Although the World Bank provided more than $2 billion to the Ukrainian government during this period, economic reform was not implemented and Ukraine’s economy could not expand. One reason was that the Bank’s Country Assistance Strategy (CAS) was not discussed with representatives of the public, giving the public no chance to participate in supervising the strategy’s implementation. No mechanisms were introduced to keep the public informed about the implementation of Bank projects. This lack of information enabled some local bureaucrats to arbitrarily manipulate disbursed funds, which hurt the World Bank’s image in Ukraine.

While poverty increased in Ukraine—about 30 percent of the country’s population is currently living at or below the poverty level—the ratio of state debt to GDP increased from 22.1 percent in 1997 to 40.8 percent in 1999. The share of state debt owed to the World Bank rose from 11.6 percent in 1997 to 40.8 percent in 1999. The increase in poverty and state debt should be discussed at public hearings.

The CAS for 1997–2000 did not pay enough attention to the specifics of the country, and the public was not well acquainted with the World Bank’s strategy or with concrete World Bank projects. Documents prepared by World Bank experts and government officials were not presented to the public. World Bank loans failed to improve the well-being of most citizens. Significant groups in the society became disenchanted with the Bank. An appraisal of the 1997–2000 CAS accomplishments, including information on the implementation of concrete projects within the CAS framework, should be published and widely circulated.

The main weakness of the CAS is the disparity between the Bank’s intention to support civil society and the absence of concrete mechanisms for providing funds for developing such a society. The World Bank envisages only economic studies to be conducted in this area. During preparation of each project the World Bank should use public hearings to inform representatives of civil society about the implementation of projects. The Bank should recognize the specifics of Ukraine and take advantage of the experience of local specialists during project implementation.

As long as civil society is weak, reducing the state’s watchdog role in environmental issues would violate citizens’ rights, including their ecological rights. There is a great risk that hazardous waste will continue to be dumped near residential areas, that unsafe labor practices will be maintained, and that public information will be concealed, contributing to the continued degradation of the environment in Ukraine. Thus state influence should be reduced only in parallel with the strengthening of civil society. If civil society is weak while many bureaucrats are motivated solely to enrich themselves, foreign loans (and domestic budgetary resources) intended for the public sector could be squandered by officials.

The majority of the public is not feeling the positive impact of the loans. The CAS is not linking the well-being of the population to the preservation and revitalization of the environment. Environmental preservation remains an appendage to economic growth.

The World Bank should encourage the government to involve NGOs in preparing and monitoring investment projects and restructuring programs. The Bank should advocate transparency of government institutions, in particular by helping set up public information departments at ministries and other government organizations. The World Bank should promote creation of a favorable legislative environment for NGO activity.

The Bank should prevent possible negative consequences of using Programmatic Adjustment Loans (PAL) as key elements of financing. Injecting these funds into the state budget makes it impossible for the public to trace their whereabouts. Supervising the use of funds should therefore be strengthened. The World Bank should include NGO representatives in working groups that will participate in preparing and implementing PALs.

Environmental issues are granted a rather modest place in the strategy. The main emphasis is on the GEF Biodiversity Conservation Project for the Azov-Black Sea Ecological Corridor. The CAS does not clarify what part of the World Bank’s total loan portfolio, including the PAL, will be used for conservation. The World Bank should help finance ecological education in Ukraine’s secondary schools and universities. A National Ecological Fund should be established to pool all ecological fees, and these and other funds should be used for environmental protection (currently, only 10 percent of collected ecological fees and fines are spent on ecological activity).

The CAS ignores judicial system reform in Ukraine. The structure of judicial bodies was established in 1939, at the height of the Stalinist terror, and has not changed since then. It may well be that World Bank resources will be lost because of lack of civilized justice. One can create as many laws as possible and allocate funds in support of the most progressive projects, but the laws will never be executed and funds will get into someone else’s pocket. To overcome corruption, a well-operating civilized judicial power must be established. In addition, the CAS lacks programs that support national science and culture, vital elements of civil society.

This document destroys the myth—established long ago by professional demagogues of the modern Ukrainian political establishment—that the cruel "world plunderer" (the World Bank) brutally devours the naive Ukrainian lamb. This document should be published and circulated in all regions throughout Ukraine. It should be printed in the Ukrainian mass media.

To improve awareness of reform by the population and ensure its participation in the discussion of draft laws, it is critical to provide email facilities in all 778 administrative areas of Ukraine. To ensure public access, personal computers and modems have to be installed in all regional libraries. To ensure the introduction of an effective land code that would also achieve environmental objectives, including equitable land distribution and incentives for ownership reform, public hearings should be organized across the country. To prevent corruption and ensure transparency and awareness of citizens, the World Bank, together with other donors and the government of Ukraine, should see that all foreign loans and grants are deposited under the relevant central and local budget headings, so that the public can monitor use of these funds. The World Bank should not provide any money to the government unless the government specifies how the public can be involved in project evaluation.

A more detailed description of priorities in restructuring social infrastructure would be advisable. Involvement of civil society in the social sector reform is not articulated, and World Bank support in this area is not specified. It is important to include public education on key social policy issues in the list of priorities.

The CAS should be more specific about improving the delivery of social services (social assistance, pension benefits, health and education services). Nonetheless, it is extremely useful that the World Bank is aware of the need to address these problems and is trying to help Ukraine.

Drastic administrative reform has to be implemented. State interference in the activities of a commercial enterprise had not been reduced. Deregulation should be carried out, not merely legislated .

All government officials should read the CAS.

The World Bank’s operations are not sufficiently transparent to the Ukrainian public, although the government is using the money of Ukrainian taxpayers, who have the right to know the details. Some general information about the Bank’s projects is available on the Bank’s Web site, but it is not detailed enough. It should be expanded to include progress reports about specific projects, details of related loan conditions, identification of beneficiaries and those responsible for implementation, and assessments of completed projects.

The greatest value-added of the World Bank in Ukraine would be assistance in striking a balance between the government and the private sector. Eight years after independence, the balance between these sectors has not been established. There is still too much government presence in the private sector. Areas in which the private sector could succeed are dominated by government agencies.