Reforms, Priorities and Foreign Investments: Interview with Hugues Mingarelli, Head of the EU Delegation to Ukraine

August 5, 2019
UkraineWorld recently sat down with His Excellency Hugues Mingarelli, Head of the EU Delegation to Ukraine, who is finishing his tenure in a month's time. A diplomat who has proven to be an affectionate friend of Ukraine, he shared his insights on some of Ukraine's major achievements in recent years, as well as challenges that loom ahead. The interview was conducted jointly with European Pravda
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Photo credit: Serhiy Sydorenko

EVALUATING THE PROGRESS DONE

Your Excellency, you have been working in Ukraine for three years. How do you think the country changed during this period?

Hugues Mingarelli: I have no doubt that Ukraine has changed for the better during these years. Many things have improved in the political, social and economic life of the country, and significant reforms have been carried out. However, the vast majority of Ukrainian citizens continue to live in very difficult living conditions. These people have not perceived the concrete impact of the reforms that have been carried out on their daily lives. It's unacceptable to have large-scale poverty in a rich country like Ukraine, so there is a need to fight social inequality and to promote social cohesion.

Which specific goals in EU-Ukraine relations have been achieved during the last few years? And, more importantly, which ones have not?

Hugues Mingarelli: First of all, we have been able to put in place a visa free travel regime, which has made it possible for millions of Ukrainians to visit EU member states without administrative difficulties. We have managed to start the implementation of the Association Agreement, which has allowed for the deepening of political association between Ukraine and the EU. We have managed to promote regulatory convergence between the two economies so that today your goods can be exported to EU markets. Finally, we have managed to establish a policy dialogue in many sectors, starting with energy all the way to the environment.

Therefore, relations between Ukraine and the EU have never been so close.

As opposed to that, some areas that we still need to work on primarily include the rule of law. Apart from that, we still have to improve the business environment. Ukraine is a very attractive country, but due to the lack of respect for property rights, as well as due to insufficient rule of law, investors do not come to Ukraine as they should. It's a pity because, again, there are so many assets in this country that you should be flooded by foreign investments.

Let's speak about some priorities, as perceived by the EU, that Ukraine needs to focus on domestically.

Hugues Mingarelli: First of all, we have always said that it would be important to step up the efforts to enforce the rule of law. We have said as well that it would be necessary to take steps to launch privatization of large state-owned enterprises. We believe that more should be done to promote better corporate governance of state-owned companies. Apart from that, it will be necessary to promote land reform, because there is great potential for Ukraine when it comes to it. And, if the reform is carried out in the right way, this could lead to the creation of hundreds of thousands of jobs.

It will be necessary to continue decentralization reform because we know that in a number of new hromadas (amalgamated communities – ed.) elections still need to be held. The decentralization process, that has been a success up to now, must continue. The reform of public administration has yielded its first positive results, but again – a lot still needs to be done here.

Photo credit: Serhiy Sydorenko

When it comes to the energy sector, we have been saying for two years what has to be done to promote the reform of the gas market. We hope that this will be done soon, as well, because this is in the interest of the Ukrainian people. Apart from that, we have to promote the implementation of the electricity market new law. One day, it will also be necessary to have an independent and competent nuclear regulator in this country.

Finally, the reform of the law-enforcement agencies will have to be implemented, too. A new law on national security has been adopted but not implemented. There is a need to reform the SBU, the Prosecutor-General's Office, as well as to push forward with the reform of the National Police.

In your opinion, what major milestones do Ukraine and the EU face in their relations in the short to mid-term perspective?

Hugues Mingarelli:

The Ukrainian side has already asked for the deepening of our sectoral cooperation in four areas, namely energy, digital economy, customs and justice, as well as home affairs.

Work is underway in each of them, and I hope that for the next summit we will be able to deliver on some of these areas, thus showing that we are able to intensify our cooperation and to promote sectoral integration in a few areas.

Among other things you mentioned the customs service and digital unions. Does it mean that the idea propounded by President Poroshenko about the four unions with the EU is living up under the new President?

Hugues Mingarelli: Yes, it is living up, indeed. Moreover, the new President has insisted on the work in digital sector, namely integration of the Ukrainian digital market into the EU one.

WHAT'S NEXT? CHALLENGES THAT LOOM AHEAD

Recently, EU's new leadership has been appointed/confirmed. It is going to start its work this November. Now, it is no secret that the new leadership, as well as the new convocation of the European Parliament, is much more fragmented than the previous one. How exactly can that impact the EU's relations with Ukraine?

Hugues Mingarelli: Frankly, at this point it's impossible to tell precisely how this could impact EU-Ukraine relations, and if there's going to be such an impact at all.

All I can tell is that you, without any doubt, continue to have a large number of friends in the European Parliament.

These people will continue to promote cooperation between your country and the EU. However, if you ask me if the new European Parliament is generally more pro-Ukrainian than the former one, I'll tell you that I do not know. You are right when you say that it is more fragmented. At the same time, you have no more strong domination by the conservatives and the social democrats. Instead, you have a strong liberal group and a strong Green group. It's change but not fragmentation, though.

Let's speak about the future of the Eastern Partnership format. Polish politicians, both former and incumbent ones, like, for instance, minister Czaputowicz, have been talking about the ways to update it, including through institutionalization, rotating presidency, and so on. However, there has hardly been any specific reaction to these initiatives from Brussels.

Hugues Mingarelli: There is reflection underway in Brussels about which kind of renewed objectives could be set for the Eastern Partnership. I know that many people consider that we should favor the cooperation between the three partner countries that have Association Agreements. I'm sure that in the next few months people will come up with new ideas. However, for the time being I cannot tell you that new ideas have been put forward in Brussels. There is reflection underway.

IMAGE EQUALS INVESTMENTS

A couple of months back you said that the image of Ukraine abroad and reality are two very different things…

Hugues Mingarelli: And I continue to say that, yes.

… So, as a follow up to this idea, what do you suggest Ukraine does to present itself in a better light abroad?

Hugues Mingarelli: I am no specialist in communications and I do not have a recipe. However, I believe that it would help if more people from Western Europe could visit Ukraine, and for this it would be important to develop low-cost flights. If you had more low-cost flights, I think you would have more Spaniards, Portuguese, French, Italians travelling to Ukraine, and these people would come here and see with their own eyes what Ukraine is about. This would be my first point. My second point consists of having more exchange programs, so that more Ukrainians would be able to go to our countries for a few months. Again, if in our countries we could see that Ukrainians are European people who often speak better English than we do and who are extremely skilled, this would be another way to improve your image.

However, creating opportunities, like more low-cost flights, is one thing. To provide people with an incentive and make them want to use those opportunities is quite another thing. What exactly do you think would be interesting for people from abroad to experience in Ukraine?

Hugues Mingarelli: You have everything in Ukraine: you have beautiful seaside, you have mountains, you have architectural patrimony, which is exceptional.

In most towns you could have millions of tourists a year.

How to attract them, again, is not my job, I cannot tell you this. But you just have to bring these people here, because all the foreigners that will come, will ask "So this is what Ukraine is about!"

Let's transpose this situation to the business sector. What can be an incentive for Western investors to come to Ukraine?

Hugues Mingarelli: As I have already told you, you have all possible assets and positive things, but you have a problem with the rule of law, with corruption being a cornerstone issue. If you have a better level of rule of law, better protection of property rights, I'm sure that you will have an exceptional volume of foreign investments.

Speaking about Ukraine's attractiveness to investors, it has an image of an agricultural country in the world. What other sectors can Ukraine bet on to be attractive for foreign investments?

Hugues Mingarelli: You produce engines and helicopters, you produce missiles and rockets, you have unbelievable steel mills. When I visited the Interpipe factory in Dnipro, I had already seen many steel factories in our member states, but none of them were so modern and so well-equipped. And - I'm being told, for I'm not an expert myself - in the IT sector you have many extremely qualified young Ukrainians, with a lot of startups. So, apparently, this is a sector that could also attract a lot of investment.

Going back to the issue of low-cost airlines, this Open Skies agreement is frozen. What is your prediction on when it can be signed?

Hugues Mingarelli: As soon as Brexit takes place, the main obstacle will be removed. This is because, as you know, the signature of the agreement has been blocked because of disagreement between Spain and UK over Gibraltar airport. However, the day the UK is out of the EU, the obstacle will be removed. So I hope that the signing of the agreement will take place by the end of this year, hopefully within months, or even weeks, after Brexit.

This article was prepared with the financial support of the International Renaissance Foundation

Maksym Panchenko
Analyst and journalist at Internews Ukraine and UkraineWorld

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