses have been expanded andderegulation efforts have continued, which helped improve the business environment. Overall,
the government has shown a remarkable degree of continuity, including through the design ofa seven-pillar national recovery and development plan, presented in May 2022 and followedup by a government priority action plan for the current year approved in March 2023. The
continuous and evolving engagement with the IMF, as well as with the Commission under the
Macro-Financial Assistance Plus instrument (MFA+), have also been an important anchor for
further reform efforts.
Macroeconomic stability
Before Russia’s full-scale invasion, Ukraine’s macroeconomic performance was rather
weak, owing to low levels of foreign and domestic investment, a declining population, anda reliance on low value-added sectors. In 2021, total investment in Ukraine accounted for
13.8% of GDP (EU average of 22.1%). Foreign direct investment (FDI) has remained weak at
an average of 2.8% of GDP over 2017-2021. A decline in population, fuelled by low birth rates
and substantial emigration, has not only reduced Ukraine's total population but also decreased
the share of the working-age population from 70% in 2011 to 67% in 2021. This has hindered
economic growth and added to fiscal pressures by increasing the dependency ratio. In addition,
Ukraine’s economy is reliant on low value-added sectors – especially agriculture and mining –which makes the economy vulnerable to fluctuations in global commodity prices and weighson its living standards. As a result, Ukraine has made limited gains in income convergence with
the EU average over the past decade, with GDP per capita standing at 29.3% of the EU average
7

However, conscious of the long-term impacts of a fixed exchange regime on the economy and on theeffectiveness of monetary policy, the NBU adopted in June 2023 a strategy to ease FX controls and movetowards a more flexible exchange rate once conditions allow. On 3 October 2023, the NBU shifted to a
managed float system for the hryvnia, marking the first step in liberalising the exchange rate.

72

in 2021 in terms of purchasing-power parity (PPP). Income inequality remains low comparedto the EU and has been stable over the past decade, with the GINI coefficient reaching 25.6 %in 2020, compared to an average of below 30% in the EU.
Ukraine’s
economyhas
been
profoundly impacted by Russia’s war
After a milder-than50,0 of aggression.
5
expected COVID-19 recession and an0
incomplete rebound in 2021, real GDP-5-10growth collapsed in 2022 (-29.1%,-15
somewhat more resilient than initially-20-25
expected). Population displacement,-30
supply-chain disruptions, inflationary
-50,0
-35
pressures, and territorial losses due to the
2018
2019
2020
2021
2022
Stockswar took a toll on economic activity in
Balance of goods and services
2022, especially on consumption and
Gross Capital Formation
investment, which fell by 27% and 34%,
Gov. Cons.
respectively. Net exports also declined
Priv. Cons.
Source: SSSU, own calculations
considerably as supply bottlenecks
weighed on exports and the spending of Ukrainian refugees abroad boosted import growth.
Despite growing by 18% in real terms due to war-related spending, the contribution of public
consumption to GDP growth remained small. In 2023, the economy has started to recoversomewhat despite continued Russian attacks. This is thanks to the resilience of critical energy
infrastructure, some positive signs of a partial return of refugees, and the ability of businesses
and households to adapt to the war economy.
Graph 2.1: Ukraine - Real GDP growthand contributions
10 % y-o-y

The current account turned into a surplus following Russia's invasion. In the 5 years prior
to the pandemic, Ukraine’s registered current account deficits of 2-3% of GDP mainly due toa sizeable negative trade balance. This was offset in part by traditionally strong remittances
inflows to Ukraine. The pandemic caused the current account to swing into a small surplus due
to a compression of import volumes following the sharp contraction in economic activity overthe course of 2020. Russia’s war of aggression against Ukraine led to an unprecedented trade
deficit of 16.2% of GDP in 2022, which was mainly driven by a strong contraction in theexports of goods (-35.2%) due to production disruptions as well as transport and supply-chaindifficulties. Still, the current account posted a record surplus of 5% of GDP, thanks to a strong
surplus of both the primary and the secondary income balance, driven by exceptionally highforeign official grants and remittances inflows, which stood at 5.4% and 15.7% of GDP,
respectively.

73

Foreign investment has fallen
markedly following the outbreak of
the war. After a notable recovery in
102021, foreign investment inflows havecollapsed since the outbreak of the war
0(-92% in 2022). Portfolio investment inUkraine registered an outflow of 1.3%
of GDP in 2022, while other-10
investments in the country reached8.5% of GDP, driven primarily by the% of GDP-20
additional government borrowing. The
2018
2019
2020
2021
2022
financial account registered an
Work remittances balance
aggregate outflow of USD 11.1 billion
1.A Balance on goods and services
Current account balance(6.9% of GDP) in 2022. The gap to theSource: IMF and Central Bank of Ukraine
current and capital account inflow of
USD 8.2 billion was financed through the draw-down of the official international reserves by
USD 2.9 billion.
Graph 2.2: Ukraine - Current accountselected components and FDI

The National Bank of Ukraine (NBU) has ensured financial stability and strengthened
confidence in the domestic currency. Prior to the war, Ukraine implemented welcome
reforms to enhance the autonomy and governance principles of the NBU, which successfully
helped reduce inflation from 12.6% in January 2017 to 3.2% in January 2020. Following theRussian full-scale invasion, the NBU introduced swift actions to ensure financial stability andstrengthen the confidence in the domestic currency. These included suspending the inflationtargeting framework, fixing and devaluing the exchange rate, and raising its main refinancing
rate. While official reserves suffered a depletion in the first months of the war, international
financial support helped restore them to their highest historical level in July 2023. The positive
trends in terms of improved expectations and confidence in the national currency allowed the
NBU to refrain from a further increase in its policy rate beyond 25% (which was on the contrary
cut by 300 basis points in July 2023 and 200 basis points to 20% in September 2023) or fromfurther devaluing the hryvnia (beyond the 25% in July 2022). The NBU took additional
confidence-enhancing measures in late 2022 and early 2023, as a result of which the spread
between the market and official exchange rates narrowed down to a rather marginal 4%. The
central bank is fully committed to return to an inflation-targeting framework in a flexible
exchange rate regime as soon as circumstances permit it, as highlighted in the recently adopted
FX strategy, as well as in the decision of the NBU on 3 October 2023 to move to a managed
exchange rate regime.
Inflation declined strongly in 2023 after reaching a 6 year high in 2022. After somemoderation in 2020, inflation increased steadily throughout 2021, mainly due to increasing
global commodity prices – particularly for energy and food – as well as supply bottlenecks
both in Ukraine and abroad. The war exacerbated inflationary pressures, causing further
disruptions in supply chains, a decrease in the supply of some goods, and higher production
costs. Coupled with considerable monetary financing by the central bank during the war, thesefactors led to a strong and steady rise in inflation over 2022, reaching 26.6% in December 2022.
Inflation has nevertheless eased visibly since, reaching 8.6% in August 2023, due to increased
supply of food and fuels, a rapid partial recovery of the energy system from Russia’s attacks,
which reduced energy prices, as well as skilful policymaking by the NBU. Indeed, consciousof the adverse effects of monetary financing, including on macro-financial stability, the NBU
has discontinued this practice since the beginning of 2023 and the government has relied on
taxation, foreign assistance, and financing mobilised from the domestic market. This helped74

reduce inflation expectations and ease pressures on core inflation.
Public finances deteriorated markedly, reversing the gains from fiscal consolidation prior
to the war. The state of public finances has deteriorated markedly due to the duration and costof the war, making Ukraine lose access to international debt markets and rely on foreignassistance and domestic markets to finance its funding needs. Thanks largely to massive official
foreign grants, the 2022 general government deficit was contained to 16.3% of GDP. Driven
by spending on defence and public order, overall public expenditure increased by 65% in 2022.
While tax revenues contracted by almost 8% in 2022, total public revenues increased by 32%,
primarily thanks to the massive foreign grants. The war has led to a reverse in gains from theconsiderable fiscal consolidation that had
been achieved since 2017, during which %4 of GDP Graph 2.3: Ukraine - Fiscal
100
developments
public debt had decreased from around
0
81% of GDP in 2016 to 49% of GDP in
80-42021. Driven by the sizeable borrowing
60
but also reflecting the decline in nominal -8GDP, total public debt reached 78.5% of -1240
GDP at end-2022. The substantial -16
deteriorationinpublicfinances -20
20highlights the need to execute the budget
2018 2019 2020 2021 2022
within the available resource envelop in
Public debt (% of GDP) (rhs)the short-term, complemented by
Source: Ministry of Finance, wiiw
important efforts to increase the revenue
base over the medium term. In addition,in the area of public financial management, building on significant improvements in the years
before the war, further priority reform areas include ensuring the availability of fiscal data,
restoring the medium-term budgetary framework, improving public investment management,
and reinforcing the mandate and functionality of the supreme audit institution. Improving themonitoring and management of fiscal risks, including those related to state-owned enterprises,
public guarantees and age-related expenditure, is also an important reform priority.
Functioning of the product markets
Business environment
Weaknesses in the business environment led to low levels of investment. Ukraine’s
competitiveness is weak, primarily owing to weak institutions, the prevalence of market
dominance and an ineffective anti-monopoly policy. Nevertheless, some progress inderegulating its economy has been made, where the cancellation of almost one fifth of theregulatory acts under review in the period 2016-2020 was a significant step to streamline
regulation. Despite a moderate regulatory burden and no significant legal barriers to market
entry, corruption, ongoing geopolitical tensions and inefficient contract enforcement
discourages private investment and cross-border business relations, including FDI.
To allow companies to operate during the war, the authorities have lifted certain
regulatory requirements for the period of application of the martial law and continued toprogress with a number of broader reforms. Against the backdrop of a highly uncertain
outlook, business activity was supported by further steps towards deregulation and reducing
administrative burden. As of August 2022, it is possible to set up a limited liability company
in an automatic way on the basis of a model charter, without the need to go through a stateregistration authority. Similarly, digital tools have been deployed successfully to facilitate thefunctioning of the court system. The Rada also adopted a law that introduces a simplified
75

bankruptcy procedure that avoids summoning the parties, while simplifying the insolvency
officers’ work and providing for the creation of an automated information system.
The informal sector still constitutes a substantial share of Ukraine's economy, estimatedat 30-40% of Ukraine's GDP. This significantly impacts tax revenues, exacerbates poor
working conditions by hindering access to social protection, distorts competition and hampers
the effectiveness of policy measures. Several factors contribute to the persistence of thisphenomenon: despite deregulation, there is still a complex and inefficient regulatory
framework; weak law enforcement; and a general lack of trust in governmental institutions.
Furthermore, corruption creates a volatile business environment, providing a strong incentive
for businesses to operate informally.
State influence on product markets
The war has exacerbated the state’s footprint in the economy. The Ukrainian state alreadyhad a substantial economic footprint in peace times. In 2021, the public sector accounted for
18% of gross value added (down from 21% in 2020) and 32% of gross fixed capital formation(down from 35% in 2020). Ukraine’s more than 3 256 state-owned enterprises (SOEs) at centrallevel accounted for one-tenth of output and 18% of employment before the war, with an average
return on equity at 0.3% in 2019 far below that of the private sector (8%). Furthermore, SOEs
have held a dominant role in many markets, stifling competition and making it difficult for new
firms to enter. In 2022, for which detailed national accounts are not available yet, the relative
share of the sector of public administration and defence jumped up to 24% of GDP (from 7.2%
in 2021), while the share of government consumption more than doubled to 38.2% of GDP.
The importance of many public companies, e.g. the railways, the energy provider and the post
office, strengthened as a result of their crucial role in the emergency response to the full-scaleinvasion.
Privatisation and restructuring
Privatisation and corporate governance of state-owned enterprises are a significant
challenge for economic policy. Prior to the war, Ukraine had been quite successful inprivatising small property and production assets, notably through the electronic auctions
platform ProZorro. In July 2022, the Rada adopted a law to simplify the procedure for small
privatisations, which have resumed since then. Investors showed interest in two ports, several
distilleries and other small real estate pieces. On 30 May 2023, a law was adopted that interalia unblocks large-scale privatisations, which have been suspended since the beginning of thewar, and where progress had previously been limited. The law also amends the structure of theState Property Fund of Ukraine (SPFU). The law also makes significant changes vis-à-vis
sanctioned property, which will be transferred to the SPFU for management and/or
privatisation, sale or lease. As far as SOEs are concerned, while progress on the corporate
governance reform was recorded before the war, it is not yet in line with OECD standards toensure de-politicised, professional and transparent management.
Functioning of the financial market
Financial stability
Although the already high non-performing loans ratio has increased during the war,
financial stability has been preserved thanks to swift policy action by the National Bankof Ukraine. Following the 2014-2016 banking crisis, the National Bank of Ukraine
strengthened proper oversight of the banking sector, which was characterised by a high levelof non-performing loans. Nevertheless, after two rounds of asset quality reviews, bankclosures, and recapitalisations, non-performing loans started to decrease, declining from 58%
76

in 2017 to a still very high 30% in 2021. In response to the full-scale invasion, the National
Bank of Ukraine took steps to safeguard banks’ liquidity and the confidence in the system,
which has remained strong as evidenced by the increase in deposits by 35% y-o-y by endFebruary 2023. The banking sector has remained stable and with ample liquidity, although
Non-Performing Loans ratio increased to 38.1% by end-2022 in light of war-related impacts
on economic activity and collateral. Despite building additional provisions for about USD 3.5
billion, banks remained profitable in 2022, owing to high liquidity ratios, which yieldsignificant interest income in a high interest rate environment. With a market share of close to
50% over the last five years, the four state-owned banks dominate the banking sector.
Access to finance
Lending to the private sector remains low. Ukraine’s financial sector is predominantly bankbased and the total stock of bank lending to the private sector stood at just 20% of GDP in 2022
(28% in 2021), much below the EU average. Banks showed strong resilience to the war
situation. This was thanks to initiatives such as Power Banking (guarantee of service despite
power outage) and national ATM roaming (no inter-bank withdrawal charges), although bothrisk appetite and loan demand have decreased against the backdrop of rising interest rates.
Banks’ aggregate portfolio contracted by 4% in 2022, with corporate loans almost flat whileloans to households declined by 13%. To ease borrowers’ situation, the government has
simplified the conditions for benefitting from debt restructuring and extended access to theprogramme of ‘Affordable Loans 5-7-9%’. Even during the war, surveys do not point out
access to finance as an impediment to conducting business. Capital markets and non-bankfinancial intermediation are in a very early stage of development.
Functioning of the labour market
Ukraine’s labour market suffers from labour and skills shortages, structurally high rates
of young people not in education, employment or training (NEET), as well as informal
employment. Despite witnessing a decline in labour supply, the unemployment rate has
fluctuated at around 9% over the past five years. Labour force participation stood at 62% in
2021, with a low and decreasing rate of participation among women. The share of young people(aged 15-24) who were NEET stood at 15.5% in 2021. Despite high formal educational
attainment, skill mismatches persist, which impacts productivity. Improvements in active
labour market policies could help increase employment and reduce skill gaps by training
workers with the skills that employers need. Informal employment was estimated at 20% of all
employed in 2021.
The war has had a profound impact on the labour market and exacerbated pre-existing
structural challenges. The massive outflow of people to other countries, an estimated 5
million internally displaced persons, and substantial job destruction in the wake of the invasion
have reshaped the labour market landscape. At the macroeconomic level, the most importantchange was not the increase in the unemployment rate, but the dramatic fall in the labour force.
Around 6.2 million people left the country, of which around 2.1 million were of working age.
In addition, it has been estimated that around two thirds of refugees at working age have an
advanced education. Coupled with the physical and mental impacts of the war on workers, this
could exacerbate earlier trends of decreasing labour supply caused by a declining population
at working age. Additionally, the surge in internally displaced persons has intensified skill
mismatches and labour shortages in regions experiencing a pronounced workforce exodus andhigher unemployment rates while fostering informal employment in recipient regions. Despite
nominal wages remaining roughly constant, the hike in inflation has led to a collapse in real
incomes for households.
772.3.2.

The capacity to cope with competitive pressure and market forces within theUnion

Due to the impacts of Russia’s ongoing full-scale invasion as well as the pre-existing
structural economic challenges,, Ukraine is at an early stage of preparation in terms of its
capacity to cope with the competitive pressure and market forces within the EU. The war has
severely damaged the country’s capital infrastructure and caused a massive human exodusthat has deeply affected the economy. Investment as a share of GDP was already very low
before the war and infrastructure remained underdeveloped, especially trade-related
infrastructure. Investment in research and innovation has been low, and educational outcomes
have not met the needs of the labour market.
The structure of the Ukrainian economy changed little in the five years before the start of theRussian war of aggression and remained concentrated in sectors with low added value. Even
before the war, the stock of FDI was well below the EU average, reflecting persistent
weaknesses in the business environment and high perceived corruption. While tradeintegration with the EU has been advancing recently, including thanks to the implementationof the Deep and Comprehensive Free Trade Area, it remains low, while the openness of the
Ukrainian economy overall had been decreasing before the invasion.
At the same time, the international response in support of Ukraine has been massive over thelast year. Future reconstruction could also help support modernization and allow Ukraine to
specialise in higher value-added chains and strengthened competitiveness.
To improve competitiveness and support long-term growth, Ukraine should in particular:→ continue and, when the situation allows for it, accelerate repairs and rehabilitation of
infrastructure, in particular the restoration of energy transmission and generation
capacity, including from renewable energy sources, as well as utilities, transport
infrastructure, schools and health facilities;→ take measures to facilitate investment, including for reconstruction, in particular byimproving public procurement processes, reducing barriers to project implementation,
reforming planning processes and strengthening the administrative capacity needed forinvestment management;→ take steps to improve the quality of education and training, including for Ukrainians
returning from abroad, to ensure outcomes align with the needs of the labour market,
including the skills required for reconstruction. Ensure that the education system is also
equipped to re-integrate Ukrainians returning from abroad.
Education and innovation
Ukraine invests a relatively large share of its GDP in education, which is notproportionately reflected in outcomes. The country invests a higher proportion of GDP in
education than the EU. This has contributed to high levels of formal educational attainment,with 54% of the working-age population in 2020 enrolled in or having completed tertiary
education, nearly double the EU average. A large part of this share is accounted for by
vocational education and training rather than traditional academic degrees. Ukraine ranked
39th out of 77 countries in the latest round of PISA reading assessments in 2018, which is low
compared with its investment in education.
Despite relatively high rates of investment and formal educational attainment, there is
still a mismatch between the skills of the workforce and those demanded by employers.
Nearly 38% of firms in Ukraine identified an inadequately educated workforce as a major78

constraint, which is much higher than the EU average. This rate increases to nearly half offirms with at least 10% foreign ownership. Compared to relatively large investments invocational training within the education system, spending on active labour market policies tomitigate the skills mismatch remains very low at just 0.03% of GDP in 2017.
The war has prolonged the pandemic-related disruptions to the continuity of educationand poses a serious challenge to educational outcomes in the medium term. As of February
2023, an estimated 10% of all educational institutions in the country had been damaged or
destroyed, and around 4.6 million children had been forcibly displaced by the war. According
to the Ministry of Education and Science, only 32% of primary and secondary-school students
are in full-time, face-to-face education as of June 2023.
Investment in research and development remains low. Total expenditure on research anddevelopment, which has been declining over the last 10 years, reached 0.29% of GDP in 2021
compared to an EU average of 2.2%. Over half of R&D spending comes from the private sector.
According to the European Innovation Scoreboard 2022, Ukraine is regarded as an emerging
innovator.
Physical capital and quality of infrastructure
The state of Ukraine’s physical infrastructure reflects a persistent lack of investment in
the years before the war and will require significant investment in order to support
recovery and economic growth. The average ratio of gross fixed capital formation has
fluctuated at around 17% of GDP since the Maidan Revolution, which is about half of theinvestment effort of similar emerging economies. FDI inflows averaged 2.2% of GDP over thefive years from 2018, falling to 0.3% of GDP in 2022. The total stock of pre-war FDI remained
low at around 31% of GDP. The country ranks very low on the quality of trade-related
infrastructure and around a quarter of firms identified transportation as a major constraint in
the 2019 World Bank Enterprise Survey. These challenges have been exacerbated by warrelated disruptions to export routes including in the Black Sea. Ukraine has a highly developed
gas transmission system that is also closely integrated into the European gas network, thougha significant part of the country’s overall energy generation and transmission infrastructure has
been damaged in the war.
In terms of digitalisation, Ukraine has made remarkable progress in recent years, though
war-related damage has disrupted connectivity. In 2021, 83% of Ukrainian households hadinternet access at home, representing an increase of over 20 percentage points in just three
years. Internet connectivity was a key driver of pre-war economic growth, in particular for the
IT industry. Good digital connectivity has supported the country’s resilience during the war.
The destruction of physical capital caused by the war has been immense. According to the
Rapid Damage and Needs Assessment, direct damage in the first year of the war is estimatedat EUR 150 billion, with the housing (38%), transport (26%) and energy (8%) sectors having
suffered the greatest damage. Total reconstruction and recovery needs were estimated in
February 2023 at EUR 380 billion. This encompasses steps towards becoming a modern, lowcarbon, disaster- and climate-resilient country in view of becoming an EU Member State andtakes into account inflation, surge pricing commonly seen during mass construction, higher
insurance premiums, etc. The destruction of the Kakhovka Dam in June 2023 caused severe
economic and environmental loss. Russia has occupied, damaged or destroyed a large part ofUkraine’s installed power capacity, thousands of kilometres of electric, gas and heating
networks, transformers, compressor stations, heat-only boilers and other infrastructure
facilities. Emergency repairs have continued with international support, which together withexceptional efforts by the transmission system operator Ukrenergo have kept the grid79

operational. About a quarter of agricultural land could not be used for production before
demining has taken place.
Sectoral and enterprise structure
The structure of the Ukrainian economy changed little in the five years before the startof the war and remained concentrated in sectors with low added value. Agriculture
accounted for just over 12% of GDP (EU average: 1.6% of GDP) and over a fifth of total
employment in 2021. The share of manufacturing in GDP has been declining persistently inrecent years from 14.4% in 2016 to 8.6% in 2022 due in part to labour market pressuresresulting from high emigration, electricity tariff reform as well as the impact of the war in
Donetsk and Luhansk and the COVID-19 pandemic. The ICT sector, where Ukraine had beendeveloping a comparative advantage, kept its relative share in output almost intact at 5.2% of
GDP in 2022. Before the war, the trade, agriculture and industry sectors accounted for almost
60% of all employment, suggesting that these sectors were lagging in labour productivity
relative to the other parts of the economy.
Nearly all businesses in Ukraine (99.98%) are small and medium-sized enterprises(SMEs), with access to finance remaining an obstacle for firms of all sizes. In 2020, SMEs
employed 81% of workers and accounted for 62.6% of GDP and over a quarter of exports.
Access to finance remains a key obstacle for businesses of all sizes and was identified by nearly
half of firms as a major constraint in 2019, five times the rate in the EU. The interest rate spreadfor SMEs compared to large firms had been rising before the war, though SMEs account for an
increasing share of outstanding loans (61% in 2020) and represent nearly one-third of newlending each year. The government strategy to boost SME development and open access tofinance expired in 2020, and an updated strategic policy framework remains to be developed.
The government introduced an affordable loan programme to improve access to bank lending
for small firms. This has continued and expanded during the war, with an increase in the
maximum loan amount and a reduction in interest rates to 0% for the duration of martial law.
Economic integration with the EU and price competitivenessThe overall openness of the economy had been shrinking even before the war, with foreign
trade relative to GDP contracting from 108% in 2015 to 88% in 2022. Despite this generaltrend, economic integration with the EU progressed further thanks to the implementation of the
Association Agreement and the Deep Comprehensive Free Trade Agreement (DCFTA).
Ukrainian companies have been actively using the opportunities of the DCFTA, with 27% morebusinesses exporting to the EU in 2022 than in 2016. The share of exports to the EU, which
consisted mostly of agricultural products, metals and minerals, increased from 28% in 2015 to
36% in 2021. The share of imports from the EU, which comprised primarily machines,
chemicals and minerals, also strengthened from 36% in 2015 to 41% in 2021. The EU is thelargest source of FDI in Ukraine, accounting for three-quarters of FDI inflows in 2021. Thanks
to the temporary suspension of all tariffs, the agreement on road transport and the effective
implementation of logistical Solidarity lanes since the start of the war, trade integration with
the EU has progressed further, with 39% of Ukrainian exports going to the EU in 2022 andabout half of Ukrainian imports coming from the EU.

80

60

Graph 2.4a: Ukraine - Imports% of GDP
contribution

60

40

40

20

20

0

Graph 2.4b: Ukraine - Exports% of GDP
contributions

0
2018
2019
2020
2021
2022
EU
CIS
Asia
Others Source: IMF

2018
2019
2020
2021
2022
EU
CIS
Asia
Others Source: IMF

On price competitiveness, unit labour costs remained relatively low and stable in Ukraine
between 2014 and 2018, remaining less than a third of those in neighbouring EU Member
States in US dollar terms.
2.4. PUBLIC PROCUREMENT, STATISTICS, FINANCIAL CONTROL
Chapter 5 – Public procurement
EU rules ensure that the public procurement of goods, services and works in any Member Stateis transparent and open to all EU companies on the basis of non-discrimination and equal
treatment.
Overall, Ukraine has some level of preparation in the area of public procurement. Limited
progress was made during the reporting period in the face of the Russian war of aggression
against Ukraine and the application of martial law. Further legal alignment with the EU
acquis is needed, including on concessions and public-private partnerships (PPPs), exclusion,
selection, use of the most economically advantageous tender criterion, as well as defence
procurement.
In the coming year, Ukraine should in particular:→ make progress in aligning the laws on public procurement with the EU acquis, including
on concessions and PPPs;→ proceed with the appointment of public procurement commissioners in the AntiMonopoly Committee of Ukraine;→ ensure that exceptions to the laws on public procurement are kept to the minimum
required under martial law.
Institutional set-up and legal alignment
The legal framework on public procurement is partially aligned with the 2014 EU directives
on public procurement. Further alignment is needed, including on the scope of and exemptions
from public procurement legislation, mixed contracts and value estimation, exclusion, selection
and award criteria. This includes the removal of fixed weights for the price criterion andmandatory use of e-auctions, as well as adjustment in the use of e-catalogues. The Law on
concessions was significantly modified in 2019, but still does not comply fully with EU
requirements. The defence procurement Law, adopted in 2020, is partially aligned with the EU
Directive on defence procurement.
An amendment to the Law on public procurement, which entered into force in July 2022,
introduced temporary domestic content requirements for a period of ten years for selected
machines and equipment. However, public procurement in connection with Ukraine’s
international commitments is exempted from domestic content requirements.
81

In light of the Russian war of aggression against Ukraine, the application of martial law in
Ukraine and its duration, Ukraine has introduced temporary exceptions from public
procurement legislation, including the use of direct awards and simplified procedures, by wayof resolutions.
An appropriate institutional framework to implement the public procurement policy is in placewith adequate powers and functions. The role of the Authorised Body, responsible for defining
the public procurement policy, is performed by the Ministry of Economy of Ukraine and its
Public Procurement and Competition Policy Department; concessions and PPPs fall under the
responsibility of the Department on Investments, Innovations and Intellectual Property of the
Ministry of Economy.
Implementation and enforcement capacity
Despite the ongoing military aggression, the authorities have ensured the continuity ofoperations in public procurement, including the use of the e-procurement system Prozorro.
Based on the annual reports from the Ministry of Economy, the public procurement market
represented 9.3% of GDP in 2022 against 17.1% in 2021 and 17.8% in 2020. There wastherefore a notable decrease in 2022 due to the war.
On the monitoring of contract awards and implementation, negotiated procedures weresuspended under martial law and replaced by direct award. The use of framework agreements
and centralised procurement, especially at regional and local level, needs to be scaled up.
Concessions and PPPs have remained very low as the required IT solutions have not yet been
implemented following the relevant law introduced in 2019. In 2022, the State Audit Service(SAS) detected irregularities in 67% of monitored procedures, down from 78% in 2021 (thisincludes all types of irregularities). Public procurement control is complex and weak due to alack of skilled staff, overlapping responsibilities, suboptimal quality of control andenforcement. Although expanding, SAS coverage of monitoring and the ex post internal auditof public procurement remains modest; while the system of risk indicators needs improvement.
The contracting authorities need to continue to build capacity to manage public procurement
processes. Professional standards, a professionalisation strategy and training policy based on
an assessment of training needs, need to be put in place. Training currently remains voluntary,and no statistics are available on the number of trained staff.
Efficient remedy system
Legislation on the right to legal remedy is partially aligned with the EU acquis. The
Antimonopoly Committee of Ukraine (AMCU) handles complaints about public procurement
violations. Complaints related to violations of PPPs and concessions legislation are looked intoby the administrative and commercial courts of Ukraine.
The implementation capacity of the AMCU remains insufficient. Before the war, the AMCU
was heavily overloaded with complaints (14,828 cases in 2021 compared to 3,865 cases in2022). Following the 2021 amendment to the AMCU law establishing commissions for theconsideration of public procurement complaints four commissioners out of a maximum of ten
envisaged were recruited in 2023.
The ongoing increase of the number of commissioners and the introduction of specialisedcommissions for public procurement is expected to increase the AMCU’s capacity to resolve
cases. However, its internal administrative capacity would also need to be expanded.
Chapter 18 – Statistics
EU rules require that Member States are able to produce statistics based on professional
independence, impartiality, reliability, transparency and confidentiality. Common rules areprovided for the methodology, production and dissemination of statistical information.
82

Ukraine has some level of preparation in the area of statistics. Limited progress was madeduring the reporting period towards alignment with the EU acquis, including adoption oflegislation to integrate the European Statistics Code of Practice. The administrative capacity of
the institutions involved needs to be further strengthened and coordination among them
improved. The publication of statistical information has been largely suspended while martial
law is imposed. Data transmissions to Eurostat remained limited.
In the coming year, Ukraine should in particular:→ strengthen the institutional independence and administrative capacity of the State Statistics
Service of Ukraine (SSSU) and the coordination among relevant bodies to improve the qualityof statistics;→ adopt the national strategy for the development of Ukrainian statistics for 2024-2029;→ increase the production and transmission of high-quality and timely data to Eurostat.
On statistical infrastructure, the Law on state statistics provides the legal framework fornational statistics and regulates the rights and functions of national statistical bodies. The Law
on official statistics, which strengthens the coordinating role of the SSSU and establishes theStatistics Council, entered into force on 1 January 2023. The SSSU is the recognised national
statistical authority of Ukraine in charge of production of the official statistics. It operates under
the Ministry of Digital Transformation. It coordinates the national statistical system, which
also includes the Central Bank of Ukraine and the Ministry of Finance. The country is making
preparations to establish a National Council of Statistics as a consultative body to the Cabinetof Ministers. Its exact tasks and role within the national statistical system should be clearly
defined. Ukraine is in process of preparing a new national strategy for the development of
Ukrainian statistics for 2024-2029.
Ukraine cooperates with and regularly submits limited data in several statistical domains to
Eurostat on a voluntary basis. In connection with the World Bank’s International Comparison
Program, Ukraine carries out nearly all the surveys required under the relevant regulation, using
the methodologies and classifications set out in the Eurostat-OECD Methodological manual onpurchasing power parities.
On classifications and registers, the main classifications are in line with the EU acquis andare updated regularly. The State Statistics Service maintains the register of statistical units'classification of economic activities.
On macroeconomic statistics, annual and quarterly sector accounts are compiled using theclassification of institutional sectors. Annual and quarterly indicators for GDP and its
components use the production approach by income category and by end-use category. Ukraine
needs to start submitting national accounts data to Eurostat. Transmission of European System
of National and Regional Accounts (ESA) 2010 data to Eurostat is very limited. transmitted
to Eurostat.
The Ministry of Finance compiles government finance statistics (GFS) based on the IMF’s
GFS Manual 2014, which differs substantially from the System of National Accounts 2008 andEuropean System of Accounts 2010 in presentation. GFS or excessive deficit procedurestatistics are not transmitted to Eurostat. Institutional arrangements need to be carefully
reviewed to ensure statistical independence in the delineation of the general government sector
and the recording of its operations.
On price statistics, the harmonised index of consumer prices is not calculated. Price statistics
data is not transmitted to Eurostat.
83

Ukraine follows the methodology and conceptual framework for compiling the balance of
payments data as set out in the relevant manual (BPM6, IMF, 2009). The dissemination ofdata on the monthly and quarterly balance of payments and international investment position
corresponds to the timelines set by Regulation (EC) 184/2005.
On business statistics, in 2022, a new methodology for calculating indicators of demographic
statistics of enterprises was developed in accordance with the requirements of European
Business Statistics Regulation. Business statistics data is not transmitted to Eurostat.
On social statistics, the latest population census took place in December 2001. The next census
is planned six months after the end of martial law. Ukraine annually provides to Eurostat thedata for population statistics (POPSTAT) and demographic statistics (DEMOBAL)
questionnaires. However, the data provided is only broken down by age and sex and without
the necessary full metadata information. Ukraine needs to develop statistics in the area ofasylum and managed migration. Social protection statistics are implemented and comply with
Regulation on the European System of Integrated Social Protection Statistics. Labour market
statistics on the structure of earnings, the labour cost index, and the labour cost survey havebeen partially implemented. During the martial law, state statistical bodies have not been
conducting sample surveys of the population (households), including the survey of the labour
force.
On agricultural statistics, a pilot agricultural census was conducted in 2012. The date of thenext census will be decided after the war has ended. No data on agricultural statistics istransmitted to Eurostat.
On transport statistics, no transport data is provided under the regulated statistics. In 2022,
work on identifying sources of administrative data, which are needed by the State Statistics
Service for the implementation of European legislation in transport statistics, continued.
Despite some data quality concerns, Ukraine is broadly in line with the acquis on energy
statistics.
Environment statistics data is not transmitted to Eurostat. It is therefore not possible toevaluate compliance. Ukraine’s self-assessment indicates the production of some statistics on
waste and compilation of four environmental accounts.
Chapter 32 – Financial control
The EU promotes the reform of national governance systems to improve managerial
accountability, sound financial management of income and expenditure, and external audit ofpublic funds. The financial control rules further protect the EU’s financial interests against
fraud in the management of EU funds and the euro against counterfeiting.
Ukraine is at an early stage of preparation for implementing financial control. During thereporting period, Ukraine made limited progress by approving the financial audit
methodology for external audits and establishing audit committees within central authorities.
In 2023, Ukraine should focus on the following recommendations:→ ensure tighter connectivity between public internal financial control (PIFC) reform and theCentral Harmonisation Unit (CHU), and strengthen the CHU’s role in enforcing delegatedmanagerial accountability;→ strengthen the Accounting Chamber of Ukraine’s (ACU) independence, mandate andISSAI-based audit work through the approval of a new ACU law, and address the shortageof internal auditors;
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→ increase cooperation between the ACU and Parliament to strengthen oversight of the statebudget and its implementation.
Public internal financial control
The strategic framework for PIFC is part of the public finance management reform strategy
for 2022–2025. The CHU monitors progress of both key areas in PIFC, internal control andinternal audit. Around 100 key spending units are responsible for budget management,
medium-term budget plans and performance management, as assigned by the budget code.
Managerial accountability is not yet fully incorporated into legislation and administrative
practice. The Cabinet of Ministers has adopted basic principles of internal financial control that
apply to spending units at all levels, but the principles do not go into details about lower-level
management and employees. The implementation of basic managerial accountability
mechanisms for central government bodies remains limited in practice.
The Budget Code of Ukraine regulates the requirement to establish internal audit practice.
Internal audit units are mandatory in ministries, central executive bodies and other key
spending units at central and regional level, but recommended in local self-government. In
2023, the legal requirement of installing audit committees at central public entities came into
force. The capacity to effectively carry out internal audits is hindered by a shortage of internal
auditors and high staff turnover. A certification commission has been established within the
Ministry of Finance.
The CHU within the Ministry of Finance focuses on (i) developing internal control and internal
audit functions; and (ii) coordinating activities related to internal audit and the evaluation andmonitoring of internal control systems. Its tasks are described in the Budget Code andsecondary legislation. The CHU aims to improve efficiency in its key tasks, for example bydeveloping a web-based PIFC portal.
An enhanced cooperation between the Public Internal Financial Control institutions and theauditing institution with the law enforcement agencies could help in combating corruption.
External audit
The Constitution does not recognise the independence of the Accounting Chamber of Ukraine(ACU). The legal framework limits the ACU’s mandate to audit public bodies and resources,
including control over the national budget’s revenues and use. It does not have the mandate toaudit local budgets, state-owned businesses or off-budget spending. While the ACU reports on
PIFC and internal audit findings to the Ministry of Finance, exemptions should be considered
to maintain its autonomy. Although the ACU is instructed to apply international audit
principles, this has led to flawed practices not aligned with international standards due to
conflicts with Ukraine’s constitution and laws.
The ACU has recently approved the methodology for financial audits, which aligns withinternational standards. The manual will be used in planned pilot audits in 2023. Methodologies
for compliance and performance audits still require approval. In practice, the ACU focuses
more on inspections than audits, as defined by international public sector auditing standards.
There is also an overlap between the mandates of the ACU and the State Audit Service (SAS),with the latter having a broad mandate that includes defined public financial and IT audits.
The current impact of the ACU’s audit work is minimal as its performance is measured basedon the number of audits conducted rather than the actual impact of audit recommendations.
There is no formal procedure for monitoring the implementation of ACU audit
recommendations.
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The ACU currently does not produce audit reports that are in line with recognised international
standards. These are rather inspection reports that do not serve the purpose of promotion ofreforms or identifying systemic issues.
Protection of the EU’s financial interests
The national legislation ensures some degree of EU alignment. It addresses issues of corruption
offences, money laundering and misappropriation. It is essential to establish and strengthen
liability for fraud that impacts the EU budget. Ukraine should adopt a national fraud strategy
for the protection of the EU’s financial interest.
While an anti-fraud coordination service (AFCOS) has not yet been established to facilitate
effective cooperation and exchange of information, including of an operational nature, with theEuropean Anti-Fraud Office (OLAF), the State Audit Service (SAS) was nominated as thenational contact point for cooperation with OLAF and the European Court of Auditors.
Although its mandate is limited at the national level in this capacity. There is no corresponding
AFCOS network of authorities involved in the protection of the EU’s financial interests, but anational mechanism was designated through the setup of the he Interdepartmental Coordination
Council which needs to meet regularly to become effective. While Ukraine does not manage
EU funds directly and thus does not report irregularities through the Irregularities Management
System, the SAS has developed procedures to prevent and report violations, errors and fraud torelevant bodies, including the European Commission. Collaboration between OLAF andrelevant institutions is on a case-by-case basis. The Bureau of Economic Security, which is
responsible for investigating offences that impact Ukraine’s financial interests, is under review,
with the scope of its activities in protecting the EU’s financial interests yet to be determined.
Protecting the euro against counterfeiting
Ukraine has signed and ratified the 1929 Geneva Convention for the Suppression ofCounterfeiting Currency. The Centre for the Suppression of Counterfeit Banknotes and Coins,which is operated by the National Bank of Ukraine, manages, analyses and processes
counterfeit euro banknotes and those from other foreign currencies withdrawn from circulation
by Ukrainian banks. The responsibility for combating counterfeiting lies with the Bureau of
Economic Security, the Ministry of Internal Affairs, the State Security Service and theprosecution service. However, the allocation of responsibilities among these bodies requires
further clarification.
3.

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION

Russia’s full-scale war of aggression against Ukraine has affected the latter’s relations withenlargement countries and neighbouring member states, as well as its activities in regional
formats.
Ukraine participates in the Eastern Partnership policy, and is part of a number of regional
formats, including the Central European Initiative, the Black Sea Economic Cooperation, theOrganization for Democracy and Economic Development and the Regional Cooperation
Council. The level of engagement of Ukraine in some formats was strengthened, or was
profoundly shaped such as in the Black Sea Economic Cooperation Organization without theparticipation of Russia. Some formats are being reassessed.
Ukraine maintains longstanding close ties with neighbouring Moldova. Bilateral political
dialogue on all levels has improved further, following Moldova’s strong support for Ukraine
in the context of Russia’s war, including through hosting a high number of refugees andactively supporting the export of Ukrainian products under the Solidarity Lanes initiative. Both86

countries exchange on the EU accession process, on regional and security issues, the situationin the Transnistrian region and on management of water resources of the Nistru River, which
remains a challenging topic.
Ukraine and Georgia, fellow “Association Trio” members have a strategic partnership since2017, but relations are currently strained. While Georgia, continues to support Ukraine’s
territorial integrity and sovereignty, including through co-sponsorship of Ukrainian UN
resolutions and hosts a significant number of Ukrainian refugees, Ukraine considers Georgia’s
position on the Russian aggression as ambivalent. Ukraine has criticised inter alia, the nonalignment of Georgia with EU sanctions against Russia and absence of military-technicalcooperation. The ill health of former Georgian President Saakashvili, a Ukrainian citizen, had
led to additional diplomatic tensions.
Türkiye is a strategic partner for Ukraine, with important bilateral economic and people-topeople ties, evidenced by a bilateral visa-free regime and a free trade agreement signed in
February 2022 (not yet ratified). Bilateral relations have been bolstered since the beginning of
Russia’s full-scale war by Türkiye’s technical, humanitarian and military support to Ukraine,by its co-sponsoring of UN resolutions in favour of Ukraine’s territorial integrity andsovereignty, by its closure of the Bosphorus and Dardanelles straits for the passage of military
ships, as well as Türkiye’s mediation efforts contributing to prisoner of war exchanges and theBlack Sea Grain Initiative. Türkiye has also been a prominent participant in Ukraine’s
International Crimea Platform. Nevertheless, Türkiye has not aligned with EU sanctions
against Russia in the context of the latter’s full-scale aggression. Ukraine has not joined all
CFSP statements on Türkiye in the past.
The Ukrainian authorities have sought to maintain and prioritise effective cooperation andclose diplomatic ties with neighbouring EU Member States, both in the context of the war of
aggression – determined in large part by the support of individual countries – and in the context
of Ukraine’s prospective EU integration.
In the Western Balkans, Ukraine’s relations with Albania remain good. Albania has sponsoredor co-authored all resolutions in support of Ukraine during its non-permanent membership(2022-2023) of the UN Security Council.
Bosnia and Herzegovina supports the territorial integrity and sovereignty of Ukraine,condemning Russia’s war of aggression. Bilateral relations are generally good but have been
affected by certain statements on Russia’s role in Europe and significant hindrances, due topolitical contestation, in the implementation of restrictive measures against Russia. The twocountries enjoy the visa-free regime. A number of agreements are in place, including on tradeand on investment protection. Trade flows remain low.
The ties between Ukraine and North Macedonia are strong and deepening through political
dialogue and diplomatic support as well as military assistance in the face of Russia’s full-scalewar. A bilateral free trade agreement was revised and upgraded in 2022, and North Macedonia
declared its support for Ukraine as a priority for its Chairmanship of the OSCE in 2023.
Ukraine-Montenegro relations are equally strong, bolstered by the latter’s continued support
in UN fora as well as on sanctions, trade, technical and military assistance.
Ukraine-Serbia relations have been challenging since 2014 by Ukraine’s perception of limited
Serbian support in the face of Russian aggression, in particular as regards Serbia’s absence ofalignment with EU common foreign and security policy restrictive measures. Still Serbia voted
in favour of UN General Assembly resolutions in support of Ukraine’s territorial integrity andsovereignty and has confirmed this support at the Presidential level. Serbia is also Ukraine’s
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first trade partner in the Western Balkans, while negotiations on a free trade agreement stillneed to be concluded.
Ukraine has not recognised the independence of Kosovo* but has indicated continued support
for EU-facilitated dialogue between Belgrade and Pristina. Ukraine also participated in theNATO Kosovo Force mission until 2022, when it withdrew its contingent of servicemen andmilitary equipment. Kosovo has decided on a voluntary basis to support all Declarations by theHigh Representative on behalf of the EU and has aligned with EU restrictive measures,
including all those related to Russia’s aggression against Ukraine.
Hungary participates in initiatives such as Grain from Ukraine facilitating Ukrainian foodexports and provides financial and humanitarian support to Ukraine. However, relations
continue to be affected by Ukrainian legislation relating to persons belonging to national
minorities, including the implementation of the recommendations of the Venice Commission
on education, state language, use of minority languages in public life, administration, media
and books.
Poland has become one of Ukraine’s closest strategic partners in the context of Russian warof aggression and has been providing vital political, humanitarian, economic, technical anddefence assistance. Poland also continues to host big number of Ukrainian refugees. The
introduction of exceptional and temporary preventive measures on imports from Ukraine to theEuropean Union - which was requested by Poland, Bulgaria, Hungary, Romania and Slovakia- has caused tensions between the two countries. The measures were lifted on 15 September.
Ukraine and Romania continue to cooperate closely, with recently strengthened bilateralpolitical dialogue. Romania participates in the Grain from Ukraine scheme and helps export
Ukrainian food products through EU solidarity lanes. Romania hosted the Black Sea Security
Conference under the auspices of Ukraine’s Crimea Platform in April 2023. Like Poland andSlovakia, Romania has hosted logistical hubs for the delivery of EU humanitarian and civil
protection support to Ukraine since early 2022. Also, a new trilateral cooperation format
encompassing Ukraine, Moldova and Romania was established.
Ukraine’s good relations with Slovakia have also been enhanced during Russian war of
aggression. Slovakia provided political, military, financial and humanitarian assistance, as wellas its international advocacy in support of Ukraine’s policy goals. Slovakia hosts a significant
number of Ukrainian refugees under the temporary protection. A joint commission on
economic, industrial, scientific and technical cooperation was relaunched in December 2022.
Since early 2022, Poland, Romania and Slovakia have been hosting logistical hubs for thedelivery of EU humanitarian and civil protection support to Ukraine.
Relations with Bulgaria were bolstered by Bulgarian political, financial, military andhumanitarian aid to Ukraine, as well as growing economic ties. They were also nurtured by
Bulgaria’s participation in EU solidarity lanes and the Grain from Ukraine initiative.
4.

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP
CLUSTER 2: INTERNAL MARKET

This cluster covers: the free movement of goods (Chapter 1); freedom of movement for workers(Chapter 2); right of establishment and freedom to provide services (Chapter 3); free movement*

This designation is without prejudice to position on status, and is in line with UNSCR 1244(1999) and the ICJ
Opinion on the Kosovo declaration of independence.

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of capital (Chapter 4); company law (Chapter 6); intellectual property law (Chapter 7);
competition policy (Chapter 8); financial services (Chapter 9); and consumer and healthprotection (Chapter 28).
This cluster is key for Ukraine’s preparations for the requirements of the EU’s internal market
and is of high relevance for the implementation of DCFTA. Ukraine is moderately prepared in
the area of free movement of goods and is in between some and moderate preparation in thearea of free movement of capital. Ukraine has some level of preparation in most areas of theinternal market, namely in the area of right of establishment and freedom to provide services,competition policy, company law, intellectual property law, financial services and consumer
and health protection. In the area of free movement of workers, Ukraine is at an at an earlystage.
In the area of free movement of goods, some progress was made on quality infrastructure.
Regarding the freedom of movement of workers, no progress was made. Ukraine demonstrated
some progress in the area of right of establishment and freedom to provide services, inparticular by adopting a new law on postal communications. In the area of free movement of
capital, some/good progress was made with prevention of money laundering. On company law,some progress was made by adopting legislative amendments aimed at further alignment oncompany law, financial statements and audit. Good progress was made in intellectual property
law, thanks to the launch of the National Intellectual Property Authority and the adoption of
the Law on copyright and related rights. On competition policy there was limited progress. On
financial services some progress has been demonstrated by starting to unwind some emergency
measures, implementing the acquis on corporate governance in banks, conducting risk-based
supervision of banks and introducing legislation to promote sustainable and digital finance.
Limited progress was made on consumer and health protection.
Chapter 1 – Free movement of goods
The free movement of goods ensures that many products can be traded freely across the EU
based on common rules and procedures. Where products are governed by national rules, theprinciple of the free movement of goods prevents these creating unjustified barriers to trade.
Ukraine is moderately prepared in the area of free movement of goods. Some progress wasmade during the reporting period on alignment with the EU acquis on quality infrastructure
and on several “new and global approach” EU product acquis on products that may be covered
under a potential agreement on conformity assessment and the acceptance of industrial
products (ACAA) envisaged under the Deep and Comprehensive Free Trade Area.
In the coming year, Ukraine should in particular:→ complete the alignment of its legislation with the acquis on quality infrastructure, inparticular on market surveillance;→ further align its legislation with the acquis on harmonised sectoral legislation;→ re-establish the inspection and enforcement capacity of the market surveillance authorities.
General principles
The DCFTA contains obligations for Ukraine to align its legislation with the EU acquis in theharmonised area. It also provides for the possibility to conclude an ACAA once Ukraine hascompleted the alignment process in selected product sectors in terms of legislation, institutions
and standards. Preparations for an ACAA are currently underway. This includes theCommission’s assessment of Ukraine’s alignment with specific EU acquis in the harmonisedarea, as well as alignment with and the implementation and enforcement of the acquis on
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product conformity assessment, notification and market surveillance, the institutionalframework for the production, distribution and marketing of industrial products. Once
concluded, an ACAA would enable Ukraine to participate in the single market on the sameterms as an EU Member State for the selected sectors.
Non-harmonised area
In the non-harmonised area, Ukraine needs to start activities for screening national technicalregulations for compliance with Articles 34-36 of the Treaty on the Functioning of theEuropean Union.
Harmonised area: quality infrastructure
Ukraine’s legislation on quality infrastructure is partially aligned with the EU acquis.
Administrative structures already exist to deal with technical regulations, standardisation,
conformity assessment, metrology, accreditation, and market surveillance.
On standardisation, Ukraine’s implementing legislation is fully aligned with the EU acquis.
The national standardisation body, UkrNDNC has 123 staff. It has been an affiliate member ofthe European Committee for Standardisation (CEN) and the European Committee for Electrotechnical Standardisation (CENELEC) since January 2023. UkrNDNC has also been an
observer to the European Telecommunication Standards Institute (ETSI) since 2018. Ukraine
is a full member of the International Electro-technical Commission and of the International
Organisation for Standardisation (ISO). National standards are adopted in conformity with
European standards (CEN, CENELEC and ETSI standards). During the reporting period,
26 000 European and international standards were all adopted at once in December 2022.
Ukraine still has conflicting old standards that need to be withdrawn.
Ukrainian legislation on the accreditation of conformity assessment bodies is partly alignedwith the EU acquis. The National Accreditation Agency of Ukraine (NAAU) has 104
employees. Ukraine has 1 095 accredited conformity assessment bodies (722 testinglaboratories, 38 medical laboratories, 31 calibration laboratories, 105 certification bodies ofmanagement systems, 14 certification bodies of persons and 115 inspection bodies). NAAU isa signatory of the European Cooperation for Accreditation Multilateral Agreement (EA MLA)
in the areas of accreditation of testing and calibration laboratories, medical laboratories,
product certification bodies, management system certification bodies, personnel certification
bodies and inspection bodies. Ukraine is a full member of both the International Laboratory
Accreditation Cooperation by having signed its Mutual Recognition Agreement and of theInternational Accreditation Forum by signing its Multilateral Agreement.
On metrology, four national metrology institutes operate in Ukraine. Calibration activities are
performed by 24 state-owned enterprises. During the reporting period, the National Metrology
Institute in Kharkiv and state-owned enterprises located in territories directly impacted by war
faced substantial damage. The national metrology institutes in Kyiv and Ivano-Frankivsk
maintain their capacity and are operational. Ukraine is a full member of the International
Organization of Legal Metrology, the International Measurement Confederation and theInternational Bureau of Weights and Measures.
In the field of market surveillance, the State Service of Ukraine on Food Safety and Consumer
Protection is operational with 140 employees. During the reporting period, due to the ongoing
war the number of inspections decreased in line with provisions of the martial law. Market
surveillance inspections and controls remain suspended, with only exceptional unscheduled
measures taking place. This suspension limits the effectiveness and efficiency of market
surveillance and may affect the quality and safety of products.
90Harmonised area: sectoral legislation
In the area of ‘new and global approach’ product legislation, Ukraine has adopted
implementing legislation in the reporting period designed to be fully aligned with the acquis
on machinery, electromagnetic compatibility, low voltage and construction products. Ukraine
had previously also adopted legislation designed to align with the acquis on radio equipment,
toys, cosmetics, recreational craft, civil explosives, pressure equipment and personal protective
equipment. Ukraine is partly aligned with the acquis on lifts, cableways, gas appliances,equipment for explosive atmospheres, simple pressure vessels, environmental noise from using
outdoor equipment and pyrotechnic articles. More work needs to be done on alignment withthe acquis on eco-design, energy labelling (Ukraine has been party to the Energy Community
Treaty since 2011), measuring instruments, non-automatic weighing instruments and medical
devices.
On ‘old approach’ product legislation, Ukraine is partly aligned with the acquis on motor
vehicles (EU-type approval) and 2/3 wheeled motor vehicles, and on fertilisers, pre-packaging
and units of measurements. It is not aligned on tractors, or on non-road mobile machinery. It isalso not aligned with the acquis on chemicals, including the registration, evaluation,authorisation and restriction of chemicals (REACH Regulation), chemicals labelling(Classification, Labelling and Packaging Regulation (CLP)), good laboratory practice (GLP),
detergents, drug precursors or aerosol dispensers.
On procedural measures, Ukraine’s legislation is designed to align with the acquis on
footwear and on textile labelling, it is partly aligned with the acquis on defence products,
defence procurement, and the return of cultural objects unlawfully removed from theterritory of an EU Member State. It is not aligned with regard to crystal glass or firearms, or
medicinal products pricing.
Market surveillance and product safety institutions of Ukraine are vulnerable to corruption
risks. Current preparations for changes to the law on Market surveillance aligning to the EU
market surveillance regulation (2019/1020) foresee to centralise control of market
surveillances activities with the Ministry of Economy alone, which could increase corruption
risks in the market surveillance system of Ukraine. Further concerns are the lack of funding for
inspection activities and the ongoing suspension of market surveillance during the martial law.
Corruption risk mitigation strategy needs to be developed in line with overall anti-corruption
policy framework.
Chapter 2 – Freedom of movement for workers
Citizens of one Member State have the right to work in another Member State and must be
given the same working and social conditions as other workers.
Ukraine remains at an early stage of preparation regarding the freedom of movement ofworkers. Over the reporting period, during Russia’s full scale invasion, there was noprogress on ensuring that EU workers and their family members are treated in the same way
as Ukrainian nationals.
In the coming year, Ukraine should in particular:→ work on concluding additional agreements on social security coordination, notably withEU Member States;→ start work in preparation of joining the European Network of Employment Services.

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Ukraine’s legislation is not aligned with the acquis on access to the labour market and freemovement of workers. Foreigners and stateless persons can be employed in Ukraine after
obtaining an appropriate permit issued by the State Employment Service of Ukraine. There isa minimum wage threshold for obtaining the permit. Foreigners cannot be employed as civil
servants. There is no specific legislation on employment of EU nationals, who therefore fallunder the same conditions as nationals of non-EU countries. The right of EU workers to reside
in Ukraine can be revoked on the grounds of involuntary unemployment, illness or accident(and if employment is terminated). Moreover, foreigners, including EU workers’ children, only
have free and equal access to higher education as nationals if they are permanently residing in
Ukraine.
There is no dedicated body that deals with the promotion, monitoring and support of equal
treatment and free movement of workers. There are also no plans to create one for the moment.
No steps have been undertaken to prepare for joining the European Network of Employment
Services (EURES network). Beyond the bilateral agreements mentioned above, there are nofurther initiatives to cooperate with other countries on freedom of movement of workers, suchas exchange of information, sharing of best practices or joint inspections.
On the coordination of social security systems, Ukraine has several bilateral agreements withEU Member States on mutual employment and social services, including on pension rights, for
Ukrainian nationals who worked abroad. These agreements also provide for equal treatment of
EU workers and their family members as Ukrainian nationals.
No national health insurance card has yet been implemented in Ukraine. Implementation of theEuropean Health Insurance Card might therefore be challenging.
Chapter 3 – Right of establishment and freedom to provide services
EU natural and legal persons have the right to establish themselves in any Member State andto provide cross-border services. For certain regulated professions, there are rules on mutual
recognition of qualifications. EU rules on postal services focus on improving the quality ofuniversal service, gradual market opening to competition, and the establishment of an
independent regulator.
Ukraine has some level of preparation in the area of right of establishment and freedom toprovide services. Some progress was made during the reporting period, in particular on
postal services, but further efforts are needed to align legislation with the EU acquis under
this Chapter.
In the coming year, Ukraine should in particular:→ take measures towards eliminating existing restrictions for the provision of services,using the possibilities provided by the Association Agreement;→ complete approximation with the EU postal acquis, including with the Regulation on
cross-border parcel delivery services;→ continue its progress in aligning with the EU acquis on mutual recognition of professional
qualifications.
The EU-Ukraine Association Agreement includes rules that grant the right of establishment
to EU natural and legal persons in Ukraine. The process of removing barriers to this right ofestablishment, as described in the Association Agreement, has not yet been initiated.
On the freedom to provide cross-border services, the Association Agreement provides forthe cross-border supply of services except for some sectors, for instance audiovisual services,92

national maritime cabotage, and domestic and international air transport. The process ofremoving the remaining barriers to the provision of cross-border services by EU natural andlegal persons has not yet been initiated.
As regards the right of establishment and the freedom to provide cross-border services, Ukraine
will need to align its legislation also with the Services Directive (2006/123/EC). Progressive
steps should be taken in this regard.
On the mutual recognition of professional qualifications, the legislation and approach
followed by Ukraine varies depending on the sector involved. It is based on a comparative
assessment of the education and professional qualifications of the applicant seeking recognition
with the relevant professional qualifications defined by the professional standard approved in
Ukraine. No agreement for mutual recognition of professional qualifications currently exists
with the EU. Full implementation of EU law on professional recognition needs to take place.
This includes the Professional Qualifications Directive, the Proportionality Test Directive andsector-specific legislation (e.g. for lawyers: the Establishment Directive and Lawyers Services
Directive).
In the area of postal services, Ukraine has made progress on alignment with the EU postal
acquis. On 3 November 2022, a new Law on postal communications was adopted, which
entered into force on 25 May 2023. The new legal framework for postal services is partiallyaligned with the Postal Services Directive 97/67/EC amended by Directives 2002/39/EC and2008/6/EC. It sets out the scope, main principles and financing of universal service provisionand the role of the national regulatory authority. The designated universal service provider,which is state-owned, maintains the exclusive right to provide a universal postal service,including ordinary letters. Postal service provision is not licensed in Ukraine, but is based on
notification to the national regulatory authority. There are 166 economic operators included in
the unified state register of providers of postal services. The national regulatory authority,
which is legally separate and operationally independent, carries out regulatory oversight,
monitoring and enforcement of obligations arising from the postal law. Ukraine has also
committed under the EU-Ukraine Association Agreement to align with the EU Regulation on
cross-border parcel delivery services by 2024. The Annex on rules applicable to postal andcourier services was updated with the Regulation in November 2021.
Chapter 4 – Free movement of capitalIn the EU, capital and investments must be able to move without restrictions, with common
rules for cross-border payments. Banks and other economic operators apply certain rules tosupport the fight against money laundering and terrorist financing.
Ukraine is in between some and moderate level of preparation in the area of freemovement of capital. Some/good progress was made in the reporting period, in particular
as regards the alignment of Ukrainian anti-money laundering legislation with the FATF
standards. Ukraine has committed to impose no restrictions on capital movement and current
payments in accordance with the rules in Article VIII of the Articles of Agreement of the
IMF and Chapter 7 of the Association Agreement with Ukraine. However, the National Bankof Ukraine (NBU) has introduced foreign currency (FX) restrictions under martial law tosafeguard macroeconomic stability. In the coming year, Ukraine should in particular:→ Continue preparations to apply for the Single Euro Payments Area (SEPA);→ Continue the alignment of Ukrainian legislation and institutional practices with the FATF
standards;
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→ Take steps to establish the Register for holders and beneficial owners of bank accounts,
payment accounts and safe-deposit boxes.
On capital movements and payments, the NBU introduced temporary capital restrictions
following the start of the Russian invasion with a view to safeguarding Ukraine’s
macroeconomic stability. Restrictions are subject to constant revision by the NBU in light ofdevelopments in the monetary and FX markets. The NBU has drafted a roadmap on graduallyeasing war-related currency restrictions introduced at the beginning of the invasion incooperation with the IMF.
As for restrictions that were in place before the war, Ukraine had already taken some steps
towards currency liberalisation based on the Law on currency and currency operations. It
entered into force in 2019, and the NBU has a roadmap for its implementation. This roadmap
provides for a gradual cancellation of all currency restrictions and the transition to a regime offree capital flows, taking into account the pace of improvement in macroeconomic conditions
in Ukraine (but without any specific deadlines for removing the currency restrictions).
The Land Code of Ukraine adopted in March 2020 banned the acquisition of agricultural landby foreigners for an unlimited period of time. This ban will be lifted upon referendum of which
the date is not yet specified. Since March 2022, there has been a Cabinet of Ministers’
resolution that sets a moratorium on transactions that involve Russian assets and establishes
the list of people deemed to be associated with the aggressor and exceptions.
On payment systems, Ukrainian laws prescribe the same terms and conditions for domestic
and cross-border transfers of currency valuables and there are no special rules for such transferswith EU Member States. One of the differences between cross-border payments and paymentsin the domestic currency is the currency supervision of cross-border payments (covering not
only payments to customers of EU Member States). On the transparency of currency
conversion changes, Article 30 of the Law on payment services sets the requirements on theinformation provided to users before concluding the agreement on the provision of payment
services. The adoption of the Law on payment services, which came into force in August 2022,
was an important step towards alignment with the EU acquis in the area of payment services.
It incorporated the EU Payment Services Directive 2 and the E-Money Directive into nationallaw. This law is an important step on Ukraine’s path to applying for the Single Euro Payments
Area (SEPA).
On the fight against money laundering and terrorism financing, Ukraine remains in
Moneyval’s enhanced follow-up process since December 2017. Following the start of the war,
Moneyval suspended its evaluation of Ukraine, but in June 2023 it decided to resume it, at therequest of Ukraine. The next Moneyval follow-up report is expected at the end of 2024.
In September 2022, amendments were adopted on the ultimate beneficial ownership (UBO)
framework that improved the UBO registration and verification system and increased legal
liability for failure to provide UBO information. The Ukrainian Government also adopted anumber of bylaws to align Ukrainian anti-money laundering legislation with the international
Financial Action Task Force (FATF) standards, including on the ultimate beneficial ownershipand supervision of non-financial businesses and professions. In November 2022, the Ukrainian
Parliament changed the definition of politically exposed persons, contrary to FATF standards.
In September 2023, the Parliament passed in the first reading a law aimed at restoring a FATFcompliant definition of politically exposed persons, but several of its provisions were not inline with FATF standards. In October 2023, the Parliament adopted a new legislative
amendment removing the three-year time limitation and reverting to a risk-based approach for94

former holders of prominent public functions to be qualified as politically exposed persons to
restore a FATF-compliant definition of politically exposed persons.
As regards virtual assets, Ukraine needs to either complement its 2019 law or to proceed withthe adoption of a new comprehensive law on virtual assets in order to implement the applicable
FATF standards. Ukraine’s alignment with the FATF standards and further reform needs to beformally assessed by Moneyval as part of its regular monitoring and evaluation framework.
Chapter 6 – Company law
The EU has common rules on the formation, registration and disclosure requirements of acompany, with complementary rules for accounting and financial reporting, and statutory
audit.
Ukraine has some level of preparation in the area of company law. Some progress wasmade during the reporting period with the adoption of legislative amendments aimed atfurther alignment with certain aspects of the EU acquis on company law, financial statements
and audit.
In the coming year, Ukraine should in particular:→ further align its legislation with the EU acquis, including on disclosure of company andforeign branches information, on encouraging long-term engagement of shareholders,and on takeover bids;→ align national legislation with the acquis on cross-border operations (conversions,mergers and divisions) and on the use of digital tools and processes in company law.
In the area of company law, a new Law on joint stock companies entered into force in January2023 to further align with the EU acquis on shareholders rights and listed companies, including
electronic voting at general meetings, management structures and changes in corporate
structure. The Unified State Register can be accessed electronically providing information on
legal entities and private entrepreneurs that is in line with the EU acquis. The Law on public
electronic registers provides for the electronic interaction of registers created in Ukraine. The
system should be technically ready for interconnection with business registers of EU Member
States once Ukraine joins the EU and a complete alignment with the EU acquis as regards theinformation to be disclosed by companies to the national business registers for transparency
purposes is achieved. Further alignment is needed with the acquis on disclosure of company
and foreign branches information, cross-border operations (mergers, divisions, conversions),
long-term shareholder engagement, gender equality on boards of directors and use of digital
tools and processes. In 2022, Ukraine’s corporate governance code (based on OECD
principles) was extended to limited liability companies and additional liability companies thatare professional participants on capital and organised commodity markets.
On company reporting, national legislation is partially aligned with the EU acquis for themain legal requirements, including on annual financial statements, management reports, rules
on auditors, disclosure obligations and sanctions. There is a simplified financial reporting
regime for small and micro-companies. Amendments adopted in 2022 to the Law on
accounting and financial reporting introduced the size categories of parent company groups
and their subsidiaries (small, medium and large) for the preparation and publishing of
consolidated financial statements, with exemption for certain small and medium-sized groups
from their mandatory preparation (except groups that include public interest entities). Undermartial law, administrative and/or criminal liability has been lifted for the non-submission orlate submission of financial and audit reports. Ukraine needs to prepare to align with the 2022
EU Directive on corporate sustainability reporting.
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While there are provisions in national legislation harmonised with the acquis on transparency
requirements for issuers of securities, further alignment is needed regarding the publication of
information on sanctions applied to market participants, as well as home/host member stateissues and cooperation between member states.
On statutory audit, amendments to the Law on the Audit of financial statements and auditing
activities were adopted in September 2022 aimed at further alignment with the EU acquis in
this area, regarding inter alia auditor certification and quality control of audit services. The law
has specific requirements for the statutory audit of public interest entities. The Audit PublicOversight Body, established in 2018, supervises the formation, approval and registration of
statutory auditors, and is responsible for quality assurance of audit services through a system
of investigations and sanctions.
Chapter 7 – Intellectual property law
The EU has harmonised rules for the legal protection of intellectual property rights (IPR,
copyright and related rights. Rules for the legal protection of IPR cover, for instance, patents
and trade marks, designs, biotechnological inventions and pharmaceuticals. Rules for the legal
protection of copyright and related rights cover, for instance, books, films, software andbroadcasting.
Ukraine has some level of preparation on intellectual property law. Good progress was madeduring the reporting period, in particular with the launch of the National Intellectual Property
Authority and the adoption of the Law on copyright and related rights, which aims at legislativealignment with the EU copyright acquis, and the IPR enforcement.
In the coming year, Ukraine should in particular:→ continue alignment with the EU acquis on copyright and industrial property rights, as wellas on trade secrets;→ continue improving the functioning of collective management organisations and thepayment of royalties to right holders;→ further improve the IPR enforcement system, in particular by combating piracy andcounterfeit products and establishing an intellectual property court and leverage thecollaboration with the European Union Intellectual Property Office.
In the area of copyright and related rights, in December 2022, the new Law on copyright andrelated rights was adopted, which got further amended in March 2023, together with thecollective management organisation law. Concerns remain in particular regarding the term ofprotection, for copyright and related rights, the distribution of a fair remuneration between
performers and producers of phonograms, the reproduction right and the rights of thebroadcasting organisations. Problems also persist with the enforcement of the current copyright
law regime, for instance with the collective rights management, in particular with publicbroadcasting organisations that do not pay royalties to performers and phonogram producers.
On industrial property rights, the Law on patents from August 2020, which incorporated
the EU standards of legal protection of inventions and utility models into national legislation,
is not fully aligned with the EU acquis. Ukraine’s trade marks legislation is partially alignedwith the EU acquis. The subsequent implementing rules still need to be adopted. Ukraine’s
legislation also includes EU standards on the legal protection of designs.
Ukraine needs to further align its domestic legislation with the EU acquis on compulsory
licensing and the respective Protocol amending the World Trade Organization’s Agreement on
Trade-Related Aspects of Intellectual Property Rights. Ukraine does not have a specific law on
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trade secrets, though there are some provisions on trade secrets in the Civil Code of Ukraine.
Ukraine’s Law on IPR enforcement is broadly aligned with the EU acquis. However,shortcomings remain in combating piracy and counterfeit products, as Ukraine remains one of
the four main transit points for shipments into the EU of counterfeit products. The competentauthorities dealing with IPR enforcement include the National Police, the Bureau of Economic
Security, the State Customs Service and the Office of Prosecutor General.
Following the adoption of the IPR institutional reform in 2020, the Ukrainian National Officefor Intellectual Property and Innovations is the new institution responsible for intellectual
property and has been operational since November 2022. It functions as the National
Intellectual Property Office and as the coordination platform for dialogue on intellectual
property rights with all stakeholders. The agency has been promoting the strengthening ofinstitutional capacity through training courses. It developed a closer collaboration with theWorld Intellectual Property Organisation and the European Union Intellectual Property Office,with which it signed in 2021 a Memorandum of Understanding to enhance technicalcooperation. It is a self-financed agency, through fees, and currently has 500 employees.
Currently, the system of courts with jurisdiction over IPR cases includes common courts (civil
jurisdiction) and commercial courts (commercial jurisdiction). The Law on judiciary and statusof judges from 2016 provides for the establishment of an intellectual property court. However,
the appointment of the 21 judges is pending, as the High Qualification Commission of Judges
remained non-operational until 2022.
Chapter 8 – Competition policy
EU rules protect free competition. They include antitrust rules against restrictive agreements
between companies and abuse of dominant position, and also include rules on concentrations
between companies which would significantly impede effective competition. EU rules also set
out a system of State aid control. Governments are only allowed to grant State aid if restrictive
conditions are met, with a view to preventing distortion of competition.
Ukraine has some level of preparation in competition policy. During the reporting period,
there was limited progress in the legislative alignment with the EU acquis. An amendment to
the Law on the protection of economic competition was voted in in August 2023, which aims
at further aligning that Law with the EU acquis. The Law on State aid remains suspended due
to martial law, but this should not stand in the way of reforms in the policy area.
In the coming year, Ukraine should in particular:→ further align the legislative framework in the area of competition and State aid with the EU
acquis, including by modifying the law on State aid to cover under its scope services ofgeneral economic interest (SGEIs).
→ compile a reliable and comprehensive inventory of State aid schemes instituted before theestablishment of the authority responsible for State aid control in Ukraine.
Antitrust and mergers
On the legislative framework, the Law on the protection of economic competition is to a large
extent aligned with the EU acquis. However, certain gaps still remain. For example, that law
does not clearly differentiate between economic and non-economic activities, lacks a clear deminimis rule, does not contain exemptions from the prohibition of concerted practices, and does
not define the notion of ‘abuse’ and of ‘dominant position’. An amendment to the Law on theprotection of economic competition was adopted in August 2023. The law introduces a number97

of changes aiming at further aligning the Ukrainian legislation with EU regime. Those changes
include the introduction of a leniency and a settlement mechanism and rules on joint and several
liability of undertakings for breaches of competition law.
On the institutional framework, the Anti-Monopoly Committee of Ukraine (AMCU) is
responsible for implementing the Law on the protection of competition. It is an operationallyindependent authority financed by the national budget. It does not have the right to set priorities
and reject complaints on the grounds of priority, while its powers to conduct effective
inspections are limited. Some fundamental rights such as access to the file and hearing are also
not fully in line with the EU rules. In addition, no party can bring a case for damages andstoppage of anticompetitive conduct directly before a domestic court based on a possible breachof competition rules that affects their interests. They must first apply and get a decision fromthe AMCU. The amendment to the Law on the protection of economic competition, introduces
amendments to the hearing process before the AMCU, increases AMCU’s powers of inspection
and its ability to conduct unannounced inspections and increases the salaries of its employees,
State aid
On the legislative framework, the current Law on State aid transposes Articles 107 and 108of the Treaty on the Functioning of the European Union and includes a notification andstandstill obligation. Following the outbreak of the Russian war against Ukraine, that law wassuspended under martial law. As a result, while the Law on State aid is suspended, State aid
granting bodies have no obligation to notify to the AMCU new State aid and proposals toamend the terms of State aid already granted. Furthermore, State aid granted while the Law on
State aid is suspended is considered compatible aid.
On secondary legislation, Ukraine approved legislation during the reporting period on therecovery of illegal State aid and guidelines on State aid for culture and support of cultural
heritage.
On the institutional framework, even before the suspension of the Law on State aid, theenforcement of State aid rules, in particular as regards on notifications, had been challenging,as granting bodies in the government had not consistently notified State aid measures to
AMCU. As a result, AMCU was not able to compile a complete inventory of State aid schemes,
instituted before AMCU was established. Moreover, the de minimis State aid regime is notworking well due to a lack of efficient control of the respective thresholds.
Ukraine also needs to do more to improve transparency in the transactions between the Stateand public undertakings/ State-owned enterprises, aligning its legislation more closely with thedirective on the transparency of financial relations between Member States and public
undertakings.
Liberalisation
Ukrainian competition and State aid legislation is fully applicable to public undertakings andundertakings with special or exclusive rights. However, according to the Law on State aid,
services of general economic interest (SGEIs) are not covered by the State aid discipline.
Ukraine should therefore align the Law on State aid to cover under its scope.
Chapter 9 – Financial services
EU rules aim at ensuring fair competition among, and the stability of, financial institutions,
namely banking, insurance, supplementary pensions, investment services and securities
markets. They include rules on authorisation, operation and supervision of these institutions.
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Ukraine has some level of preparation in the area of financial services. Despite focusing on
maintaining macro-economic stability, Ukraine has made some progress in the reporting
period by starting to unwind some emergency measures, implementing the acquis on
corporate governance in banks, conducting risk-based supervision of banks and introducing
legislation to promote sustainable and digital finance.
In the coming year, Ukraine should in particular:→ prepare an asset quality assessment of the banking sector;→ strengthen the regulatory powers of the National Securities and Stock Market
Commission, in line with the principles of the International Organisation of Securities
Commissions;→ continue efforts in alignment with the EU acquis, related to the regulation of banking
and insurance sectors (including bank resolution and bank deposits guarantee schemes)
and the regulation of securities markets, investment funds and investment services.
On banking and financial conglomerates, significant reforms are envisaged under the current
IMF programme. A first step is to unwind the emergency measures introduced under martial
law. These are causing the most distortions and hampering effective financial system
operations and oversight. Some steps have already been taken, such as resuming the count ofloan days past due in June 2022, introducing a procedure under martial law in October 2022 toresolve insolvent systemic banks, and submitting a draft law in March 2023 to improve theprocedure for withdrawing non-systemic banks from the market under martial law. An asset
quality assessment of banks will be necessary to evaluate the health of the banking sector in
Ukraine and develop an effective strategy to address non-performing loans.
During the reporting period, Ukraine proceeded with implementing the Law on improving
corporate governance in banks and other operational issues of the banking system from 30 June
2021 to align with the EU capital requirement rules. The National Bank of Ukraine (NBU)
developed draft regulations on the organisation of the internal liquidity adequacy assessment
process and on the procedures for calculating the minimum amount of regulatory capital aswell as the leverage ratio.
In 2022, the NBU conducted risk-based banking supervision in line with the guidelines of theEuropean Banking Authority on common procedures and methodologies for the supervisory
review and evaluation process and the recommendations of the Basel Committee on Banking
Supervision.
On insurance and occupational pensions, the main rules of the new Law on insurance, which
are aligned with the Solvency II Directive, will take effect on 1 January 2024. The NBU has
begun to draft the implementing legislation for the Law on insurance.
As for the financial market infrastructure, in preparation for a return to normality, a new
financial sector development strategy was adopted on 19 July 2023 to prepare for a safe andprompt unwinding of financial sector emergency measures, while restoring accounting andprudential norms.
On the securities markets and investment services, long-standing gaps remain in the powersof the National Securities and Stock Market Commission (NSSMC) relative to international
standards. The authorities have committed to amend the NSSMC Law following technicalassistance from multiple international finance institutions in order to strengthen the NSSMC
mandate in line with the standards and principles of the International Organization of Securities
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Commissions. A Credit Unions Law was adopted on 14 July 2023, which is largely in line withEU legislation.
On sustainable and digital finance, the National Bank developed its Sustainable Finance
Development Policy 2025, to further integrate sustainability considerations into the financial
sector of Ukraine, which foresees the integration of environmental and social risks management
into financial institutions’ activities and the mandatory disclosure by financial institutions of
their activities’ sustainability level. Anew Law on payment services, which came into force on
1 August 2022, has expanded the list of entities with the power to issue electronic money. It
comprises banks, electronic money institutions, branches of foreign payment institutions,postal operators, the NBU, public authorities and local self-governments. In addition, the NBU
Resolution from 29 September 2022 approved the Regulation to set up the procedure for
issuing and using e-money for transactions. The Regulation also establishes requirements for
issuers of electronic money and puts in place restrictions on the use of electronic money. A law
on virtual assets was adopted on 17 February 2022, but will enter into force only after relevant
amendments to the Tax Code of Ukraine.
During the reporting period, it was agreed that Annex XVII to the EU-Ukraine Association
Agreement, which covers the acquis on financial services, will be comprehensively updated.
The aim is to obtain internal market treatment for this sector in future. Based on the agreed
update of the financial services legislation, Ukraine will need to pursue further alignment with
the EU acquis.
Chapter 28 – Consumer and health protection
EU rules protect consumers’ economic interests and in relation to product safety, dangerous
imitations and liability for defective product. The EU also ensures high common standards for
tobacco control, blood, tissues, cells and organs, and medicines for human and veterinary use.
The EU also has rules for upholding patients’ rights in cross-border healthcare, and in
preparing for and responding to cross-border health threats including communicable diseases.
Ukraine has some level of preparation in consumer and health protection. Over thereporting period, limited progress was made on alignment with the EU acquis.
In the coming year, Ukraine should in particular:→ further align national legislation with the EU consumer protection acquis;→ adopt a health information system strategy;→ adopt the national health security action plan to address threats of biological, chemical,
environmental and unknown origin; approve and start implementing the 2023-2025
national action plan on antimicrobial resistance.
Consumer protection
On horizontal aspects, Ukraine’s consumer legislation is partly aligned with the acquis on
consumer rights, unfair contract terms, unfair commercial practices, price indications, package
travel and linked travel arrangements, the sale of goods, digital content and services. It is also
partly aligned with the acquis on product safety. It is not aligned with the acquis on
representative actions and on timeshares, and does not address the latest changes to EU
consumer legislation introduced by the EU Directive 2019/2161.
Ukraine’s State Service on Food Safety and Consumer Protection is the central government
body responsible for consumer safety and protection, market surveillance and advertising rules.
As of 2020, the National Bank of Ukraine, the Office for Financial Services Consumer Rights
100Protection and the National Securities and Stock Market Commission are responsible forprotecting consumer rights in financial services in the areas of banking, and capital andcommodity markets. To further align the legislation with the EU acquis, the law on protectionof consumer rights was adopted in the reporting period, but has not yet entered into force. It
introduced the concept of electronic trading platform (marketplace) and an electronic productcomparison service (price aggregator), and authorised the State Consumer Service and internet
service providers to restrict access to fraudulent trading websites.
Ukraine does not have an alternative dispute resolution system in place in line with the EU
acquis to enable consumers to resolve disputes with traders out of court. As for out-of-court
consumer dispute resolution for financial services, the Office for Financial Services Consumer
Rights Protection currently fulfils certain responsibilities.
On product safety, the legal basis for market surveillance is the Law on state market
surveillance and control of non-food products and the Law on general non-food product safety,
which are partly aligned with the EU acquis. Ukraine’s market surveillance risk assessment
methodology was developed on the basis of the EU Rapid Information System ‘RAPEX’guidelines8.
On non-safety-related issues, there was some progress on alignment with the acquis on thepayments market. The Law on payment services was also amended in April 2023,
strengthening requirements for advertising and information disclosure during the provision ofservices in the payment market.
Public healthUkraine is implementing its 2023 public health strategy. The adoption of the Law on publichealth and its implementing legislation saw some progress, but they remain partly alignedwith the EU acquis, for example in communicable and non-communicable diseases, and crossborder health threats.
On access to healthcare, entitlement to publicly financed health services is based on
citizenship and permanent residence. Refugees are entitled to the same health services as
Ukrainian nationals, but irregular migrants and asylum seekers are entitled to emergency care
only and must pay the full cost after treatment. Certain professional categories have additional
entitlements funded by the government. This fragments the public funds allocated to healthand results in unequal access to healthcare. The main barriers that people face while seeking
healthcare are the cost of medicines and treatment, waiting times and transport.
Despite launching the e-health system, including e-prescription, there continues to be
fragmentation and overlaps in health data. Ukraine lacks a health information system strategy,
and the legal framework needs to be completed. A lack or limited quality of disaggregatedhealth-related data is one of the key systemic issues that affects the planning and policymaking
processes as well as the implementation of health programmes.
Ukraine’s legislation is partly aligned with the acquis on tobacco control. It has ratified the
WHO Framework Convention on Tobacco Control and has achieved significant progress on
its implementation. However, it has not yet ratified the WHO Protocol to Eliminate Illicit
Trade in Tobacco Products.
On communicable diseases and serious cross-border health threats, Ukraine’s legislation
is partly aligned with the EU acquis. Implementing legislation still needs to be drawn up to
8

The RAPEX system is now called Safety Gate.

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ensure effective prevention, preparedness (for example, there is no unified epidemic
preparedness plan) and response plan.
Ukraine’s epidemiological surveillance systems are based on key EU principles but need to
be improved to ensure integration with the EU early warning and response system. A national
health security action plan to help address threats of biological, chemical, environmental andunknown origin has yet to be adopted. Vaccination coverage remains significantly below the
WHO global recommendations, also due to disruptions caused by the war.
The national 2023-2025 action plan on antimicrobial resistance is pending approval. There isa need to strengthen and ensure interoperability between health and veterinary sectors andfood/safety sectors on antimicrobial resistance and improve overall preparedness and response
planning.
The 2030 action plan on non-communicable diseases addresses risk factors, services andprevention activities. However, monitoring rules are not aligned with global noncommunicable disease targets. The national cancer registry is harmonised with international
registries, but there is no dedicated cancer screening programme for the early detection ofcancer apart from six free cancer examinations in the national programme of medical
guarantees (mammography, esophagogastroduodenoscopy, colonoscopy, bronchoscopy,
cystoscopy and hysteroscopy). There is no monitoring in place for the early detection of
cervical and breast cancer.
On blood, tissues, cells and organs, national legislation is partly aligned with the acquis on
blood, with further alignment necessary for instance on blood safety. Responsibilities areshared between the Ministry of Health and various state bodies to ensure policy
implementation, licensing and control functions. The traceability and reporting system forblood donations is not yet fully developed. Ukrainian legislation is not aligned with the acquis
on cells for medically assisted reproduction. It also does not regulate inspections of assisted
reproduction centres or standards of quality and safety of human organs intended fortransplantation. Ukraine has launched a transplantation development programme.
The law on medicines that will enter into force 30 months after the end of martial law
introduced important changes to previous legislation on medicines for human use. When inforce, it will be partly aligned with the EU acquis. Ukraine does not yet fully adhere tointernational standards on the quality, safety and efficacy of medicines. It is not aligned withthe acquis on medicines for veterinary use but is partly aligned with the acquis on medical
devices and on in vitro medical devices.
National legislation is partly aligned with the acquis on cross-border healthcare. There is noautomatic reimbursement of healthcare costs for treatment received abroad unless it is
impossible to receive the required care from healthcare institutions in Ukraine and an
application has been submitted for state funding. There is no separate legislation for healthcare
provided to EU nationals.
On nutrition and physical activity, healthy lifestyle and disease prevention could play amore prominent role while monitoring could be strengthened.
Corruption in medical service provision and medical education and out-of-pocket paymentsin the public healthcare system remain a cause for concern. There is a need to strengthenmechanisms to monitor healthcare service delivery and patient compliance management. The
complaint monitoring mechanism has the potential to become an effective tool for preventing
and investigating corruption but is not widely known. Once operational, the e-stock system102

should provide a further useful tool for improving transparency on the supply of medicines
across the country.
CLUSTER 3: COMPETITIVENESS AND INCLUSIVE GROWTH
This cluster covers: digital transformation and media (Chapter 10); taxation (Chapter 16);
economic and monetary policy (Chapter 17); social policy and employment (Chapter 19);
enterprise and industrial policy (Chapter 20), science and research (Chapter 25); education andculture (Chapter 26); and the customs union (Chapter 29).
There is a good level of preparation in Ukraine in the area of customs union, where there wasgood progress in terms of alignment with the EU acquis. The chapter on digital transformationand media, where numerous regulatory acts focusing on implementation of main EU principles
have been adopted is moderately prepared/has a good level of preparation. There is a moderatelevel of preparation in the chapters economic and monetary policy, and science and research.
Ukraine has some level of preparation in education and culture, taxation as well as enterpriseand industrial policy. Ukraine is at an early stage of preparation in social policy andemployment. Ukraine has made some progress in the area of taxation, where a law introducing
the OECD standard on the automatic exchange of information on financial accounts was
adopted. There was limited progress in enterprise and industrial policy as well as social policy
and employment. This cluster and the reforms concerned are closely linked to the ability andcapacity for recovery and reconstruction. Reforms must be pursued to increase competitivenessand build a sustainable and inclusive economy.
Chapter 10 - Digital transformation and media
The EU supports the smooth functioning of the internal market for electronic communications,electronic commerce and audiovisual services. The rules protect consumers and support theuniversal availability of modern services.
Ukraine is in between moderate and a good level of preparation in the domain of digitaltransformation and media. It made good progress in this area during the reference period.
In the coming year, Ukraine should in particular:→ achieve full alignment with EU roaming legislation;→ ensure the necessary financing and human resources for enacting the legal rules on
expansion of the Regulator’s competencies (both telecommunications and media regulator)and for the performance of the central executive bodies in the area of electronic
communications;→ further align with the EU Directive on security of network and information systems (NIS).
On electronic communications and information technologies, alignment with the EU
enforcement practices in the digital sector is based on core legislation, i.e. the Law on electronic
communications and the Law on the national commission for the state regulation of electronic
communications, radio frequency spectrum and provision of postal services (‘the Law onregulator’). These two core laws are approximated with Directive (EU) 2018/1972, which
establishes the European Electronic Communications Code. In particular, Article 5 of thisDirective ensures that the legal status of the regulatory body in electronic communications,with its powers and independence, is fully compliant with European approaches.
The regulator, as a newly established national regulatory authority, is a legally distinct andfunctionally independent institution with appropriate decision-making powers. These
include exclusive responsibilities to carry out regulatory tasks, adopt binding decisions and103issue relevant legal and normative acts. Full implementation of the two core laws implies
adoption of a series of secondary regulations. During the reporting period, numerous regulatory
acts have been adopted. These focus on implementation of the main EU principles, includingtransparency and general authorisation together with numbering and radio spectrum.
Due to financial constraints in general, the 2023 budget law provides the regulator with only
limited financing. This makes it difficult for it to perform its functions as defined by the Law
on regulator. The authority of the central executive body in the areas of electronic
communications and radio frequency spectrum, the State Service of Special Communications
and Information Protection of Ukraine, faces similar challenges.
In light of current security-related constraints related to the Russian war of aggression, Ukraine
has not yet implemented the acts related to the regulatory framework for radio spectrum
policy, in particular the release of the 700 MHz band from TV broadcasting for mobile
communications.
Ukraine has a well-advanced e-government system, where people have easy access to public
services. The government launched its vision for electronic public service design and delivery
known as ‘The State in a Smartphone’ in 2019. It resulted in the rapid development ofelectronic services and has proven its resilience and adaptability throughout the war. Digital
governance has increased the efficiency and transparency of the government and facilitatedgovernment-citizen dialogue. The unified web portal for electronic services, Portal Diia,
enables access to the most popular electronic public services (120 in total). Electronic public
services are also available in the Diia mobile application (25 services) as well as on other web
resources of public authorities. The mobile application is used by 17.3 million users andinstalled on more than 32 million devices. UA should continue seeking alignment with boththe European Interoperability Framework (latest revision in 2017) and the Interoperable Europe
Act (2022).
After updating Appendix XVII-3 of Annex XVII to the Association Agreement/Deep andComprehensive Free Trade Area, Ukraine has launched a process to put in place legislation
relevant to EU roaming that would align Ukraine’s legislation with the EU
telecommunications acquis. Ukraine has the prospect of joining the EU’s ‘Roam like at home’scheme if it implements the EU roaming regulation and other relevant legislation subject to adecision granting internal market treatment.
In the area of electronic identification and trust services, Ukraine has a high degree ofalignment with the EU requirements (eIDAS Regulation). In January 2021, the EU and Ukraine
adopted a joint work plan for cooperation on electronic trust services with a view to a possible
agreement based on approximation with EU legislation and standards. While Ukraine decided
to legally recognise – on an experimental basis – qualified electronic signatures originating in
EU Member States on 22 November 2022, the Commission published tools (Third Countries'
trusted list) on 25 January 2023 that facilitate the validation of electronic signatures or seals
created in third countries, as advanced electronic signatures and seals in EU Member States.
Ukraine is the first ever third country included in this list. On 1 December 2022, the Ukrainianparliament adopted the Law amending certain legislative acts on ensuring the conclusion of anagreement between Ukraine and the European Union on mutual recognition of qualified
electronic trust services and implementation of the European Union legislation in the field ofelectronic identification. It provides for the obligatory conformity assessment of qualified trust
service providers by the independent bodies according to a certification model, similar to thatof the EU.

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Ukrainian open data policy supports the reuse of open data by both the public and private
sector. Ukraine has achieved a high level of transposition of the Open Data Directive. The
Ministry of Digital Transformation drafted a new open data strategy in June 2022. According
to the EU Open Data Maturity Report 2022, Ukraine ranks second (after France) in the overall
index, and is also the best performer among the candidate countries.
Ukraine’s National Security and Defence Council is implementing a national cybersecurity
strategy. Its computer emergency response team, CERT-UA, has received international
accreditations and is taking steps within overall framework of the EU-Ukraine cyber dialogue
towards closer institutional cooperation with EU counterparts, including the European Union
Agency for Cybersecurity and CERT-EU. Ukraine adopted the regulations to exchange on
cyber incidents as of 9 February 2023 with the objective to move towards alignment with therequirements established at the EU level by the framework for high common level ofcybersecurity across the EU (NIS 2 framework). Ukraine still has no 5G mobile network anddoes not seem for the moment to have plans to implement the EU toolbox for 5G security.
On audiovisual policy, Ukrainian legislation is broadly in line with the Audiovisual Media
Services Directive (AVMSD). On 13 December 2022, Ukraine adopted the Law on media andon 30 of May 2023 amendments to the Law on advertising, which broadly align the nationalrules with the new provisions of the revised AVMSD (Directive (EU) 2018/1808). The law
entered into force on 31 March 2023 and seeks to ensure the independence of media regulator.
It also includes mechanisms to ensure the transparency of media ownership and freedom ofreception and retransmission for both TV and radio broadcasting if their content meets therequirements of the European Convention on Transfrontier Television and of Ukrainian law.
The main regulatory authority for audiovisual media services is the National Council of
Ukraine on Television and Radio Broadcasting. Restrictions are in place for the retransmissionof television programmes, with control over the content carried out by residents of a country
recognised as an aggressor state or an occupying power, or those that systematically violate therequirements of Ukrainian legislation.
Both laws have stricter rules on retransmission of the audiovisual content of broadcasters
established in the EU than the EU Audiovisual Media Services Directive. These are aimed atpreventing Russian TV channels from retransmitting audovisual content and advertising fromEU Member States to Ukraine. They are considered necessary to protect Ukraine’s information
space in the current security climate, but will need to be addressed by the time Ukraine joins
the EU.
On the protection of minors, content that can be harmful to the physical, mental or moral
development of children and young people is regulated both for television and radio. While
there are no safety-by-design or privacy-by-design principles embedded in the policy to protect
children, there are examples of industry- and NGO-driven initiatives to address the issue of
harmful content, including self-generated content. Awareness-raising activities are alsoorganised as part of formal education. Media literacy has been integrated as a key componentof the education system.
Chapter 16 - Taxation
EU rules on taxation cover value-added tax and excise duties and aspects of corporate
taxation. They also cover cooperation between tax administrations, including the exchange of
information to prevent tax evasion.
Ukraine has some level of preparation in the area of taxation. It has ensured continuity of
tax administration and made some progress in this policy area during the reporting period.
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On 20 March 2023, Ukraine adopted the law introducing the OECD standard on the automatic
exchange of information on financial accounts (Common Reporting Standard), which is due
to start in 2024. On 3 November 2022, Ukraine joined the OECD Multilateral Competent
Authority Agreement on the exchange of country-by-country reports.
In 2023, Ukraine should in particular:→ make progress in terms of aligning legislation on VAT and excise duties;→ prepare the introduction of the general anti-abuse rule as part of the Anti-Tax AvoidanceDirective;→ ensure the implementation of the automatic exchange of tax information with EU
Member States in line with the OECD Global Standards.
On indirect taxation, Ukraine’s VAT law is generally aligned with the EU VAT Directive.
The standard VAT rate is 20%, with reduced rates of 0%, 7% and 14% for specific operations.
A preferential VAT regime is applied to transactions involving the import of goods. VAT andexcise duties on fuel and the simplified taxation, suspended at the beginning of the war, were
restored. The VAT refund, which had been suspended, has been restored and has been fully
automated. No VAT refund arrears have been reported as of April 2023.
Excise taxation is partially aligned with EU law. Alcohol and alcoholic beverages are classified
and taxed based on EU rules, except for beer and beer mixes. Excise duties on energy products
have a narrower scope and lower rates compared to the EU Directive. Further alignment isneeded on VAT and excise duty on goods imported by individuals from third countries.
Ukraine has a tax warehousing system for alcohol, tobacco and energy products, but it does notcomply with the EU duty suspension system. The system includes premises within the
country’s customs territory and mobile excise warehouses for fuel or ethyl alcohol on thecustoms territory of Ukraine under duty suspension. Excise tax is immediately due once
excisable goods have been produced or imported, with the excise suspension regime notapplied. The country needs to bring its excise warehousing system in line with the EU acquis.
The system of electronic administration of the sale of fuel and ethyl alcohol monitors andcontrols the movement of taxed products within the territory of Ukraine.
In terms of direct taxation, residents are taxed on worldwide income, whereas non-residents
are taxed only on their Ukrainian-sourced income. The standard tax rate of 18% applies tovarious types of income, including earnings (salary), benefits, foreign income and passive
income, with a few exceptions. However, corporate income tax is not fully in line with the
Merger Directive, Parent-Subsidiary Directive and the Interest and Royalties Directive. The
cross-border transfer of assets within the same company may be subject to corporate profit tax.
Exit taxation rules similar to those in Council Directive EU 2016/1164 and in the general antiabuse rule as part of the Anti-Tax Avoidance Directive have not been implemented.
On administrative cooperation and mutual assistance, Ukraine has double taxation
avoidance agreements with all EU Member States. It has also signed the Convention on Mutual
Administrative Assistance in Tax Matters (OECD/Council of Europe). Parliament adopted theLaw on automatic exchange of information on financial accounts, aligned with the EU
Directive on Administrative Cooperation (DAC 2), on 20 March 2023. The first automatic
exchange of information is scheduled for 2024, covering the period from mid-2023. Ukraine’s
legislation on base erosion and profit shifting (BEPS) implements the OECD BEPS Action 13
on Multinational Enterprises Groups Country-by-Country Reporting, largely aligning with the106

EU DAC 4 Directive. Ukraine intends to use the OECD Common Transmission System for
automatic exchange of information based on the common reporting standards and country-bycountry standards. However, there is no central communication office for informationexchange with EU Member States yet.
On operational capacity and computerisation, 95% of State Tax Service personnel areoperational despite the ongoing war, with some working remotely. As of 3 April 2023, 63
taxpayer centres had temporarily stopped their activities, with taxpayers offered extraterritorialservices. Thanks to EU support, the IT centre of the State Tax Service has been able to continue
operating. Before the war, State Tax Service staff were recruited under the Law on civil service.
However, there is a need to assess training needs and base the annual training programme on
this assessment.
IT reforms in tax are guided by the IT reform strategy for the public finance management
system, adopted by the Cabinet of Ministers in November 2021. A dedicated IT reform strategy
for the State Tax Service is currently being finalised. The State Tax Service currently operates
electronic tax administration systems as well as VAT tax invoices (ERPN) and excise invoice(ERAN) registration systems. Ukraine needs to establish connections to EU IT systems suchas the Excise Movement Control System, the VAT Information Exchange System based on the
Mutual Assistance Directives and the Recovery Directive.
Chapter 17 – Economic and monetary policy
EU rules require the independence of central banks and prohibit them from directly financing
the public sector. Member States coordinate their economic policies and are subject to fiscal,
economic and financial surveillance.
Ukraine is moderately prepared in the area of economic and monetary policy. As theRussian full scale invasion demanded extraordinary economic policy measures, no progress
could be made in the policy areas. The Ukrainian authorities have taken comprehensive
measures aimed at maintaining macroeconomic and financial stability in wartime, which
required to deviate from standard practices. The policy approached has delivered stability.
In the coming year, Ukraine should in particular:→ prepare to return to inflation targeting and the flexible exchange rate regime;→ limit monetary financing of the state budget;→ prepare to return to medium-term budgetary planning from 2024.
In terms of monetary policy, the strategic goal of the National Bank of Ukraine (NBU) against
the backdrop of the war is to maintain macroeconomic and financial stability. The NBU has
been pursuing policies aimed at maintaining price and financial stability, by maintaining anadequate level of foreign currency reserves. In the face of high uncertainty and less effective
conventional market instruments, the NBU continued to implement a fixed exchange rate
regime coupled with capital controls under martial law as the main anchor for stabilising
expectations and ensuring price and financial stability.
Martial law allows the NBU to take several temporary policy measures. These include allowing
monetary financing and state budget support by purchasing securities issued by the governmenton the primary market as well as imposing limits on deposit withdrawals and restrictions on
the repatriation of non-resident funds, given the need to provide an adequate response to thewar and ensure the uninterrupted funding of the budget. From 16 June 2023, the NBU easedsome of the restrictions to transfer funds abroad, if guaranteed by International Financial
107

Institutions and foreign export credit agencies, and from 21 June 2023 to service and repay newloans to non-residents. The NBU has ceased monetary financing since the start of 2023 andcommitted to abstaining from monetary financing going forward. The NBU also adopted astrategy on gradual easing of foreign currency restrictions, transition to greater flexibility ofthe exchange rate and return to inflation targeting.
Overall, the legislative framework ensures the functional, institutional, personal and financial
independence of the NBU and it prohibits direct and indirect monetary financing of the public
sector. In 2021, legislation was adopted that further strengthened the Central Bank
independence, notably the operational independence of its different functions (e.g.
supervision). The law contains a provision that the NBU must perform its tasks, operate anduse its instruments without any external and public interference. However, it still provides forsome level of engagement with the authorities by allowing mutual consultations between the
NBU and the government. The legislative framework also allows either the President of
Ukraine or the Rada to unilaterally remove a member of the governing body without judicial
review, which weakens the protective measures against arbitrary dismissals. Furthermore, there
is still scope to further streamline the eligibility criteria and experience requirements forappointments at the Council and Executive Board.
On economic policy, medium-term budget planning has become difficult due to the war. This
includes setting key priorities for financing, establishing spending ceilings and outlining
possible fiscal risks. Furthermore, transparency has been negatively affected, with much lesscomprehensive budgetary information being published. Ukraine has continued to forecast
economic and social developments, although it became very challenging in view of the many
uncertainties. Forecasting capacities remain rather weak, and there is no independent fiscal
institution to evaluate the forecasts, scrutinise the budgetary assumptions or evaluate how
previous forecasts performed. The government announced a return to medium-term budgetaryplanning as of the 2024 budget, and there have been some tentative steps to reform theaccounting framework.
The main strategic document on economic policy is the Economic Security Strategy of Ukraine
for the period up to 2025, which was approved by Presidential decree in August 2021. As partof its implementation, a transparent system of continuous monitoring of economic stability has
been implemented, based on 34 indicators on the state of economic security with their criticallimits and target benchmarks. These indicators are similar to those defined in the EU legal
framework and are used for determining the presence of macroeconomic imbalances.
Ukraine does not report general government sector data in line with ESA 2010, as they baseon the IMF’s GFS Manual 2014, which differ substantially. At this stage, GFS or excessive
deficit procedure statistics are not transmitted to Eurostat. The underlying statistical frameworkis therefore not aligned with ESA 2010 requirements and definitions, and accounting rules andprocedures are not consistently applied across general government subsectors. In addition, thepublication of statistical information has been largely disrupted while martial law is imposed.
Chapter 19 – Social policy and employment
EU rules in the social field include minimum standards for labour law, equality, health andsafety at work and non-discrimination. They also promote social inclusion and social
protection, and social dialogue at EU level.

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Ukraine remains at an early stage of preparation in social policy and employment. Over thereporting period, it made limited progress.
In the coming year, Ukraine should in particular:→ adopt new framework legislation in the field of labour relations and occupational healthand safety to bring it in line with applicable EU directives and ensure an enabling
environment for bipartite and tripartite social dialogue and strengthen the capacities ofsocial partners;→ develop and adopt a comprehensive de-institutionalisation reform of childcare and launch
its implementation, considering the situation of displaced children;→ address shortcomings and further align with EU legislation on non-discrimination in
employment.
On labour legislation, new laws were adopted in 2022 that govern labour relations andemployee rights; they contain derogations (exemptions) applicable for the duration of martial
law. Pending reforms, labour relations are still guided in general by an overarching labour codefrom 1971 that needs to be modernised and aligned with EU legislation.
Undeclared work is widespread, with almost one in five of all employed working in informal
employment in 2021.
Enforcement of legislation by the State Labour Service, Ukraine’s labour inspectorate, remains
constrained by legislative restrictions to the powers of labour inspectors, which are notconsistent with ILO Conventions 81 and 129 on labour inspections. The State Labour Service
is being reformed but remains underfunded and has a high staff turnover. Under martial law,
the powers of labour inspectors are mostly limited to information and advice, as inspections
have been suspended.
While alignment with EU acquis on health and safety at work remains limited, steps havebeen taken during the reporting period. In 2023, the Ministry of Economy approved minimum
requirements for safety and health signs at work and for the health and safety of workers in
explosive environments. A resolution of the Cabinet of Ministers of January 2023 establisheda list of hazardous chemicals prohibited for production and use at work and the Ministry of
Health approved minimum requirements for health and safety of workers exposed toelectromagnetic fields and the limit and working levels of industrial vibration and the procedure
for assessing the level of danger of the impact of vibration on the employee. Since 2020, theState Labour Service has reviewed occupational safety at companies in all regions of Ukraine
to identify the most risk-prone sectors, developed regional occupational safety profiles and set
up preventive work plans. There are no reliable statistics on workplace accidents, which remain
severely underreported.
On social dialogue, a law on collective agreements was adopted in February 2023 and willenter into force six months after the cessation or cancellation of martial law. The National
Tripartite Social and Economic Council suffers from high staff turnover, understaffing and alack of clear duties and responsibilities. Since September 2022, its rotating presidency has notbeen renewed, creating a period of major inactivity. The government continues to holdconsultations with trade unions and employers’ organisations through their joint representative
bodies. Capacity of social partners remains to be strengthened.
Ukraine’s employment policy has yet to be harmonised with the relevant EU acquis, inparticular with the relevant guidelines issued for the EU Member States. Ukraine has noseparate strategy on employment. However, the strategy on economic development of Ukraine,109

which runs until 2030, includes the strategic objective of increasing employment. There is no
information available to assess its implementation, considering the big severe labour market
distortion caused by the war.
The State Employment Service implements the national policy on employment, labour
migration and social protection against unemployment. It administers unemployment benefits
and supports jobseekers and employers alike. The service is being reformed to make it more
responsive to jobseekers’ and employers’ needs. Active labour market measures include theintroduction of a state programme to provide micro-grants to individuals so they can create ordevelop their own business.
Employment statistics are collected in accordance with International Labour Organization(ILO) standards but not provided to Eurostat. The invasion has had a massive impact on thelabour market, with vast numbers of persons being internally displaced or having fled to othercountries. The employment rate (20-64) stood at 64.8% in 2021. For women the rate was
59.3%. with a low and decreasing rate of participation among women. Youth unemployment(15-24 years) was 19.1% in 2021. Informal employment was estimated at 20% of all employedin 2021. Ukraine adopted a strategy and an action plan to reduce undeclared work, but it has
stopped collecting data on it since the war.
On social protection and inclusion, there has been some progress in administering social
insurance benefits and extending their coverage, while weak targeting and the low level of
support has undermined the effectiveness of Ukraine’s social protection expenditure in
reducing poverty and inequality. In view of the considerable number of internally displacedfollowing the outbreak of the Russian war of aggression against Ukraine, a strategy on internal
displacement covering evacuation, integration and reintegration has been put in place. There
are no developments on social inclusion, access to social housing and social service provision.
In 2022, Ukraine continued to strengthen the social protection of the most vulnerable segmentsof the population. The continuity of several types of social payments was ensured through aspecial system of centralised accrual during martial law. This allowed people who live in the
territory of military operations and under occupation to accrue payments that could not be
made. In addition, benefits received in the past were automatically extended for the period ofmartial law. Assistance schemes for internally displaced persons have also been introduced.
In January 2023, Ukraine started developing a unified information system for theadministration of all social payments. In a first stage, individuals will be able to apply for
housing subsidies and social security benefits centrally and online.
On childcare, there has been no progress on the de-institutionalisation of the childcare system,
while the impact of the Russian war of aggression against Ukraine added more urgency to afundamental reform of the existing system, as the reform adopted in 2017 has not led to
substantial progress.
The government has adopted legal changes to non-discrimination in employment and social
policy. They oblige employers to ensure equal opportunities for employees to conclude longterm agreements and inform them about suitable vacancies. Ukrainian law now prohibits any
discrimination in employment that breaches equal opportunities or restricts any employee's
rights, among others on grounds of race, skin colour, sex and gender identity, sexual
orientation, age, health, disability, marital status or language. In August 2022, Ukraine
approved rules of procedure on penalties for non-compliance with anti-discrimination
legislation. The Ukrainian Parliament Commissioner for Human Rights (ombudsperson), as
the main body for combating discrimination, remains under-resourced, with limited capacity
to enforce its mandate in employment and social policies.
110No official statistics exist on court cases dedicated to discrimination at work. An overview ofcourt cases demonstrates, however, that discrimination is usually not among the main reasonsfor disputes (which mostly focus instead on returning to work or the payment of wage arrears).
Specialised civil society organisations estimate that the level of rejected appeals against
discrimination is high. Ukraine is still to adopt legislation obliging employers to prove thelegality of their decision, action or inaction in discrimination-related court cases, as provided
for in the national human rights strategy for 2021-2023.
On equality between women and men in employment and social policy, legislation does notcreate any barriers or impediments for men or women to occupy any position in any profession
in the labour market, neither in the public or private sector. Already in 2017, legislation thatprohibited women from practising some 450 professions was abolished, with some exceptions(such as ILO Convention 45, which forbids underground work in mines). In September 2020,
Ukraine acceded to the Biarritz Partnership for Gender Equality. Changes to the Law onadvertising adopted in May 2023 banned also discrimination on grounds of sexual orientationin advertising as well as gender stereotyping, sexism in job listings and advertising, introducing
penalties for employers. In February 2022, all jobs in the Ukrainian armed forces, including
combat roles, were opened to women. However, existing legislation on female employment
does not address existing imbalances and female underrepresentation in certain economic
areas. Legislation obliges employers to take measures in order to prevent and protect against
sexual harassment and other forms of gender-based violence, but there is a lack of direct
requirements or procedures for prevention and protection.
The consistent differences in wages between men and women are largely due to occupationalsegregation, i.e. differences in employment preferences, with more women working in sectors
with relatively high educational requirements but lower wages, primarily in the public sector.
Since a substantial part of the economy is informal, official wage statistics do not accuratelyreflect wage differences between men and women. Ukraine has no tax-benefit system in place
to create similar financial incentives to work for both parents, while unpaid care and domestic
work still fall mainly on women.
In August 2022, Ukraine adopted a state strategy to ensure equal rights and opportunities formen and women for the period up to 2030. In line with the operational plan for 2022-2024, thecountry has committed to prepare for the ratification of ILO Convention 190 concerning theelimination of violence and harassment in the world of work. Certain parts dealing with sexual
harassment and gender-based violence are included in other legislation, but are not specifically
dedicated to labour relationships.
According to the Ministry of Economy of Ukraine, the gender pay gap before the fully-fledged
Russian invasion in Ukraine stands at 18,6%. . In May 2022, Ukraine presented the National
Strategy and Action Plan to reduce the gender pay gap, address occupational separation,
gender-based discrimination and harassment at work and close legal loopholes preventing thefull application of the equal pay for equal work principle.
Chapter 20 – Enterprise and industrial policy
EU industrial policy strengthens competitiveness, facilitates structural change and encourages
a business-friendly environment that stimulates small and medium-sized enterprises (SMEs).
Ukraine has some level of preparation in the area of enterprise and industrial policy, withlimited progress made on alignment with the EU acquis during the reporting period.
In the coming year, Ukraine should in particular:111

→ develop mid-term priorities for SME development and take measures for improving thebusiness environment and investment climate;→ adopt necessary legislation to align with Directive 2011/7/EU on combating latepayment in commercial transactions.
On enterprise and industrial policy principles, in 2021 Ukraine adopted an overarching
National Economic Strategy until 2030. It outlined long-term priorities for the development of
Ukraine’s economy and strategic measures in main sectors, including industry andentrepreneurship. Following the outbreak of the Russian war of aggression against Ukraine,the 2030 strategy has been largely overtaken by the National Recovery Plan (NRP), which
specifies the urgent measures and investments needed to support the country’s wartime
economy and society. The NRP is a strategic document that sets out the recovery/development
goals of Ukraine until 2032, focusing on stimulating resilience, recovery, modernisation andgrowth. It stresses the need to align Ukraine's recovery and modernisation with the EU
principles of green transition and digital transformation, prioritising private investment andnationwide entrepreneurship and SMEs as an important pillar of the new economic model.
The reconstruction of industry will have to be accompanied with measures directed towards
improving the business environment, reducing the informal sector, and rolling back the state
presence in the economy.
While Ukraine’s SME Strategy and Action Plan expired in 2020, it included the strategic
framework for SMEs in alignment with the Small Business Act principles. In the OECD’s
SME Policy Index 2020, Ukraine registered significant progress since measurements started in2016. The next assessment is scheduled for 2024. As per the 2020 Index recommendations,Ukraine should ensure the sustainability of its institutional and regulatory framework for SME
policy, step up deregulation efforts and ensure the creation of a level playing field for SMEs.
In addition, streamlining support for SME greening and internationalisation and providing a
range of business development services will help improve the competitiveness of the Ukrainian
industry.
A number of SME digitalisation and deregulation measures have been initiated to improve theregulatory and operational environment for SMEs. Regulatory impact assessments are
regularly conducted and include an SME test. The Unified State Electronic System of Permit
Documents (eLicense) is being created to digitalise administrative services in the field oflicensing, and the ePermit system is also set to be developed by the end of 2023.
Ukraine has used the same definition for SMEs as the EU since 2012. It is enshrined in theCommercial Code of Ukraine and widely applied in regulating economic activity.
On enterprise and industry policy instruments, the Ukrainian legislation is not aligned withEU legislation on the rules of Directive on combating late payment in commercial transactions.
There is no dedicated legal basis to combat late payment in commercial transactions.
Due to the absence of a current stand-alone SME strategy, the government agencies have been
operating on an ad hoc, reactive and short-term basis during both the COVID-19 pandemic andthe war. Ukraine has implemented separate programmes to support SMEs during the war.
These cover aspects such as business relocation, financing and simplification of taxation. On
entrepreneurship education and business support, the national Diia.Business support activities,
including the national multidimensional portal and a network of offline centres, have been
increasingly important. The Diia.Business portal contains free educational courses on various
aspects of starting and managing business. It also contains online services such as business112

registration, choosing a taxation system, obtaining licences in the sphere of economic activity
and public procurement. Digital competence is included as a key competence in the national
education curricula. Female entrepreneurship is supported by several tools and women-specificprogrammes promoted on Diia.Business.
Ukraine signed an association agreements for participation in the EU’s Horizon Europe andCreative Europe programmes and signed an affiliation agreement for the Single Market
Programme on 3 February 2023, which has meanwhile been ratified. Ukraine’s businessmatchmaking and integration into EU and global value chains are supported by eightorganisation members of the Enterprise Europe Network consortium in Ukraine, fiveorganisations that administer the Erasmus for Young Entrepreneurs programme and about 40
clusters that participate in the Ukrainian Cluster Alliance and have access to the European
Cluster Collaboration Platform instruments.
As regards sector policies, the updated Partnership Roadmap for 2023–2024 in the area of raw
materials was endorsed on 19 May 2023.Good progress of implementation of the initial
Partnership Roadmap 2021-22 was reported despite the war conditions.
Chapter 25 – Science and research
The EU provides significant support for research and innovation. All Member States canparticipate in the EU’s research and innovation programmes and benefit from them, especiallywhere there is scientific excellence and solid investment in research and innovation.
Ukraine is moderately prepared in the area of science and research. It participates in the
EU research and innovation (R&I) programmes and seeks greater integration into theEuropean Research Area and the New European Innovation Agenda. Overall, limited
progress was made towards alignment with the EU acquis during the reporting period.
In the coming year, Ukraine should in particular:→ intensify effort to integrate into Horizon Europe, by taking steps to establish an office in
Ukraine, appointing national contact points and taking part in the relevant governancestructures;→ adopt the strategy for scientific and technological development;→ develop regional smart specialisation strategies.
Ukraine has taken steps to modernise its R&I policy following the recommendations of the
Horizon 2020 Policy Support Facility. The country has set up two national advisory councils(for science and technology development and for innovation) and the National Research
Foundation.
Russia’s war of aggression against Ukraine is aggravating the long-term trend of underinvestment in R&I by destroying infrastructure and human capital. 35% of research
infrastructure had been damaged or destroyed by March 2023 and 25% of the scientificworkforce had left the country. In addition, public investment in science and innovation has
been cut to a minimum. As of 2020, Ukraine’s research spending shrunk to less than half of its
2003 level. In 2021, Ukraine’s research spending as a share of GDP stood at 0.29% of GDP,
which is less than half of its 2003 level.
The Ukraine Start-up Fund was set up to strengthen Ukraine’s innovation capacity and businesscollaboration. There is currently no national technology transfer roadmap. According to theEuropean Innovation Scoreboard 2022, Ukraine is regarded as an emerging innovator,
113performing at 31% of the EU average. On innovation the performance gap with the EU is
increasing.
The country has a legal basis for the design of smart specialisation strategies and their inclusionin overarching regional development strategies has been obligatory since 2021. While theactual development of strategies has been interrupted by the war, several Ukrainian regions
expressed interest in restarting the process in 2023.
On cooperation with the EU, Ukraine is revising the roadmap for integration into the European
Research Area and has been making progress on some of its priorities such as gender equality,
open science (the National Open Science Plan was adopted in October 2022) and reforming
the research assessment system. However, Ukraine’s participation in European Research Area
governance structures is still limited. In relation to the New European Innovation Agenda,
Ukraine has developed a strategy for the development of the innovation sector and has been
invited to join the European Innovation Council Forum and the Coalition of the Willing to
exchange on innovation policies and initiatives.
Horizon Europe and Euratom remain the cornerstones of support for Ukraine’s R&I sector. By
August 2023, 79 grants had been signed totalling EUR 22.3 million. In addition, Ukraine
benefits from dedicated initiatives under the Marie Skłodowska-Curie Actions programme, theEuropean Innovation Council, the EU Cities Mission and in the areas of research infrastructure.
The opening of the Horizon Europe office in Kyiv will help make the most of the available
opportunities. Ukraine should also swiftly appoint the Horizon Europe national contact points(NCPs) to strengthen participation in the programme.
Ukraine has 39 intergovernmental agreements for R&I cooperation with 35 countries. In 2022,
Ukraine cooperated with eight partner countries via 79 joint international research projects.
Chapter 26 – Education and culture
The EU supports cooperation in education and culture through funding programmes and thecoordination of Member State policy through the ‘open method of coordination’. The EU andthe Member States must also prevent discrimination and ensure quality education for childrenof migrant workers, including those from disadvantaged backgrounds.
Ukraine has some level of preparation in the area of education and culture. The education
system and youth policy are broadly aligned with EU objectives. Ukraine’s cultural policy
reflects the general priorities of the New European Agenda for Culture. Ukraine has a goodlevel of cooperation with its European partners on sport. The country is broadly aligned withEU policy on training and qualifications. Some progress has been achieved in all these areas.
In the coming year, Ukraine should in particular:→ develop a plan for a relevant statistical data collection, analysis and sharing mechanism
for education and training;→ start implementing a plan to optimise the network of education institutions;→ adopt legislation to modernise and regulate professional education (vocational educationand training).
Education and training statistics are not widely available, and data is collected and publishedwith a considerable time lag. According to World Bank data, public spending on education
amounted to 5.4% in 2020 (the EU MS average was 5% of GDP).
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The network of education institutions, including higher education institutions, needs to be
optimised to respond to the demographic changes in Ukraine and improve the quality ofeducation. The Russian war of aggression poses major challenges, including large-scale
destruction of education facilities. This severely hampers access to education in the affectedareas. Digital learning centres have allowed some students to resume their studies, but learning
outcomes and the psychological state of students and teachers have suffered greatly.
Ukraine has adopted a set of laws and policies to provide education principles and standards inaccordance with EU standards. The New Ukrainian School reform aims at introducing content
education based on key competencies, including green and digital. The new standards inprimary and basic secondary education define 11 key competencies that correspond to the EU
key competencies for lifelong learning. The New Ukrainian School is being rolled out withsome delays in terms of teacher training and the printing of new textbooks.
The Law on education establishes the structure of the education system and gives a significant
role to the Ukrainian National Qualifications Framework, lifelong learning and education basedon key competencies. In February 2023, the Commission published a report on the comparison
between the European Qualifications Framework and the Ukrainian qualifications framework.
The report demonstrates how Ukrainian qualifications compare with the European ones andsupport the recognition of Ukrainian qualifications and can help further studies andemployment. Ukraine became a member of the Advisory Group of the European Qualifications
Framework and can start preparing for the referencing to the European Qualifications
Framework.
An Arrangement for Cooperation on Education between the European Commission and theMinistry of Education and Science of Ukraine was signed in June 2023. Both parties agreed tostrengthen and further develop cooperation and dialogue in this field. The Commission has also
opened up participation in the Eurydice Network to the Ministry of Education and Science of
Ukraine to get a deeper understanding of the respective education systems and their cooperationin education.
Regarding the issue of national minorities in education, where Ukraine needs to fully
implement the recommendation of the Council of Europe’s Venice Commission on the
education law, implement those on the State language law and address the remaining
recommendations of the Venice Commission Opinion of June 2023 and the follow-up Opinionof October 2023, this will continue to be monitored as part of Chapter 23 on judiciary andfundamental rights.
The VET system still operates under a law from 1998 that needs modernisation to among
others merge VET and pre-tertiary levels of education into one joint professional education
system. Meanwhile, the development of the VET sector is guided by a dedicated strategy andconcept with the aim of making VET more attractive and relevant. Work-based learning plays
a significant role (70%) in dual VET programmes. However, the involvement of businesses
remains low, and the quality of training, materials and technical equipment of VET institutions
does not fully meet the requirements of employers and students.
Validation of non-formal and informal learning is well established and implemented. The
National Agency for Qualifications accredits qualification centres that assess professional
qualifications independently, including the validation of non-formal and informal learning.
On higher education, Ukraine is a member of the Bologna Process and has ratified the Lisbon
Recognition Convention. It has made progress on the key European Higher Education Area
commitments, effectively engaging in EU higher education policy and transnational
cooperation. At the same time, the implementation of the Strategy for the Development of115

Higher Education in Ukraine for 2021-2031 has been slow due to the disruption and lack ofresources caused by the war. In May 2023, it made some progress in improving the mechanismof quality assurance of higher education. Ukraine participates in the international dimension of
the Erasmus+ programme. Around 30 higher education institutions from Ukraine have joined
European Universities Alliances in 2023, as associated partners.
In July 2023, Ukraine nominated its representatives to the European Education Area Working
Groups 2021-2025. It is also in the process of joining the Eurydice Network.
Youth policy is governed by the law on basic principles of youth policy, the strategy on thedevelopment of youth policy in Ukraine until 2030 and the state-targeted social programme
Youth of Ukraine for 2021-2025. The Ukrainian Volunteer Service has established an effective
national volunteer platform. However, activities on youth employment partnerships, youth
participation, skills development of disadvantaged young people and youth entrepreneurshipfor the digital and green economy need to be implemented in a more visible way.
Ukraine’s approach to cultural policy broadly reflects the general priorities of the New
European Agenda for Culture. At the strategic level, Ukrainian cultural policy focuses on threestrands: (1) the creation of conditions for the active involvement of Ukrainian actors into panEuropean cultural processes, (2) the promotion of European values, and (3) the strengtheningof culture ties with the EU Member States. Its strategy for the development of culture is due
for revision in 2025. The law on culture has been amended to include rules on the digitalisationof cultural heritage assets’ registers. The strategic elements are further translated into threeconcrete policy priorities: (1) designing and implementing a new approach for a public modelof cultural infrastructure, (2) safeguarding cultural heritage, and (3) fostering networking
among the internationalisation of Ukrainian cultural and creative sectors, which includes theassociation to Creative Europe. The European Capital of Culture is an additional priority.
On sport, Ukraine has continued to cooperate with European partners, including in theEuropean Week of Sport Beyond Borders and in the Council of Europe’s sport partnership.
Chapter 29 – Customs union
All EU Member States are part of the EU customs union and follow the same customs rules
and procedures. This requires legislative alignment as well as adequate implementation andenforcement capacity, and access to the common computerised customs systems.
Ukraine has a good level of preparation in the area of the customs union. Despite the ongoingmilitary aggression, Ukraine has made good progress in the customs union area in thereporting period, especially in terms of alignment with the EU acquis. Ukraine is connected to
the EU customs information system and is using the new computerised transit system (NCTS).
Ukraine has been a contracting party of the Convention on a Common Transit Procedure, which
is 100% based on the Union transit system, since 1 October 2022.
In the coming year, Ukraine should in particular:→ make progress in areas related to customs procedures, customs debt and the application ofguarantees as well as simplification of customs formalities, and with the development of a
new Customs Code;→ ensure the timely implementation of NCTS Phase 5 and expand the use of the common
transit procedure as well as the authorised economic operator (AEO) framework;→ adopt legislation criminalising large-scale smuggling of all goods and build up
administrative capacity to implement this.

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Ukraine’s Customs Code, adopted in 2012, largely aligns with the Union Customs Code,including amendments to transit, AEOs and intellectual property rights. In 2022, the Customs
Code was amended twice to simplify customs formalities, decision-making procedures, andenable accession to the common transit system. The government adopted and implemented a
law aligning the classification of goods with the harmonised system and combined EU
nomenclature in October 2022 .
Further efforts are needed to raise the usage of the national AEO programme and finalise therelated IT system for mutual recognition with the EU AEO programme.
Further alignment of the Customs Code with the Union Customs Code is needed, particularlyin the areas of customs procedures, simplification of customs formalities, pre-departure
information and the enforcement of intellectual property rights.
The IT system for registering traders’ liabilities needs to be updated.
The pre-war simplifications for customs clearance, extended until November 2023, should be
lifted to promote the use of NCTS and grant benefits to compliant AEOs, while strengthening
risk-based customs controls and improving inland controls. Returning operative intelligencerights to the State Customs Service (SCS) is necessary to improve its effectiveness.
Ukraine became a contracting party of the Convention on a Common Transit Procedure andthe Convention on the Simplification of Formalities in Trade in Goods on 1 October 2022, but
the number of common transit movements remains modest.
Despite the ongoing war and suspension of operations at several regional customs offices andborder crossing points along the eastern border, the SCS has largely maintained its
operational and administrative capacity. However, a comprehensive reform is necessary totransform it into a modern, efficient, transparent and corruption-free institution. This includes
recruiting stable and full-fledged leadership through transparent and merit-based selection.
Improving human resources management with an appropriate training framework is crucial,alongside strengthening integrity and anti-corruption measures.
The SCS IT infrastructure needs a significant upgrade as existing systems for customs
clearance and risk management are outdated and non-compliant with security requirements.
While a strategic plan for digitalisation of the SCS was adopted in 2022 and is being
implemented, the ongoing war limits financial resources and makes IT reform dependent on
external funding. A long-term national strategic plan for digital development of SCS until 2026,
based on the multi-annual EU customs strategic plan, should be finalised and adopted. A planfor the implementation of EU-related IT systems needs to be developed.
Criminalisation of large-scale smuggling and accession to the Protocol to Eliminate Illicit
Trade in Tobacco Products, along with empowering the SCS to investigate cases of smuggling,
are needed. Strengthening intellectual property rights will require the government to establish
a legal framework and develop necessary IT tools. Developing risk management for postclearance control and customs audit, as well as introducing risk-based customs valuation, needs
to be addressed.
CLUSTER 4: THE GREEN AGENDA AND SUSTAINABLE CONNECTIVITY
This cluster covers: transport policy (Chapter 14); energy (Chapter 15); trans-European
networks (Chapter 21); and environment and climate change (Chapter 27).
Ukraine has a good level of preparation on energy and some level of preparation in the areasof transport, trans-European networks and overall in the chapter on environment and climatechange.
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During the reporting period, the country has made some progress on energy. Good progresshas been made on environment and climate, with more progress on the environment than on
climate change. Limited progress was recorded on transport and some on Trans-European
networks. Ukraine signed a road transport agreement in June 2022 with the EU to liberalisebilateral and transit road transport. However, overall legislative alignment and institutional
reforms in the transport sector remain slow. In the energy sector, Ukraine adopted importantlegislation including its long-pending law on wholesale energy market integrity andtransparency. Measures taken under martial law, which led to a decrease in transparency andindependence of energy stakeholders, will need to be reversed. Regarding Trans-European
networks, energy and transport institutions continue to show extraordinary resilience andcapability for emergency repairs to the damaged networks. In chapter environment and climatechange, Ukraine’s legislative alignment with EU acquis and strategic planning increased,
including through a framework law on waste management, flood risk management plans and awater strategy until 2050. Ukraine’s weak administrative capacity in the field of environmentand climate is a key bottleneck, also for the implementation and enforcement of rules onenvironmental impact assessments. This cluster and the related reforms are intricately linked
to Ukraine’s reconstruction during and after the war.
Chapter 14 – Transport
The EU has common rules on technical and safety standards, security, social standards, Stateaid and market liberalisation in road transport, railways, inland waterways, combinedtransport, aviation and maritime transport.
Ukraine has some level of preparation in the area of transport policy, with limited progressachieved during the reporting period. Progress was severely hampered by Russia’s continuing
military aggression against Ukraine.
In the coming year, Ukraine should in particular:→ further align and effectively implement of the EU rail and road acquis and set up theappropriate administrative structures for rail transport, in particular the regulatory body;→ strengthen its administrative capacity to enforce measures on road safety and establish
inspection and investigation bodies for rail and inland waterways transport.
In the area of transport, Ukraine is implementing the EU acquis priority transport rules underthe Association Agreement. These aim to facilitate the restructuring and modernisation of
Ukraine’s transport sector and gradual approximation with operating EU and international
standards and policies. In this context, Ukraine’s transport sector should gradually become
more sustainable, safe and efficient. Despite progress in some areas, the speed of legal andinstitutional adjustments and reforms remains very slow, being further affected by Russia’s
military aggression. The implementation of the National Transport Strategy 2030, which serves
as a framework for the modernisation of the transport sector, and its dedicated action plan for2021-2024 should be resumed as soon as possible.
The level of alignment of the Ukrainian public services legislation on rail and road transportwith the EU acquis is low and must be prioritised. In rail and waterborne transport, independent
accident investigation bodies have not been established.
In 2022, Ukraine was granted observer status in the Transport Community Treaty as a robust
basis for further transport market integration with the EU and is cooperating pro-actively withthe treaty's structures. Closer association with the Transport Community can support Ukraine
on its European path, as the Transport Community plays an important role supporting theenlargement process through the implementation of the relevant EU transport acquis.
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In the area of road transport, Ukraine has partially implemented the rules on tachographs.
Rules on access to the international road transport market and on passenger transport are inplace. On the European Electronic Toll Service/Eurovignette, there are no tolls in Ukraine androad charges are not collected. On social aspects, national rules are aligned with EU rules ondriving and rest times, but a number of other rules on rest periods have not been implemented.
Ukrainian legislation on testing the roadworthiness of vehicles is partially aligned with EU
rules.
No progress has been made in completing important regulatory reforms and adopting
legislation during the reporting period. This includes regulation of the road transport market on
wheeled transport safety and social aspects of road transport. The road safety situation in
Ukraine has worsened since Russia’s full scale invasion. The road safety strategy up to 2024
should be implemented as far as possible.
A road transport agreement was signed in June 2022 to liberalise bilateral and transit roadtransport between the EU and Ukraine for an initial period of 1 year, extended up to 2024. The
agreement also provides for the recognition of Ukrainian driving licences and certificates ofprofessional competence. Ukraine has also signed the Interbus Protocol on international regularand special regular carriage of passengers by coach and bus. However, Ukraine has yet to ratify
this protocol.
The implementation of rail transport reform was suspended with the introduction of martial
law in February 2022. The war has resulted in changes to logistics routes following the full andthen partial closure of Ukrainian Black Sea ports. It has demonstrated the importance of reliable
and resilient land connections with the EU and the vital role that rail transport plays in thecurrent context. The draft railway law has not yet been adopted.
Ukrainian Railways (JSC Ukrzaliznytsia) remains the sole integrated railway undertaking thatmanages infrastructure and provides rail transport services, with no financial and organisational
separation between infrastructure management and operations. The Law on natural monopolies
aims to regulate access to infrastructure. In practice, however, tariffs and conditions foraccessing the infrastructure are not regulated. The State Service of Ukraine for Transport
Safety, supervised by the Ministry for Communities, Territories and Infrastructure, issues
licences to wagon operators that transport passengers or dangerous goods. However, it does
not issue safety certificates.
On maritime transport, no progress has been made during the reporting period in adopting
legislation that aligns with the EU acquis. The legislative framework is not aligned with theacquis on a Community vessel traffic monitoring and information system. It is currently
impossible to implement the technical framework as the country does not exercise full control
over its coastline due to the war. Ukraine has not ratified the 2006 Maritime Labour Convention
from the International Labour Organization. Its legislation is not fully aligned with the EU
Directive on working time and the EU Directive on working time enforcement. A maritime
administration has been created and the body is operational. However, its capacities have to besignificantly strengthened in order to enforce the reforms and carry out international
obligations incumbent on a port or coastal state. On digital freight transport, the scope of
Ukraine’s legislation partially aligns with EU legislation. Ukraine still needs to implement
legislation that aligns with the EU Port Services Regulation. It should, as a flag state, makecontinued efforts and take necessary measures to improve the quality of its fleet. Ukraine also
participates in the Black and Caspian Sea (BCSEA II) technical assistance project implemented
by the European Maritime Safety Agency (EMSA).

119The 2020 Law on inland waterways transport establishes a legal, regulatory and institutional
set-up to ensure the safety of navigation. Further legislation on the functioning of the market,
access to the profession, river information systems and dangerous goods still needs to be
adopted and implemented. The government has taken steps to establish a dedicated executive
body (‘Administration of Navigation’) for inland waterways transport matters. Ukraine is amember of the EU Strategy for the Danube Region and an active Member State of the Danube
Commission. Furthermore, it has bilateral agreements with several Danube riparian states on
the mutual recognition of documents. Still, Ukraine should continue to work on fulfilling thepreconditions for recognition of crew navigation certificates in the EU, in accordance with
Directive (EU) 2017/2397.
Ukraine airspace is closed for civil aviation due to the war, which makes it impossible for
Ukrainian and foreign airlines to operate and has led to the suspension of air navigation services
by the Ukrainian State Air Traffic Services Enterprise. However, the State Aviation
Administration of Ukraine has so far maintained an appropriate level of oversight over thesafety of air carriers registered in Ukraine. Ukraine has made significant progress in aligningwith EU rules on aviation since 2017 and signed the EU-Ukraine Common Aviation Area
Agreement in October 2021. An action plan on the implementation of the Common Aviation
Area Agreement was approved in July 2022.
Ukraine has started to develop its policy, legal and regulatory framework on intermodaltransport. However, progress has been hampered by the war. The Law on multimodaltransport clarifies and simplifies the procedures and responsibilities for the use of several
modes of transport. It does so by approximating Ukrainian legislation with the Directive on theestablishment of common rules for certain types of combined transport of goods between
Member States.
More progress is needed to fully align Ukraine’s legislation with EU rules on passenger rights
in all modes of transport, in particular for bus and coach passengers and the rights of people
with reduced mobility. EU legislation on passenger rights in rail transport has been partially
implemented.
Chapter 15 – Energy
EU energy policy covers energy supply, infrastructure, the internal energy market, consumers,
renewable energy, energy efficiency, nuclear energy, nuclear safety, radiation protection andnuclear safeguards.
Ukraine has a good level of preparation in the area of energy. Ukraine achieved some
progress during the reporting period, despite the fact that the energy sector operated underemergency conditions due to Russian attacks on Ukraine’s energy infrastructure. Legislativealignment continued including on wholesale energy market integrity and transparency,
renewables, gas transmission system operator and gas storage certification. However, measurestaken under martial law led to a decrease in transparency and independence of stakeholders in
the energy sector.
In the coming period, Ukraine should in particular:→ advance green energy transition and green reconstruction: adopt an ambitious nationalenergy and climate plan (NECP) in line with the 2030 Energy Community energy andclimate targets; adopt and implement the electricity integration package; continue
improving energy efficiency including in the residential sector through regulatory measuresand via the Energy Efficiency Fund; implement policy measures to encourage investments120

in renewable energy production; launch reform of the district heating sector, and introduce
mandatory energy efficiency criteria for public procurement;→ take steps to achieve cost reflective energy pricing, in particular by gradually phasing out
public service obligations and replacing them with targeted support for vulnerable energy
consumers;→ improve the independent and effective functioning of the energy regulator, resulting in a
track record of fair and transparent decision-making to enable the energy markets tofunction properly.
In April 2023, Ukraine adopted a new energy strategy until 2050. The document has not been
made available as it remains classified by the Ukrainian government. Ukraine’s recovery planfrom July 2022 sets out the government’s intentions to increase the share of renewable energy
both in gas and electricity in the generation mix and develop the green hydrogen industry.
Before Russia’s full-scale invasion, Ukraine had developed a draft NECP. The new document
will have to be drafted taking into account the impact of the war on Ukraine’s energy
infrastructure and overall consequences for its energy system, which needs to become more
resilient, decentralised, efficient, and based on renewables. The NECP should set out concrete
policy and measures and become a guiding document for post-war reconstruction in line with
Energy Community 2030 targets, taking due account of recommendations from the Energy
Community Secretariat.
On security of supply, Ukraine relies mostly on domestic production and limited imports fromthe EU as regards natural gas. As for electricity, the capacity for electricity imports has beensteadily increased, reaching 1 200 MW in June 2023 for the Ukraine/Moldova control block.
Ukraine is not yet implementing the Oil Stocks Directive. The deadline under the Energy
Community Treaty for alignment passed on 1 January 2023. In December 2022, Ukraine
adopted a gas storage certification law, and in April 2023 the gas storage operator Ukrtransgaz
was certified in a compliant manner.
Ukraine’s gas and electricity transmission system operators (TSOs) have observer status in
ENTSO-E and ENTSOG, the European associations for the cooperation of TSOs. Ukrenergo,
Ukraine’s electricity TSO, is implementing measures to achieve full ENTSO-E membership.
On gas supplies, Ukraine participates in Aggregate EU, the EU’s joint gas purchase platform.
The country has agreements with Hungary, Poland and Slovakia on firm capacity for gas
imports to Ukraine.
On the internal energy market, Ukraine’s primary legislation is compliant with the third EU
energy package. Ukraine has yet to align with and implement the new electricity integration
package adopted in the Energy Community in December 2022. For electricity, a day-ahead andintraday market is operational under price caps. Ukraine has not yet designated a nominatedelectricity market operator. The electricity and gas TSOs and the gas storage operator are
unbundled and certified. The electricity and gas distribution system operators are also
unbundled. However, interventions by authorities and companies in the cooperate governanceof TSOs and in the market continue, which constitute a challenge. The corporate governanceof the gas TSO LLC Gas TSO of Ukraine proved non-functional. The governance reform of
the gas TSO started with legislation adopted in August 2023.
The independence of the National Energy and Utilities Regulatory Commission, Ukraine’s
national energy regulator, and trust in the institution has yet to be fully established, in line with
Ukraine’s obligations under the Energy Community. This is critical for private investment andreconstruction in the energy sector. During the reporting period, NEURC largely focused on121maintaining low and stable energy prices for the population during the war. To this end, public
service obligations were extended by Cabinet of Ministers’ resolutions to ensure the social
protection of household consumers of gas and electricity. As a result, the financial position of
the state-owned energy companies that implement public service obligations – Naftogaz forgas, Energoatom, Guaranteed Buyer and Ukrhydroenergo for electricity – has suffered greatly
as household tariffs were far below the cost recovery level. These tailored public service
obligations need to be gradually phased out and replaced by more sustainable solutions that
address energy poverty and the vulnerability of end consumers. In May 2023, NEURC slightly
increased household electricity tariffs.
After the Ukrainian and Moldovan electricity grids were synchronised with the Continental
European Network in March 2022 as an emergency measure, Ukraine started exporting
electricity to the EU market. Exports stopped after massive Russian air attacks on electricity
infrastructure from October 2022 onwards. To limit the extent of scheduled blackouts causedby military attacks, Ukraine imported electricity from the EU during the winter months,
resuming limited exports in April 2023. The volume of the electricity market fell significantly
as many industrial consumers had to stop production because of the war.
In May 2023, parliament adopted legislation on wholesale energy market integrity andtransparency (REMIT Regulation), in line with Ukraine's obligations under the Energy
Community. The REMIT law also introduced amendments regarding cross-border capacity
allocation. Agreements with EU neighbouring countries on cross-border capacity allocation are
still pending. So far, a 50:50 split of congestion rent was agreed with Slovakia. Joint auctions
for cross-border trading in electricity by Ukrenergo on the borders with Romania and Moldova
and via JAO, the Joint Allocation Office, on the borders with Poland, the Slovakia and Hungary
have yet to take place.
In the area of hydrocarbons, parliament adopted a law to simplify permitting procedures for
subsoil projects in December 2022.
On renewable energy, much of Ukraine’s installed capacity – which amounted to 9.6 GW in
2021 – has suffered from damage or is in regions with armed conflict. Implementing afunctional market-based support scheme for renewable energy sources (RES) in accordancewith Directive 2018/2001 remains a key priority for Ukraine, including for attracting muchneeded private investment. Ukraine’s current target for 2030 is a 27% share of RES in grossfinal energy consumption. In its NECP, Ukraine should set new ambitious annual targets for
RES until 2030.
In July 2023, parliament adopted legislative amendments, allowing renewable producers to sellelectricity directly on the day-ahead, intraday, bilateral and balancing markets. Prosumers caninstall RES facilities of up to 30 kW solar and wind and up to 50 kW for combined wind/solar
systems. It offers two compensation options for prosumers: a feed-in tariff and net billing basedon hourly wholesale market price. In June 2023, Ukraine adopted legislation setting theframework for guarantees of origin; a functioning national electronic registry has yet to beestablished.
On energy efficiency, Ukraine’s energy efficiency law is largely aligned with the EU Energy
Efficiency Directive. Rules on local energy planning and the deployment of energy
management systems by state and municipal authorities consider good practices from the EU.
Energy audits are mandatory for large companies. However, they are not yet supplemented bypenalties for breaches, which may hinder their enforcement, or by incentives. Measures in
Ukraine’s 2030 national energy efficiency action plan, adopted in 2021, need to be updated,
and its long-term strategy for the renovation of buildings adopted. Priority investments in122

energy efficiency for the transmission and distribution of electricity and gas need to be
identified.
Despite Russia’s war of aggression, Ukraine continues to align with EU energy efficiency
legislation. During the reporting period, Ukraine adopted four out of 26 legal acts that
implement its framework law on energy efficiency. In March 2023, it signed a law on highefficiency cogeneration, although still without any support mechanism for combined heat andpower based on useful heat demand to incentivise investments. Additional policy and support
measures are needed to promote efficient heating and cooling, including the reform andmodernisation of municipal district heating systems, wider use of renewable energy sources aswell as waste heat from industry.
Ukraine’s law on the energy efficiency of buildings is largely aligned with the EU acquis. A
few remaining compliance issues require further attention. These include inspections ofengineering systems, differentiation between buildings certification and energy audits forbuildings and introducing requirements on certifying buildings when sold or rented out. In July
2022, Ukraine adopted a new law to create conditions for the comprehensive thermal
modernisation of buildings. The law on commercial metering of thermal energy and watersupply is to a large extent aligned with the acquis on heat metering, and Ukraine has equipped
83% of buildings connected to district heating with accurate heat meters. However, individual
metering and consumption-based billing is still uncommon. Ukraine has a high level ofalignment with the EU regulations and Directive on Energy Labelling and the Directive on
Eco-design. At the beginning of 2023, Ukraine adopted 29 technical regulations on eco-designand 16 on energy labelling. To ensure effective implementation, the organisational andtechnical capacity of the state market surveillance body needs be strengthened. Mandatory
energy efficiency criteria for public procurement still need to be introduced.
In 2018, Ukraine set up the Energy Efficiency Fund with transparent corporate governance andmonitoring/verification systems to support renovations of residential buildings. So far, it has
been the only policy measure that applies compliant measuring and verification of energy
savings to end-user consumption. In 2022, the fund introduced a new restoration programme
to support the rehabilitation of residential buildings non-structurally damaged by war.
On nuclear energy, nuclear safety and radiation protection, Ukraine is party to allinternational conventions concluded under the auspices of the International Atomic Energy
Agency, including the Convention on Early Notification of a Nuclear Accident, and theConvention on Nuclear Safety. Commitments and obligations resulting from international
treaties, conventions and other agreements that fall under the responsibility of the State Nuclear
Regulatory Inspectorate of Ukraine (SNRIU) are implemented and enforced to the extent
possible taking into account the ongoing Russian war of aggression against Ukraine and theforceful illegal seizure by Russian forces of the Zaporizhzhia nuclear power plant.
The nuclear safety regulator’s capacity for independent licensing and inspection is consideredsufficient in principle. With assistance from the State Scientific and Technical Centre on
Nuclear and Radiation Safety, SNRIU can fulfil its responsibilities. However, its decisions arede facto not applied at the illegally seized Zaporizhzhia NPP. Further capacity building at
SNRIU is ongoing with international support. The regulator cooperates actively with theEuropean Nuclear Safety Regulators Group.
In February 2023, parliament adopted a law on the reorganisation of its state enterprise fornuclear energy. It provides for turning Energoatom into a joint stock company of the public
sector and includes the appointment of an independent supervisory board between December
2023 and March 2024, in line with Council Directive 204/87/Euratom. Energoatom operates
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15 nuclear units at four sites with a total capacity of 13.83 MW. The Zaporizhzhia nuclear
power plant, the largest one in Europe, has been illegally seized by Russia in March 2022. Thisis posing numerous safety threats and leaves Ukraine with 6 GW less base load electricity
production. Memoranda of understanding have been signed with Westinghouse, with theconstruction of nine new nuclear power units envisaged in Ukraine using AP1000 technology(pressurised water reactor with two cooling loops).
Ukraine has a certain level of alignment with Euratom nuclear safety legislation. Gaps exist in
the field of radiation protection of personnel, the population and the environment and onradioactive waste and spent fuel management. Ukraine’s approximation process is
experiencing delays, partly due to the ongoing Russian aggression and is fragmented.
Alignment of Ukrainian legislation with Council Directive 2014/87/Euratom and Council
Directive 2013/59/Euratom and Ukraine’s institutional framework needs to be completed.
Ukraine has a regulatory framework on radioactive waste that requires further development.
The country still lacks several planning documents in the areas of radioactive waste and spent
nuclear fuel management as well as a law on the management of uranium legacy sites. The
State Agency of Ukraine for Exclusion Zone Management is the central executive body
responsible for building and managing radioactive waste management infrastructure. It
manages the Radioactive Waste Management Fund. Its resources are insufficient to finance allnecessary infrastructure projects in this area.
On nuclear safeguards, Ukraine would need to start adapting the existing systems ofaccountancy and control of nuclear materials in order to accommodate for the safeguards
provisions (Chapter 7) of the Euratom Treaty.
Chapter 21 – Trans-European networks
The EU promotes Trans-European networks (TENs) in the areas of transport,
telecommunications and energy to strengthen the internal market and contribute to growth andemployment.
Ukraine has some level of preparation in the area of Trans-European Networks (TENs), withsome progress achieved during the reporting period. The development of new infrastructureand networks was substantially slowed down by the Russian war of aggression against Ukraine.
In the coming year, Ukraine should in particular:→ carry out emergency repairs and plan upgrades on critical infrastructure; taking into accountthe need for reconstruction in areas badly affected by the war, and ensure better connections
with EU Member States, in particular through more efficient TEN-T rail and road bordercrossing points as well as electricity interconnections;→ further align with and implement the EU TEN-T and TEN-E related regulatory framework.
→ Develop administrative capacities and scale up project preparation in order to ensure thattransport and energy infrastructure projects can be implemented in line with EU standards.
On the Trans-European transport network (TEN-T), there are currently two TEN-T core
network corridors that reach the Ukrainian border in Chop: The Mediterranean corridor and theRhine-Danube corridor. In June 2022, the EU and Ukraine signed a High-Level Understandingon the indicative TEN-T maps, making important adaptations to the indicative TEN-T network
in Ukraine, namely the inclusion of the inland waterways of the Dnipro River and Southern
Buh and adjustments to the rail and road network.
Ukraine has been associated to the Connecting Europe Facility in June 2023.
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The Indicative TEN-T Investment Action Plan identified 39 priority projects in Ukraine thatcover all transport modes: road, rail, aviation, ports and inland waterways. When the Russian
war of aggression against Ukraine started, less than 10% of the projects identified had
feasibility studies and only a few of these were in a more advanced stage of preparation or
implementation. The limited capacity to prioritise, prepare and implement projects and limited
fiscal space remain critical bottlenecks in Ukraine.
During the reporting period, Ukrainian efforts were mostly focused on emergency repairs to
the damaged transport network, restoration of lifeline connections and the implementation ofquick-win solutions to improve connections with Danube ports and EU Member States as partof the ‘Solidarity Lanes’ initiative. While Ukraine’s fiscal and institutional capacities remain
severely constrained by the war, transport institutions continue to show remarkable resilienceand capability to undertake rapid emergency repairs to the damaged transport network.
There is an urgent need to develop administrative capacities and scale up project preparation
for rebuilding and developing transport networks. Project implementation units withingovernment services and local government bodies should be strengthened. Investments in thetransport network need to be designed and implemented in line with environmental and social
standards and based on cost-benefit analysis following EU best practices. Ukraine’s own
domestic standards need amendments to align with the EU acquis, thus fosteringinteroperability with the transport network in the EU and contributing to the improvement ofroad safety.
Ukraine has yet to fully align with and implement the EU TEN-T acquis, in particular ontechnical standards needed to ensure the safety and interoperability of networks.
Decarbonisation and digitalisation of the transport sector remain challenging tasks, especiallyin the current circumstances. Further alignment and improvement of the public procurement
and environmental assessment standards and alignment with State aid rules is necessary.
Ukraine is including the Trans-European energy network (TEN-E) guidelines in its
legislative framework, with technical assistance funded by the EU. Ukraine’s alignment with
Regulation (EU) 347/2013 and designation of a national authority are still pending. A largepart of Ukraine’s internal electricity transmission infrastructure had been damaged since
February 2022; repairs are taking place constantly. Ukraine identified some priority projects tostrengthen its electricity and gas grids and build new interconnectors, for example therehabilitation of the 400 kV Mukacheve (Ukraine) – V.Kapusany (Slovakia) line. In spring
2023, reconstruction works started on the Bar compressor station.
Chapter 27 – Environment and climate change
The EU promotes strong climate action, sustainable development and protection of theenvironment. EU rules contain provisions addressing climate change, water and air quality,
waste management, nature protection, industrial pollution, chemicals, noise and civil
protection.
Ukraine has some level of preparation in the area of the environment and climate change.
Good progress was made in this chapter, despite Russia's war of aggression. On theenvironment, legislation was adopted aiming at further alignment on horizontal issues, water
quality, waste management, chemicals and noise. On climate, where progress was limited,
Ukraine continues its work on a national climate law and a National Energy and Climate Plan.
In the coming year, Ukraine should in particular:→ Ensure cross-sectoral mainstreaming of environment and climate action in thereconstruction plans of the country, identify green reconstruction strategy for key sectors
125and prioritise relevant EU legislation and standards in its National Programme for the
Adoption of the Acquis (NPAA);→ Adopt primary and secondary legislation to continue the reforms initiated in water andwaste management acquis. Adopt the law on environmental control and the legislation
harmonising with the industrial emissions acquis;→ Adopt a climate law and initiate the update of its long-term low emissions strategy
consistent with the EU 2030 framework.
Environment
Ukraine has taken several notable steps to align with EU horizontal legislation on environment
despite the difficulties posed by the ongoing Russian war of aggression. Taken in this context,
the steps undertaken by Ukraine are all the more significant, especially in view of the massive
environmental destruction suffered by Ukraine, and their relevance for the country’s post-war
recovery which will, ultimately, depend on the implementation and enforcement track record
after the war. Ukraine. Ukraine ratified two amendments to the Espoo Convention in July 2022
and signed a bilateral agreement with Romania on implementation of this Convention in
November 2022. During the reporting period, Ukraine adopted laws on the national pollutant
release and transfer register (September 2022) and on the state environmental monitoring
system.
The capacity of public administration to deliver on cross-sectoral mainstreaming ofenvironment and climate action in relation to reconstruction of the country as well as on
implementation and enforcement of already adopted EU acquis, needs to be strengthened.
Ukraine needs to significantly strengthen administrative and inspection capacities in theenvironment and climate sector. The implementation and enforcement of EIA and SEA
legislation deteriorated due to martial law. SEAs and EIAs must be carried out in line with the
Espoo Convention and the adopted EU acquis including for hydropower development
programmes and projects. Access by civil society to environmental information andparticipation in decision-making needs to be ensured. Ukrainian legislation addresses
disciplinary, civil, administrative and criminal liability for environmental offences, but fullalignment with and implementation of the relevant EU acquis is yet to be achieved.
On air quality, work on further alignment with two ambient air quality directives continues.
In August 2022, procedures were adopted for the development of action plans to improve air
quality, followed by the adoption of methodological recommendations in April 2023 on theircontent and procedures. Under the United Nations Economic Commission for Europe(UNECE) Air Convention, Ukraine submitted the Nomenclature for Reporting and Informative
Inventory Reports in 2022 and 2023. In March 2023, legislative amendments to the statemonitoring system, including on air quality, were adopted. Further work is needed on air
quality information collection, processing, reporting and dissemination procedures as well as
monitoring and control. Relevant investments should be planned for this purpose. On sulphurin fuels, systemic compliance monitoring of the products concerned is required. Alignment
with the Directive on the control of volatile organic compound emissions resulting from thestorage of petrol and petrol vapour recovery has yet to be fully achieved.
On waste management, a framework law was adopted in 2022, which enters into force in July
2023. On sewage sludge, general issues related to water drainage and sewage treatment wereaddressed with a new law in January 2023, but full compliance with the directive is yet to beachieved. A law on limiting the use of plastic bags was adopted in 2021, but additional efforts
are needed on enforcement and information dissemination to the general public.
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On water quality, river basin management plans are being developed as well as standards toassess the ecological status of rivers, lakes, transitional waters and coastal waters using fourout of five biological quality parameters of the Water Framework Directive. In October 2022,
the government approved flood risk management plans to implement the transposed Floods
Directive. A water strategy to address water use and the protection and reproduction of water
resources until 2050 was approved in December 2022. Its action plan also includes thedesignation of nitrate vulnerable zones by December 2023 and several indicators on wastewater
discharges for the Directive on urban wastewater treatment. In January 2023 a Law on waterdrainage and sewage treatment addressed some of its elements. The regular national annual
report on the quality of drinking water and state of drinking water supply for 2021 waspublished at the end of 2022. Drinking water quality is addressed in Ukrainian legislation andin its water strategy, but compliance with EU requirements needs to be further assessed.
Implementation of the Directive on technical specifications for chemical analysis andmonitoring of water status continues. Administrative capacity in the water sector is insufficient,also due to lack of funding.
On nature protection, a law on the protection of forests was adopted in June 2022. The
government approved changes in forest reproduction rules, prohibiting the use of invasive alien
species, in December 2022. It also approved the list of invasive tree species in May 2023. An
action plan on the implementation of a strategy on biosafety and biological protection for 20222025, which also covers measures on invasive alien species, was adopted in July 2022. Ukraine
is a party to the Nagoya Protocol on access to genetic resources since May 2022. Further action
is needed to protect biodiversity, including on the acquis on wild birds, habitats, zoos, leg holdtraps, access to genetic resources and seals. A strategy on biodiversity protection and an action
plan on its implementation need to be developed also taking into account the Kunming
Montreal Global Biodiversity Framework. Capacities for setting up and managing Natura 2000
sites need to be set up, and already adopted legislation needs to be implemented. Ukrainian
legislation is partially aligned with the EU Regulation on timber and with the EU Regulation
on forest law enforcement governance and trade. However, there is a high risk of noncompliance. The independence and capacity for monitoring and control of licences, felling andthe sale of forest products need to be strengthened. The Parliament of Ukraine ratified the
Nagoya-Kuala Lumpur Supplementary Protocol under the Cartagena Protocol on Biosafety to
the Convention on Biological Diversity on 10 June 2023.
Ukraine has some level of preparation on industrial pollution and risk management. A legal
framework covering these areas exists in Ukraine, but efforts are needed to further align with
the EU acquis, including by adopting missing primary legislation. In May 2023, the Parliament
adopted in first reading a draft law on integrated environmental permitting and best available
techniques. The existing national limits for the emission of pollutants and discharge do notmeet emission levels associated with best available techniques set out in the Industrial
Emissions Directive, including for around 220 large combustion plants. Mandatory automatedpollutant emission control system procedures were introduced in March 2023 for new
equipment. However, they exclude the most polluting equipment from the Soviet era, and therules will only enter into force several years after the end of martial law. Ukraine reported its
emissions data for 2021 to the European Environment Agency in accordance with the Large
Combustion Plants Directive. On industrial accidents, Ukraine joined the UNECE Convention
on the Transboundary Effects of Industrial Accidents in 2022. Ukraine’s legislation will now
need to be updated to meet the Convention’s requirements and the EU acquis. In August 2022,
legal amendments were adopted to align with the Seveso III Directive dealing with onshore
major accident hazards. In September 2022, the government adopted a resolution on the127identification of high-risk facilities based on the principles of the Directive. Reporting
procedures on safety measures for high-risk entities were drawn up in February 2023.
Ukraine is encouraged to start administrative preparations for alignment with the new EU
environmental acquis stemming from the European Green Deal in the areas of circular
economy, biodiversity protection and zero pollution. Further work and administrative measures
are needed to implement the EU Eco-Management and Audit Scheme and EU Ecolabel
Regulations as well as adapt environmental standards and promote green public procurement.
In the area of chemicals, Ukraine adopted a law in December 2022 to address import and export
issues. More efforts are needed to bring the legal framework in compliance with the EU acquis.
Ukraine adopted the law on joining the Minamata Convention on Mercury in May 2023. In
September 2022, a law on the public health system was adopted, prohibiting the production
and use of asbestos. In July 2022, the government postponed the entry into force of the technicalregulation to ban cosmetics testing on animals by one year. No progress has been made on
biocides.
On noise pollution, a law on the public health system, adopted in September 2022, partiallyaddresses the requirements of Directive 2002/49/EC. Full transposition is pending.
On civil protection, on 20 April 2023, Ukraine and the EU signed an agreement on theparticipation of Ukraine in the Union Civil Protection Mechanism (UCPM). Ukraine will
become a Participating State in the UCPM retroactively from 1 January 2023, once it informs
the Commission of the conclusion of its ratification procedure. As a Participating State,
Ukraine will be able to not only receive but also to offer assistance via the UCPM to othercountries affected by disasters. Ukraine will have access to more funding and will benefit fromthe full range of tools under the UCPM for structured cooperation in civil protection prevention
and preparedness with the EU. Ukraine has already shown strong solidarity with other countries
affected by disasters. Ukraine provided bilateral assistance to Türkiye in response to theearthquakes in February 2023 and to Slovenia in response to the floods in August 2023.
Ukraine has a well-structured civil protection system at national, regional and local level. The
State Emergency Service of Ukraine coordinates response efforts. Since the beginning of thewar in 2022, it has effectively coordinated, together with a wide range of stakeholders acrossthe Ukrainian government, the delivery of unprecedented in-kind assistance to Ukraine throughthe UCPM. The country has a 24/7 operational duty service, which cooperates closely with theEuropean Commission’s Emergency Response Coordination Centre. To facilitate cooperation,
the number of English-speaking staff could be further increased. Roles and responsibilities
within the civil protection system would benefit from further clarification. The Ukrainian civil
protection system has a well-documented history of disaster risk management, based on robust
tactical capacities and a solid legal and institutional framework. It could be further improvedby strengthening disaster prevention and preparedness measures. A national disaster risk
assessment is updated periodically but is not based on a nationally approved methodology.
Ukraine has not been fully mapped for specific hazards; its Early Warning System could befurther strengthened. Increased synergies and cooperation should be established between theState Emergency Service of Ukraine and the authorities in charge with industrial pollution, risk
management, industrial accidents, onshore major accident hazards covered under the Seveso
III Directive to put forward cross-sectorial preventive measures as part of the national disasterrisk management assessments.
Climate change
On climate change, Ukraine has continued work on a framework climate law to make climate
commitments legally binding and to establish a climate governance architecture.
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Ukraine updated its nationally determined contribution (NDC) in July 2021, including acommitment to reduce greenhouse gas emissions by 65% by 2030 compared to 1990. The
commitment to reach net-zero emissions by 2060, which is included in the updated NDC, has
not translated into a long-term low-emission development strategy yet. A strategy and action
plan to implement its NDC is not yet in place, and an updated long-term low emission
development strategy is needed. A national adaptation strategy was adopted in 2021 as well as
an operational plan for its implementation covering 2022-2024.
A Contracting Party to the Energy Community, Ukraine has obligations connected to the
Decarbonisation Roadmap. Connected to this, the country is currently preparing a National
Energy and Climate Plan with support provided through the Energy Community; the NECP is
expected to articulate Ukraine’s medium-term vision for decarbonisation and resilience withneeds and opportunities for rebuilding areas affected by Russia’s war of aggression in a greener
way.
Also related to the Energy Community’s Decarbonisation Roadmap, a law on monitoring,
reporting and verification of greenhouse gas emissions was adopted in 2019 and entered into
force in 2020, as a first step towards emission trading, followed by a number of secondary
legislation acts. As the martial law is in place, the monitoring, reporting and verification system
is not fully operational. Ukraine needs to urgently step up on implementing the Energy
Community’s Decarbonisation Roadmap and in particular prepare for the Emissions Trading
System (ETS).
Ukraine has a law on ozone-depleting substances and fluorinated gases adopted in 2019.
Administrative capacity remains weak in terms of both human and financial resources andneeds to be urgently enhanced. Lack of administrative capacity hinders the alignment andimplementation of EU legislation, including at local level. Ukraine needs to do more toconsistently mainstream climate considerations in all dimensions of public policy in a wholeof-government approach.
It will need to align the future national climate strategy and climate law with the EU 2030
framework for climate and energy policies, notably certain pieces of legislation under the Fit
for 55 package adopted during the reporting period.
CLUSTER 5: RESOURCES, AGRICULTURE AND COHESIONThis cluster covers agriculture and rural development (Chapter 11); food safety, veterinary andphytosanitary policy (Chapter 12); fisheries and aquaculture (Chapter 13); regional policy andcoordination of structural instruments (Chapter 22); and financial and budgetary provisions(Chapter 33).
Ukraine is moderately prepared as regards food safety and veterinary (SPS) and phytosanitary
policy, has some level of preparation as regards regional policy and coordination of structural
instruments and in fisheries and aquaculture and is at an early stage in the other areas agriculture and rural development and financial and budgetary provisions. Ukraine has madesome progress in four areas, namely agriculture and rural development, SPS and phytosanitary
policy, fisheries and aquaculture and financial and budgetary provisions, primarily throughlegislative and policy alignment and through launching a national agrarian register. Progress
was limited in regional policy and coordination of structural instruments.

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Chapter 11 – Agriculture and rural development
The EU’s common agricultural policy supports farmers and ensures Europe’s food security.
It helps tackle climate change and the sustainable management of national resources;
maintains rural areas and landscapes across the EU; and keeps the rural economy alive bypromoting jobs in farming, agri-food industries and associated sectors. This requires strong
management and control systems. There are also common EU rules for marketing standards,
quality policy and organic farming.
Ukraine remains at an early stage of preparation in the area of agriculture and ruraldevelopment. Some progress was made, notably in the adoption of legislation aligning with
the EU acquis and the launch of the State Agrarian Registry aimed at registering farms. The
implementation of other horizontal CAP issues and the improvement of administrative
capacity was limited.
In the coming year, Ukraine should in particular:→ finalise its national strategy for agriculture and rural development for 2023-2030
complementing the sector recovery action plan, and start implementing it;→ continue aligning its legislation with the EU acquis on agriculture and rural development
focusing on the requirements stemming from the Association Agreement and strengthen
the administrative capacity for evidence-based policy development;→ monitor and extend the registration of farms in the State Agrarian Registry andsystematically use it for all financial support programmes, take preparatory steps forestablishing an EU-compliant paying agency and farm accountancy data network.
On horizontal issues, the Ministry of Agrarian Policy and Food (MAPF) is in charge of
agriculture and rural development. The government has yet to appoint a body responsible forthe management and control of government expenditure on agriculture, separate from the
managing authority for programming. The establishment of the administrative and control
system required by the EU acquis should be accelerated. An integrated administration andcontrol system (IACS) should be set up. In August 2022, Ukraine established a State Agrarian
Registry, an automated information system for collecting, processing and providing
information about producers of agricultural products and their agricultural activities. The
Ukrainian State Fund for Farm Support supports farms including through interest-free loans
and payments per hectare and heads of livestock. However, it is not yet an EU-compliant
paying agency. Improved integration and data quality of registries, in particular the Land
Parcel Identification System (LPIS) is necessary. Ukraine is encouraged to bring support
measures in line with EU acquis. A farm accountancy data network (FADN) needs to beestablished. Non-state advisory services of various legal forms are allowed in Ukraine.
Government support was provided before the war to registered advisers. Ukraine has started
to establish an Agricultural Knowledge and Innovation System.
On common market organisation the Ukrainian legal framework has yet to be aligned with
the EU acquis. Work has focused on legal acts that regulate marketing standards for certain
products, and standards for further products are being developed. The law on the associationof agricultural producers is pending parliamentary adoption and aligns only partially with the
EU acquis.
In the wine sector, Ukraine started to establish a vineyard register and new viticulture zoningof wine growing areas in line with EU acquis. Common market organisation for wine shall be
regulated through the Law on grapes and viticulture, which remains to be adopted.
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On rural development, Ukraine’s draft national strategy for agriculture and rural development
for 2023-2030 remains to be finalised, including environmental standards, climate resilienceand bioenergy. It aims to complement the sector recovery action plan. Rural development is
implemented on the basis of assistance to support small and medium-sized businesses in rural
areas. A partial credit guarantee fund for small farmers was set up as a nonbanking financial
institution and its management board was established in May 2023. It remains to become
operational. A scheme launched in February 2023 supports investments by small farms andtheir integration into functional agricultural value chains.
On quality policy, the 2020 law on the protection of geographical indications (GIs) makes it
possible to register GIs in line with the EU system. Two laws were adopted in September andDecember 2022, which further regulate this sector. Protected GIs are registered in a publicly
available state register. Ukraine will have to build its administrative capacity to ensure theprotection and control of GIs.
In the area of organic farming preparations are underway for alignment with the EU acquis.
Certification of organic production is mainly carried out by international certification bodies
with Ukraine having launched the accreditation process of two Ukrainian certification bodies.
Actions to enhance monitoring and control are important. Ukraine’s policy objective is to reach
3% of total agricultural land certified as organic by 2030.
Chapter 12 – Food safety, veterinary and phytosanitary policy
EU hygiene rules for foodstuff production ensure a high level of food safety. Animal healthand welfare and the safety of food of animal origin are safeguarded together with the qualityof seeds, plant protection material, the protection against harmful organisms and animal
nutrition.
Ukraine remains moderately prepared on this chapter. Some progress was made, inparticular in the adoption of legislation aligned with the EU acquis in all sectors covered by
the chapter. Implementation of the legislation should be carefully monitored andadministrative capacities and disease surveillance stepped up.
In the coming year, Ukraine should in particular:→ continue to implement and update the strategy for aligning with and implementing the
EU acquis to meet the requirements of the Association agreement, with a focus on the
animal health and phytosanitary measures;→ accelerate EU market integration through a project to pilot the EU’s trade control andexpert system (TRACES) and subsequently extend its use to the whole country;→ enhance food safety through the reform of food safety bodies (State Service of Ukraine
on Food Safety and Consumer Protection, State Agency for Animal Identification andRegistration, authorised laboratories), strengthening food safety controls andimplementing robust disease surveillance and vaccination.
With 242 EU legal acts to be approximated, the sanitary (food safety and animal health) andphytosanitary (plant health) sector is the single most comprehensive area in the EU-Ukraine
Association Agreement. In June 2023, Ukraine informed to have concluded the alignment with
81 EU acts, while work on another 75 was ongoing. Phytosanitary primary legislation is stilllacking.
On general food safety, the Ministry of Agrarian Policy and Food and the Ministry of Healthhave competence in the area of food safety, veterinary and phytosanitary policy. The Ministryof Economy is also involved in parts related to its competences. A single body, the State Service
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of Ukraine on Food Safety and Consumer Protection (SSUFSCP), is responsible for national
food safety control. It is also responsible for risk-based national controls through a network of
sub-national bodies at regional (Oblast) and sub-regional level. As a result of an in-depth
functional review, the SSUFSCP’s central office revised its structure in December 2022. Its
functionality should further improve by assuming all obligatory sanitary and phytosanitary
duties.
The Law on the public health system adopted in October 2022 and to be implemented from
October 2023 introduces a comprehensive ‘One Health’ approach, which also provides for
information exchange on infectious diseases common to animals and humans. The government
prepared a general strategy and joint action plan for cooperation between the food safety,
animal and human health authorities in March 2023.
On veterinary policy, legislative alignment with the EU acquis advanced. The government
adopted legislation including on animal welfare, veterinary medicinal products and disease
surveillance. Regionalisation and zoning procedures for certain notifiable diseases have been
considered satisfactory in audits by the European Commission. Ukraine is invited to implementzoning decisions taken within the EU. The systems for animal disease notification andmanagement of information on outbreaks need to be upgraded to become fully functional.
Preparations started to use the EU’s trade control and export control system (TRACES) within
one year. The animal movement control and registration system was extended to sheep, goats,pigs and equines to provide for more effective animal health measures. Official controls to
enforce animal registration and identification, including controls of markets, are yet to be
improved and aligned with EU legislation.
As for the placing of food, feed and animal by-products on the market, Ukraine’s official
food and feed control system saw the adoption of further legislation. Structural and institutional
reforms based on EU standards took place through the creation of a risk assessment unit in the
SSUFSCP and standard operational procedures were agreed. The multiannual national control
plan 2022-2026 was approved. A risk analysis, assessment and management system is in place,with food production facilities participating in it. On export, as of 23 March 2023, 427
Ukrainian businesses had obtained the right to export their products to the EU. Ukraine
regularly updated its food safety monitoring plan. Food safety databases are to be further
integrated and administrative capacities need to be strengthened at all levels. The control ofgoods during the import process also follows a risk-based approach. Ukraine fully participatesin the Commission’s rapid alert system for food and feed (RASFF), but is not a member of the
network. Official controls of imports and the handling of animal by-products not intended forhuman consumption remain to be fully aligned with the EU acquis.
On food safety rules and specific rules for feed, legislative changes provided for theestablishment of a national institution for the registration of veterinary medicines and feed
additives and for the implementation of the hazard analysis and critical control points system
in feed and feed additive production facilities. Risk-oriented feed control was introduced.
Some progress was made on phytosanitary policy. Ukraine established a comprehensive
system for the regulation and monitoring of plant protection products, pesticide use, and thequality and certification of seeds through the Law on plant protection products (January 2023)
and the Law on seeds and planting material (December 2022). Relevant producers, importers,
exporters and distributors are registered in a single register. Adoption of the draft framework
Law on state regulation in the field of plant protection remains to be concluded. Substantial
work is still needed to implement integrated pest management principles in a harmonisedmanner as well as increase the number of inspectors and their administrative capacity.
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Authorised laboratories perform official laboratory testing for veterinary, sanitary andphytosanitary controls. Most of these are accredited to ISO/IEC 17025. Laboratory capacity,
including staffing, equipment and accredited methods, is generally satisfactory, while theirorganisation and the structure of the laboratory network is to be adjusted to EU standards.
National reference laboratories remain to be designated and provide to improve testing
methods, train staff, participate in proficiency testing programmes and provide contingency
capacity.
On genetically modified organisms (GMOs), the relevant authority’s control powers arelimited. A legal framework for the regulation of genetic engineering activities, GMO
registration and a system of government control of GMOs and penalties based on the nine EU
legal acts that establish the legal framework is yet to be adopted.
Chapter 13 – Fisheries and aquaculture
The common fisheries policy lays down rules on fisheries management, protects living
resources of the sea and limits the environmental impact of fisheries. This includes setting
catch quotas, managing fleet capacity, rules on control and inspection, rules on markets andaquaculture and support for fisheries and coastal communities. Further, it promotes asustainable aquaculture.
Ukraine has some level of preparation in the area of fisheries and aquaculture. Some
progress was made, including through the adoption of legislation aligned with the EU acquisand by adopting a national sector strategy. Development of the legislation should beaccelerated, and administrative capacities substantially strengthened, notably to enforce
controls and inspection. Ukraine continues to be a reliable partner in international fora.
In the coming year, Ukraine should in particular:→ implement the national strategy for the fisheries and aquaculture sectors development
until 2030 according to its action plan, including the alignment of the national legislation
with the EU acquis and adopt EU common fisheries policy objectives and principles,
including for resource management, inspections and controls, and to fight illegal,
unreported and unregulated (IUU) fishing;→ develop administrative and institutional capacity for the management and control offishing activities and launch the establishment of an independent fisheries control agency
based on EU Member States’ best practices;→ become a fully-fledged member of the General Fisheries Commission for theMediterranean (GFCM).
Ukraine’s new strategy for fisheries and aquaculture development until 2030 was adopted in
May 2023. The Strategy outlines the development of the sectors till 2030 in line with theCommon Fisheries Policy general rules and principles linked to the sustainable exploitation offishery resources. Based on an assessment of the state of implementation of EU legal acts in
April 2023, Ukraine prepared a national plan for full approximation with the EU acquis in thefisheries sector. The Ministry of Agrarian Policy and Food is responsible for establishingfisheries policy and drafting legislation, while the State Agency of Melioration and Fisheries
is responsible for policy implementation.
On resource management, Ukraine amended its legislation in March 2023 for the governanceof fisheries, conservation and rational use of aquatic biological resources and aquaculture, withcertain parts of the fisheries management system adapted to the EU acquis. Ukraine will needto develop necessary administrative and scientific capacity to systematically collect data on
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fisheries and adopt mechanisms to achieve a balance between fishing capacity and fishing
opportunities as well as to take measures to assess and reduce the environmental impact offishing activities.
On fleet management, the country has no separate fleet register for fishing vessels. Fishing isbased on a permit issued to businesses through open auctions and vessels are registered either
in the state shipping register of Ukraine or the ship book of Ukraine. Ukraine needs toharmonise its fleet registers with the EU fishing fleet register.
Inspection and control activities are limited, and catch from illegal, unreported andunregulated (IUU) fishing reportedly enters the fish market. The current lack of effective
inspection and control hampers Ukraine’s capacity to efficiently tackle IUU fishing. Work on
the legislation aligned with the EU acquis to step up the fight against IUU fishing is howeverunderway. A new law, adopted in March and that entered into force in July 2023 includes
improved controls of fishing activities and of the origin of aquatic biological resources andfor the implementation of a unified electronic management system for fishery products,
similar to the rules in the EU common fisheries policy. Legislation is being developed toensure the traceability of aquatic bioresources for the sustainable management of aquatic
biological resources, to prevent IUU fishing and promote conservation of fish stocks. A
dedicated public body for fisheries control will need to be created in line with best EU
practices. Improvements will be needed around control data, as well as in standards, strategies
and risk assessment for inspection. Electronic monitoring capacity of the fishing fleet shouldbe improved, including on fishing in the high seas. The overall sanctioning system should be
dissuasive, proportionate and effective.
Ukraine has no specific structural measures for fisheries and aquaculture. A planned reform
aims to resolve conflicts on water use, property and tax policies. Ukraine has the largest inland
water basin in Europe. This creates favourable conditions for inland fisheries and aquaculture
development. The development of marine aquaculture is still at an experimental stage, whileorganic aquaculture has not been addressed yet. The State strategy until 2030 places highpriority on developing it. Ukraine needs to improve the implementation of its legislation
specific to aquaculture in line with the EU acquis and implement it. There are some State aid
measures applicable to fisheries or for the development of aquaculture, including for the partial
reimbursement of constructing production facilities or equipment costs.
On market policy, there are standards that aim to align with the EU acquis on veterinary
requirements, hygiene and consumer information for food of animal origin. Specific market
rules, similar to the ones provided in the EU common market organisation regulation for fisheryand aquaculture products, are to be developed. No specialised legal acts regulate the creationof registered fisheries producer associations.
On international agreements, EU-Ukraine cooperation on fisheries and aquaculture is set out
in the Association Agreement, including the management and conservation of fishery resources
and cooperation with regional fisheries management organisations. Due to the ongoing war of
aggression, the agreement between Ukraine and the Russian Federation on issues of fishing in
the Sea of Azov was terminated in October 2022, and the exchange of information was
suspended. As for the regional cooperation on conservation and management of fisheries
resources, Ukraine is a cooperating non-contracting party to the General Fisheries Commission
for the Mediterranean (GFCM), being the regional fisheries management organisation working
to ensure the conservation and the sustainable use of living marine resources in the
Mediterranean and in the Black Sea. Ukraine is committed to becoming a fully-fledged memberof GFCM: Ukraine participates as a founding member in the Common Maritime Agenda for
the Black Sea, and actively cooperates under the auspices of the Northwest Atlantic Fisheries
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Organization, the Central Asian and Caucasus Regional Fisheries and Aquaculture
Commission and the Commission for the Conservation of Antarctic Marine Living Resources.
Ukraine is very active under the Common Maritime Agenda, the EU sea-basin strategy for thedevelopment of a sustainable blue economy in the Black Sea.
Chapter 22 – Regional policy and coordination of structural instruments
Regional policy is the EU’s main tool for reducing regional disparities and investing insustainable and inclusive socio-economic growth. It is operating through “shared
management” between the Commission and EU Member States. The implementation ofcohesion policy programmes requires appropriate administrative capacity on programme andproject level, the establishment of systems of sound financial management and control and also
the fulfilment of other EU acquis elements such as environmental or public procurement
legislation.
Ukraine has some level of preparation in the area of regional policy and coordination of
structural instruments. Overall, limited progress was made over the reporting period, withmore notable progress in implementing territorial cooperation programmes with Member
States.
In the coming year, Ukraine should in particular:→ update the State Strategy of Regional Development and modernise the State Fund for
Regional Development to align them with the recovery and reconstruction process,principles of multi-level governance and a territorially based regional policy.
→ adopt necessary measures to bring into practice the law on principles of regional policy, inparticular given the varying impact of the war on Ukrainian regions; and strengthen thecapacity of regional and local administrations to prepare related development projects;→ strengthen the coordination framework within regional policy to ensure systematic andinclusive engagement of regional and local stakeholders, a coordinating role for the
Ministry for Restoration, and an adequate regional angle for the Agency of Restoration.
While a general framework for state regional policy and increased public funding for regional
development were put in place alongside decentralisation reform, Russia’s invasion has
affected all regions, albeit with significant differences. The territorial disparities, which existed
before 2022, have therefore widened considerably.
In terms of the legislative framework, the law on principles of state regional policy wasamended to establish a framework for the recovery of war-affected regions, including a threelevel strategic planning system (national, regional and local development strategies). The law
defines four functional types of territory: (i) recovery territories; (ii) regional growth poles; (3)territories with special conditions for development; and (iv) territories of sustainable
development. This framework should now be implemented by first developing the qualification
criteria and a list of territories. Similarly, various local strategic documents that are required(such as a local development strategy, recovery and development plan, comprehensive spatial
development plan) should be clarified, interconnected and linked with adequate financing lines.
While the law currently focuses on Ukraine’s regional development, it will need to be
progressively aligned with EU regional policy, including on NUTS (Nomenclature of
Territorial Units for Statistics) territorial classification.
Overall, a robust conceptual framework of organisation for the regional policy in Ukraine
should be developed and aligned with the recovery and reconstruction process. Accordingly,
Ukraine should update, in consultation with relevant stakeholders, the State Strategy of135

Regional Development 2021-2027, taking into account the different regional development
needs due to the impact of the war.
In terms of the institutional framework at central level, the Ministry for Restoration of
Ukraine was established by merging the Ministry of Communities and Territories Developmentwith the Ministry of Infrastructure, which resulted in high staff turnover. Ukraine should build
capacity in the new Ministry, ensuring adequate staffing for regional development and strong
coordination with other key ministries, in particular the Ministry of Finance.
The Secretariat of the Cabinet of Ministers of Ukraine performs the tasks of the national
authority of Ukraine for Interreg programmes. It should continue its efforts to disseminate
information about Interreg programmes in Ukraine, especially among local and regional
authorities to support developing projects with possible new beneficiaries from Ukraine.
The State Agency for Restoration and Infrastructure Development was set up, also with
regional offices, to enable implementation of the rapid recovery and post-war reconstruction
projects.
At regional level, the key role in developing regional programmes lies with regional (oblast)
administrations, a number of which were turned into military administrations. This risks
excluding local stakeholders from decision-making. Ukraine has been gradually restoring civil
administrations once the security situation in the liberated territories permits it. The delineationof competences between central, regional and local tiers of government, especially in thedomains relevant for recovery, should also be clarified.
Regional development agencies aim to support the socio-economic development of regions andcommunities and attract investments in 22 regions. The capacity to perform their mission
remains limited due to an unclear mandate, high staff rotation and poor funding.
On administrative capacity, a formal coordination framework involving authorities at central
and sub-national level needs to be set up to prepare for the effective programming andmanagement of EU funds. Regional and local stakeholders should be engaged in a more
systematic way in designing, implementing and monitoring these processes.
On digitalisation, the Digital Restoration Ecosystem for Accountable Management was
set up to provide a single digital pipeline for all reconstruction projects, including at local level.
The system allows anyone to monitor project performance and use this information to create
reports.
Regional development is funded by the State Fund for Regional Development (UAH 4.5
billion, down 50% in 2023 compared with the pre-war amount in 2021). The Fund for the
Liquidation of the Consequences of Armed Aggression (UAH 35.5 billion) may also be used
for regional and local projects. Programming based on these funds should be based onpriorities, adequate quality of project proposals, cost-benefit analysis and close alignment
between the strategic planning of public investment and the budget. To this end, capacities ofsub-state administrations should be increased, and the availability of statistics at local level
improved to enable evidence-based decisions to be taken.
Ukraine entered into five Interreg programmes with EU neighbours and held the Presidencyof the EU Strategy for the Danube Region in 2022. This helped it gain experience in European
territorial cooperation and shared management, including programming, sound financial
management, project selection and contracting for instance.
On financial management and control systems, the country needs to establish medium-termbudget planning. The link between policy and budget at national and local level should be136

strengthened. The legal basis for the system of monitoring and evaluation of regional
development is complex and fragmented.
The internal and external audit functions are in place thanks to the Accounting Chamber of
Ukraine and the State Audit Service and it is important to strengthen their capacities. However,
the Chamber has no mandate to audit local budgets, other than resources transferred from thenational budget. This poses also a risk to the audit of Ukrainian beneficiaries receiving support
from Interreg programmes which are implemented under shared management in a similar way
to the EU cohesion policy. Internal audits of local authorities and ex ante procurement
verification are missing.
The participation of Ukrainian regions in peer-to-peer recovery initiatives with EU counterparts
may facilitate further integration of Ukrainian sub-national authorities into EU networks.
Chapter 33 – Financial and budgetary provisions
This chapter covers the rules governing the funding of the EU budget (‘own resources’). These
resources mainly consist of: (i) contributions based on the gross national income of each
Member State; (ii) customs duties; (iii) the non-recycled plastic resource and (iv) a resource
based on value added tax. Member States must have the appropriate administrative capacity
to adequately coordinate and ensure the correct calculation, collection, payment and controlof own resources.
Preparations under this chapter are at an early stage. There was limited progress in the areas
covered by the chapter.
In the coming year, Ukraine should:→ further strengthen the administrative capacity and coordination mechanism among key
stakeholders in the own resource system.
On traditional own resources, Ukraine has implemented most of the fundamental principles
in the policy areas that affect the own resources system. The 2019 Customs Code aligns with
the Union Customs Code in most of its rules, in particular on transit, authorised economic
operators and intellectual property rights. However, customs legislation is not fully alignedwith the EU acquis, while administrative capacity in the IT sector is under strength.
Ukraine applies a single VAT system that is largely, but not fully aligned with the European
system. VAT is levied on imports and enforced, where necessary, as outlined in the Tax Code.
Ukraine currently lacks a mid-term revenue strategy, which is to be developed under the IMF
programme by the end of 2023.
Mechanisms to prevent and combat tax and customs fraud are generally in place. The
Bureau of Economic Security is responsible for investigating and prosecuting financial crime,
including tax and customs fraud. However, its performance has been unsatisfactory so far. The
State Audit Service functions and the anti-fraud focal point for the European Anti-Fraud Office,and reports on cases of fraud.
National accounts and gross national income (GNI) data in Ukraine partially comply with
European System of Accounts 2010 standards, and include an estimation of the non-observed
economy (17.7% of GNI for 2020). However, Ukraine does not submit the data to Eurostat.
On administrative infrastructure, the current level of human and administrative resources isinsufficient to ensure the full and accurate application of EU rules on payments into the EU
budget upon membership.
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CLUSTER 6: EXTERNAL RELATIONSThis cluster covers: external relations (Chapter 30); and foreign, security and defence policy(Chapter 31).
Regarding external relations, Ukraine has a good level or preparation. It made limited progresson trade policy in the reporting period. It stepped up its engagement with global partners andAfrican Union partners in 2022 and extended humanitarian assistance to Türkiye following
2023 earthquake. Ukraine is invited to remain compliant with the WTO and Association
Agreement rules and assess the need for new bilateral agreements in the context of its candidate
status and forthcoming accession.
As regards chapter 31, Ukraine has made good progress, ensuring a high level of alignment
with relevant EU decisions and declarations of the EU’s common foreign and security policy(93% in 2022, 89 % alignment between January and August 2023). Ukraine enhanced thecooperation with EU on the security and defence policy issues and jointly worked on combating
hybrid threats. Ukraine has not yet ratified the Rome Statute of the International Criminal
Court.
Chapter 30 – External relations
The EU has a common commercial policy towards third countries, based on multilateral andbilateral agreements and autonomous measures. There are also EU rules on humanitarian aid
and development policy.
Ukraine has a good level of preparation in the area of external relations showing a significant
convergence with the EU. Ukraine has matured in its capacity of WTO Member since 2008.
Limited progress was made during the reporting period.
In the coming year, Ukraine should in particular:→ ensure that its trade policy is in compliance with World Trade Organization (WTO) and
Association Agreement rules;→ before any new bilateral trade agreement, asses its impact, in light of candidate status andforthcoming accession.
On common commercial policy, Ukraine has been a member of the WTO since 2008. Since
2016, trade relations with the EU have been regulated by the EU-Ukraine Association
Agreement, which established the Deep and Comprehensive Free Trade Area.
Ukraine has notified to the WTO preferential bilateral trade agreements with 17 countries,
eight of which do not have a preferential trade agreement with the EU. It signed a preferential
trade agreement with Türkiye in 2022, with ratification pending, and is negotiating anddiscussing preferential trade agreements with several partners (in particular the United ArabEmirates). In relation to this, Ukraine should continue to coordinate closely with the EU on
international trade negotiations, in particular to ensure that, when it joins the EU, itscommitments are compatible with those of the EU.
Ukraine has 66 bilateral investment treaties in force, 21 of which are with EU Member States.
It has also signed seven treaties that have not yet entered into force. Ukraine continued
benefiting from a generalised system of preferences (tariff system) granted by several
countries, including the United States.
Ukraine has had a solid legal framework in place on export controls of goods and technologies,
including on dual use, since 2003. It adopted and maintained a consolidated list of dual-use
goods and technologies based on Council Regulation (EC) No 428/2009. Applications for138

obtaining export permits for dual-use goods and technologies are subject to expert reviews,
with the modalities set up by the law.
Ukraine has a legal framework in place to provide humanitarian aid to other countries andrelies on the state budget reserve fund to provide this aid. It provided considerable humanitarianand civil protection support (through the State Emergency Service) to Türkiye following the
Türkiye-Syria earthquake in February 2023.
On development policy, Ukraine stepped up engagement with global partners and African
Union partners in 2022. This followed the appointment of a Special Representative for the
Middle East and Africa in 2021. In November 2022, in connection with the UN and Türkiyebrokered Black Sea Grain Initiative, which allows for commercial food and fertiliser exports
from key Ukrainian ports in the Black Sea, President Zelenskyy launched the Grain from
Ukraine programme at an international summit on food security in Kyiv. The initiative seeks
to address global food insecurity through (donated or internationally funded) deliveries of
Ukrainian grain and foodstuffs to developing countries. Under the initiative, 625 000 tonnes ofwheat have been delivered to African countries since December 2022.
Chapter 31 – Foreign, security & defence policy
Member States must be able to conduct political dialogue under EU foreign, security anddefence policy, align with EU statements, take part in EU actions, and apply agreed sanctions
and restrictive measures.
Ukraine has a good level of preparation in the area of foreign, security and defence policy.
Good progress is demonstrated by continued unprecedented political dialogue with the EU at
all levels and significantly enhanced security and military cooperation with the EU and its
Member States. Ukraine has also demonstrated progress in the overall alignment with
Statements by the High Representative on behalf of the EU and Council Decisions. In the
coming year, Ukraine should in particular:→ work towards the ratification of the Rome Statute of the International Criminal Court (ICC)and its related instruments,→ further maximise alignment with Statements by the High Representative on behalf of the
EU and EU sanctions (Official EU Council positions and actions in the area of CFSP);→ pursue and further enhance political dialogue on foreign and security policy with the EU.
Against the backdrop of Russia’s unprovoked and unjustified war of aggression against
Ukraine, the country continued to take steps to further integrate into the EU in the area of
foreign and security policy. Ukraine continued political dialogue at an unprecedented leveland frequency with the EU and the EU Member States.
The institutional framework enables Ukraine’s participation in the common foreign andsecurity policy (CFSP) and common security and defence policy (CSDP). The CFSPrelated issues fall under the competences of the Ministry of Foreign Affairs, which has good
capacity to handle EU affairs. Ukraine’s Ministry of Foreign Affairs established a position of‘political director’.
Ukraine has a good record of alignment with CFSP (statements by the High Representativeon behalf of the EU and Council Decisions). For the calendar year 2022 Ukraine reached 93%alignment and 89 % alignment between January and August 2023. This represents a clear
political intention to align with CFSP.

139

On restrictive measures, Ukraine aligns with EU restrictive measures against Russia.
Regarding EU restrictive measures not related to Russia’s war of aggression, Ukraine has notaligned with a number of measures, e.g., related to the political and security situation in the
Eastern Mediterranean, Africa, Middle East and Asia Ukraine has mechanisms in place toensure effective implementation of EU sanctions. Authorities should strengthen the related
national legislation and continue to improve their capacity to implement and enforce thesanctions.
Ukraine intensified its diplomatic engagement with global partners through food securityoriented agreements as well as high level political engagement and dialogue. This approach isin line with the EU’s own outreach to global partners aimed at addressing global consequencesof Russia’s aggression, countering Russian disinformation narratives, and supporting President
Zelenskyy’s Peace Formula.
Ukraine’s cooperation with international organisations is strong and constructive, including
with the UN, the Council of Europe, the OSCE and the Organisation for Black Sea Economic
Cooperation. Accession to NATO is reflected in the Ukrainian Constitution as a central goal
and the main foreign policy objective. Ukraine formally applied for NATO membership on 30
September 2022. Ukraine stepped-up collaboration and coordination at all levels with both the
EU and NATO in the framework of EU-NATO cooperation in the field of capacity building
for partners.
Ukraine has not yet ratified the Rome Statute of the International Criminal Court and its
related instruments, although it has already accepted the jurisdiction of the Court twice,including through legislative acts adopted in 2022 in the context of evident war crimes
committed as part of Russia’s war of aggression.
On non-proliferation, Ukraine is party to and has ratified the main non-proliferationagreements. Ukraine complied with its international obligations under international export
control regimes throughout the reporting period. Ukraine participates in the Wassenaar,
Missile Technology Control Regime, Nuclear Suppliers Group and Australia Group) andZangger Committee. Ukraine continued to submit reports on international transfers of certain
categories of military goods to the UN Register of Conventional Arms, the OSCE as well as
the Wassenaar Arrangement.
Ukraine signed the Arms Trade Treaty in 2014 and continues procedural preparations for its
ratification. Ukraine has put in place additional preventive measures in this regard, and it issetting up a unified firearms registry. Ukraine’s legislation provides for multiple measures tocounter illegal arms trafficking and ensure arms control.
In July 2022 the Parliament established the Temporary Special Commission to monitor thereceipt and use of international equipment and technical assistance (in particular, weapons)during martial law. EU and Ukraine established the internal security dialogue.
As regards security measures (classified information), the EU and Ukraine have an
arrangement to exchange classified information.
On common security and defence policy, Ukraine has continued to seek its involvement in
EU defence initiatives and civil and military crisis management, including Permanent
Structured Cooperation (PESCO) and the European Defence Fund (EDF). Given the context,
military and security cooperation between Ukraine and the EU and its Member States was
significantly enhanced in particular within the framework of the European Peace Facility (EPF)
and through the EU Military Assistance Mission in support of Ukraine (EUMAM Ukraine)
140

The EU and Ukraine continue to cooperate in the area of countering disinformation and cyberthreats. The establishment of a dedicated cybersecurity dialogue in 2021 and its second
iteration in 2022 were key to enhance the EU-Ukraine cyber cooperation with the aim to bolster
cyber resilience and advance responsible state behaviour in cyberspace. Both sides also built
up a unique cooperation aimed at tackling disinformation. Ukraine has been a contributing
country to the NATO Cooperative Cyber Defence Centre of Excellence since March 2022.

141

ANNEX 1 - RELATIONS BETWEEN THE EU AND UKRAINE
After the start of Russia’s war of aggression against Ukraine, Ukraine applied for EU
membership on 28 February 2022 and was granted European perspective and candidate
country status in June 2022. The European Council granted European perspective andcandidate status to Ukraine in June 2022, on the understanding that seven steps identified in
the Commission's opinion on the membership application, are taken.
The EU and Ukraine signed an Association Agreement (AA), including a Deep andComprehensive Free Trade Area (DCFTA) in 2014, which fully entered into force in 2017.
The AA / DCFTA is the key legal instrument serving as the basis of EU-Ukraine bilateralrelations and provides the foundations for political association and economic integration
between the European Union and Ukraine. Overall, Ukraine continued to broadly implement
its obligations under the Association Agreement. Under the DCFTA Ukraine has committed toalign its legislation to EU single market rules. While important progress has been achieved,
Ukraine is behind schedule in some of these commitments. In some areas, effective
enforcement by independent and transparent institutions remains challenging. The DCFTA
comes with a commitment to comply with its provisions, as well as those under WTO such as
ruling of a bilateral arbitration panel of December 2020, in respect of which Ukraine has still
to comply with Article 35 of the Agreement and eliminate the wood export ban introduced in2015.
Regular political and economic dialogue between the EU and Ukraine has continued throughthe AA/DCFTA structures. Regular subcommittee meetings were held throughout the period.
The Association Committee did, however, not meet during the reporting period whereas the 7th
EU-Ukraine Association Committee in Trade Configuration took place on 25-26 October 2022;
the Assocation Council was held on 5 September 2022 in Brussels and the 24th EU-Ukraine
Summit took place on 3 February 2023, in Kyiv.
Trade relations with the EU intensified after the entry into force of the DCFTA. With theapplication of autonomous trade measures since June 2022, the EU has unilaterally removed
all outstanding tariffs under the DCFTA. Such measure was renewed for another year in May
2023.
In light of Ukraine’s candidate country status, the EU and Ukraine agreed a Priority Action
Plan in February 2023. Once fully implemented, Ukraine will see increased its access to the
EU internal market, paving the way towards full accession in the future.
The EU has been living up to its commitment to support the implementation of the Solidarity
Lanes initiative with new logistics corridors between Ukraine and the EU now firmly
established trough rail, road and inland waterways covering trade both directions. Solidarity
lanes have become the lifeline for Ukraine.
Citizens of Ukraine enjoy visa-free travel to the Schengen area as of 11 June 2017. An
agreement on readmission between the European Union and Ukraine is in force since 2007.
Regarding bilateral financial assistance, since the Russian invasion, the EU, Member States
and the European Financial Institutions, stepped up their support in a Team Europe approach,mobilising EUR 59 billion for Ukraine’s overall economic, social and financial resilience inthe form of emergency macro-financial assistance, budget support, emergency assistance, crisis
response and humanitarian aid. This includes EUR 2.3 billion in grants from the NDICI Global
Europe instrument (2022 and 2023), EUR 25.2 billion of macro-financial assistance(concessional loans) as well as military assistance of EUR 25.2 billion, including EUR 5.6
billion under the European Peace Facility and bilateral EU Member States contributions.
142

Together with the resources made available to help Member States cater for needs of
Ukrainians fleeing the war in the EU (EUR 17 billion), the overall support to Ukraine andUkrainians amounts to EUR 82.6 billion. This includes, amongst other, around 100 000 tonsof in-kind assistance under the Union Civil Protection Mechanism (UCPM), turning this into
the largest and most complex UCPM operation to date. The EU has provided support for
medical evacuations of, to date, more than 2770 severely ill Ukrainian patients as well as
mental health and psychosocial support to Ukrainians via the International Federation of the
Red Cross, funded by the EU4Health Programme.
Ukraine has been participating in the Eastern Partnership (EaP) since its launch in 2009. Thisoverarching framework has further boosted regional relations with the EU. Ukraine benefits
from regional programmes financed from NDICI-Global Europe. Ukraine also benefits frominvestments through the Neighbourhood Investment Platform (NIP). Before and during
Russia’s war of aggression, the EU has worked hand in hand with financial institutions to
support Ukraine. The Economic Investment Plan, which was set up already before the war,
will serve as an important vehicle of the reconstruction of Ukraine. The plan will continue tomobilise investments in grants, loans and guarantees and leverage additional public and private
investments for Ukraine in sectors covered by the flagship initiatives such as support to SMEs,
economic transition for rural areas, improving connectivity by upgrading border crossing
points, digital transition and sustainable energy.
Ukraine participates in several Union programmes: Horizon Europe, EURATOM Research
and Training Programme, Digital Europe, Fiscalis, Customs, Creative Europe, EU4Health,
LIFE, Single Market Programme, Union Civil Protection Mechanism, and Connecting Europe
Facility. Organisations and individuals from Ukraine can also benefit from certain actions of
the Erasmus+ and European Solidarity Corps programmes. Ukraine is participating in several
Interreg programmes and is a member of the EU macro-regional Strategy for the Danube
region.
In 2014, the European Union Advisory Mission for Civilian Security Sector Reform Ukraine(EUAM Ukraine) was created. Following the Russian aggression, the EU established the EU
Military Assistance Mission (EUMAM Ukraine) on EU soil in support of Ukraine in October
2022.

143

STATISTICAL DATA (as of 31/08/2023)
UkraineBasic data
Population (thousand)Total area of the country (km²)

Note

2010
45 783 s
603 548 w

2017
42 415 s
603 549 w

2018
42 217 s
603 549 w

2019
41 984 s
603 549 w

2020
41 733 s
603 549 w

2021
41 419 s
603 549 w

National accounts
Gross domestic product (GDP) (million national currency)
Gross domestic product (GDP) (million euro)GDP (euro per capita)GDP per capita (in purchasing power standards (PPS))GDP per capita (in PPS), relative to the EU average (EU-27 = 100)
Real GDP growth rate: change on previous year of GDP volume (%)
Employment growth (national accounts data), relative to the previous year (%)
Labour productivity growth: growth in GDP (in volume) per person employed, relative tothe previous year (%)
Unit labour cost growth, relative to the previous year (%)**3 year change (T/T-3) in the nominal unit labour cost growth index (2015 = 100)
Labour productivity per person employed: GDP (in PPS) per person employed relative to
EU average (EU-27 = 100)
Gross value added by main sectors
Agriculture, forestry and fisheries (%)
Industry (%)
Construction (%)
Services (%)
Final consumption expenditure, as a share of GDP (%)
Gross fixed capital formation, as a share of GDP (%)
Changes in inventories, as a share of GDP (%)
Exports of goods and services, relative to GDP (%)
Imports of goods and services, relative to GDP (%)
Gross fixed capital formation by the general government sector, as a percentage of GDP
(%)

Note
3)
3)
3)

2010
1 120 585 w
106 389 w
2 319 w
:
:
4.1 w
0 sw
4w

2017
2 981 227 w
99 361 w
2 339 w::
2.4 w
- 1 sw
3w

2018
3 560 302 w
110 765 w
2 620 w
:
:
3.5 w
1 sw
2w

2019
3 977 198 w
137 373 w
3 269 w
:
:
3.2 w
1 sw
2w

2020
4 222 026 w
137 133 w
3 285 w::
- 3.8 w
- 4 sw
0w

2021
5 450 849 w
168 710 w
4 077 w::
3.4 w
- 2 sw
6w

:
:
:

:
:
:

:
:
:

:
:
:

:
:
:

:
:
:

3)
3)
3)
3)
3)
3)
3)
3)
3)

8.4 w
25.3 w
3.7 w
62.6 w
84.4 w
18.1 w
0.3 w
46.5 w
49.3 w:

12.1 w25.0 w
2.6 w
60.3 w
87.8 w
15.8 w
4.2 w
48.1 w
55.9 w:12.0 w
24.8 w
2.7 w
60.5 w90.2 w
17.7 w
0.9 w
45.2 w
54.0 w:

10.4 w
23.2 w
3.1 w
63.3 w
93.2 w
17.6 w- 2.7 w
41.2 w
49.3 w:

10.8 w
20.9 w
3.3 w
65.0 w
92.6 w
13.4 w- 4.5 w
38.8 w
40.3 w:

12.7 w
23.8 w
3.2 w
60.3 w
86.8 w
13.2 w
1.2 w
40.7 w
41.9 w:Business
Industrial production volume index (2015 = 100)
Number of active enterprises (number)
Birth rate: number of enterprise births in the reference period (t) divided by the number ofenterprises active in t (%)Note5) 6) 7)8)

2010
125.1 w::

2017
105.4 w
1 598 025 w:

2018108.7 w
1 618 543 w:

2019
108.0 w
1 706 428 w:

2020
102.7 w
1 729 058 w:

2021
105.0 w
1 719 536 w
:

1) 2)

144

3)
4)
3)

Death rate: number of enterprise deaths in the reference period (t) divided by the numberof enterprises active in t (%)
People employed in SMEs as a share of all persons employed (within the non-financial
business economy) (%)
Value added by SMEs (in the non-financial business economy) (EUR million)
Total value added (in the non-financial business economy) (EUR million)

8)

:

:

:

:

:

:

:

61.6 sw

63.0 sw

63.9 sw

64.0 sw

64.3 sw::

31 486 sw
66 678 w

33 936 sw
68 917 w

47 334 sw
90 454 w

48 221 sw
86 283 w::

Inflation rate and house prices
Consumer price index (CPI), change relative to the previous year (%)**Annual change in the deflated house price index (2015 = 100)Note9) 10)

2010
9.4 w
:

2017
14.4 w:2018
10.9 w
:

2019
7.9 w
:

2020
2.7 w
:

2021
9.4 w
:

Balance of payments
Balance of payments: current account total (million euro)
Balance of payments current account: trade balance (million euro)
Balance of payments current account: net services (million euro)
Balance of payments current account: net balance for primary income (million euro)
Balance of payments current account: net balance for secondary income (million euro)
Net balance for primary and secondary income: of which government transfers (million
euro)**3 year backward moving average of the current account balance relative to GDP (%)**Five year change in share of world exports of goods and services (%)
Net balance (inward - outward) of foreign direct investment (FDI) (million euro)

Note

2010
- 2 272.3 w- 7 230.5 w
4 230.4 w- 1 513.6 w
2 241.4 w:

2017- 3 046.9 w- 8 465.8 w
804.6 w
1 404.2 w
3 210.1 w:

2018- 5 464.2 w- 10 848.4 w
1 143.0 w
1 148.7 w
3 092.5 w:

2019- 3 696.3 w- 12 770.8 w
1 567.6 w
1 710.2 w
5 796.7 w:

2020
4 735.0 w- 5 867.8 w
3 845.7 w
3 174.1 w
3 583.0 w:

2021- 2 815.8 w- 5 689.0 w
3 368.9 w- 4 407.1 w
3 911.4 w:::
4 338.9 w::
3 054.6 w::
4 111.9 w::
4 619.8 w::- 50.8 w::
6 351.5 w

554.5 w
527.1 w

249.1 w
25.7 w- 107.5 w- 133.1 w

751.7 w485.2 w

19.3 w- 39.4 w- 167.3 w- 149.5 w

4 893.4 w

3 303.7 w

4 004.4 w

5 371.4 w- 31.5 w

6 184.2 w

3 948.2 w

1 745.4 w

2 727.4 w

4 149.3 w- 731.1 w

4 599.3 w- 24.8 w
1.1 sw- 29.5 w
0.9 sw- 20.2 w
0.7 sw- 17.9 w
0.6 sw- 14.1 w
0.7 sw- 12.0 w
1.0 sw11) 12)
13)11) 13)14) 11)
13)11) 12)
13)14) 11)
12) 13)12) 15)16)

Foreign direct investment (FDI) abroad (million euro)of which FDI of the reporting economy in the EU-27 countries (million euro)
Foreign direct investment (FDI) in the reporting economy (million euro)of which FDI of the EU-27 countries in the reporting economy (million euro)**Net international investment position, relative to GDP (%)
Year on year rate of change in gross inflow of remittances (in national currency) from
migrant workers (%)
Public finance
General government deficit / surplus, relative to GDP (%)
General government gross debt relative to GDP (%)
Total government revenues, as a percentage of GDP (%)
Total government expenditure, as a percentage of GDP (%)Note17) 18)19) 18)17) 18)17) 18)2010- 6.3 w
38.6 w
40.2 w
46.5 w

2017- 1.2 w
71.8 w
40.3 w
41.5 w2018- 1.9 w
60.9 w
39.5 w
41.5 w2019- 1.9 pw
50.2 w
39.4 w
41.2 w

2020- 5.4 w
60.4 w
39.6 w45.0 w

2021- 3.3 w
49.0 w
37.0 w
40.3 w

Financial indicators

Note

2010

2017

2018

2019

2020

2021

145

Gross external debt of the whole economy, relative to GDP (%)
Gross external debt of the whole economy, relative to total exports (%)
Money supply: M1 (banknotes, coins, overnight deposits, million euro)
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)
Money supply: M3 (M2 plus marketable instruments, million euro)
Total credit by monetary financial institutions to residents (consolidated) (million euro)**Annual change in financial sector liabilities (%)**Private credit flow, consolidated, relative to GDP (%)**Private debt, consolidated, relative to GDP (%)
Interest rates: day-to-day money rate, per annum (%)
Lending interest rate (one year), per annum (%)
Deposit interest rate (one year), per annum (%)
Euro exchange rates: average of period (1 euro = … national currency)
Trade-weighted effective exchange rate index, 42 countries (2015 = 100)**3 year change (T/T-3) in the trade-weighted effective exchange rate index, 42 countries(2015 = 100)
Value of reserve assets (including gold) (million euro)20) 21)20) 11)22) 23)22) 24)22) 25)28)
28)

83.1 sw
178.7 w
27 417.9 w
56 448.8 w
56 546.3 w::::
1.72 w
11.62 w
3.20 w
10.533 w
135.4 w
- 0.3 sw

97.4 sw
202.5 w
17 961.6 w
36 081.3 w
36 090.3 w::::
11.60 w
15.90 w
12.13 w
30.004 w
86.5 w- 0.2 sw

90.4 sw
199.6 w
21 166.7 w
40 164.2 w
40 286.0 w::::
16.30 w
19.20 w
15.64 w
32.143 w
85.4 w- 0.1 sw

79.4 sw
192.2 w
29 144.0 w
54 319.2 w
54 436.1 w::::
15.00 w
18.35 w
15.18 w
28.952 w
94.6 w
0.0 sw

74.6 sw
192.4 w
30 226.3 w
53 177.5 w
53 253.6 w::::
7.10 w
7.89 w
7.22 w
30.790 w
93.2 w
0.1 sw

67.8 sw
165.6 w
41 433.7 w
66 928.6 w
66 985.2 w::::
6.78 w
7.67 w
6.95 w
32.310 w
91.5 w
0.1 sw20) 11)26 036.1 w

15 760.9 w

18 177.1 w

22 682.2 w

23 711.1 w

27 294.4 w

External trade in goods
Value of imports: all goods, all partners (million euro)
Value of exports: all goods, all partners (million euro)
Trade balance: all goods, all partners (million euro)
Terms of trade (export price index / import price index * 100) (number)
Share of exports to EU-27 countries in value of total exports (%)
Share of imports from EU-27 countries in value of total imports (%)

Note

2010
45 525 sw
38 277 sw- 7 247 sw
106.7 sw::

2017
43 912 sw
38 298 sw- 5 614 sw
101.7 sw::

2018
48 423 sw
40 080 sw- 8 343 sw
99.6 sw::

2019
54 310 sw
44 712 sw- 9 599 sw
99.9 sw::

2020
47 490 w
43 053 w- 4 438 sw
105.0 sw::

2021
72 843 w
68 072 w:
118.9 sw::

Demography
Crude rate of natural change of population (natural growth rate): number of births minus
deaths (per thousand inhabitants)
Infant mortality rate deaths of children under one year of age (per thousand live births)
Life expectancy at birth: male (years)
Life expectancy at birth: female (years)

Note

2010
- 4.4

2017
- 5.0

2018
- 6.0

2019
- 6.5

2020
- 7.8

2021
- 10.7 e

9.2
65.2
75.3

7.7
68.3
78.0

7.1
68.1
78.0

7.1
68.4
78.3

6.8
:
:

7.2
:
:

Labour market
Economic activity rate for persons aged 20–64: proportion of the population aged 20–64
that is economically active (%)*Employment rate for persons aged 20–64: proportion of the population aged 20–64 thatare in employment (%)
Male employment rate for persons aged 20–64 (%)
Female employment rate for persons aged 20–64 (%)Note3) 31)

2010
72.2 w

2017
70.9 w

2018
71.8 w2019
72.9 w2020
72.0 w

2021
71.9 w

3)

66.4 w

64.2 w65.6 w

66.9 w65.2 w

64.8 w

3)
3)

71.1 w62.1 w

69.4 w
59.4 w

70.5 w
61.0 w

72.7 w
61.6 w

70.8 w60.0 w

70.8 w59.3 w

26)
27)

29)
30)

146

Employment rate for persons aged 55–64: proportion of the population aged 55–64 thatare in employment (%)
Employment by main sectors
Agriculture, forestry and fisheries (%)
Industry (%)
Construction (%)
Services (%)
People employed in the public sector as a share of total employment, persons aged 20–
64 (%)
People employed in the private sector as a share of total employment, persons aged 20–
64 (%)
Unemployment rate: proportion of the labour force that is unemployed (%)
Male unemployment rate (%)
Female unemployment rate (%)
Youth unemployment rate: proportion of the labour force aged 15–24 that is unemployed(%)
Long-term unemployment rate: proportion of the labour force that has been unemployedfor 12 months or more (%)
Unemployment rate for persons (aged 25–64) having completed at most lower secondary
education (ISCED levels 0-2) (%)
Unemployment rate for persons (aged 25–64) having completed tertiary education(ISCED levels 5-8) (%)
Social cohesion
Average nominal monthly wages and salaries (national currency)
Index of real wages and salaries (index of nominal wages and salaries divided by the
inflation index) (2016 = 100)
GINI coefficient3)

40.4 w

38.2 w

39.5 w

41.9 w

42.1 w

41.1 w32) 3)
32) 3)
32) 3)
32) 3)

20.2 w
19.1 w
6.4 w
54.3 w:

15.4 w
17.7 w
6.6 w
60.3 w:

14.9 w
17.8 w
6.5 w
60.8 w:

13.9 w
17.8 w
7.1 w
61.2 w:

14.1 w
17.8 w
7.0 w
61.1 w:

14.1 w
18.2 w
7.0 w
60.7 w
:

:

:

:

:

:

:

8.1 w

9.5 w

8.8 w

8.2 w

9.5 w

9.8 w

9.3 w

11.1 w10.0 w

8.5 w

9.8 w

9.5 w

6.8 w

7.7 w

7.4 w

7.9 w

9.1 w

10.1 w

17.4 w

18.9 w

17.9 w

15.4 w

19.3 w

19.1 w32) 3)
33)
3)

1.8 w

2.5 w

1.9 w

1.0 w

2.0 w

2.4 w

8.4 w

12.8 w

14.2 w

13.9 w

16.3 w

15.3 w

3)

6.0 w

7.5 w

7.2 w

6.5 w

7.4 w

8.5 w

2010
2 239 bw:

2017
7 104 w
119 w

2018
8 865 w
134 w

2019
10 497 w
147 w

2020
11 591 w
158 w

2021
14 014 w
175 w

25 w

23 w

24 w

25 w

25 w

24 w

:
:

:
:

:
:

:
:

:
:

:
:

3) 37)

2010
147.9 sw
1 182.5 w

2017:
1 314.4 w

2018:
1 279.5 w

2019
:
w

2020
:
w

2021
:
w

3) 37)
3) 37):
7w

41.3 w
12 w

47.5 w
13 w

w
w

w
w

w
w

32) 3)
33)32) 3)
33)32) 3)33)3)Note34) 3)

35) 36)
3)

Poverty gap*Early leavers from education and training: proportion of the population aged 18–24 withat most lower secondary education who are not in further education or training (%)
Standard of living
Number of passenger cars relative to population size (number per thousand population)
Number of mobile phone subscriptions relative to population size (number per thousand
population)
Mobile broadband penetration (per 100 inhabitants)
Fixed broadband penetration (per 100 inhabitants)

147

Note

Infrastructure
Density of railway network (lines in operation per thousand km²)

Note1) 38)

2010
35.9 sw

2017
32.8 sw

2018
32.7 sw

2019
32.8 sw

2020
32.8 sw

2021
32.7 sw

39)

15 w

15 w

15 w

15 w

15 w

15 w

Note
3)
3) 40)
3) 41)

2010
6.6 sw0.80 sw
0.30 w

2017
5.4 sw
0.45 sw
0.20 w

2018
5.3 sw
0.47 sw
0.20 w2019
5.4 sw
0.43 sw
0.20 w

2020
5.4 sw
0.40 sw
0.20 w

2021:
0.29 sw
0.10 w36) 42)
39)

20.2 w

59.8 w

61.5 w

65.8 w

79.2 w

82.7 w

Note
43)

2010
43.7 ew:

201737.1 ew:

201840.3 ew:

201939.4 ew:

2020
34.7 ew
:

2021
w
:

3)
39) 44)7.2 ew
29.8 w

9.2 sw
38.1 w

10.3 w
42.7 w

9.4 w
41.4 w

11.5 w
42.3 w

10.6 w
w

EnergyPrimary production of all energy products (thousand TOE)
Primary production of crude oil (thousand TOE)
Primary production of solid fuels (thousand TOE)
Primary production of gas (thousand TOE)
Net imports of all energy products (thousand TOE)
Gross inland energy consumption (thousand TOE)
Gross electricity generation (GWh)

Note

3)

2010
77 5263 590
32 14215 43641 906 s
132 795
188 8282017
58 890
2 208
13 51715 47133 167 s
89 768155 9902018
60 8862 341
14 33816 48732 347 s
93 851
159 7962019
60 3552 478
14 18616 26132 976 s
89 641154 0122020
57 1212 476
12 69015 85629 487 s
86 583148 264

2021
:
:
:
:
:
:
150 042 w

Agriculture
Agricultural production volume index of goods and services (at producer prices) (2010 =100)
Utilised agricultural area (thousand hectares)
Livestock numbers: live bovine animals (thousand heads, end of period)
Livestock numbers: live swine (thousand heads, end of period)
Livestock numbers: live sheep and live goats (thousand heads, end of period)
Raw milk available on farms (thousand tonnes)
Harvested crop production: cereals (including rice) (thousand tonnes)
Harvested crop production: sugar beet (thousand tonnes)
Harvested crop production: vegetables (thousand tonnes)

Note
6)

2010
100.0 w

2017132.7 w2018
143.6 w2019
145.7 w

2020
130.9 w

2021
152.4 w

41 275.6 w
4 494.4 w
7 960.4 w
1 731.7 sw
11 248.5 w
38 678.6 sw
13 749.2 w
8 246.7 w

41 274.3 w
3 530.8 w
6 109.9 w
1 309.3 sw
10 280.5 w
60 677.8 sw
14 881.6 w
9 369.4 w

41 259.9 w
3 332.9 w
6 025.3 w
1 268.6 sw
10 064.0 w
69 101.9 sw
13 967.7 w
9 543.0 w

41 138.4 w
3 092.0 w
5 727.4 w
1 204.5 sw
9 663.2 w
74 425.2 sw
10 204.5 w
9 801.9 w

41 144.2 w
2 874.0 w
5 876.2 w
1 140.4 sw
9 263.6 w
64 333.4 sw
9 150.2 w
9 747.5 w

41 144.2 w
2 644.0 w
5 608.8 w:
8 713.9 w:
10 853.9 w
10 038.3 w

Length of motorways (kilometres)
Innovation and research
Public expenditure on education relative to GDP (%)*Gross domestic expenditure on R&D relative to GDP (%)
Government budget appropriations or outlays on R&D (GBAORD), as a percentage ofGDP (%)
Percentage of households who have internet access at home (%)

Environment*Index of greenhouse gas emissions, CO2 equivalent (1990 = 100)
Energy intensity of the economy (kg of oil equivalent per 1 000 euro GDP at 2015
constant prices)Electricity generated from renewable sources relative to gross electricity consumption (%)
Road share of inland freight transport (based on tonne-km) (%)

148

3)
3)

Source: Eurostat and/or the statistical authorities in Ukraine: = not availableb = break in seriese = estimated valuep = provisionals = Eurostat estimate
w= data supplied by and under the responsibility of the national statistical authority and published on an "as is" basis and without any assurance as regards their quality
and adherence to EU statistical methodology* = Europe 2020 indicator** = Macroeconomic Imbalance Procedure (MIP) indicator

Footnotes:
1) Data of the State Service on Geodesy, Cartography and Cadastre of Ukraine.
2) Data are given according to the new Classification of Land Types.
3) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
4) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
Persons aged 15-70 years.
5) Adjustment for the effect of calendar days of the dynamic series of indices to the average monthly value of the base. (2016) year is carried out using the DEMETRA+ program, using the
TRAMO/SEATS method activity.
6) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
7) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
8) The information for 2021 include of data reports of enterprises, which were submitted on initiative.
9) Consumer price inflation
10) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
11) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
12) Since year 2020 the National bank of Ukraine have improved the foreign direct investment compilation, in context of which non-financial corporations' reinvested earnings have been
incorporated in FDI flows and stocks data. Therefore, BoP, IIP, FDI data for 2015- 2019 were revised.
13) Since year 2021 the National bank of Ukraine have improved the foreign direct investment compilation, in context of which loans between fellow enterprises have been incorporated in FDI
flows and stocks data. Therefore, BoP, IIP, FDI data for 2015- 2020 were revised.
14) FDI Data were recalculated taking into account EU-27 Member States, excluding the United Kingdom.
15) Data were recalculated taking into account GDP revised16) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
17) Modified cash data (Government finance statistics manual 2014).
18) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
19) State and state guaranteed debt.
20) Assets and debt converted from US dollars to euro using cross rates at the end of the reporting year.

14921) Assets and debt converted from US dollars to euro using cross rates at the end of the reporting year.
Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
22) Converted into euro using the annual exchange rates at the end of period.
23) Monetary aggregate M1 includes: certain liabilities of resident deposit-taking corporations vis-a-vis resident sectors of the economy except general government and other deposit-taking
corporations; currency in circulation outside the deposit-taking corporations; and transferable deposits in national currency.
24) M2 comprises M1 and transferable deposits in foreign currency and other deposits.
25) M3 comprises M2 and securities other than shares.
26) Average weighted interest rate on all instruments of National bank's refinancing.
27) Distribution of deposit certificates of the National Bank of Ukraine.
28) Nominal effective exchange rate index of the hryvnia (2015=100), 39 countries.
29) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
30) Index based on the previous year31) Fixing from 2019 economically active population - labour force.
32) Persons aged 15-70 years.
33) Persons aged 15 years and over.
34) Data refer to enterprises and their independent divisions with 10 or more employees. Data from before 2010 should not be compared with data from 2010 onwards.
35) Since 2011 the calculation of indicators of population and households analysed by level of material well-being uses an equivalence scale: a coefficient of 1 is assigned to the first member ofthe household and 0.7 to all others. Basic indicators back to 2007 have been recalculated taking into account this equivalence scale.
36) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
37) The State Statistics Service of Ukraine does not have this information. This information is collected by the National Commission on the State Regulation in the sphere of Communications andInformatization.
38) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
Data of the State Service on Geodesy, Cartography and Cadastre of Ukraine.
Data are given according to the new Classification of Land Types.
39) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied.
40) Data for 2014-2021 exclude the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and the parts of the Donetsk and Luhansk regions which aretemporarily occupied. The information for 2021 is formed on the basis of data reports of enterprises, which were submitted on initiative.
41) The information for 2021 is formed on the basis of data reports of enterprises, which were submitted on initiative.
42) Share of persons who used the internet at home.
43) Data for 2021 disseminate in 25.04.2023.
44) Data are not available - according to subitem 1 of item 1 of Ukraine's law on protection of interests of entities that submit reporting and other documents during the period of martial law orstate of war, dated on March 03, 2022 by ¿ 2115 - IX

150

151