Guarding the guardians: Ukraine’s security and judicial reforms under Zelensky

Summary

• Despite Ukrainians’ deep unhappiness with the corruption and inefficiency of the judiciary and security bodies, the Poroshenko administration failed to reform these services.
• Political interference and personal enrichment have long been part of the practice of these services, overshadowing the strong work they are often capable of and holding back reformist elements.
• The office of the prosecutor general and the Ukrainian Security Service need particular attention, but merely passing new laws will not be enough: replacing incumbent high-level officials should be an early step.
• The EU, US, and NATO have worked effectively together on encouraging reform in Ukraine, but they must now ensure that these services remain high in the minds of the Zelensky administration and of Rada members.

Introduction

Since 2014, much of Europe’s public debate on Ukraine has revolved around the geopolitical contest between the West and Russia, the war in Donbas, and their security implications for Europe. But, at its core, Ukraine’s Revolution of Dignity was an anti-corruption uprising that only became geopolitical later. Ukrainians longed for a government that was less corrupt, more responsive to citizens’ demands, and bound by the rule of law. They ousted a government that had denied them their rights, fought the foreign invasion that would have reinstated a repressive kleptocracy, and elected new political leaders. However, these new leaders did not meet expectations – in either Ukraine or the West. Disappointment with the slow progress of reforms, particularly a series of setbacks in the fight against corruption, was key to the subsequent collapse in popularity of former president Petro Poroshenko and of established political parties. Ukraine’s new president, Volodymyr Zelensky, has promised to do better.

Contrary to its public image in Europe, Ukraine did not spend the Poroshenko era in a political stalemate characterised by fatigue with reform. When the European Council on Foreign Relations evaluated the state of Ukraine’s reforms in 2016, the country had made substantial progress in rebuilding its armed forces, decentralising administrative and political structures, and reforming its energy sector, banking system, regulatory framework, and public procurement system. However, reform of its judicial system, law enforcement agencies, and the intelligence services had fallen significantly short of expectations. It had become obvious that Poroshenko and some other members of the government wanted to retain loopholes that would allow them to escape prosecution for corruption and embezzlement – and to secure influence over any element of the state that would help them remain the chief arbiter of unofficial power networks. Like Poroshenko, high-profile leaders such as Volodymyr Groysman, Arseni Yatseniuk, and Arsen Avakov all tried to entrench their power beyond their constitutionally mandated roles. They did so by constructing personal power networks based on loyalty and coercion within state structures.

The resulting weakness in the rule of law undermined much of the progress Ukraine had made with other reforms. For instance, it negatively influenced international perceptions of Ukraine’s business environment, thereby hampering investment. Kestutis Lancinskas, who served as head of the European Union Advisory Mission to Ukraine for three years, has cited stalled changes to the Ukrainian Security Service (SBU) and the prosecutor general’s office (PGO) as key to the country’s reform effort. Many experts, scholars, diplomats, businessmen, and civil society activists share this view.

To help European policymakers address these challenges, this paper assesses the state of reform within the SBU and the PGO. Past reforms – especially largely failed reforms to the judiciary – are good indicators of what to avoid in the next round. Selecting the personnel for key posts – such as the next prosecutor general or the head of the Specialised Anti-Corruption Prosecutor’s Office (SAPO) – will be as important as the legislative and regulatory acts reforming the prosecution service. On the SBU, aside from new legislation, it will be crucial to disband the notorious Directorate K and redistribute personnel and competences to new investigative bodies. Vested bureaucratic interests will try to blunt the new reform effort and instead propose quasi-reforms that look good on paper but change little on the ground. This report identifies some of the potential pitfalls that lie ahead for reformers and makes suggestions as to how to avoid them.

Lessons from judicial reform

Western supporters of the government in Kyiv have long pressed it to complete reform of the judiciary. In October 2016, Ukraine ratified a law entitled “On the Judiciary and the Status of Judges”, which created a new supreme court and paved the way for the lustration and self-governance of the judiciary. The law followed the standard procedures suggested by the Council of Europe’s Venice Commission. These included the reform of the High Qualification Commission of Judges (HQCJ) to preside over appointees to the new supreme court and to oversee the appointment of judges to other courts. Under the system, the Supreme Council of Justice presides over decisions on judges’ careers and appoints them to high-level positions – with the aim of facilitating the self-governance of the judiciary and of reducing political influence over it.

Europe’s standard box-ticking approach to transplanting European laws and procedures into various environments has had several disadvantages in Ukraine. From the beginning, there were disputes over the composition of the HQCJ and the Supreme Council of Justice. Local NGOs had no say in designing the lustration and appointment process. Nor did international stakeholders. The appointment process has been opaque, as the HQCJ does not publicly explain the reasons for its decisions. This has quickly led to disputes between the HQCJ and the Public Integrity Council over the transparency of appointments. Moreover, the lustration processes (officially called qualification assessment) has affected only one in 20 of Ukraine’s judges – despite the fact that just 5-16 percent of Ukrainians trust the judiciary, and that corruption in the courts is widespread. The HQCJ has promoted judges that do not meet Ukraine’s integrity requirements to the supreme court and other important courts. The composition of administrative courts hardly changed through the reforms, and many of their verdicts have reflected the political preferences of the administration rather than the product of legal deliberations.

Thus, experts have been deeply frustrated with the practical results of Ukraine’s judicial reforms, the performance of the new courts, and the quality of their verdicts. Political actors still influence court decisions. Even more detrimental to the reform effort in Ukraine is the apparent tendency of some judges who were part of the old system to try to dilute transparency measures, as well as checks and balances on their power, and thereby protect vested interests or conceal past crimes. A prime example of this is the constitutional court’s decision to declare laws on illegal enrichment unconstitutional and thereby force Ukraine’s investigative services to close ongoing illegal enrichment cases. While some Western experts tend to take seriously the court’s legal arguments – that the law would contradict the principle of the presumption of innocence – most Ukrainians view the decision as part of a scam designed to facilitate graft.

The essential lesson that Europeans should draw from this – whether discussing reform in the security sector or other areas – is that laws and institutions are only as good as the people in charge of them. As such, the appointment of these figures is a key part of reform.

While the limitations of purely legalistic judicial reform will hamper the country for some time to come, Ukraine has at least begun to move in a positive direction. Its creation of a special anti-corruption court was long delayed due to various vested interests, as well as Poroshenko’s attempt to allow the politically loyal HQCJ to pick judges for the court and constrain international and domestic bodies’ capacity to monitor it and veto its decisions. However, due to intense international pressure, oversight of the lustration and selection process for the new anti-corruption court will be much stricter than Poroshenko planned: the court is widely expected to be willing to jail even high-ranking officials for corruption and embezzlement. To protect former members of the Poroshenko government, the then administration did not allow the court to revise old verdicts or to hear appeals from trials that began before the HQCJ was created. But a recent vote in the Rada, Ukraine’s parliament, removed this get-out-of-jail-free card.

The previous government saw the reform of the judiciary as largely complete. This may be the case in purely legalistic terms, as the only pieces of legislation in this area that Ukraine is yet to implement concern procedural laws and other issues that followed the country’s 2016 constitutional changes. Zelensky has flirted with the idea of “relaunching” or “repairing” Ukraine’s judicial reforms. According to his advisers, he does not intend to reinstate political control over the judiciary, as governments in Poland or Hungary have attempted to do. In line with the advice of many independent experts, current plans focus on reforming the HQCJ by changing its personnel; altering its approach to reviews and interviews; including international and Ukrainian civil society experts in the review and performance appraisal process; and ensuring that the lustration process becomes more transparent. These amendments would certainly increase the effectiveness of Ukraine’s reforms in the long run. However, self-government of the judiciary is now written into the constitution, so the constitutional court and the old-style judiciary will find plenty of ways to fend off or delay further reform. This will be a very tricky process in the future.

Meanwhile Ukraine’s sistema (informal power networks that govern the country) will try to preserve its influence over the police, investigative, and intelligence structures in order to try to foil the efforts of the country’s new courts and other institutions. It is for this reason that reform of the prosecution service and the security service is so crucial, and is now in the political spotlight once more.

Reform of the prosecution service

Earlier incarnations of the PGO were a relic of Ukraine’s Soviet past and – particularly during the presidency of Viktor Yanukovych – a symbol of the backwardness of its public institutions. The prokuratura, as it was commonly known, was not only a prosecutor’s office – it was also an investigative service and law enforcement agency all at once, employing more than 10,000 detectives and special detention forces. Because the organisation was subordinated to the president, the president would use it – along with the SBU – as a power structure that could bypass the interior ministry. Due to its might and strict hierarchical structure, the organisation was the embodiment of presidential power in Ukraine.

As a result, by 2014, Ukrainian lawmakers were pushing to reform and restructure the prosecution service through the adoption of a new law. Following standard Western practice, the law stripped the service of its law enforcement and investigative branches, abolished the hierarchy and strict subordination of the different levels of the service, and introduced a system of self-governance in which the independent Qualification and Disciplinary Commission (QDPC) oversaw career development and disciplinary issues. The law also included plans for deep structural changes that would decentralise the service. It broadened the competences of, and increased the number of employees at, the service’s local and regional branches – which, due to chronic understaffing, had depended on Kyiv to make even minor decisions – at the expense of its central office. The restructuring process involved the appointment of new regional and local head prosecutors, and the reassignment of prosecutors to new posts in Ukraine’s regions. Every prosecutor appointed under the new law was supposed to undergo an evaluation. The law itself was well designed but, as is often the case, the degree to which it was implemented depended heavily on the people involved. As one would expect with the reform of such a large body, the process proved difficult and time-consuming.

There was strong resistance to the reforms from within the service. In 2015 and 2016, then-prosecutor general Viktor Shokin sought to confound the lustration and appointment processes by placing Yanukovych-era personnel in positions of power before the QDPC became operational. These pre-emptive moves ran counter to one of the core purposes of the new law: to force lustration upon the service. Shokin later personally intervened in several anti-corruption investigations – in a move that echoed pre-revolutionary Ukraine and explicitly contradicted the provisions of the 2014 law.

Under the legislation, the authorities have removed 14-18 percent of prosecutors from office. Meanwhile, roughly one-quarter of applications for posts within the service have come from external candidates, but most of them have been rejected. It is unclear whether the high rate of rejection results from a lack of qualifications among candidates or internal bureaucratic hurdles. However, the effectiveness of the QDPC is questionable, as there are numerous cases in which it has failed to act upon evidence that high-ranking prosecutors have engaged in illicit enrichment or other misbehaviour.

Two shortcomings of the 2014 law have been key to maintaining the prosecutor general’s direct influence throughout the service. Firstly, there is no set mechanism for determining which prosecutor takes a case. Those in the upper levels of the service, including the prosecutor general, can take a case away from those lower down and appoint any other prosecutor to take that case to court. Many officials have abused this provision to transfer cases – especially those involving corruption among the elite – from hawkish prosecutors to politically loyal ones (who often end the investigation). Interference directed through loyal prosecutors has become even more widespread during the reign of Shokin’s successor, Yuri Lutsenko. Lutsenko has not only allegedly tried to halt investigations into corrupt members of the elite but also allegedly attempted to launch investigations based on fake “evidence” into anyone he sees as a threat in order to intimidate them.

Secondly, Ukraine still has procedural laws and regulations that allow senior figures in the service to put prosecutors under pressure. The most common practice of this kind relates to bonuses, which make up around half of prosecutors’ salaries. Prosecutors who take a hawkish approach to politically connected entities often suffer from cuts to these bonuses. From the top down, the bonus pyramid creates strong incentives to demonstrate political loyalty – even though there are many dedicated prosecutors who prefer integrity to wealth.

When asked about the most urgent issue in reforming the PGO, all but one of the experts interviewed for this paper immediately called for Lutsenko’s replacement as prosecutor general. Lancinskas has publicly accused Lutsenko of misconduct and unprofessionalism. These accusations stem from the prosecutor general’s record of interfering in anti-corruption investigations, impeding the work of the National Anti-Corruption Bureau of Ukraine (NABU), and instigating investigations into anti-corruption watchdogs. In 2017 he tried to prosecute the head of NABU, Artem Sytnyk. The effort appeared to be designed to make NABU back off from its investigations into various top officials (including Lutsenko, on charges of illegal enrichment). As Sytnyk did not relent, the Rada prepared legislation to constrain NABU’s activities – only for Western countries to prevent it from enacting these laws. A series of accusations against the NABU leadership apparently fabricated by Lutsenko (with support of the SBU) did not hold up to scrutiny. The episode has further weakened international and domestic trust in Ukraine’s law enforcement agencies, and Lutsenko appeared to be at the heart of the problem.

The most prominent victim of his campaigns was US ambassador Marie Yovanovitch, whom Washington recalled after Lutsenko announced that the US embassy had given him a list of people ‘not to be investigated’. The list was a crude fraud, written before Yovanovitch became ambassador. Yet US President Donald Trump seemingly calculated that he could use the case to damage political rival Joe Biden, by spinning conspiracy theories about the US deep state’s reach in Ukraine. (Trump is yet to appoint a replacement for Yovanovitch.)

Lutsenko likely targeted Yovanovitch because of her outspoken approach to addressing the shortfalls of Ukraine’s law enforcement agencies. More importantly, she criticised Lutsenko’s conduct in office and maintained a commitment to assisting reforms that targeted vested interests in the country.

Lutsenko may have successfully sidelined one of his critics but, in doing so, he risked dragging Ukraine into American domestic politics and thereby undermining US support for the country in the ongoing fight against Russia’s military incursion and political pressure. Thus, the episode provided a startling reminder of how reckless, self-serving behaviour of this kind can have geopolitical implications.

Lutsenko has been able to engage in such activities partly because the prosecutor general is an ambiguous role hovering between that of an official and that of a political appointee. Although the president chose him for the role, and parliament confirmed the appointment, Lutsenko can only be removed from office if he is found guilty of professional misconduct.

Zelensky has implied that Lutsenko is indeed guilty of such behaviour. With pressure mounting on Lutsenko, he might well resign in the near future. While only a constitutional amendment can change the presidential right to appoint the prosecutor general, Ukraine should seek to repeal the March 2016 ‘Lex Lutsenko’, which allowed Lutsenko to take office despite his lack of legal experience or qualifications. The country should also seek to ensure that an independent commission oversees the nomination process, which would improve its transparency. Again, such a commission would only make sense if comprised of impartial experts – not political appointees. The president would still to be involved in the process, by picking one candidate out of three or five that made it through the commission’s evaluation. Civil society groups have stressed that this kind of depoliticisation would increase the legitimacy of the office and would help restore trust in Ukraine’s legal system.

The Specialised Anti-Corruption Prosecutor’s Office

SAPO also suffers from problems with its top leadership. A special branch within the prosecution service, SAPO was established in 2015 alongside NABU, and was designed to take to court cases that NABU had investigated. It distinguished itself from its predecessor with a new admission scheme, higher salaries, and special scrutiny of new members of the service. It also enjoys a considerable degree of autonomy within the service, not depending on other departments’ resources and procedures. These measures were intended to ensure that SAPO would work effectively regardless of delays in reform to other areas of the PGO.

However, the West’s hopes that this would lead to an effective fight against corruption were soon dispelled, as SAPO and NABU each began to trade accusations that the other was hindering the anti-corruption campaign. While SAPO frequently states that NABU investigations are so poorly executed as to have no chance of success in court, NABU often accuses SAPO of terminating cases at will or under orders from political leaders. As interviews conducted for this paper confirmed, Western observers have always sided with NABU in these disputes, reinforcing the organisation’s reputation as the sole barrier against a tide of corruption. As with the PGO, SAPO’s leadership and its political connections are at the core of the disagreements.

Hostility between SAPO and NABU reached a peak in 2018, when the former (with the assistance of the SBU) wiretapped the office of SAPO head Nazar Kholodnytsky. The operation uncovered numerous wrongdoings by Kholodnytsky: his decisions to inform some individuals that they were subject to ongoing investigations, assign dovish prosecutors to high-level corruption cases, isolate and attack hawkish prosecutors, defer investigations or close them outright, and otherwise interfere with cases. Lutsenko backed Kholodnytsky, declaring that he would not pursue any of the accusations in court. The QDPC stated that Kholodnytsky behaved in an unethical way and failed to fulfil his duties, but – seemingly due to his political connections – refused to remove him from office. Nonetheless, Kholodnytsky will come to the end of his legally mandated five-year term in 2020. As the process for appointing the next head of SAPO will be crucial to Ukraine’s future, Ukrainian civil society groups and Western observers should carefully monitor the screening and selection process for the role. Ukrainian experts are also demanding a new law on SAPO to prescribe stricter integrity rules and tougher, more transparent, selection processes.

Replacing the top leadership might seem an overly simplistic and personalised approach to structural problems – and, therefore, likely to fall short of the challenge. But investigators and specialists interviewed for this paper agree that it is essential to first change the leadership of institutions such as SAPO rather than passing new laws. Indeed, most Ukrainian anti-corruption laws contain few flaws, even if they are not impeccably implemented. Moreover, there seems to be little animosity between operatives, investigators, and other staff in Ukraine’s various law-enforcement agencies. Even if there are clashes between the leaders of their organisations, officers are generally happy to work with their counterparts in other services as long as ‘corroding’ orders are not coming from the top and undermining their professional purpose. There is a consensus among them that the misbehaviour described above occurred because leaders such as Lutsenko and Kholodnytsky sought to protect politically connected figures at the behest of members of the government. If the PGO was led by an individual committed to shielding the service from such interests, they argue, it would be a different organisation: it would still be entangled with vested interests, but these interests could be easily exposed and dealt with. Such a leader would also give Ukraine’s new self-governing bodies a greater chance to grow into their responsibilities.

On a structural level, the PGO is poised to refine its human-resources management procedures by introducing vetting procedures for appointments and improving the transparency of performance evaluations. Although the PGO already conducts them, such appraisals currently act as mechanisms for ensuring political loyalty rather than for objectively evaluating prosecutors’ performance. Due to widespread distrust in qualitative evaluations, the new process will centre on quantitative factors. Yet few experts outside the service believe that the new approach will change much. So long as they value political loyalty above professionalism, high-ranking leaders will find ways to abuse the new processes and steer their subordinates’ careers to their liking.

Reform of the security service

While the PGO has been involved in – or responsible for – some of the most visible and politically toxic scandals in Ukraine’s fight against corruption, the SBU needs structural reform that has less obvious but more extensive implications for Ukraine. The SBU is the legal successor to the Ukrainian branch of the KGB. It was established using the legal framework, resources, and facilities of the KGB that remained on the soil of the newly independent Ukrainian state. The border guard service was the only part of the organisation to split off from it during the transition, becoming an independent law enforcement agency. In 2004 then-president Leonid Kuchma created another independent service by hiving off the SBU’s foreign intelligence directorate (although, as recent court cases have shown, the SBU retained some foreign intelligence capabilities, particularly in relation to Russia). But this was Kuchma’s only reform of the service.

As a consequence, the SBU still has powers that in a western European country would be divided across several separate agencies. In addition to its domestic and foreign intelligence work, the SBU runs domestic counter-intelligence and counter-terrorism operations, as well as investigations into organised crime, economic crime (including corruption and tax fraud), smuggling, and other offences. It also supervises and controls other investigative and law enforcement services; issues security clearances; conducts signals and other technical intelligence work, such as wiretapping and communications surveillance; and protects state secrets and secure governmental communications systems. The SBU is not only an intelligence service but also a law enforcement agency that can conduct independent investigations, arrest suspects, and hold them in custody. The service has its own special forces (so-called “alpha teams”) that perform a variety of tasks, including detentions, counter-terrorism operations, and house searches. All other services – including the State Bureau of Investigation and NABU – must apply for assistance from the SBU to engage in technical intelligence work.

Due to its wide array of competences and direct subordination to the president, the SBU can act as a weapon well suited to political wars and personal enrichment. In Ukraine’s semi-presidential system, it rivals the ministry of interior and its respective investigative services and special police forces, as well as the ministry of finance (on issues such as financial crime). Like the PGO, the SBU was an important source of presidential power, protecting the president’s interests and imposing it upon society. Yanukovych wielded this power with particular recklessness, using the SBU to intimidate investigative journalists and opposition figures. In 2010 his government signed the Odessa agreement on “increased cooperation” with the Russian authorities, de facto subordinating the SBU to the Federal Security Service (FSB) and leaving it vulnerable to penetration by Russian spies. Unsurprisingly, the Yanukovych-era head of the SBU, Oleksandr Yakymenko, defected to Russia in February 2014, taking key operatives and documents with him. Alpha team members were widely suspected of involvement in the fatal shooting of protesters during the Revolution of Dignity. Some even joined the ranks of secessionist fighters in Donbas.

The first post-revolutionary head of the service, Valentyn Nalyvaichenko, emphasised the need for lustration within the service, particularly those parts of it tasked with running the rapidly expanding counter-insurgency operation in the east. However, he ran into stiff bureaucratic opposition, with many SBU commanders challenging their dismissals in court. Although most SBU field operatives appeared to regard Nalyvaichenko’s reforms as positive, he was dismissed in 2015 after clashing with the political leadership and the PGO over the fight against high-level corruption.

Since Nalyvaichenko’s departure, the government has made no attempt to reform the SBU. Thus, there is an ongoing debate about the extent to which the SBU has once again became part of the president’s sistema, and whether individual parts of the service have been left to pursue the fight against corruption in their own ways. The most notorious part of the SBU in this respect is Directorate K, which is tasked with fighting corruption and organised crime. The leaders of the directorate have generated public ire for indulging in a lavish lifestyle that goes far beyond what is affordable on their salaries.

Worse, members of Directorate K have taken part in smear campaigns targeting reformers and anti-corruption activists. The directorate is so deeply entangled with Ukraine’s business elite that it has deterred investment and thereby become a burden on the economy. For example, Ukrainian industrialists have hired local SBU agents to investigate their competitors and derail rival business ventures. As one high-ranking official from an EU member state interviewed for this paper explained, “Directorate K does not fight corruption; it runs corruption”. For now, SBU employees are exempted from electronically declaring their wealth and assets – officially, to protect their investigations and cover-identities. However, this exemption also applies to top officials appointed by presidential decree, as well as high-ranking line managers, who do not conduct covert operations. Needless to say, anti-corruption watchdogs sharply criticise this practice.

Preventing abuses of power is one reason for reforming the SBU, but another key reason is to increase the organisation’s effectiveness and professionalism. Employing roughly 31,000 people, the service is larger than the entire intelligence community (including domestic, foreign, electronic, and military intelligence services) of any one EU member state. This does not necessarily translate into a high number of field operations, as many of these employees work within the SBU’s bureaucratic and social welfare machinery. Honouring its KGB heritage, the SBU still operates its own kindergartens, schools, hospitals, and nursing homes. With its budget stretched between so many cadres, low salaries make it increasingly difficult to hire skilled investigators and field operatives. A detective in NABU or the new State Bureau of Investigation earns roughly three times as much as an SBU agent. During the 1990s and the early 2000s, the social prestige of the work and the career chances it entailed were good enough to provide the SBU with talented applicants. But, today, the army has equal prestige as a patriotic organisation, meaning that those for whom this is a motivating professional factor are more likely to want to join the army. There was widespread agreement among people interviewed for this paper that the SBU requires reform. There was less consensus about how deeply such reform should cut into existing competences, structures, and procedures.

There is also significant demand for change from SBU employees, particularly young operatives. Despite all the negative press it has received during the past decade, the SBU retains many smart, dedicated agents. Its counter-intelligence and counter-subversion branches have foiled countless attacks, assassination attempts, and other acts of subversion in eastern Ukraine, even if this has gone largely unnoticed in the West. Indeed, the international investigation into the MH-17 tragedy would have led nowhere were it not for the SBU’s surveillance and wiretapping of separatist fighters. So far, the SBU’s arrest of Vladimir Borysovich Tsemakh in a sting operation on the front line has provided the only tangible opportunity to bring to justice those responsible for shooting down an aircraft carrying 298 people. The sting was a masterful commando operation that is worth applauding. Indeed, upon entering the SBU’s main building, one faces a wall commemorating the growing number of SBU agents who have died for their country – a sobering reminder that they are not in a comfortable, risk-free business.

The SBU works to maximise the value of its counter-intelligence officers’ training by regularly rotating them into and out of the warzone. As a result, their operational experience is second to none in Europe. The same is true for members of the SBU’s cyber security department. Predominantly staffed with young specialists, the department fights Russian cyber attacks and cyber espionage on a daily basis.

Ukraine needs these services, especially during wartime. And, despite the Poroshenko government’s frequent use of the conflict as an excuse to dodge restructuring efforts, many young officers want to see such reform as soon as possible. They want to be part of a Western-style service that can be easily integrated into Western cooperation structures. They see the dealings of Directorate K and the SBU’s involvement in domestic political games as detrimental to the organisation’s core mission and standards of professionalism.

Slow progress on reform

The US embassy in Kyiv, the European Union Advisory Mission, and the NATO Liaison Office – known collectively as the International Advisory Group – have coordinated attempts to reform the SBU, but progress has been slow. This is partly due to the fact that the Poroshenko administration’s key priority was to ensure that the service remained malleable and loyal – and not necessarily effective or clean. Thus, even when the SBU’s misdeeds made international headlines, reforms would stop short of seriously threatening the status quo.

However, shortly before the June 2018 NATO summit, two years of International Advisory Group pressure on Ukraine to adopt the Law on National Security paid off. The group succeeded by conditioning $250m in military assistance to Ukraine on the passage of the law. The Poroshenko administration essentially wanted to use the law to entrench the status quo, but the United States, the European Union, and NATO demanded that it include several reforms, particularly in relation to the intelligence community. The law regulates the competences of, and relations between, Ukraine’s defence and security organisations; in effect, it provides a basis for transforming Ukraine’s post-Soviet security sector into a modern European one.

Given that it is a framework law, further legislative acts are required to implement it fully. Still, one can already see the law’s potential to instigate further reform – but also the loopholes it may create. Paragraph 19 of the law defines the SBU’s competences as counter-intelligence, counter-terrorism, and the protection of critical infrastructure and state secrets. In a huge success for reformers, this definition excludes any mention of operations to counter organised crime, economic crime, or corruption – the core responsibilities of Directorate K.

Nonetheless, the new legislation defines the SBU as a unique law enforcement agency that will retain its special forces, remaining a hybrid special police and intelligence service. In the eyes of Ukrainian leaders, this broad structure aligns with the goal of Westernising Ukraine’s institutions, as the SBU will be modelled on the Polish Internal Security Agency (ABW). Nonetheless, as a product of multiple makeovers of the once-mighty Security Service, the ABW stands out for its considerable power relative to other European domestic intelligence agencies.

To continue to implement its security sector reforms, Ukraine plans to pass the following pieces of legislation in the near future:

• A law on the SBU. This will be key to the reforms, as it will define the organisation’s responsibilities and powers in greater detail and set provisions for its cooperation with other investigative and law enforcement agencies. It will also touch on restructuring, depoliticisation, and demilitarisation. Due to the law’s importance, behind the scenes there are intense negotiations over competing drafts of the legislation. Some parties to the discussions are attempting to preserve a role for Directorate K by once again giving the SBU responsibility for “economic counter-intelligence” – in contradiction of the law on national security.
• A law on parliamentary oversight of the intelligence community. This will establish a permanent committee in the Ukrainian parliament to oversee the intelligence services. The committee will include staff with special security clearance to access documents from the services. However, there is considerable dispute among lawmakers about how extensive this access should be and the kind of reports that intelligence agencies should provide to parliament.
• A law on state secrets. With Ukraine’s security sector subject to deep structural change, creating a common system for classifying information and issuing security clearances is necessary to enable cooperation between Ukraine’s intelligence and law enforcement agencies. As the SBU will doubtless keep its monopoly on issuing security clearances, it is important to precisely define the kind of information that should be classified and who should have access to it. Again, there are competing drafts of the law – all of which include four different levels of classification.

The law on national security tasked either cabinet ministers, the Rada, or the presidential administration with implementing its provisions within six months. However, the authorities missed this deadline due to bureaucratic reluctance to engage in the process and the International Advisory Group’s rejection of the first draft of the law.

None of the draft versions of the SBU law have been formally submitted to parliament or made publicly available. The draft that has been passed on to the presidential administration was written by SBU leaders and largely preserves the status quo, while giving the SBU even more power in some instances. The draft retains Directorate K’s role in tackling economic counter-intelligence and renames some SBU competences to comply with the letter, but not the spirit, of the law on national security.

Although they differ on the degree to which the SBU will be demilitarised, the drafts of the law on the agency have drawn criticism from all members of the International Advisory Group. This is because the international community sees restructuring, a reduction in competences, depoliticisation, and strengthened oversight as much more important issues than demilitarisation. Current drafts of the law would not only fail to rebuild the SBU around a core counter-intelligence and counter-terrorism mission but would also free it of obligations to cooperate with other investigative services. The draft law is so conservative that it has drawn calls for a different approach even from within the SBU.

Andrij Levus, a former member of the Rada, has prepared another draft of the SBU law, but this has remained within the parliamentary committee on the intelligence services. According to Western officials, the document comes much closer to complying with NATO and EU practices than the SBU-authored draft. It does so by narrowing the SBU’s competences to the four core missions defined in the law on national security. Levus, an ally of Nalyvaichenko, was one of the few members of the Rada to have a deep knowledge of the SBU and intelligence more broadly. His vision of a radically reformed, Westernised SBU has some sympathisers within the agency itself, if not necessarily among its former leaders. The problem is that his party, People’s Front, failed to enter the Rada at the 2019 general election, and no one quite knows which new member of parliament will be tasked with drafting laws on the intelligence and security sector.

Meanwhile, Levus has also submitted a draft to the Rada of the parliamentary oversight law, written with input from the International Advisory Group. But the Rada has not yet voted on it. In effect, the process stopped in February 2019 as the presidential election absorbed the political parties’ attention. Civil society groups and Western advisers want the committee to be well staffed and to have access to post facto reviews of all intelligence operations.

Ukrainian security agencies generally want to reduce the size of the intelligence committee and maintain current operational reporting procedures, providing the Rada with only broad annual reviews that summarise intelligence services’ activities rather specific details about missions. These agencies fear that more detailed reviews will compromise their operational security, particularly if pro-Russian MPs receive greater access to intelligence. Yet a thorough oversight and review process that involves figures outside the government is necessary for investigating human rights violations and abuses of power – and, as such, preventing the SBU from being dragged into domestic political rivalries. The outgoing government would prefer a committee that has a minimal role and therefore poses no serious threat to its control. NATO argues that extensive reviews will not compromise operational security, as any given report will be submitted to the committee only after an operation has concluded.

The Ukrainian security services have little experience of outsiders reviewing their operational practices. Indeed, such a level of parliamentary oversight would be unique in the post-Soviet space: because the communist tradition favours secrecy and opacity, transparency seems absurd for operatives who are unused to it. In contrast, all Western countries maintain strict parliamentary oversight (or judicial oversight, as in the US) of the intelligence services in one form or another. And, judging by the European experience, the role of parliamentarians in assessing day-to-day intelligence work has been overstated in the Ukrainian discussion. In fact, committee employees with security clearance – usually former intelligence agents – do most of the work, compiling data received from the services and then briefing MPs on issues they regard as politically sensitive.

In any case, a truly effective oversight committee will require appropriate resources if it is to create a more transparent and accountable SBU. Such change within the service would mark a definitive break with the SBU’s Soviet legacy and, given its historical role in politics, would be a major step towards Westernisation.

The law on state secrets, of which there is no registered draft yet, has not led to a broad political fight. This is due to its relatively technical nature – which might yet spell trouble. Ukraine has modelled a four-tier classification system based on the NATO classification system. The SBU will be solely responsible for issuing security clearances and conducting background checks on people who have applied for them.

So far, so good. But there are discussions about whether the lowest level of classification should be modelled on NATO-restricted, UK-official, or Ukrainian-restricted clearances. This level is widely used for most paperwork within ministries, down to the local authority level. If the SBU had to issue security clearances to every official who read documents with this level of classification, this would create a major bottleneck in such work. Ukrainian civil society representatives fear that the resulting delays could be used to derail the work of oversight institutions. For instance, many branches of government could evade oversight if bureaucratic requirements delayed clearances for National Agency for Prevention of Corruption (NAPC) personnel reviewing e-declarations, for staffers working on the oversight committee, or for judges overseeing SBU investigations. The government needs either to create an easier, decentralised process for issuing security clearances or to rework its system of classification.

Effective implementation

The process of crafting and implementing these three laws will be crucial to ensuring that Ukraine’s security sector reforms succeed. As discussed above, these laws will require changes in the organisational structures of government bodies – and even well-crafted laws can be useless if they are badly implemented (or not implemented at all). Thus, effective implementation of the laws will require close monitoring of complex processes and, where appropriate, support from Ukraine’s Western partners in several key areas.

The battle over the competences of the SBU is also, to some extent, a battle over its structure. This can be seen in the new law on national security’s curtailment of the SBU’s role in fighting organised crime and corruption. Because the deputy head of the SBU is also always the head of Directorate K and handpicked by the president, until recently the department had considerable political backing in this battle.

Zelensky has appointed his childhood friend Ivan Bakanov as acting head of the SBU – a role that, unlike the full position, does not require parliamentary approval. While Bakanov originally planned to make deep reforms to the service, since he took office senior leaders within the SBU have subjected him to intense lobbying and bureaucratic tricks to delay this process. He faces a challenge in establishing his credibility within the service, especially given that he has no experience in intelligence. Moreover, Bakanov needs to resist the push for the SBU to deal with economic counter-intelligence. For now, he plans to restructure the service to ensure that none of its departments investigates economic crime, corruption, or smuggling. Following the change, the SBU will consult NABU or the State Bureau of Investigation to jointly investigate any crimes that play a role in a Russian subversive effort or other malign foreign action.

This leaves the issue of what to do with Directorate K, of which Bakanov is also head, as he is in fact also now deputy head of the SBU. Directorate K has an estimated 2,000 employees (statistics on the SBU’s staff and internal structures are classified). This may be a small workforce as a share of the SBU overall, but it is large in comparison to other investigative services: NABU, for example, has only 700 employees, 200 of whom are investigative detectives. As a consequence, other services fear that the entire department will be moved to another ministry wholesale or turned into a new financial investigation service. This would preserve the existing structures, networks, family ties, and dependencies in the department – and with them many of the historical problems of Directorate K.

Following an audit, members of the directorate should be integrated into other services on an individual basis. Despite the organisation’s poor reputation, not all its detectives are corrupt. And some members of Directorate K who have misbehaved in the past may change their ways if they are taken out of an environment characterised by widespread corruption.

To depoliticise the SBU, Ukraine should reduce the president’s role in steering the service. As it stands, the president appoints all of its major commanders in the service, down to the heads of regional branches. He can choose appointees to his liking and is not bound by any form of commission, internal performance appraisal, or tender process. As this freedom has allowed the president to demand personal and political loyalty from appointees to the service, Ukraine should write limits on the president’s influence over the service into the new law on the SBU, while subjecting its career development processes to stringent rules and administrative regulations.

The demilitarisation of the SBU will also be important, if less so than the restructuring or depoliticisation processes. Demilitarisation will involve a transfer of the service’s extensive social and logistical infrastructure to other ministries, thereby freeing up financial resources within the organisation and reducing its need for administrative staff. Demilitarisation will also involve changes to the SBU’s organisational culture, employment laws, operational procedures, and responsibilities. If properly implemented, this process can ensure the service’s officers are vetted, and weed out those who were engaged in the wrongdoings described above. Given the lessons Ukraine has learned from its experience of judicial reform, the demilitarisation process should draw heavily on international assistance – in this case, from European, Canadian, and US agencies.

The introduction of modern human-resources management – including performance appraisals, vetting for positions and (internally) transparent promotions, internal communications, and some form of representation of employees’ interests – should also be part of SBU reforms. Due to the major restructuring exercise facing the service, its employees are currently experiencing a great deal of insecurity. Yet the process will provide an opportunity to increase turnover and appoint the heads of new departments. If Ukraine does this well, it will boost the effectiveness and legitimacy of the SBU. If the country fails to do so, this could generate frustration among officers and lead to the departure of skilled, motivated people from the service. As the sobering results of Ukraine’s attempts to reform the judiciary show, one should not take success for granted.

Is Zelensky’s presidency an opportunity for reformers?

Zelensky defeated Poroshenko in the May 2019 election largely because he called for change. And Ukrainians’ desire for change is understandable. Yet, the country’s reforms have progressed only slowly since 2014, and they have not touched the core of high-level corruption networks. While things have improved considerably since the Yanukovych era – particularly in small-scale corruption and government transparency – the government has not yet fulfilled the public’s demand for it to jail corrupt officials. The more Ukrainians are forced to bear the burden of reform and restructuring – as well as that of the war effort – the more their hatred of rent-seeking top officials will grow. Public anger and distrust are spreading throughout Ukraine.

Zelensky could capitalise on this sentiment to push through reform, particularly as Ukrainian voters have given him a broad mandate for change. But it remains unclear whether he will instigate lasting change – and, if he does, whether this will be the kind of change Ukrainians long for. For the time being, Ukraine’s community of political experts and journalists seem polarised in their views of the new president. Both Zelensky’s opponents and his supporters use every minor incident to prove their respective points. But they also admit that there are still plenty of unanswered questions about him. Assessing the current situation is not straightforward, but there are nonetheless some indications already of his attitude towards reform.

During the election campaign, and in several private talks with EU representatives, Zelensky has been open-minded about reform of the SBU and the PGO. He has vowed to appoint a new prosecutor general. As his party won a landslide victory in the parliamentary election held in July, he now has full support in the Rada for his reform agenda. Short of constitutional amendments, he will be able to pass any law. And he and his appointees in the presidential administration have set broad goals for the incoming government.

Zelensky’s appointment of Andriy Bohdan – who held government positions in the Yanukovych era and has worked as a lawyer for oligarch Igor Kolomoski – as head of the presidential administration has drawn criticism from anti-corruption experts and civil society organisations. Yet these groups have had a generally positive reaction to his selection of Ruslan Ryaboshapka to work on anti-corruption matters. Ryaboshapka, who formerly worked for the NAPC, has many contacts in civil society organisations. So do others in Zelensky’s team, such as Aivaras Abromavicius. A former economy minister and a hardline reformer, Abromavicius is tasked with restructuring Ukroboronprom, a notoriously corrupt and inefficient state-owned arms conglomerate. Zelensky has appointed Oleksandr Danyliuk, former minister of finance under Groysman, as head of the National Security and Defence Council. Danyliuk will be key to security sector reform, particularly as he will be involved in crafting legislation to that effect. Danyliuk is very actively pushing for reform of the SBU, and Ryaboshapka is seconding the effort. The two men might become a ‘go to’ address for European diplomats to support the reform effort. Finally, Vladyslav Bukharev, the new head of Ukraine’s foreign intelligence service, divides opinion. Because he has a long career history in the SBU and Ukraine’s intelligence sector more broadly (and once earned a medal from the FSB), some reformers cannot but regard him as a someone who once led Directorate K and thus a representative of the sistema.

Overall, the team around Zelensky has the potential to enact true reforms. But one should not applaud the new president just yet. The first Poroshenko-Yatseniuk coalition government also appointed many reformers, only for them to drop out one by one due to their frustration with the obstacles they encountered in their work, and because of senior leaders’ attempts to conceal corrupt behaviour.

By appointing Bakanov head of the SBU, Zelensky has at least confirmed that he sees the organisation as important. However, the president stunned international observers when he demanded quick results from the SBU in the fight against corruption – the exact opposite of what the service is supposed to be engaged in. A few weeks later, the SBU held a well-orchestrated conference to publicise its recent success in countering smuggling – another competence that reformers and international advisers would like to see the service lose. Some of them now fear that quick victories in this struggle – Directorate K probably knows best about corruption among top officials; it is part of it – might dissuade Zelensky from reforming the department at all. The directorate might trade some law enforcement successes (and the positive media coverage this generates) for survival and a degree of operational freedom. The bureaucratic politics of the SBU also fits with Zelensky’s CEO-style approach: he is pragmatic, seems to have no deeply held views on legal and structural issues, and (in this case, at least) appears to support any solution that produces quick results – even if this solution is unsustainable and prone to abuse.

Yet, again, it is too early to draw conclusions about the president’s reform efforts. Zelensky has replaced most of the SBU’s regional and departmental heads with younger officers. These new appointees seem committed to restructuring the service and putting counter-intelligence, particularly the fight against Russian subversion, at its heart. If the SBU adjusts in this way, other services should take responsibility for investigating other crimes and, as discussed above, conduct joint investigations with it where necessary. Many SBU officers express the hope that they will be able to engage in operations with less political interference than they experienced under Poroshenko. To quickly curtail Directorate K’s misbehaviour, the SBU leadership has introduced a hotline for cooperating with the US-Ukraine Business Council. This should ease the process of reporting abuses of the SBU’s investigatory powers, identifying corrupt cells within the service, and thereby reassuring investors in Ukraine. However, while this is a good stopgap measure, it is no substitute for structural reform.

Danyliuk has announced that he will establish nine groups to plan security sector reform, of which one will deal with the SBU. Encouragingly, he has also committed to involving members of the International Advisory Group in their work. But he has not yet set a clear agenda for these groups to work on Ukraine’s draft reform laws. This is especially worrying at a time when some government officials in Kyiv seem to be increasingly convinced that they can reform the SBU without passing a new law on the service. Even if the government undertook such reform in good faith, the lack of an underlying legal basis for it would leave it open to reversal by the next president. More positively, Danyliuk intends to create a new financial investigative service that will take over many of the competences of Directorate K. As he is a candidate for the post of prime minister, Western states should listen to Danyliuk carefully.

Indeed, they need to follow all reform efforts in Kyiv closely. Zelensky’s stated aim to apply Ukraine’s lustration law to officials appointed by Poroshenko may be disproportionately harsh. Although this goal seemed to be mostly about campaign positioning in the lead-up to the parliamentary election, it sent a chill through everyone who worked for the government in the Poroshenko era, including true reformers. Under Yanukovych, corruption and treason were institutionalised. In contrast, under Poroshenko, the government may have fought corruption only half-heartedly, but it also appointed many decent, professional officials.

The State Bureau of Investigation Service started to investigate Poroshenko in May 2019 – immediately after he the lost election – for alleged treason and abuse of power related to his declaration of a state of emergency in November 2018. This has raised concern that Ukraine might be sliding into an era of post-Soviet revenge justice, in which the judicial and investigative services become tools for intimidating former leaders and the current opposition. If this is the case, an unreformed SBU and a politically loyal prosecutor general could easily become embroiled in yet more corrupt power-plays in Ukraine. Once you control the sistema, there is always the temptation to use it.

Vested interests within the bureaucracy – many members of which are shocked to be facing the new political reality – will likely find ways to assert themselves with powerholders and officials. For the international community, now is the time to put reform of the law enforcement sector back on the Ukrainian government’s agenda.

What should Europe do?

European support – closely coordinated with the International Monetary Fund, Canada, and the US – has been critical in supporting Ukraine’s institutional reforms and political transformation. This will continue to be the case. The more closely Ukraine’s supporters cooperate with one another, the better. In this context, most of the recommendations of ECFR’s 2016 Ukraine reform audit remain relevant. Meanwhile, Europe needs to keep a close eye on a series of key upcoming events:

• The adoption of a new law on the prosecutor general.
• The appointment of a new prosecutor general.
• The appointment of a new head of SAPO.
• The adoption of a new law on the SBU.
• The adoption of the law on parliamentary oversight.
• The adoption of the law on state secrets.
• The revision of the Criminal Procedure Code.
• The creation of a new financial investigation service.
• The process of restructuring the SBU – particularly dismantling Directorate K – and implementing new regulations to depoliticise the service.

As any of these steps could go wrong, Europe should identify how it can use its influence with the Ukrainian government to ensure they all succeed. In doing so, the bloc should focus on ways to counter vested interests in Ukraine.

Many Ukrainians express bitter frustration about the rise of pro-Russian nationalist parties in Europe, some European countries’ indifference towards the war Russia has imposed on Ukraine, and the neutral rhetoric some European diplomats use to describe the conflict. Yet most Ukrainians still see Europe as an example, a reference point, and a focus of attention and desire in public discourse. This includes employees of the SBU as much as civil society activists: their ideas about what makes Europe European may differ, but one could say the same thing of EU citizens. Indeed, engagement with Europe is still a matter of prestige for Ukraine. European opinions and advice – heard in consultations, receptions, conferences, summits, and the like – matter.

Thus, the first thing European policymakers working on Ukraine should do is straightforward: talk to Ukrainian politicians as much as possible and raise the issue of reform in the security sector persistently and precisely. Europeans should make every effort to point out the shortfalls of current reform efforts to new ministers, the president of the Rada, heads of delegations to bilateral parliamentary committees, and top officials who have been appointed following the election.

Since 2016 – when the EU put in place a Deep and Comprehensive Free Trade Agreement with Ukraine, as well as a visa-liberalisation scheme – European governments have had few significant pressure points they can use to encourage reform in the country. Yet Ukraine is in dire need of financial support for its infrastructure projects, especially those in the war-torn east. The EU should offer to provide such investment, on the condition that Kyiv adopts and implements the reform legislation discussed above. The bloc could incentivise reforms by promising to lower its import quotas for agricultural products and other restricted items.

In the past, macro-financial assistance strictly conditioned on reforms was one of the EU’s strongest sources of leverage over Kyiv. Currently, SBU reform is not a condition of the largest and most important of such packages: those from the IMF. But the EU plans to provide a €1 billion macro-financial assistance package to Ukraine, which it could tie to the appointment of a new prosecutor general, as well as to credible new laws on the SBU, parliamentary oversight, and state secrets.

The European Union Advisory Mission has a large pool of specialists and experts that it can draw on to supervise Ukraine’s implementation of reforms. And the EU has the capacity to fund these efforts, working alongside the US Agency for International Development within a flexible supervisory framework. In this, European and American assets complement each other well. Similarly, European and American officials agree on the types of reform Ukraine needs, supporting one another in signalling their desire for change in the country and coordinating their oversight of the process. Deep practical cooperation with the US is key to Europe’s support for Ukraine.

With tension between the White House and European capitals rising, efforts to protect practical cooperation from political interference and ideological hostility is vital to the reform agenda in Ukraine. For instance, as Russia’s seizure of Ukrainian vessels and sailors in the Kerch Strait in November 2018 suggests, Ukraine needs EU and US support to help protect its security in the Black Sea. The International Maritime Court in Hamburg has ruled these Russian actions against Ukrainian sailors illegal and demanded their release. As Russia is happy to ignore the ruling, only Western pressure – perhaps involving sanctions or blockades – will change Moscow’s calculations. To this end, NATO has increased its maritime presence in the Black Sea in the past year, conducting port visits and exercises that have provided reassurance to the Ukrainian public, who are keenly aware of such events. For the time being, the US has led the effort, with only limited participation by western European countries. But this could change. Coupled with European political leaders’ messages of support and demands for reforms, such gunboat diplomacy can become a valuable tool of European influence.

Finally, bureaucratic assistance and inter-office contacts are an unspectacular but useful long-term tool for influencing Ukrainian officials. Regardless of the service or department they work in, these officials want Ukraine to Westernise its institutions. Socialised in a Soviet or post-Soviet environment, they often have little knowledge of how the West’s institutions – not least its judicial systems and intelligence services – truly work. Yet they are eager to gain experience in the West, seeing the prospect of further cooperation with, and recognition from, Western institutions as a strong incentive for reform.

Many Ukrainian officials are initially astonished by Western rules on transparency, accountability, and integrity. But once they gain practical experience abroad of how these rules work, they understand that such provisions do not impede their work and could aid Ukraine. Of course, bureaucratic exchange programmes will by no means have a significant influence on short- or medium-term political decisions. They are no substitute for swift government action. Yet one should not underestimate the impact they could eventually have on Ukraine’s bureaucratic preferences and governance culture.

About the author

Gustav Gressel is a senior policy fellow and acting head of the Wider Europe programme at ECFR, based in the Berlin office. Before joining ECFR he worked as a desk officer for international security policy and strategy in the Bureau for Security Policy in the Austrian Ministry of Defence and as a research fellow for the Commissioner for Strategic Studies in the Austrian Ministry of Defence. He also worked as a research fellow at the International Institute for Liberal Politics in Vienna. Before beginning his academic career, he served in the Austrian Armed Forces for five years.

Gressel earned a PhD in Strategic Studies at the Faculty of Military Sciences at the National University of Public Service, Budapest, and a master’s degree in political science from Salzburg University. He is the author of numerous publications on security policy and strategic affairs and is a frequent commentator on international affairs in German and international media.

Acknowledgements

I would like to thank all governmental officials, agents, officers, prosecutors, civil society representatives, experts, lawyers, and journalists who were willing to sit down with me, share their insights, and provide me with information on the current status of reform in this area. Without them, there would be no report. Olena Halushka also deserves deep gratitude for providing me with detailed feedback on previous versions of this paper.

Chris Raggett and Adam Harrison deserve to be mentioned for their excellent job editing the paper. And, finally, I want to thank my colleagues at ECFR, our Wider Europe programme coordinator Joanna Hosa, and former programme head Nicu Popescu for supporting me in this endeavour. I also need to apologise to my Ukrainian friends for taking so long to finalise the report.