On Aug. 8, the EU Council approved the transfer of €3,056 billion within the fourth tranche under the Ukraine Facility program. This is an EU project that supports the Ukrainian economy and allows the state to focus its money on defence.
Under the previous agreements, Ukraine had to get €4.5 billion for completing 16 reforms. Ukraine completed 13 instead.
Spokesperson of European Commission Guillaume Mercier said that three reforms Ukraine didn’t complete are reform of Ukraine’s Asset Recovery and Management Agency (ARMA), decentralization reform, and reform that regulates selection of judges in the High Anti-Corruption Court (HACC).
Gwara Media’s journalists studied what those are, why Ukraine needed them, and what blocked the progress.
ARMA reform
The ARMA was created to search for likely “unlawful” property and assets, arrest them, and then transfer them into state ownership.
Also, when in criminal proceedings the court finds, for instance, a business owner guilty and confiscates their property and other assets, these assets are then transferred under the ARMA’s management.
Here’s an example: in 2018, the National Anti-Corruption Bureau of Ukraine (NABU) launched criminal proceedings into unlawful schemes related to the gas reserves on Novoiarivsk and Novyi Rozdil thermal power stations in Lviv Oblast. Investigation figured that because of the station’s schemes the state lost 1,4 billion hryvnias (~$33,7).
The ARMA confiscated both stations from their owners and beneficiaries and transferred the rights to manage those assets to the Naftogaz Teplo company to avoid an industrial disaster and launch a heating season for 60,000 residents of Novoiarivsk and Novyi Rozdil.
Why did ARMA need to be reformed?
“For years of ARMA’s work, certain areas where abuses (of authority) happened have been recorded. For instance, (within) the speed with which managers of arrested assets are selected. Plus, the competition for the position of head of the Agency was conducted without international experts, which increased the risks of illegal political influence on the commission’s decision. And the independent audit wasn’t conducted according to law,” representatives of Transparency International Ukraine (TIU) told Gwara Media’s journalists.
Ukraine’s Parliament passed the bill for ARMA’s reform on June 18, 2025. But the president signed the bill into law in July 2025 — after the European Commission decided to cut off the fourth tranche. The ARMA reform bill was included in the parliament’s agenda back in February 2025.
TIU says that the bill was stuck in the parliament for that long because not everyone involved in passing it was interested in “cardinal changes” of the Agency’s work.
Under the old law, the commission that conducted the ARMA’s audits was formed by Ukraine’s President, Cabinet of Ministers, and Parliament. Now, under the new law, the contest is run by a commission of three experts, selected from people recommended by donors and international experts. Ten months after the bill was made into law, this commission has to assess the ARMA’s work and release a conclusion about its efficiency.
Also, under the previous law, eight people picked the head of the agency. They were appointed by various political subjects: parliament, head of the NABU, General Prosecutor, Finance Minister, and Financial Intelligence Unit (FIU). Now, the ARMA’s head will be selected by six people, half of which will be appointed by international partners, and another half — by Ukraine’s government.
“The most significant changes reform makes are related to perfecting the management of arrested assets,” Transparency International told Gwara. “ARMA has to accept assets within a defined timeframe, order their evaluation using special funds’ financing, and contain (the assets) until they can be transferred to another proprietor. Assets will be classified into simple and complex depending on the specifics of their management. That will determine the approach to selecting a future asset’s proprietors. The management agreement will be ratified by the government, and the proprietors will be obligated to insure the assets. There’s also a possibility of temporary assets for the needs of the military and those who suffered from the war.”
ARMA will develop approximate plans of asset management with detailed information about their characteristics, risks, and expected expenses and returns. There will be regular control of asset management efficiency. Realizing frozen assets would be happening via Ukraine’s system of public procurement Prozorro, under the terms defined by the respective bylaws.
“It’s important to take into account that the ARMA has an opportunity to search and manage assets arrested within criminal proceedings, including those related to corruption. That’s why there are lots of parties who are interested in whether or not the ARMA works efficiently, including in parliament,” the TIU said to Gwara.
New judges for High Anti-Corruption Court
The second demand of the Ukraine Facility that wasn’t completed was the strengthening of the High Anti-Corruption Court (HACC). That should have been realized through hiring new judges in the first quarter of 2025, says Karyna Aslanyan, manager of the “Rule of Law” area in the Agency for Legislative Initiatives (ALI), to Gwara.
HACC was created in 2019 as one of the main components of Ukraine’s anti-corruption infrastructure. That’s where cases brought up by the National Anti-Corruption Bureau (NABU) are processed, with a Special Anti-Corruption Prosecutor’s Office (SAPO) involved.
Aslanyan explained that, over a year back, the High Qualification Judges Commission (HQJC) announced a competition for 25 open judicial positions, as was demanded under the Ukraine Facility program. Only two people won the competition, and, after the Presidential appointment, both are now working in the HACC.
Why did so few people, two out of 261, get through the competition? The head of the HACC, Bohdan Krykvylenko, explained that candidates “dropped off” on several stages of the competition established by HQJC. 30% of them filled out the document incorrectly, some of them couldn’t get through the cognitive tests, and another part didn’t manage to complete the practical assignment. Only seven people, according to Krykvylenko, got to the interviews where their ethics and integrity were assessed.
“The previous contest for the HACC failed because the demands for candidates were excessive, especially for the judges who wanted to work in appellate courts,” Karyna Aslanian says to Gwara. Twenty-three judicial positions in HACC were left vacant after that first contest.
“The result: a failed competition, missed deadlines for Ukraine’s commitments under the Ukraine Facility and IMF Memoranda, an understaffed HACC, prolonged consideration of high-profile corruption cases, and the necessity to start the competition from scratch,” Karyna Aslanyan wrote in her analysis for one of Ukraine’s media.
Recently, HQJC announced a new competition until Aug. 6, 2025. This year, candidates could apply both to appellate and first instance courts. The parliament also removed the 75% threshold for a cognitive test relating to Ukrainian statehood and allowed contestants who didn’t pass, skipped, or refused to pass the test before to apply again.
“But even now, we still have the issue that not many people are willing to contest for a position in HACC,” Aslanyan says.
Under the Ukraine Facility, Ukraine had to fill no less than 20% judicial vacancies, optimize and accelerate the process of hiring judges.
Only 205 people applied to this year’s competition, and selection is ongoing.
Decentralization reform
The reform concept for decentralization was established in 2014. Until the issue of establishing a proportional oversight over local governments became pressing, this reform was considered one of the most successful in Ukraine by the authorities.
At the beginning, within the reform, local territorial hromadas (communities) were established and received authority to make their own local decisions and more money from the state budget. Even after the beginning of Russia’s full-scale invasion, this reform was one of the most supported by society in the country.
The first stage of implementing the reform’s conception had to be adding changes to the Constitution of Ukraine, said the head of Centre of Policy and Legal Reform Ihor Koliushko. The changes to the Constitution, Koliushko said, had to create oblast- (region in Ukraine) and district councils and divide the authority between them. The lack of political consensus to do that blocked changing the Constitution.
Dividing authority is still not completed. From one side, there are interests of mayors and community leaders, from the other —there are interests of the state and state’s representatives, e.g. regional state administrations (which during martial law are called regional military administrations.)
Currently, Ukraine’s parliament has a draft law related to decentralization (№4298) on the agenda that creates legal conditions and a basis for making regional state administrations function via the prefecture model, ALI’s experts explained to Gwara.
The draft law was created in 2020. According to Vitalii Beshin, a head of the parliament’s committee on self-governance, the draft law, since then, passed through first reading, four preparations for second reading, consultations with local governments and local state administrations, Council of Europe’s representatives, etc. It also got approval from the European Commission.
However, according to the head of some communities, this draft law contradicts the European Charter of Local Self-Government and still needs considerable work.
Hromadas’ leaders are concerned about this draft bill “rolling back” the initial reform. According to them, it increases the regional state’s administrations’ status, “giving them an opportunity to uncontrollably intrude into the hromada’s business and do so without any consequences.”
Finally, draft law №4298 doesn’t fit into Ukraine Facility demands for decentralization reform, the ALI’s experts told Gwara.
“Instead of a clear distribution of power between local councils and state administrations, the (draft law) leaves to state administrations their old functions and gives them rights to cancel the decision of local communities without involving the court,” the ALI said.
Another draft law that was talked about as part of decentralization reform is bill №13150. The parliament didn’t pass it on Sep. 4, 2025. But it also doesn’t fit under the demands of the Ukraine Facility, Transparency International Ukraine wrote.
The draft bill didn’t transform local state administration into the prefecture-type establishments, but it installed state control over local self-government. That contradicts both the European Charter of Self-Government and Ukraine’s Constitution. The latter outlines the hromadas’ rights to independently make decisions related to the local issues.
In his interview for ZN.UA, Ihor Koliushko noted that for efficient decentralization, it’s necessary to make a clear distinction between what local state administrations can do. The areas of their authority that need to be regulated are: monitoring over whether acts of local self-governmental structures are legal; coordination of local departments of central government; implementing solutions developed on district and oblast’s levels.
According to him, it’s necessary to also directly link local administrations to the Cabinet of Ministers (Ukraine’s government) and create — in the government— a structural department that’ll communicate with district administrations. That, according to Koliushko, will enable unity within the state’s policies.
On the regional level, Koliushko proposes to prepare for implementing the European regional model. An oblast council has to have clearly established areas of authority and can’t, in any way, get itself involved in the area security, for instance. He also said that Ukraine doesn’t need district councils. Hromadas can form municipal councils with members of respective communities. The oblast councils, instead, must have executive committees with clear jurisdictions and competencies.
Another thing discussed in the Centre of Law and Reform is raising the oblast state administrations to an over-regional level. The idea is to create over-region administrations and delegate to them the functions of the state administrations. Such an administration would be able to monitor the compliance of oblast councils with the law and coordinate the work of district administrations.
“Of course, (it’ll work) if the president doesn’t get involved and doesn’t call all of it “the president’s vertical.” Everything has to work within a system of executive authority, meaning under the government’s authority. Sadly, both the Cabinet of Ministers and the respective Ministry (responsible for decentralization) take a passive position about the key question for state management,” Koliushko concludes.
What’s next with the Ukraine Facility and these reforms?
The ARMA reform law is already signed in, and the competition for HACC’s judicial positions is complete, but everything is more complex with decentralization.
At the beginning of August, Oleksii Sobolev, Minister of Economy, Environment, and Agriculture, reported that Ukraine’s government decided to change the Ukraine Facility plan. According to Sobolev, the opportunity to change and adapt the terms of Ukraine’s obligation was implied and explicitly discussed with the European Commission since the launch of the Ukraine Facility.
One of the changes is connected to the decentralization reform. In the new Ukraine plan, boundaries of authority for local self-government structures and state administration have to be installed after the war, instead of the first quarter of 2026.
If the Council of Europe approves the updated Ukraine Facility plan, Ukraine can postpone decentralization reform, for which the EU cut off the fourth tranche, for an indefinite time.
The government expects the EU to ratify the proposed changes to the plan by the end of September.
“Ukraine demands new norms for international law with its blood. But what’s clear for Ukraine today, this outrageous unfairness; it takes time for the rest of the world to accept. To admit that existing norms do not work.”
UPD from Sep. 21, 22:28: The headline fixed from “over 1.5 billion” to “almost 1.5 billion.”
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The project is co-financed by the governments of Czechia, Hungary, Poland, and Slovakia through Visegrad Grants from the International Visegrad Fund. The mission of the fund is to advance ideas for sustainable regional cooperation in Central Europe.
The project is supported by the Ministry of Foreign Affairs of the Republic of Korea.
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