Remarks of the Prime Minister of Ukraine Arseniy Yatsenyuk during the session of the Government on September 3, 2014

I welcome the representatives of the media, members of the Cabinet of Ministers of Ukraine and representatives of the working group comprising leading Ukrainian experts - those people who actually together with us have been writing a simple and understandable recovery plan for Ukraine, I would like to demonstrate it to you.

On the one hand, it is not timely to discuss the reform plan, the plan of recovery for the country, what should be done in the economy, what has been achieved, what peaceful goals we set in front of us, as every day turning on the TV, every day we hear information messages, especially after the trips to our ATO veterans, to our soldiers, when we talk to soldiers, the wounded, their families, it is hard to talk about reforms.

But the war will come to end. Peace always comes after war. The peace we should be fighting for; the peace we must attain through battle. It is timely for us now to think what to do in the country, when peace is established, when aggression stops. Hence, it is the plan to rebuild the country. This plan envisages both ending the aggression and restoring the state as a whole.

First of all I would like to dispel any discussions about various kinds of reform plans, that are much needed for Ukraine immediately. These have been offered by many, at least a number of them are talked about. And everyone says that we need a strategic plan, a new, different one, much better.

The position of the Government is to avoid “reinventing the wheel”, especially, to engage in reform populism. Here is the plan of reforming the country. It has been designed for seven years. It was signed by the President and the Prime Minister. This plan of reforming the country is the Association Agreement between Ukraine and the European Union. I don’t think that someone can create another more comprehensive and informative document like that.

Therefore, in terms of strategic reforms, these policy reforms take 700 pages in the document, which was elaborated throughout 7 years, signed by Ukraine and the European Union and which should be instantly ratified.

As for the tactical steps, that are urgent, vital and necessary for the country, and in order to stabilize the situation. I emphasize, not just to ensure resuming the economic growth, to improve but to stabilize the situation.

We have set several goals, short term and urgent objectives for the state.

The first goal is to stop the Russian military aggression and to restore the sovereignty of Ukraine.

The second is to implement this prominent Agreement with the European Union and to introduce a visa free regime between Ukraine and the European Union.

The third is our soldiers, our military officers and our participants of the anti-terrorist operation. After the war - rehabilitation and assistance to the participants of the ATO and the rebuilding of Donbas, that will need billions of dollars and years to come.

The next direction is decentralization of power. One of our top priorities is a new system of taxation. Our goal in the country is to strike a blow on corruption and winning the war against corruption.

And finally - to overcome the winter. Just to pass the winter through with gas, electricity, food, heating, water.

These are simple and clear objectives, the current Government sets.

Let me start with overcoming of Russian aggression. There is warfare in the East, the war that is not an internal conflict of Ukraine, the war that was unleashed and is being conducted by the Russian regime. First, Russia annexed Crimea, then it went farther and intervened the territory of the eastern Ukraine.

What was our response? There were no real Armed Forces, when the Government came to power, neither regular troops nor efficient machinery, nor National Guard. Throughout recent six months we have restored combat readiness of the Ukrainian army, created the National Guard, threefold increased funding, improved salaries, so the whole Ukrainian economy of today works for army’s needs: equipment, weapons - and to fight against Russian gangsters and terrorists.

We have filed claims against the Russian Federation, including the European Court of Human Rights. The total sum of losses, according to preliminary data only, makes up over 1 trillion hryvnyas.

Fourth – we have launched a procedure for bringing actions against Russia in the UN International Court of Justice for violation of the Convention on the Suppression of Terrorism. Russia is a terrorist state, the aggressor state and will be answerable in compliance with international law.

What should be done now? The country needs a new military doctrine with a clear definition of who is the aggressor and who poses the threat. In the new defense doctrine Russia should be recognized as an aggressor state, the only state which threatens the territorial integrity and national security of Ukraine

Second – billions sent by us for the army’s needs should equip the military and, at last, be used by the defense department as fast as possible.

Third – we launch the project "The Wall" - construction of a real state border infrastructure between Ukraine and the Russian Federation.

Another issue. The Government has approved the draft law “On the abolition of non-alignement status", "On resuming the course towards Euro-Atlantic integration", and the documents should be adopted by the Parliament.

We aim imposing of sanctions. The Government has approved this bill. We submitted it to the Parliament, despite the difficult situation in the Parliament. This law should be approved now as well as the decision to impose sanctions against Russia. As also claiming compensation from the Russian Federation as an aggressor state for losses they caused to the Ukrainian state.

Before the NATO summit I would like to note that our goal is to obtain a special status between Ukraine and NATO. We believe that NATO could recognize Ukraine as a special partner – partner No. 1. The United States of America, we count, will grant us the status of a key U.S. ally.

The second block with regard to rehabilitation and support.

What is viewed necessary apart from what had been done? We have liquidated the service within the Cabinet of Ministers, applied the experience of America.

We constantly allocate funds to the families of those who died and launched a program to provide housing for those families who lost breadwinner the ATO. Have simplified certain procedures. Working in a state of actual war.

What should be done? Rehabilitation of ATO participants, providing social and psychological assistance. And here we rely on aid from west, both financial and technical; prosthetics and medical assistance, including abroad.

As for the return to Donbas. After attaining peace - those who moved to other areas of Ukraine, will return back home to Donbas, and the Government is introducing targeted state assistance for those who are returning to their homes.

Destroyed infrastructure.

For this purpose the European Union and our western partners are sending a special mission to hold the inventory and assessment of damages. And in November of the current year we are to hold a huge international donor conference with the aim to find funds to rebuild Donbas.

Regarding our European direction. The agreement has been signed, Russia used to do and will do everything to undermine implementation of the Agreement, for Russia it is not an economic, but political aspect, as there haven’t been, don’t exist and will never be any economic losses for Russia. But they realize politically signing and ratification of the Agreement is the complete loss by the Russian Federation of influence on Ukraine.

What are our achievements? The agreement was signed. Exports began to diversify due to the fact that the EU has opened its market, even without opening the market in the opposite direction by Ukraine. We have increased exports to the EU states by $ 1.3 billion and, at the same time, cut our trade turnover with Russia by $ 2.5 billion. Dependence on Russia is significantly reduced.

This challenge is an opportunity to redirect the economy, energy, and generally to reorient the country from dependence on Russia for independence together with the European Union.

We have passed the first stage of the visa-free regime and we have actually formed the first stage of the state structure in the Government in terms of implementation of the agreement, appointed deputy ministers from the EU, set up a Government office, approved the structure.

Now, what should be done? We must ratify the Agreement. We expect for the Parliament to ratify the agreement with the EU.

Second - the entire state apparatus should be directed to the only thing - the European reforms in the European agreement.

Third, we shall approve the National plan of implementation of the Agreement in September. This is a step-by-step plan: when, what law, what decision to make, to accept, what regulation, what order of a competent ministry. That is, a specific action plan called to ensure implementation of the strategic plan of reforms.

By the year end we should establish joint cooperation bodies with the European Union. These are effective institutions at the level of governments of Ukraine, the European Commission and at the level of ministries and respectively European commissioners, as provided for by the agreement.

Finally, to complete the procedure and begin to issue passports for visa-free travel - biometric passports.

Concerning decentralization – reforming of the state apparatus and curbing corruption.

What have we done? We have passed the first stage - staff reduction. 28 thousand officials have been cut in the first stage. It makes up 10%.

Second, we have shortened car fleet, charter flights and the budget of this inflated state machinery. It is about UAH 2 billion.

Third - we will sign today and make public a resolution on reducing the number of both central executive bodies and regulatory authorities.

In the Parliament there is a draft law on fiscal decentralization.

I appeal to the Parliament next week to vote for the Law “On fiscal decentralization".

We have also prepared a package of anti-corruption bills, submitted them to the President and expect these key anti-corruption laws to be considered as top priority, those the Government elaborated together with GRECO and foreign experts.

Regarding the action plan, what ought to be done in decentralization area. To endorse our Law “On fiscal decentralization", to adopt the laws that are already in Parliament, including “On the voluntary association of territorial communities", introduce a three-layer structure of local self-government and Ukraine needs amendments to the Constitution for that. Budget and financial decentralization will be conducted by the Government, as it is the competence of the Government. The Constitution is the document that should be adopted in collaboration with Parliament and the President.

The revenue base should be accumulated by local governments. We have included it in our Budget code.

Our offer is exceptionally economic incentives. Here is the practicability to unite.

Reform of state administration by the end of 2014 - today the first decision in this direction will be adopted and promulgated.

Now corruption. We should enact laws designed by the Government, without delay, adopt and begin to implement.

I wish to single out concerning corruption. The main issue is the discrepancy between the declarations and a real life style of government officials.

We introduce a procedure of monitoring the life of public servant.

First of all, it should affect civil servants of I-III categories.

The establishment of the National Anti-corruption Bureau and the National Preventive Commission on Combating Corruption - we have worked on that, these are universally accepted European approaches, so we insist that Parliament pass these laws, and began to carry them out.

We prolong work on returning of assets of former high-ranking officials.

This should be a joint work of the President, Government and Parliament. There won’t be justice in the country unless we replace judges. Therefore, the new Law "On judicial system and status of judges" and the real lustration of the judicial system through Qualification Commission, through the Council of judges, through generally acceptable tools.

With regard to economic stabilization - we have managed to avoid bankruptcy and default. Through war economic performance are unsatisfactory. Economic growth is negative. Inflation is high. Currency fluctuations are very frequent.

What have we achieved in the section of economic stabilization of the plan? First of all, it is our international borrowers. These are the only, who were ready to invest in Ukraine.

Until the end of the year there will be attracted USD 10.7 billion: USF 9.2 bln for Ukraine to repay debts in order to avoid default, not to be declared bankrupt. We actually manage to cover our social security payments, to finance military operations, to ensure payment of salaries and pensions from our internal resource.

So for every copeck we have taken, we provide reports.

Thanks to our tough and proper work with the International Monetary Fund positions of the Government regarding the need for rather difficult, but necessary reforms for the country. It's not reform for the IMF, these reforms are for Ukraine.

It is vital to diversify markets. Therefore, the Government established the Office of the Trade Representative of Ukraine. Similar institutions exist in the European Union and the United States, where Office of Trade Representative of Ukraine will deal with lobbying of interests of Ukrainian business abroad and protection of the Ukrainian business from interference in their matters.

We have now the Law "On public procurement".

Now we have approved the Concept of reforming the tax system and prepared the laws that are to be submitted to the Parliament the next week.

The Action plan, what should we do. We follow the program with the IMF sticking strictly to each point.

The government will be consistent in implementation of the program of reforms inked between Ukraine and the international creditors.

Second - deregulation. Our objectives are reducing functions, cutting in number and simplifying of procedures, improving the efficiency of the state apparatus.

Third – reforming the tax system. For three months we have been preparing these bills.

We have calculated, in the first stage we are going to reduce the number of taxes from 22 to 9. Some of them will be completely eliminated, certain part will be absorbed by other taxes.

Then. We will completely simplify a procedure of administration, I mean of payment of the very tax.

The last. We have introduced a separate procedure of administration of value added tax. The law has been adopted.

The next thing, regarding an income tax. Frankly speaking, I had an idea actually to eliminate the income tax.

We have taken a European solution, which is the unification of tax accounting on the basis of the financial reports. In other words, now there will be two different types of reports, a system of payment the income tax will be simplified,    and the main thing- expenses in the reports will correspond to real expenses.

Reducing the size of the single social tax. We wish to achieve significant reduction of the rate of single social tax, despite the fact that on our forecasts social funds can lose about USD 50 billion.

This step should be done. It is truly risky.

Now the state property issue. We appeal to the Parliament to adopt as urgent a Law "On the list of objects not subject to privatization". The Government plans to hold unprecedented privatization. We remove from the list of objects not subject to privatization, 1 thousand 251 object.

We plan to sell through transparent tenders and auctions. The task of the Government and the authorities - regulation and receiving income.

The objective of business structures – to work for the increase of their own revenues and, respectively, for the increase of workplaces and improvement of profitability of their businesses.

We offer, and it is innovation, the stakes, the so-called trial stakes up to 5%, which are placed at the first stage of privatisation process to be placed on western stock exchanges instead of those of Ukraine. Then we will see the real price.

We desire a fair, transparent and efficient privatization with our western partners.

Moreover, we have two blocks that relate to the agricultural sector. I would like to reiterate, one of the key elements of the Ukrainian economy is viewed to be our agriculture.

A new food policy of the country.

Regarding our energy sector.

Russia has terminated gas supply to Ukraine on June16.

During sessions of the Government I have stated not once that Russian gangsters and terrorists deliberately destroy the energy infrastructure of the country.

We can assert an emergency situation in the energy market, which was provoked by Russia’s halt of gas supplies and through the bombardment by Russia-backed terrorists of the Ukrainian energy objects.

What have we done? We received the storage when there was only buffer gas in the amount of 5 billion cubic meters. Now in Ukrainian storage there have been accumulated 16 billion cubic meters of gas.

Second. We were disconnected from power supply, namely from the gas, by the Russians. In general, depending on season, an average amount of gas we need to buy in Russia is 25 billion cubic meters of gas. Throughout four months we have launched deliveries of both Russian and non-Russian gas from the European Union. The total replacement, due to the supply of the EU, makes up 15 billion cubic meters of gas. The flow in 10 billion cu m was opened yesterday from Slovakia by Minister Prodan, Chairman of "Naftogaz" Kobolev and Slovak Prime Minister.

Yesterday, all of us in synergy with Europe inaugurated the network. Its shipment capacity is 10 billion cubic meters of gas another 5 billion we receive from other sources through Poland and Hungary.

Hence, 60% of Russian gas delivered by Russian Gazprom has been replaced by gas deliveries from European Union companies.

We suggested our own approach, which is not Ukrainian, but purely economic and European-like: in the low season (summer) we pay $300, which is a market price. In high season (winter), we pay $385, in average it totals $ 340. Another option we offer is: there is energy spot market in Europe, excluding transit, we are ready to follow the rules of the spot market, and to pay the market price.

We will pay off, but we should have a European approach, a competitive contract, and we are ready for that. Ready either through a decision of the Stockholm Court, or through tripartite consultations between the European Union, Ukraine and Russia.

I consider we have approved one of the key laws on upgrading Ukrainian energy sector: it is the reform of the Ukrainian gas transportation system. Ukraine is one of the few countries that actually started implementation of the Third energy package. It is exemplary.

We offer to separate supplier, transportation and storage, and we invite our European and American partners to participate as operator company where the control belongs to Ukraine, pipe is 100% state ownership, but 49% is the share we give to those partners who are willing to invest in the modernization and operation of the Ukrainian GTS.

Regarding nuclear fuel. We are also dependent on the Russian Federation’s supplies of nuclear fuel for Ukrainian NPPs. Total volumes of electricity generated by our nuclear power plants is about 50%. The Government decided, we signed a contract with Westinghouse for the diversification of nuclear fuel delivery. We started buying nuclear fuel not only from Russia.

This project has existed for few years, presently we have significantly increased the volumes of the fuel and take measures to diversify.

Concerning consumption – it has reduced by 30% as compared to analogous period of last year.

What are our objectives in energy area? We plan to announce a tender to attract investors to exploitation and modernization of the gas transportation system, organize an energy conference in Brussels on this issue, wait for the Europeans and Americans to participate as operators of the Ukrainian GTS.

Transit - Russia has received Ukraine's proposal to reconsider the rate of transit and to conclude a new transit deal. To have guarantees for deliveries we need to have bilateral and multilateral agreements between Ukraine and the EU and to move the point of gas transfer from western to eastern border section of Ukraine. So we have launched negotiations with our European partners on the conclusion of new agreements.

Austerity regarding energy resources and we insist on it. Winter will be difficult.

And today the Government adopts such programs on funding from budget of tools to replace gas for other kinds of fuel.

In the process of preparing the Energy Strategy we have taken a decision to build new nuclear power units in Ukraine in order to increase the amount of electricity that is produced by safe nuclear power plants.

Therefore, until the end of the year - to conclude an agreement on the construction of new reactors.

Also this year we are funding the construction of transmission lines in order to increase the supply of electricity, primarily by nuclear power plants, and I hope that in May the following year we will put this powerful line in exploitation.

As for coal, which is directly connected with electricity generation. They bombed the main mines, from which the Ukrainian thermal power plants received coal, therefore, the Government has already signed an Agreement to receive 1 million tons of coal delivered from South Africa.

I want to thank for preparation of this recovery plan for Ukraine to all our Ukrainian experts. We have had long and interesting meetings, this document was born due to our joint activity.

That is, in fact, dear media representatives, members of the Government, our Action Plan. Here's the strategy - the Agreement with the EU, the Reform Plan, but the tactic is the recovery plan of the country.

Thank you for your attention!