May 2012

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1: Special Report. Ukrainian Government Performance Report 2011

Special Report. Ukrainian Government Performance Report 2011

A Special Report on the performance of the Ukrainian government in 2011 as determined by Ukraine’s rankings across 23 international indicators.

At the beginning of 2010 the People First Foundation published a report on Ukraine’s standing within the family of nations using comparative data prepared by Ukrainian and international experts and reputable international organizations. This data ranked Ukraine’s performance across a wide spectrum of indicators. This year we have repeated the research in-order to measure the governments overall performance in improving the living standards, financial stability and reputation of Ukraine during 2011.

All of the information in this report has been taken from verifiable open sources, the references to which are detailed at the end of the report. The research was carried out in the last week of December 2011 in order to make it as accurate and comparable with the 2010 as possible.

Indicators:

▲	Situation improved compared with 2010
●	No significant change compared to 2010
▼	Situation worsened compared with 2010

№	Indicator	2010	2011
1. ▼	HIV / AIDS	Ukraine holds first place in Europe by both prevalence and growth rate of the HIV/AIDS epidemic. 1.63% of the Ukrainian population aged between 15 and 49 is HIV-positive. Total number of HIV-positive people in Ukraine is over 360 thousand(1).	According to UNAIDS data, the growth rate of the HIV/AIDS epidemic is around 0.3% for 2011. Only 25 thousand people out of over 360 thousand infected get the necessary treatment. Experts illustrate that every 24 hours or so a group of people the size of a football team dies of AIDS in Ukraine(2).
2. ▲	Life expectancy	Ukraine has the worst life expectancy in Europe after Russia (overall life expectancy is 67.9 years) ranking 123rd out of 194 countries next to Maldives, Azerbaijan, Uzbekistan and North Korea(3).	According to UN data, Ukraine is one of nine countries (Ukraine, Belarus, Russia and six African countries) where life expectancy is still lower than it was in 1970s(4). Overall life expectancy has risen slightly from 2010 to 68.5 years meaning Ukraine currently holds a position between Georgia and Mauritius(5).
3. ▼	Mortality	According to UN data (2005-2010) the mortality rate in Ukraine is the worst in Europe: 17th place worldwide next to Somalia, Russia and Burundi(6).	The mortality rate in Ukraine is 15.2 per 1000 people whilst in EU countries it is an average of 6.7 per 1000. Ukrainians on average live 10 years less than citizens of EU and many CIS countries(7).
4. ▲	Charity	Ukraine and Serbia share 150thplace of 153 countries in the World Giving Index published by British Charities Aid Foundation. Ukraine's neighbours in this rating are Burundi and Madagascar (8).	According to World Giving Index 2011 Ukraine rose from 150th to 105th place, moving up 46 places with the following indicators: giving money 11% (5% last year), 30% volunteering time (14%) and 37% helping a stranger (19%)(9).
5. ▼	Corruption	The worst level of corruption in Europe (together with Russia). Other neighbours sharing 146th place in the rating are Cameroon, Ecuador, Kenya, Russia, Sierra-Leone, Timor-Leste and Zimbabwe(10).	Ukraine has fallen to 152ndplace (6 places down) in the Corruption Perception Index 2011; next to Tajikistan, Republic of Congo, Kenya and Zimbabwe, which is a sign that corruption in Ukraine has worsened. Russia has improved its ranking to 143rd place(11).
6. ▼	Economic freedom	Last place in Europe and 162nd place in the world rating of 179 countries, next to Togo (161st) and Liberia (163rd)(12).	According to the latest Index of Economic Freedom, Ukraine stands 164th of 183 countries, i.e. 2 places lower than 2010 and the worst of 43 countries in Europe(13).
7. ▲	Human rights violation	Ukraine had the highest number of complaints to the European Court of Human Rights per 10,000 people. Next closest were Russia and Turkey(14).	Ukraine held 5th place by the number of complaints to the European Court of Human Rights per 10,000 people(15). In recent years ECHR has affirmed about 100 decisions against Ukraine per year(16).
8. ▼	GDP per capita	By nominal GDP per capita Ukraine is the third worst country in Europe (according to IMF and WB data) after Georgia and Moldova(17).	Ukraine continues to be one of the poorest countries in Europe by nominal GDP per capita: $3000. Other countries that are close to Ukraine are Moldova, Kosovo, Serbia and Bulgaria(18).
9. ▼	Wealth	According to Global Wealth Report 2010 released by Swiss bank Credit Suisse, Ukraine holds the next to last position among 40 European countries surpassing only Moldova. Average property of a Ukrainian citizen is estimated at $2,700, only $200 more than in Moldova. Average wealth level per citizen in Poland is $28,600, Romania – $12,400, Russia – over $10,000(19).	According to Global Wealth Report 2011 Ukraine is now last in Europe. Average property of a Ukrainian citizen is estimated to be $3,384 while in Russia it is $10,911 per citizen, in Romania – $17,599, in Poland – $27,410 whilst Moldova takes Ukraine’s former position with $3,481(20).
10. ▼	Debts	Ukraine is the second biggest debtor to IMF after Romania with $12 bln. of debt(21). It also holds 10th position in the list of biggest debtors to the World Bank with $3.22 bln. of debt together with India, China, Turkey and Mexico(22).	Gross Ukrainian national debt has grown by 7.5% between January and September 2011. Total state (direct) and guaranteed debt has grown by 7.5% up to $58,385 bln.(23)
11. ▼	Conditions for business	Ukraine ranks 98th in the Best Countries for Business rating compiled by Forbes, between Russia and Senegal; the worst in Europe except for Bosnia and Herzegovina(24).	In the 2011 Forbes rating, Ukraine ranks 105th of 134 countries, which means that it has lost 7 places in a year. Ukraine is ranked between Cambodia and Yemen whilst Russia is 102nd. The rating takes into account a range of indicators, such as property rights, innovation, tax burden, corruption, trade freedom, red tape, investor protection etc(25).
12. ●	Traffic accident mortality	Ukraine has one of the highest traffic accident mortality rates in Europe. 13-20 people die on Ukrainian roads every day(26). 13% of all deaths that happen in traffic accidents in Europe happen in Ukraine(27).	About 5,000 people died and 40,000 were severely injured in traffic accidents in Ukraine over the course of 2011. On average 14 people die on the roads every day. Ukraine stands 4th in Europe by the number of traffic accidents. According to World Bank data road accidents cost Ukrainian economy over $5 bln. every year(28).
13. ▼	Poverty	12.5 mln. Ukrainians are officially below the poverty line. An average Ukrainian lives on $105 per month ($3.38 per day). According to World Bank data 26.4% of Ukrainians live in real poverty, which is the same as in Moldova, a little better than in Armenia (28.7%) and much worse than in Georgia (18%) and Russia (13.6%). Poverty rate in Ukraine is 11% higher than the European average(29).	The number of poor people who struggle to make enough to cover food costs has increased from 12.5% in the beginning of 2008 to 13.8% in October 2011. The number of those who make enough money for food and essentials has increased from 34% to 41%. Poverty in Ukraine has a female face, since 62% of the people who struggle to feed themselves are women. 50% of mendicants and 29% of the poor are people of pensionable age (60 years or more)(30).
14. ▼	Investment climate	Ukraine holds 40th place of 45 countries by the total amount of foreign direct investment per capita (World Bank data, 2009) between Armenia and Albania(31).	According to World Bank and International Finance Corporation data, Ukraine has lost 7 places in 2011 and now is 152nd of 183 countries. Among the countries that rank higher are: Poland (62nd), Kazakhstan (47th), Belarus (69th), Kyrgyzstan (70th), Moldova (81st) and Russian Federation (120th)(32).
15. ▼	Small and medium business	European Commission data states that Ukraine, at 16%, has one of the lowest contributions of SMEs to GDP. It ranks 34th of 44 countries, between Russia and Armenia(33).	In the first half of 2011 over 100 thousand enterprises have stopped functioning and the number of those wanting to start their own business has reduced by almost two thirds(34). The contribution of SMEs to Ukrainian economy is now 13%(35).
16. ●	Alcoholism	Ukraine holds the first position in the world by alcohol consumption among children and adolescents. Ukrainian children start using alcohol at 10-13 years of age. 40% of adolescents consume alcohol at least once a month, Israel ranks second with 28%, Czech Republic is third, Russia ranks 15th.(36)	Ukraine continues to rank first in the world for child and adolescent alcoholism. About 15% of Ukrainian children start drinking alcohol at 13(37) and 40 thousand Ukrainians die of alcohol related causes every year(38).
17. ▼	Human trafficking	Ukraine is one of the European leaders in human trafficking together with Belarus, Moldova, Romania and Bulgaria. Human rights advocates calculate that these countries sell at least 225 thousand people into slavery every year. International Organization for Migration states that over 100 thousand Ukrainians have suffered from human trafficking since 1991(39).	Ukraine is now on the list of countries with the most human trafficking worldwide following Russia, Turkey and Poland. The number of Ukrainians who suffered from human trafficking is growing every year(40).
18. ▼	Illegal emigration	Ukraine is one of the European leaders in the rate of migration. About 5-6 mln. Ukrainians work abroad, but no more than 5% of those work legally(41).	International Organization for Migration states that by the end of 2011 there were 6.5 mln. migrants working abroad; almost 14,5% of Ukrainian population(42). Experts estimate that annual losses from outflow of professionals are about $15 bln. Ukrainian migrants transfer between $5 to $9 bln. which equals 5-8.5% of GDP and is equivalent to the amount of foreign investment into the country(43).
19. ▲	Competitiveness	Ukraine ranks 89th of 139 countries in Global Competitiveness Report prepared by the World Economic Forum, next to Albania, Gambia and Honduras(44).	Ukraine has moved up from 89thto 82nd place in the annual Global Competitiveness Report and now stands between Trinidad and Tobago and Namibia. Of the ex-USSR countries Estonia ranks 33rd, Azerbaijan 55th, Latvia 64th, Russia 66th, Kazakhstan 72nd, Georgia 88th, Moldova 93rd. The 2011 report includes 142 countries of the roughly 200 existing(45).
20. ▼	Freedom of media	According to the data provided by international freedom of press organization Reporters Without Borders, in 2010 alone Ukraine has fallen 42 places lower in the freedom of press rating, from 89th of 175 countries in 2009 to 131st in 2010. This is one of the swiftest downfalls in the whole history of the index. Russia has risen 13 places in 2010 from 153rd to 140th(46) . Ukraine is coloured orange signifying noticeable problems. In 2011 it is the colour of Mongolia, India, Brazil, Italy, Southern-European countries etc.	In February 2011, Reporters Without Borders have issued the annual freedom of press world map. Ukraine is coloured red which indicates difficult situation, along with Russia, Belarus, China, Iraq, Afghanistan, Venezuela, Colombia, Turkey etc.
21. ▼	Coal mining safety	Since 1990 Ukraine has lost over 3500 coal miners, i.e. since gaining independence Ukraine has lost more people to the mining accidents than in the rest of Europe over the same period(47). Ukrainian coal mines are considered the second most dangerous in the world after the Chinese.	Data provided by the State Service for Mining Inspectorate and Industrial Safety of Ukraine shows that, since the beginning of 2011, 160 miner have died in Ukrainian coal mines. In 2010, 131 miners have died meaning that the mortality rate has increased by 23%(48).
22. ●	Software piracy	Seventh Annual BSA and IDC Global Software Piracy Studystates that 85% of all software used in Ukraine during 2009 is unlicensed. Ukraine's ranking is the worst in Europe and 9thworst in the world. Because of piracy the government loses $260 mln. each year in taxes alone(49).	Ukraine ranks 12th in the world's rating of countries with the widest spread software piracy. Georgia ranks 1st with 93% of all software used without licenses. The share of pirated software in Ukraine reaches 86% and annual turnover of the unlicensed software market in 2010 was about $570 mln(50).
23. ▼	Democracy	Democracy Index 2010 compiled by the Economist Intelligence Unit places Ukraine 67th of 167 countries and is categorised as a flawed democracy. This index is based on indicators in five different categories: electoral process and pluralism, civil liberties, functioning of government, political participation and political culture. The countries are categorized into full democracies, flawed democracies, hybrid regimes and authoritarian regimes.	Ukraine is now the 79th of 167 countries and is categorized as hybrid regime, falling 12 places in a year. Russia has also fallen from 107th to 117th position and into the authoritarian regimes category(51).

Summary:

4	Situation improved compared with 2010
3	No significant change compared to 2010
16	Situation worsened compared with 2010

People First Comment:

Improvements

The good news is that we are all going to live 7.2 months longer, we have become slightly more competitive as a nation, we don’t have such a long list of human rights violations pending at the Court of Human Rights in the Hague and we are all being more supportive of those less able to cope with the pressures of modern Ukrainian society through charitable donations and simply lending a helping hand to those in need. This last point cannot be attributable to the government but to the simple human kindness of the Ukrainian people

Unchanged

Three areas remain unchanged in that we are still killing as many people on our roads and rank in the top 4 as the worst drivers in Europe despite the new found vigilance of the traffic police. We are still drowning our sorrows in alcohol killing over 40,000 people a year and with some 15% of children starting to drink alcohol at age 13. Ukraine also has the unenviable title of being ranked 12th in terms of software piracy with somebody making around $570 million a year from the trade. Whilst these positions remain unchanged they are an indication that the government has done little to curb Ukrainian’s often totally selfish driving habits, nothing to curb alcoholism and that copyright piracy is has not been addressed at all.

Worsened

Over the past 12 months the state of Ukrainian society has diminished in over 16 of the 23 areas researched (69.5%). This is not simply an indication of inefficiency but of a more worrying decline in actual government activity. In many cases there would appear to be a direct link between government policy and the decline.

It is somewhat ironic that as we enter the year when Ukraine is jointly hosting Euro 2012 football championships we are loosing the equivalent of a football team every singe day to HIV/AIDS. In 2011 the rate of infection is estimated to rise at an average of 5,500 people per month yet the government has declined to increase the health budget at all for 2012. As a result of inflation this means an effective cut in the budget of 10 to 12% and as a result the overall mortality rate is now 2.27 times higher than in the EU.

Despite fine words from the authorities regarding the fight against corruption Ukraine has fallen 6 places in one year on the 2011 International Corruption Perception Index to 152nd place along side Tajikistan, Republic of Congo and Zimbabwe… so much for empty promises. In addition Ukraine has the worst economic freedom in Europe and ranks 164th out of 183 countries clearly indicating that the government’s soviet era policies simply have no place in the modern world.

Despite all its agricultural, mineral and industrial wealth Ukraine remains one of the poorest countries in Europe. Whilst the GDP per capita on a PPP basis is estimated at around $6,000 a recent report identified that the wealth of the top 100 in Ukraine is equal to 61% of GDP making the actual GDP/PPP figure closer to $2,340 putting Ukraine in the same league as Sudan, Yemen and Cameroon. Needless to say personal wealth also reflects the GDP position with Ukrainian wealth today running at only 31% of Russia, 19.2% of Romania and 12.3% of Poland whilst the same time there is a waiting list for new Bentley motor cars.

Ukraine ranks 2nd in the league of debtors to the IMF, owing $12 billion. Luckily for the people of Ukraine who will have to repay this, the IMF have refused to lend any more money to Ukraine until the government instigates major structural reform, something which seems unlikely in the present political climate. Furthermore and despite the government investing heavily in foreign investment promotion a Forbes magazine survey reduced Ukraine’s investment attractiveness ranking from 98th to 105th, a drop of 7 places in just one year which in its self is almost a record.

Needless to say that actual poverty has increased from 12.5% of the population to 13.8% adding a further 18,000 families to the officially poor. At the same time the government have cut the budget for the Ministry of Social protection by 17.16% for 2012 whilst spending almost a billion dollars on the Euro 2012 football tournament and increasing budget expenditures on state administration by $45 million.

According to the World Bank and the IMF the investment climate in Ukraine now lags 32 places below that of Russia, 82 places behind Kyrgyzstan, 73 places behind Belarus and 90 places behind Poland. Needless to say investors are voting with their feet and finding less intimidating places to invest and it’s not just the international community. In the first half of 2011 over 100,000 small and medium sized company owners simply closed up shop throwing thousands out of work as the governments new tax policy began to bite. The contribution to GDP from the SME sector fell by 3% in 2011 to just 13% whilst in the EU the SME contribution is around 57%.

One of the more despicable areas of lax government activity is in the area of human trafficking where Ukraine now ranks in the top four in the world. This is hardly any wonder in a country where rape victims are treated appallingly by an untrained and uncaring police force and the rule of law has all but collapsed. Needless to say some 14.5% of the working population of the country now prefer to work illegally abroad in the US and Europe as they have more rights and protection as illegal migrants than they do as citizens of their own country

In terms of press freedom Ukraine has, in one year, regressed from orange (a country with noticeable problems) to red (a country with considerable difficulties) on the ‘Reporters Without Borders’ 2011 listing putting Ukraine on par with Afghanistan, Iraq and Columbia… At the same time mining deaths have risen by 23% rivalling the record of China. At least in China the authorities are taking steps to prosecute lax mine management where are in Ukraine once the wreaths have withered mining disasters are simply swept under the carpet and the Press are ‘advised’ not to dig too deeply.

Finally Ukrainian Democracy took a nose dive in 2011, falling a record 12 places on the Democracy Index complied by the Economist Intelligence Unit and the country is now categorised as a ‘Hybrid Regime…’

Conclusion

It is difficult to see just what this government is seeking to achieve as from a simple mathematical calculation we can determine that only 17.4% of the government’s work has resulted in an improvement in Ukraine’s standard of living, 13% has maintained the status quo whilst 69.6% of their work has results in a significant worsening of the quality of life. This is socially, politically and morally indefensible and must rank this government as one of the most in-efficient Ukrainian governments of modern times.

When compared to the election promises made by the President and his party these results clearly indicated that either the Ukrainian bureaucratic machine is not following instructions or the instructions have never been issued. The latter seems more likely.

It would seem incomprehensible in any modern day democracy that a government could be so in-efficient yet survive, more so as the President’s vertical power structure was specifically designed to improve the efficiency of government.

When Ukraine gained its independence the World Bank boldly stated that with all its natural resources and with the capabilities of its highly educated people Ukraine could be one of the wealthiest countries in the world, yet 20 years later its people are reduced to poverty, its resources have been plundered and mismanaged and this once proud nation has been reduced to lower third world status… But this is what happens when the authority of the judiciary is subjugated to the will of politicians who vote themselves immunity from prosecution, when there is no transparency or accountability within the state budget enabling mass corruption and criminality and where democracy has been reduced to nothing more than a shame to appease the international community.

The future is bleak indeed unless the people of Ukraine wake to the fact that there are real alternatives and that there are non-violent ways of achieving them simply by exercising their right to say no. All governments exist through the will of the people. No government has ever survived for long as a result of repression and institutionalised plunder and this government is no different. Upon these results alone this government should resign and make way for a democratically elected government that will uphold all the rights of human dignity and set Ukraine on a course of prosperity for all as opposed to a select few.

(1) http://www.unaids.org/en/CountryResponses/Countries/ukraine.asp

(2) http://www.voanews.com/ukrainian/news/ukraine/aids-in-ua-2011-12-01-134830933.html

(3) http://www.un.org/esa/population/publications/wpp2006/WPP2006_Highlights_rev.pdf

(4) http://hearts.in.ua/community/blog/80.php

(5) http://newsru.ua/ukraine/03nov2011/uroven.html

(6) http://esa.un.org/unpp/index.asp?panel=2

(7) http://pidpr.com/blog/smertnist_v_ukrajini_bilsh_nizh_udvichi_perevishhue_evropejsku/2011-11-27-382

(8) Charities Aid Foundation (CAF). - http://www.cafonline.org/pdf/0882A_WorldGivingReport_Interactive_070910.pdf

(9) http://www.vboabu.org.ua/news/406.html

(10) Corruption Perceptions Index 2009 by Transparency International

http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table

(11) http://taxman.org.ua/news.php?id=130

(12) According to The Wall Street Journal і Heritage Foundation, 2010 Index of Economic Freedom World Rankings.- http://www.heritage.org/index/Ranking.aspx

(13) http://www.usubc.org/site/recent-news/ukraine-ranked-164th-out-of-183-countries-in-latest-economic-freedom-ranking

(14) Report of the Parliament Speaker V. Lytvyn. - http://www.qwas.ru/ukraine/np/Dopov-d-Golovi-Verhovno-Radi-Ukra-ni-V-M-Litvina-na-zagalnih-zborah-Nac-onalno-akadem-pravovih-nauk-Ukra-ni

(15) http://www.radiosvoboda.org/content/article/24267785.html

(16) http://www.volfoto.inf.ua/pagesi/istomist/statti/2011rik/dm111208/t111213/pozov/pozov.htm

(17) http://databank.worldbank.org/ddp/home.do?Step=12&id=4&CNO=2 ; http://www.imf.org/external/pubs/ft/weo/2010/02/index.htm

(18) http://ua.for-ua.com/comments/2011/07/07/090248.html

(19) https://emagazine.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=291405&lang=EN

(20) http://www.scribd.com/doc/70659548/Credit-Suisse-Global-Wealth-Databook-2011

(21) http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=993&date1key=2010-10-12

(22) http://www.rtkorr.com/news/2010/08/10/161777.new

(23) http://gazeta.ua/articles/business/_derzhavnij-borg-ukrajini-dosyag-60-milyardiv-dolariv/411473

(24) http://www.forbes.com/lists/2010/6/best-countries-10_Best-Countries-for-Business_Rank_4.html