According to the World Bank’s latest Ukraine Economic Update, Ukraine’s economy grew by 2.3 % in 2016 (after around 16% cumulative real GDP contraction in the previous two years) and grew by 2.4% in the first half of 2017. The recovery was supported by a bumper harvest and a pickup from low levels in manufacturing, construction, and key services.

1. Ukraine: perspectives and state of reforms
December 18, 2017
by SSC and Iana Seleznova
"Market confidence and company efficiency are the result of good corporate governance. If the
company has the right management system, it will grow and flourish, "- Fabrizio Zucca.
Fabrizio Zucca, Professor at SDA Bocconi School of Management and President at Strategia &
Sviluppo Consultants, on December 2 held a one-day seminar on Corporate Governance and
Strategic Risk Management for managers of Ukrainian state-owned companies that are studying at
the KSE SOE MBA program.

3. The workshop was held under the project #UkraineReforms, which was launched at the end of 2014
by the Wilfried Martens Center for European Studies in cooperation with the Kyiv School of
Economics, the Reanimation Package of Reforms and the Ukrainian Center for European Policy.
Moreover, Fabrizio Zucca also participated at the KSE public discussion "The Price of Privatization".

6. Please, see the video of the discussion via the link (in English):
https:
You can also watch Fabrizio Zucca’s interview on Persha Spalta TV program (in Ukrainian):
https:
According to the World Bank’s latest Ukraine Economic Update, Ukraine’s economy grew by 2.3 %
in 2016 (after around 16% cumulative real GDP contraction in the previous two years) and grew
by 2.4% in the first half of 2017. The recovery was supported by a bumper harvest and a pickup
from low levels in manufacturing, construction, and key services.
Boosting economic growth to 4 percent or more in the next two years is critical to reduce poverty
and improve living standards for the Ukrainian population. This will require progress on an
ambitious package of reforms, including in land markets, financial sector, anticorruption, and
privatization, to stimulate investment and productivity. Ukraine needs also a systematic fiscal
consolidation effort, or it will have to rely on ad hoc revenue measures and expenditure cuts, which
would undermine debt sustainability, growth prospects, and the quality of social services.
Also key sectors exhibiting relative strength, such as manufacturing, trade services, and transport
continued to grow at a modest pace—3.7%, 3.5%, and 4.4%, respectively—in the first half of 2017.
The mining and utility sectors contracted by 6.6% and 5.5%, respectively, due to the trade blockade
against uncontrolled areas of the Donbas region, which affected coal, steel, and electricity
production. On the other hand, construction and fixed investment continued to exhibit strong
growth in the first half of 2017—at 26% and 22%, respectively—pointing toward strengthening
investor confidence in some areas. Merchandise exports grew by 23% in the first half of 2017,
mostly due to improving commodity prices, after declining by 13% in 2016.
The moratorium on agricultural land sales, along with weaknesses in the transparency of land
rights and transactions, are major impediments to attracting investment and unlocking
productivity in Ukraine’s agriculture sector. Without the ability to purchase land, farmers have a
lower incentive to undertake productivity enhancing investments, and also cannot use land as
collateral to secure financing from banks.
A land reform is critical to improve living standards for the Ukrainian people, by driving higher
economic growth and incomes for the population, and improving the returns on land for millions of
small landholders. The Government has declared land reform a priority, beginning work on
improving transparency, exploring mechanisms to facilitate access to finance for farmers, and
discussing design principles of a draft land turnover law with stakeholders. It is critical that the
work on strengthening transparency and access to finance is completed and that a draft land
turnover law is expeditiously submitted to Parliament for approval so that the moratorium can be
lifted on January 1, 2018.
Even if Ukraine has experienced acute political, security, and economic challenges during the past
three years, since the “Maidan” uprising in February 2014, the new Government which took office
in April 2016 has committed to continuing previous reform efforts, and a government program and
action plan covering a wide-ranging reform agenda were issued in May.
Key reforms undertaken since 2014 include: carrying out significant fiscal consolidation, moving to
a flexible exchange rate, reforming energy tariffs and social assistance, making public procurement
more transparent, simplifying business regulations, stabilizing and restructuring the banking

7. sector, adopting a health reform package, and establishing anti-corruption agencies and asset
disclosures for public officials, all the while contending with powerful vested interests that continue
to oppose reforms. Going forward, Ukraine will need to advance reforms on multiple fronts to
achieve sustainable recovery and shared prosperity.
The fiscal deficit is projected to widen to 3.5 percent of GDP in 2017 due to higher public sector
wages and spending on social programs. Reducing the fiscal deficit to 2.5 percent of GDP in 2018
and beyond will require adopting responsible pension reform and implementing education and
health reform in a manner that improves the quality of services while optimizing the school and
hospital network.
Poverty remains significantly higher than pre-crisis levels and faster economic growth is critical to
reduce poverty going forward. Disposal incomes contracted sharply in real terms in 2015 due to
the deep recession and unsustainable social benefits. Fiscal expenditures and revenues grew
strongly in the first half of 2017, with the supplementary budget adding to expenditure pressures
for the rest of the year. In 2016, the fiscal deficit widened to 2.2% of GDP due to lower social security
contributions, despite expenditure restraint and growth of other revenues. In the first half of 2017,
both expenditures and revenues exhibited strong growth. Expenditures were up by 13.5% in real
terms due to the increase in the minimum wage, as well as higher spending on social programs.
Revenues also grew strongly by 22.8 in real terms in the first half of 2017, driven by higher revenues
across the board, including personal, corporate, and value added tax, as well as social security
contributions and non-tax revenues. As a result, the fiscal balance in the first half of 2017 amounted
to a surplus of 0.9 percent of full year GDP. However, the supplementary budget adopted -in July
2017 adds to expenditure pressures for the rest of the year, including higher spending on military,
social programs, and capital investment. As a result, the fiscal deficit in 2017 is expected to exceed
the target of 3% of GDP. At the same time, the public debt level continued to grow, reaching 85% of
GDP as of July 2017, due to the high cost of bank recapitalization. In September 2017, Ukraine
successfully issued $3 billion in Eurobonds, of which $1.3 billion is new financing, with the
remaining amounting helping to refinance bonds due in 2019.
The growth outlook is affected by two key factors: Ukraine faces continued headwinds from the
conflict in the Donbas region, as evidenced by the coal and trade blockade with the uncontrolled
areas and an ambitious package of reforms the authorities have been working on to address
structural bottlenecks and advance growth prospects. The next few months are a critical window
of opportunity within which to lock in these important reforms. Establishing a transparent market
for land transactions would enable Ukraine to tap its vast potential for agricultural exports.
Strengthening the governance of state-owned banks and putting in place measures to streamline
resolution of non-performing loans (NPLs) would enable a gradual resumption of lending to the
private sector. Deeper anticorruption reforms, further improvements to the business environment,
and progress on privatization would strengthen investor confidence and attract foreign investment.
Locking in these reforms in the next few months could raise growth to 4 percent or more in the next
two years.

8. Total exports: recovery from crisis
40% from total exports went to EU

9. The loss of the Russian market
The growth of export to Turkey and Belarus
EXPORT
Russia started to block trade transit for Ukraine in 2016 and Ukrainian business was poorly
prepared for competition in Europe in general.

10. If the technological and management capacities of Ukrainian companies were enough for CIS and
other developing markets, they were not enough to win the race in the EU.
After Russia has closed its markets and domestic market slashed as well for many exporters the
only alternative exists today: Switch to EU standards or forget about exports.
Only in 2017 the Deep and Comprensive Free Trade Area (DCFTA) started demonstrate positive
results. The stagnating world demand and trade wars with Russia severely hit Ukrainian exports
rebound in 2012 – 2015 from 69% to 36% (-47% from 2012 to 2015) but in the 1st half of 2017
exports started to grow with an increase of 24% from the 1st half of 2016.
EU’s back to game again: in fact there’s a change of exports priorities, 40% from total went to EU
markets in 06M 2017 while Russian share dropped to 9%, but value of exports to EU (in USD bn)
started to rise in 2017, but the EU market remains closed to “old-style” entrants from Ukraine due
to non-trade barriers and weakening demand from EU side. Ukrainian export started to grow to
Turkey and to Belarus.
PRIVATIZATION
The launch of privatization has been on the agenda of the Ukrainian government for many years
already and has become number one priority for further economic recovery of Ukraine nowadays.
In March 2015 the International Monetary Fund (IMF) has approved a four-year lending program
for the Ukrainian economy, the Extended Fund Facility (EFF) worth circa €6.3 million. Ukraine has
already received four tranches while the next tranche was expected in September 2017. However,
Ukraine failed to fulfill several mandatory conditions for the program revision, including the
adoption of laws on the anti-corruption court, on pension reforms and privatization. Hence, the next
tranche may be possible in the second quarter of 2018 if the program will be reviewed in February-
March.
There are about 3,500 state-owned enterprises that should be privatized. The largest companies to
be privatized in terms of assets are: Oschadbank, Ukreximbank, The State Food and Grain
Corporation of Ukraine, PrivatBank, Centrenergo, Turboatom, the Agrarian Fund. The economic,
legal and financial obstacles that exist in the state-owned companies make it very hard to sale many
of them. Now the Ministry of Finance of Ukraine is designing a privatization strategy and a draft law
will be hopefully approved by 2018. On the 8th December 2017 the State Property Fund of Ukraine
(SPF) has approved a list of almost 100 enterprises eligible for privatization in 2018, among which
combined heat and power plants, enterprises in the chemical and energy sectors and others.
THE MOST PERSPECTIVE SECTORS FOR INVESTMENT
Agribusiness sector.
According to various estimates Ukraine boasts over 30% of the world’s reserves of the most fertile
black soils. The share of agrarians in total export is 40%. Though the ban on sale of agricultural land
was extended by one year, it should not stop any agricultural venture from entering this market
with the biggest potential of its kind in the world. Nowadays Ukraine is the most suitable location
for organic products and sustainable biodynamic farming. About 400 thousand hectares of
Ukrainian land are certified for organic farming. Taking into account the growing international
demand for food, agricultural infrastructure (field granaries, port grain elevators) is also becoming
increasingly demanded by the sector. Such modern agricultural technologies as fuel control systems
and parallel driving are also becoming much requested in Ukraine.

11. IT service and software R&D sector.
This sector has demonstrated double-digit growth year-over-year and shows great potential due to
the country’s large skilled force. According to the recent studies Ukraine is among the top-20 IT
services exporters in the world. Nowadays this sector is becoming more and more important for
the national economy. It passed from 0,6% of the GDP in 2011 and is expected to reach 6% in 2020.
In the Human Capital Index Ukraine is on the 24th place, with 16,000 IT-specialists graduating from
the Ukrainian universities. Nowadays, over 1000 IT-companies and more then 100 science centers
operate in Ukraine. There are several IT-clusters (Kiev, Lviv, odes, Kharkiv, Dnipro) while the
principal activities are software development and outsourcing.
Energy sector.
The Ukrainian energy sector is undergoing a complex transformation. On the one hand, energy
infrastructure needs major upgrade and restructuring. On the other hand, rising energy costs and
increasing deficit of traditional fuel sources stimulate the development of alternative sources of
energy. Ukraine has huge biomass potential which can be used for biofuel production. Moreover,
Ukraine has favourable conditions for the production of wind and solar energy, especially in the
south of the country. Privatization in the electricity and gas sectors, accession to the energy
community and the promotion of “green” energy are the main conditions that may increase the
investment attractiveness of the already prominent energy sector in Ukraine.
THE STATE OF IMPLEMENTATION OF THE ASSOCIATION AGREEMENT BETWEEN THE
EUROPEAN UNION AND UKRAINE: CURRENT SITUATION AND FUTURE CHALLENGES

12. (by Iana Seleznova)
Summary
The aim of the present paper is to describe the state of the Ukrainian Reform Plan's implementation
which was adopted with the purpose to enforce the objectives, defined by the Association Agreement
between the European Union and Ukraine. The paper also identifies the main critical issues which the
Ukrainian institutions will have to deal with in order to comply with the European and International
requirements.
***
1. THE ASSOCIATION AGREEMENT BETWEEN THE EUROPEAN UNION AND UKRAINE
The Association Agreement between the European Union and Ukraine finally came into force on the
1st September 2017, after having been provisionally applied since the 1st January 2016. This is
probably the most dramatic European Union deal with a non-European Union country. Its earlier
rejection by Ukraine’s former president V. F. Yanukovich sparked the Euromaidan protests. The
Association Agreement, which includes a Deep and Comprehensive Free Trade Area between the
European Union and Ukraine (DCFTA), has laid the foundations for the ambitious Ukrainian Reform
Plan.
1. UKRAINE’S REFORM PROGRAMME
Ukraine has been a focus of European and global political attention since 2013. In particular, the
International Monetary Fund, the European Union and the United States of America have provided
Ukraine with a substantial balance-of-payments and budgetary support, along with technical
assistance. Since 2014, the European Union and Ukraine have defined a highly ambitious reform
programme. According to that, the Ukrainian authorities have started the process of adoption of
deeper and unprecedented reforms in many areas, including banking system, decentralization,
energy, free trade, healthcare, human rights, the judiciary, police system, prevention and repression
of corruption, public administration, public broadcasting, public finance and public procurement.
2. THE STATE OF IMPLEMENTATION OF UKRAINE’S REFORM PROGRAMME
2.1 Banking system
In the early 2017, Ukraine has cleaned up a big part of the banking sector and has strengthened the
institutional framework of the National Bank of Ukraine (NBU). According to international experts,
the decision to appoint a new team of professionals to senior positions within the NBU in 2014 was
decisive. Specifically, the NBU’s readiness to close dozens of prominent Ukrainian banks has been
an example of rules trumping influence. Thanks to that, all the particularly problematic banks have
been closed, changing the rules of the game and putting the country closer to achieve European and
international standards.
2.2 Decentralization
The decentralization reforms that began in 2014 have brought relevant change to the country. Local
administrations have now more responsibility for the services provided: in particular, with the
amendments to the Budget and Tax codes, they have been transferred relevant additional
budgetary powers to local governments. Thanks to that, a total of sixty percent of personal income
tax, one hundred percent of state duty and one hundred percent of the fees for administrative

13. services are paid into peripheral budgets. Local administrations can also now borrow larger sums
from the central government to sustain their spending programs. Another significant point of the
decentralization process is the success of the program of voluntary consolidation of hromadas,
started in 2015, which has determined the creation of more amalgamated communities and has
permitted a more efficient governance of these local entities. Ukraine’s decentralization program is
supported by the European Union through a one hundred million project called U-Lead, that has
been launched on September 2016.
2.3 Digital society and public broadcasting
The country has prepared several laws to transpose European Union rules applicable to
telecommunication services, aiming to ensure the effective allocation and use of radio frequencies
and a level playing field in the telecom market. On the 23rd March 2017, Ukraine amended the law
on Electronic Commerce. On the 24th May 2017 the Parliament also adopted the new edition of the
Technical Regulation for Radio Equipment and Telecommunications Terminal Equipment: the new
measures and provisions will come into force in April 2018.
2.4 Economic development and free trade
Following the recession of years 2014 and 2015, Ukraine’s economy started its recovery in 2016.
The positive trend has been confirmed in 2017: the gross domestic product grew by 2,5 percent in
the first quarter of 2017 and by 2,3 percent in the second quarter of the year. Generally, Ukraine’s
business environment has strongly improved, according also to the latest World Bank’s rankings.
With specific regard to agricultural and rural development, Ukraine has put in place several
reforms, such as introducing auctions for rental of state land, opening e-services and transferring
land rights registration from state registrars to private notaries.
In 2017 Ukraine also adopted the Concept of the State Policy in the Sphere of Consumer Protection,
a package of resolutions to improve the corporate governance of strategic state owned enterprises
(SOEs) and a strategy for the development of medium and small entrepreneurship.
The country is continuing the implementation of new rules on the protection of rights of
shareholders, creditors and other stakeholders, company law, accounting and auditing and
corporate governance, aiming to comply with European and international standards on these
matters.
With regard to trade matters, in the first eight months of 2017 total trade between the European
Union and Ukraine grew by 27,1 percent, compared to the same period in 2016. Thanks to that, the
EU has consolidated its position as Ukraine's first trading partner: in particular, after Russia banned
Ukrainian agricultural products in 2016 and cancelled its trade deal with Ukraine, the opening of
the European Union’s markets helped Ukrainian producers to re-orient their exports. Therefore,
Ukraine is now continuing to transfer European Union norms into its legislation, aiming to eliminate
differences in safety requirements as the access to the EU’s single market is a powerful incentive.
2.5 Energy
In July 2017, the European Union and Ukraine approved the Annual Work Plan 2017 to implement
their Memorandum of Understanding on a Strategic Energy Partnership. Consequently, on the 18th
of August 2017, Ukraine approved the new Energy Strategy of Ukraine 2035.

14. Ukraine’s Energy Reform is not only about a source of income for Ukraine’s Budget, but matters for
European regional security. The gas transit has given Ukraine leverage on Russia and shored up the
cooperation and interdependence between the European Union and Ukraine on common energy
security issues. In November 2017, the Ukrainian government appointed independent directors to
the board of Naftogaz Ukrayiny, with the purpose to meet key requirements from the European
Bank for Reconstruction and Development (EBRD). This measure was well welcomed by
international observers, as a key for good governance and reform in energy sector and state-owned
enterprises (SEO).
With regards to energy efficiency, on the 6th June 2017 Ukrainian Parliament adopted the law on
Energy Efficiency Fund. Few days later, on the 22nd June 2017, the laws on energy performance in
buildings and on commercial heat metering and billing were also adopted.
2.6 Healthcare
Ukraine’s Parliament adopted crucial legislation aimed at fixing the country’s healthcare system.
The purpose is to define a new healthcare setup, based on western models, and to replace the
remnants of a Soviet system that left Ukraine with one of the highest mortality rates in Europe.
In particular, on the 19th October 2017, the Ukrainian Parliament adopted the draft law on state
financial guarantees for the provision of medical services and medicines. The newly approved
measures and provisions aim to assign a new role to personal insurances, to create a new institution
called National Health Service of Ukraine (NHSU) and hospital districts to regulate the existing
network of hospitals, to give financial and managerial autonomy to hospitals, to introduce flexible
salary of doctors and to shift from financing a medical institution to financing the services provided
to the patient.
2.7 Human rights
In June 2015, the Government of Ukraine notified the United Nations Secretary-General of its
derogation from certain human right guaranteed under the International Covenant on Civil and
Political Rights and the European Convention on Human Rights, in light of the security situation in
the eastern regions of the country. The derogation was reviewed in June 2016. On the 19th April
2017 an interagency state commission was established in order to review the necessity, territorial
application and scope of these derogations. The President of Ukraine also requested to the National
Security and Defence Council (NSDC) to develop a draft law on the aspects of the state policy on the
restoration of Ukraine’s sovereignty over the temporarily occupied territory of the Donetsk and
Luhansk regions. The annual Human Rights Dialogue between the European Union and Ukraine was
held on the 13th June 2017 in Kyiv: during the meeting, the European Union particularly called for
further progress to be made in the investigations into the crimes committed during the EuroMaidan
protests and the violent events in Odessa on the 2nd May 2014. On the agenda of the meeting was
also the non discrimination policy and the rights of the child: in particular, the European Union
encouraged Ukraine to ratify the Istanbul Convention of the Council of Europe on combating and
preventing violence against women and domestic violence.
2.8 The Judiciary
In the Association Agreement between the European Union and Ukraine, the rule of law is qualified
as a key element of strengthening the cooperation between the parties. In June 2016, Ukraine
adopted constitutional amendments concerning the justice sector. The amendments provide for the
creation of a new Supreme Court, the simplification of the court system and the strengthening of
the independence of the Judiciary. Generally, the access to justice improved, thanks to an increase

15. in legal aid recipients and new legal aid bureaux. In 2017, the Ukrainian Parliament adopted a new
law establishing a Constitutional Court and, on the 29th September 2017, the High Council of Justice
in Ukraine proposed 111 candidates for appointment by the President as judges at the new
Supreme Court. Recently, the President of Ukraine signed the law on introducing the amendments
to the Code of Commercial Procedure of Ukraine, the Code of Civil Procedure of Ukraine, the Code
of Administrative Procedure and other legislative acts, which aims at bringing the country’s legal
procedure in compliance with European and international standards. Thanks to this continuation
of justice reforms, the perceived level of judicial independence has increased, according to the latest
surveys by the World Economic Forum (WEF).
2.9 Police system and security sector
The Ukrainian police reform process began in March 2014. So far, the highest point of the process
was the institution of the new National Police of Ukraine (NPU), which replaced the old militia on
the 7th November 2015.According to several international observers, the creation of the new patrol
police is generally recognized as one of the main successes in the reform of Ukrainian law
enforcement, especially considering the violent events occurred during the EuroMaidan. However,
the reform process is continuing, aiming to develop a comprehensive concept of public order
policing, to reinforce the principles of intelligence-led policing and to strengthen the capacity of
NPO for criminal investigation. In this sector, the Organization for Security and Co-operation in
Europe (OSCE) Project Co-ordinator in Ukraine is supporting the process of certification, selection
and testing of the police officers, notably for neighborhood and patrol services, even offering re-
training programs to the certified militia workers. The OSCE Project Co-ordinator in Ukraine also
assists the Ministry of Defence, the Parliament and the Security Service to learn and introduce
the international best practices in the sphere of the security sector.
3.10 Prevention and repression of corruption
Ukraine has instituted some new anti-corruption authorities, aiming to respond to public demand
for a fairer and more transparent public system.
The National Agency for Prevention of Corruption (NAPC) is a special status central executive
agency that ensures the formation and implementation of the state anti-corruption policy. The
NAPC is a collegial body consisting of five members and has the main task to verify the accuracy of
state officials’ asset and income declarations.
The National Anti-Corruption Bureaux (NABU) is a law enforcement anti-corruption agency, which
has the task to investigate corruption and prepare cases for prosecution. The NABU can also
investigate bribery and corruption of foreign officials. The detectives of the agency have received
training sponsored by the United States of America Federal Bureaux of Investigation (FBI) and by
the European Union.
The Specialized Anti-Corruption Prosecutor’s Office (SAPO) is an independent structural unit of the
Prosecutor’s General Office of Ukraine. The SAPO guides the investigations conducted by the NABU.
3.11 Public Administration
Ukraine is continuing to implement the 2016-2020 Strategy on Public Administration Reform
(PAR). In particular, Ukraine has launched the concept of reform staff positions, focusing on the
merit-based and transparent recruitment of officials. The country is also implementing a
comprehensive policy cycle management, policy-making and salary reform, an e-Governance

16. system, a human resource management information system and a new law on general
administrative procedure.
Recently, the reform implementation in public administration has been confirmed as the key for a
good governance and as essential for the resilience' strengthening, in the Declaration signed off on
the 24th November 2017, during the Eastern Partnership Summit.
3.12 Public Finance Management
In February 2017, Ukraine adopted a new Public Finance Management (PFM) strategy. Then, in May
2017, a connected Action Plan was adopted. Thanks to that, the country aims to create fiscal space,
by eliminating inefficient public spending and by strengthening revenue mobilization, and to make
more strategical the budgeting process, with the improvement of programme-based budgeting and
the introduction of medium-term budgeting. Ukraine also has started the reform of internal control
of public finances, by transferring the Central Harmonisation Unit for Public Internal Financial
Control from the State Audit Service to the Ministry of Finance. On this matter, the country is jointly
supported by the European Union and the World Bank, through the Strengthening Public Resource
Management Project: in particular, the European Union provided a 3,03 million Euro grant, which
main beneficiaries are the Ministry of Finance and the National Agency of Civil Service. As
recognized by the same World Bank, the country has made considerable progress in reducing large
structural imbalances and restoring macroeconomic stability.
3.13 Public Procurement
A key area of the reform plan is Public Procurement (PP), a huge arena for corruption in the 1990s
and 2000s. Making it fair and transparent is an important goal of the Association Agreement. It has
been also qualified as a requirement for an International Monetary Fund (IMF) disbursement and
EU visa waiver. However, on these field, Ukraine went further: its online procurement system,
called “ProZorro”, has already become a global brand. Thanks to that, also in 2017, Public
Procurement continues to be one of the flagship of the government. According to the PP reform
strategy 2022, Ukraine started to work on a significant approximation package to be adopted in
2018. As recognized by the European Union in its last progress report, the business community,
civil society and the professionalization efforts through on-line PP training for public officials
achieve high take-up and bring successes. Thanks to all these efforts, Ukraine was admitted to join
the World Trade Organization’s government procurement agreement. Even the European Bank of
Reconstruction and Development (EBRD) accepted Ukrainian e-procurement model as a showcase
of the digitalization of state tenders.
4. FUTURE CHALLENGES
The reform plan’s results have been achieved despite the security problems caused by the current
conflict in Eastern Ukraine. The EU reaffirmed its commitment to support Ukraine in continuing to
accelerate reforms and their sustainable implementation, confirming also its firm and continuing
support to Ukraine's independence, sovereignty, territorial integrity and union, by condemning and
not recognizing the illegal annexation of Crimea and Sevastopol by Russia. In this matter, the EU
endorsed its support for the implementation of the Minsk agreements and a peaceful and
sustainable resolution of the conflict in eastern Ukraine, and expressed a strong concern for the
deterioration of human rights in the Doneck and Luhansk regions and the violation of persons
belonging to ethnical and religious minorities and those who don’t recognize Russia’s illegal
annexation. The European Union constantly stresses the importance of continuing the reforming
efforts and intensifying the implementation of reforms in key areas such as better healthcare, rule
of law and taxation, the fight against corruption, the judicial reform and more efficient public

17. administration. Some of these reforms have just started, but many of them depend on human
capital: the need to recruit new people, honest and professional, remains the biggest challenge. In
fact, insufficient staffing at public institutions continues to represent an important obstacle.
Reforms are costly and time-consuming but, despite such problems, the signs are numerous that
changes are taking place and that they are irreversible.
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