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19 July, 2011  ▪  Alina Pastukhova

Web Of Red Tape

Though the government keeps promising to cut red tape, Ukrainians continue to be stuck in it

“Why, before signing contracts with citizens, do regional gas suppliers demand to see authorization papers for their apartments which were issued in the 1970s?” Viktor Yanukovych asked trying to get an answer at a meeting of the economic reform committee under the presidential administration. No-one had an answer.

Nor are there answers to hundreds of similar questions from citizens who have had problems obtaining foreign passports, having their cars complete official checkups or receiving business licenses. They are confronted with unnecessary paperwork, inconvenient office hours, lines and more. On top of this, services are slow and expensive – even forms and lamination force them to dig into their pockets.

The president says that excessive administrative service fees are unlawful, but no-one is rushing to change the status quo. Pointed interventions by Yanukovych’s team have failed to produce the desired results. Experts say that the first step here should be special legislation.


Experts at the Center for Political-Legal Reform say that Ukraine currently lacks an adequate legislative framework to regulate administrative services. Taking advantage of the existing legislative chaos (over 100 normative acts on various levels), bureaucrats deliberately complicate procedures and charge excessive fees.

Using their right to set up commercial entities, government agencies form intermediary structures that eventually monopolize government-provided services. Officially, there are more than 11,000 such entities, and most of them duplicate the functions of government agencies. According to the United State Register of Legal Persons and Individual Entrepreneurs, 7,608 of such entities are run by ministries and 3,567 by other central government bodies. These institutions often set fees at their own discretion. For example, they calculate themselves how much the services of technical inventory bureaus should cost and submit them for approval to regional state administrations.

“Income-generating opportunities lead to more permits, licenses, registration procedures, etc.,” Viktor Tymoshchuk, expert at the Center for Political-Legal Reform, says. According to the Chief Control and Revision Directorate, automobile drivers were forced to purchase plastic registration card holders worth UAH 0.9 for UAH 11 in 2005–2006. This "earned" the Interior Ministry over UAH 18 million, and this practice persists, Drivers’ Association Chair Serhii Ovchynnikov says.

Consumers of administrative services often fail to understand how much money should be paid for a given service, making them easy prey. For example, various payments totaling over UAH 500 are associated with obtaining a foreign passport instead of the official legal fee of UAH 170. Many Ukrainians complain that they have been forced to purchase an insurance policy during the procedure, even though it is not required by the law.

According to the Audit Chamber, state-owned enterprises that are run by the Interior Ministry and provide paid services systematically financed the ministry and transferred money to it as charitable aid throughout 2010. A large part of these “voluntary contributions” was used to create comfort for the ministry’s leadership, including cars, computers and office remodeling.

Entrepreneurs are an especially convenient category to be milked for money. They receive “offers” to pay extra or to approach a specific intermediary firm in order to have a problem solved or the required paperwork processed faster. “The main expenses are not the official price of services, but the bribe you have to pay in order to obtain them,” says Oleksandr Danyliuk, leader of the Common Cause movement.


The president is trying to put this all in order, but his cosmetic exercises are falling short of his target.

These are not the first attempts to make life easier for businessmen. In October 2010, the Verkhovna Rada passed a law that reduced the number of business activities that require licensing. Another law which defines a list of documents for businesses will enter into force on January 1, 2012. Under this law, only the documents actually listed can be required of businessmen. Permit centers were set up to make issuing papers easier and more transparent, but they are functioning properly in only a handful of cities.

The Cabinet of Ministers issued a resolution under which only budget-financed organizations and enterprises that have respective authority granted by the law can provide paid administrative services. On February 1, the government promised to eliminate all structures that were providing administrative services unlawfully, expecting to trim them from 11,000 to 1,500.

Experts say that until red tape is cut and a huge number of normative acts are replaced with one law that would define the provision of and payment for administrative services, no government initiative will eliminate the problem.


The Justice Ministry is currently working on two documents that are supposed to help solve this issue: a draft Administrative Procedure Code and a bill on administrative services. They are expected to reach parliament during the fall session.

The draft code defines the principles of the administrative procedure and the foundations of administrative proceedings and regulates record keeping and expenses related to various fees. People will be able to challenge the actions of an institution which has considered an administrative case in a higher government body. The bill on the administrative services makes it a duty of institutions to inform citizens free of charge about service provision procedures and prohibits them from requesting information and documents which can be obtained without the involvement of the person in question or which are not prescribed by the law.

BYuT MP Olha Bondar, first deputy chairman of the VR Committee on State Building, says that both documents define the procedure with sufficient clarity and thus make it easier to obtain services. In contrast, Viktor Tymoshchuk is convinced that it is not the final solution to the problem, because the number of services is not reduced, while payment issues receive only a partial solution: “It would be good to see certain standards under which prices will be set for services. The services themselves and the amount of paperwork need to be reduced to a minimum.”

Oleh Bereziuk, chairman of the Ukrainian Legal Society, says that if passed, these laws may conflict with the Economic Code and the Civil Code. Officials will take advantage of the situation and interpret legislative norms to their benefit.

“Involving private companies in government services, as the draft law suggests, de facto legalizes bribes. It will be clear to everyone how much should be paid and where. But this money will not go to the state budget,” says Danyliuk.

On the other hand, if only government agencies are allowed to provide administrative services, government employees could easily find themselves overburdened. This could result in a need to set up new departments to handle the workload which in turn would run counter to the concept of administrative reform. Furthermore, consumers could suffer from the inevitable interruptions and delays this would cause.

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