This interview with Yulia Marushevska, Chief of Odessa Customs, Odessa State Regional Administration, is part of the series of interviews for the research project “Ukrainian Democracy: Performance, Challenges and Futures”. The project aims to understand the key barriers to building the successful democracy in Ukraine – in the sphere or government, at the level of civil society and in the filed of foreign policy.
UDI: Do you think of Ukraine as fully democratic?
Yulia: What is “democracy”? The components of democracy are a democratic election, and the existence of appropriate institutions. There are no common standards of democracy in the world. There is always some deviation. In Ukraine, I would say, there is a type of democracy that still needs improvement. This is because, on one hand, we have a democratic electoral process and democratic leadership. On the other hand, there are problems with the institutions that are actually on the periphery. We cannot claim that they operate sufficiently enough to contribute to a successful democracy.
UDI: In your opinion, is it too early to say that Ukraine has overcome a democracy crisis?
Yulia: Nowadays Ukraine is working towards a more successful democracy. Only six months ago we talked about whether or not we have a failed state, and how much time is left. We must decide … There is a huge risk of losing sovereignty. We are going through a historic moment, when the fate of the country is being determined, which includes identifying if it is an ochlocracy. In other words, the latter refers to a country ruled by clans under the guise of democracy that in turn portray it as a democratically successful country. As a society, we have made our choice on where we want to go. But institutionally, we have not reached that point …
UDI: What is the role of civil society, regarding the promotion of reforms in the country?
Yulia: Civil society is the main driver of this process. It demonstrates the need for democratic reforms, and protects these processes.
UDI: In summer 2015, the Governor expressed his intention to reform the Customs Service system, based on the “Georgian” model. What is the status of the customs office reform process in Odessa?
Yulia: Actually, we started to work on Odessa customs in November. The project was announced by the Ukrainian President, together with the Head of the Odessa regional administration. The idea was to launch new customs standards, starting from the port of Odessa. It is a difficult time for this project at the moment. It was designed for four months. After four months, we had to announce the launch of the project and start operating the test mode. However, the internal reconstruction of the customs building was set for completion at the end of August. We did everything we could: employed people (such as new customs officers), prescribed new procedures and relevant regulations to make it all work quickly. Being one of 26 regional customs, we actually faced, within the existing Customs system, a lack of political will from Ukrainian customs leaders that blocked every stage of the project. As a result, we devoted much greater effort than was foreseen. We planned to see the results twice as fast, but had to work harder and longer for it to actualise. Yet I remain positive, considering the new people we employed through open competition testing (for example 100 candidates out of 2000 submitted applications were selected). The selection system was complex, but they were and are studying with American specialists on Border Customs Protection, to later work with EU representatives as part of the learning process. Ukrainian customs representatives are also invited to share experiences. At the end, we will develop a professionally trained personnel base with strong intellectual and psychological indicators prepared to work within the new standards. This is not just a change of faces. We want to change the system from within. We are also changing the wage remuneration scheme for such positions. You cannot build an institution if the employee’s salary is 50 dollars.
UDI: Why is dialogue with representatives of the old system not always successful?
Yulia: Generally, dialogue is hardly possible in this case. We were able to communicate only within the initial three months, but not taken seriously. The perception toward us was that we wanted to play a game, change tables, and chairs. It then became clear that no tables and chairs were to change. Instead, the processes in one of the Ukraine’s largest ports would be changed… There cannot be a dialogue because there is are huge business and private interests from people who want to finish building a house next month, or to pay for the schooling of their child in London. The idea of this project is to automate processes so that inspectors cannot make subjective decisions as often and as much now. There will be no opportunities to subjectively decide whether the chosen company will pay 100 thousand or 200 thousand in taxes – due to an automation process. We take away this human element out of the decision-making and effectively convey it into the system. Launching such a model in Odessa will help us gain support in the business sector, perpetuating an alternative work culture for customs.
This experience should be used in other major customs points, so we can fix the system and prevent what is happening in Odessa. Business can work without bribes, but those who want to register contraband goods simply do not process them in Odessa and go to other cities.
UDI: Has the geographical conjuncture of importing countries changed during your leadership?
Yulia: Basically, there are certain changes. Of course, there are seasonal changes, which dominate most of our experiences with partner countries from the European Union, the US, and Canada. Importers from the countries where businesses used to operate legally, go where there is a legal right to work, and where it is convenient for them.
UDI: Which countries have responded to the changing principles of customs and decided to direct the flow of imports to Odessa?
Yulia: We had a successful meeting with Canadian businessmen, and hope that the signing of a free trade agreement between Canada and Ukraine will increase freight flow. However, it is contingent upon the decision of businesses, rather than countries.
UDI: Are there any priority areas of work related to foreign economic policy? What kinds of business, and which trading countries, are desirable for Ukraine?
Yulia: We started cooperating with 37 partner countries. These were based on prior established relationships and guarantees of business legality and certified documents (e.g. certificates of origin provided by customs). The conditions of supervision have been simplified for them.
Our general policy is that everyone should get good service, regardless of country, product, and direction. The whole system operates on meritable relationships with any employee of any country.
As of 2016, Ukraine has sent 54% of its export goods to Asia, 24% to the EU, 1% – to CIS, 21% – other countries. Main exporters of Ukrainian goods are China (14%), Egypt (11%) and India (8%). Ukraine imports 34% of goods from Asia, 26% of goods from EU, 6% of goods from CIS, and 25% of goods from other countries. Most of the import products are sent to Ukraine from China (16%), Austria (11%) and USA (10%).
UDI: What is vertical corruption in the customs arena?
Yulia: Vertical Corruption in customs is very centralized. Having changed the governing structure of Customs (around 40 people) we managed to reduce 70% of corruption flows. It is difficult to steal without the support of leadership. [Fraud] is very noticeable in the customs system. If corruption remained, then it is only at the level of ordinary inspectors. The customs office consists of 1400 people. It is quite difficult to change their attitude, train them, and issue them a decent salary. We have now employed 120 new employees. For eight months now we have been implementing a general policy that bribes led to sacking.
UDI: Is eradicating corruption among ordinary workers the most difficult task?
Yulia: Without normal salaries, and automation processes, it is difficult to eradicate corruption. We set a goal to implement new software, and change procedures by reducing the corrupt behavior.
UDI: Is smuggling in the region still an acute issue?
Yulia: If you mean smuggling when taxes are not fully paid for certain product groups, then it looks like the goods simply would arrive through other customs pathways. Our policy is clear. Businesses legally pay all the taxes, or look for other places to trade.
UDI: Does Odessa Customs cooperate with other similar services of the Black Sea region?
Yulia: We communicate not only within the Black Sea basin, but around the world. I recently mentioned the US Border Customs Service. We are in close partnership with them. I also met with Singaporean Customs officers. I think that Odessa customs should not compete with Mykolayiv or Kherson Customs, but with international customs and their standards of service provision for working with businesses. We should move away from the fact that we are in “backyard of the world.” For instance, what takes Singapore a few hours, takes us a few days. We want to be attractive to global partners.
UDI: What foreign practices do you plan to take as a base and implement in Odessa?
Yulia: We need to change the approach of Ukrainian customs, which is focused on revenue generation, and collecting taxes. The functions of customs should be to provide security services and facilitate trade. In Ukraine, customs are involved with trade budgets. The main themes of discussion reflect on how much money they managed to collect. No one shows interest in the amount of detained drugs and weapons that new businesses were involved amidst the region. Neither the time, nor the speed of procedures, or clients are important. We introduced a hotline for business representatives to share their feedback on services, and to ask questions about procedures. We live in times of global competition. Even state institutions such as Customs must provide a service and guarantee security to its people. A collection of taxes – is still a Tax Service competence.
Speaking globally of all practices that may be perceived, we would like to introduce a post-audit process. It would address violations that may occur during the application of customs taxes, which are controlled through profits from taxing businesses, and involve police forces. I would like to integrate customs, tax, and border bases to reduce multiple practices. I refer to how customs writes a letter, asking whether certain cars came through. This takes up to two weeks to get answered. We must move from the Middle Ages to the present times.
UDI: How does investment attractiveness for the region depend on the efficient operations of customs?
Yulia: Customs matters not only to a particular region, but also to the entire country. Customs now generates budgetary revenues. In other words, customs work affects the lives of people, in terms of the quality of roads, hospitals, kindergartens. The status each depends on the payments that arrive at customs. From a business perspective, customs play one of the most important roles. Usually, when a businessman comes to Ukrainian customs, he never knows how much time and money to spend. However, businesses must work in a predictable environment. In order to plan their work, businesses forecast their expenditure. Since customs is not operating according to global standard, it can now successfully run mainly local companies with connections. If we introduce international standards and normal healthy climate within customs, it will contribute to better conditions for small businesses. At the same time, the global business can come to us under such conditions, alongside new employment opportunities.
Khrystyna Boychuk, Head of Call-Centre functioning under the auspices of Odessa Customs Service
“the main task of those who participate in the reformatory process – be them civil servants or not – is to be able to assume full responsibility for their own deeds”.
The official launch of Customs Call Centre took place in April 2016. For the time being, citizens can seek consultation from agents based in the call-centre or report acts of corruption via the HELP hot-line.
All the customers’ inquiries are categorized as follows: customs’ reforms (ideas and suggestions communicated by the public), consultations, reports on corruption incidents, complaints and gratitude. All information regarding the registered corruption reports is submitted directly to the Head of the Customs (Yulia L. Marushevska) or Deputy Heads. As a result, new cases are opened in connection to every complaint that has passed the scrutiny.
Roman Bakhovskyy, Deputy Head of the Customs, Project Leader
This spring, 108 future customs inspectors have been selected from the pool of 2700 applications. On 29 April 2016 newly-appointed customs officers took the oath and thus became full-scale members of the project “Open Customs Space”. We have come a long way in our efforts to raise candidates’ qualification level and make it possible for them to acquire a set of project implementation skills. For instance, from 10 May 2016 to 3 June 2016 all customs officers were taught a basic course on customs affairs in the Department for Specialized Training and Canine Services in Khmelnytskyi. Upon return to Odessa future customs officers were as well invited to complete a crash course on blind speed typing provided by “STEP” (Shag) Computer Academy. Of note, speed typing is the skill essential for prompt document processing. Training program was complemented by the seminar on client interaction Service+, EUBAM mission-assisted course on combating infringements of customs legislation as element of protection of security interests, US Embassy-supported course of lectures on «International Seaport Interdiction Training».