To the President of Ukraine
To the Prime Minister of Ukraine
To the Minister for the Economy and the Environment of Ukraine
To the Minister of Finance of Ukraine
To the Chair of the Verkhovna Rada Committee on Economic Development
To the Head of the Office of the President of Ukraine
To the National Agency for the Prevention of Corruption
Regarding the draft amendments to the rules
on the conscription of persons liable for military service
Think tanks specialising in economic policy would like to express their respect to you and bring the following matter to your attention:
Experts from think tanks have analysed the draft resolution of the Cabinet of Ministers of Ukraine, revised by the Ministry of Economy and Environment, entitled ‘Certain Issues Concerning the Organisation of Reservations for Persons Liable for Military Service during Mobilisation and in Wartime’ (hereinafter referred to as the ‘Draft’). The Draft proposes establishing a Coordination Centre for the Organisation of Exemptions for Conscripts (hereinafter referred to as the ‘Coordination Centre’), reducing the maximum limits on exemptions, and amending the procedure for designating enterprises as critically important.
We share the objective stated by the drafters of the Draft: to prevent illegal employment schemes designed to secure exemptions and the manipulation of the number of employees liable for military service. At the same time, such changes must be based on an analysis of their economic consequences, an assessment of the staffing requirements of state bodies and critically important enterprises, and the search for balanced solutions that will meet both defence and economic needs in wartime conditions.
The approaches proposed by the Government pose significant risks to the fulfilment of defence contracts, the functioning of energy and utility infrastructure, and the continuity of operations at enterprises that are critical to the population; they also increase the risks of corruption and uncertainty, and will contribute to the growth of the shadow economy and a decline in business activity.
The Coordination Centre as a new link: delays, duplication, lack of transparency
The Coordination Centre (comprising 17 members, co-chaired by the Deputy Ministers of Economy and Defence) is responsible for determining criticality, increasing the limit by more than 50 per cent, agreeing on criteria, and making recommendations regarding the revocation of status.
Risks:
Delays. Even under the new timeframes, the status determination procedure may take up to 17 working days instead of the current 10. There are no established consequences for failing to submit recommendations on time, and the ‘tacit consent’ rule has not been introduced. No timeframes have been set at all for increasing the limit by more than 50 per cent, agreeing on criteria or revoking status.
Duplication and barriers. The Ministry of Digital Transformation did not support the establishment of the Centre: an additional layer lacks proper justification, duplicates the functions of public authorities, extends processing times, creates administrative barriers and complicates the process of obtaining status. It proposed achieving the objective by improving the existing mechanism.
Contradictory legal nature. The Centre has the status of a temporary advisory body, but the outcomes of procedures depend on its recommendations: the threshold of over 50 per cent is set ‘on the basis of’ its recommendations, and the criteria require its approval. The Ministry of Justice noted that such powers are of an authoritative nature, which is not characteristic of an advisory body, whilst the Ministry of Energy pointed out the inconsistency with the Model Regulations on Advisory Bodies (Resolution No. 599). No term of office has been specified for this temporary body.
Composition and operating procedures. The Centre comprises only representatives of state bodies and law enforcement agencies; there are no business representatives. Recommendations are approved
Composition and operating procedures. The Centre comprises only representatives of state bodies and law enforcement agencies; there are no representatives from the business sector. Recommendations are approved by a simple majority of those present, subject to a quorum of ‘more than half’; in theory, therefore, five votes out of seventeen are sufficient. Whether a company may participate in the consideration of its own case depends on the Centre’s own decision. There is no provision for the publication of minutes or decisions.
Revocation of ‘critically important enterprise’ status without procedural safeguards
The new paragraph 18 of the Criteria stipulates that recommendations from the Co-ordination Centre ‘constitute grounds’ for revoking the status of a critically important enterprise, whilst the Regulations permit such recommendations, in particular, where there are grounds provided by law enforcement agencies.
No provisions have been set out regarding the grounds, the procedure for notifying the enterprise, the right to provide explanations, time limits, requirements for justification, or the appeal mechanism. In its opinion of 12 October 2026, the National Agency for Corruption Prevention (NAZK) noted that the absence of time limits and criteria creates the conditions for a non-transparent procedure and abuse. The drafter of the Bill rejected the proposal to establish an exhaustive list of grounds, explaining that the grounds may vary. This creates an asymmetry: status is granted ‘taking into account’ recommendations, but is revoked on the basis of a recommendation. According to the general logic of the Procedure, the loss of status removes the grounds for deferrals for employees; that is, for an enterprise this constitutes a severe operational blow, particularly whilst carrying out defence contracts or repairs at energy facilities.
A hasty review of criticality criteria in almost all sectors
Under paragraph 4 of the Draft, central executive authorities and regional administrations are required, by 20 October 2026, to review and agree with the Coordination Centre on the criteria for criticality, in particular in the fuel and energy sector, housing and communal services, the defence and industrial complex, healthcare, communications, emergency and rescue services, food security, retail trade, banking, construction, transport and logistics.
In effect, a significant part of the economy is being reassessed just a few months after the previous assessment, and this is taking place within a matter of days and without any public discussion of the new criteria. Neither the ‘indicators to be assessed’ nor the ‘established threshold’ for wages are defined in the Draft, so the criteria are open to arbitrary interpretation. The Draft does not specify whether tax debts that are under appeal or subject to an instalment plan are taken into account. For small and medium-sized enterprises in the retail, construction and logistics sectors, this poses a risk of losing their status not because of a change in their role in the economy, but due to the uncertainty of the procedure.
A closed decision-making process, the absence of an impact assessment and internal inconsistencies in the documentation
The Explanatory Note to the Draft states that public consultations are not required. There is no quantitative assessment of the impact on businesses, employees, production, the power grid, budget revenue and foreign exchange earnings. The note asserts that there are no corruption risks, whereas, according to the NACP’s conclusion of 12 October 2026, the Draft contains factors conducive to corruption and requires further refinement. The drafter has only partially taken the recommendations into account: an exhaustive list of grounds for refusal and the procedure for consideration by the Coordination Centre have not been defined.
Comments from the Ministry of Energy, the Ministry of Justice and the Ministry of Digital Transformation have not been taken into account, and the sole argument put forward by the draft’s developer, as recorded in the coordination minutes, is that the provisions of the draft comply with the decision of the Supreme Commander-in-Chief.
Furthermore, the draft was not put out for public consultation, and no consultations were held with leading business associations or non-governmental organisations.
According to think tanks, the draft, in its current form, does not fulfil its stated objective and poses significant threats to business, defence and the country’s economic stability. The main reasons are:
- The measures are not fit for purpose: instead of targeted inspections of businesses showing signs of abuse, there is a general reduction in limits and a reassessment of criticality across almost all sectors;
- a new layer is being introduced into the decision-making process without clear timeframes, criteria, transparency, the right to be heard or the right of appeal, whilst the powers of the advisory body are effectively becoming executive powers. This creates extreme risks of corruption;
- the Centre’s recommendations serve as grounds for revoking status without procedural safeguards, whilst there are no transitional provisions regarding statuses and reservations already granted;
- restrictions are being introduced in the areas where the state is most vulnerable and at the most inopportune time, without a quantitative assessment of the consequences and without consultation;
- substantive comments from the Ministry of Energy, the Ministry of Justice, the Ministry of Digital Transformation and, to some extent, the National Agency for Corruption Prevention have remained unanswered on the merits.
We call on the Cabinet of Ministers of Ukraine to take immediate action to prevent the negative consequences of the proposed changes, and to further refine the draft resolution, taking into account the comments of think tanks, relevant ministries and the business community. We propose implementing the package of measures in two stages:
- Urgent measures – by 20 October 2026:
– to introduce a moratorium on the review of criticality criteria and the revocation of ‘critically important enterprise’ status until the regulatory framework has been finalised;
– provide for a 90-day transition period during which existing reservations will remain valid, so that enterprises can adapt to the new rules without jeopardising the continuity of their operations, the fulfilment of defence contracts and the functioning of critical infrastructure. - Finalisation of the regulatory framework – within 30 days:
– to minimise the remit of the Coordination Centre, limiting its role exclusively to that of a consultative and advisory body on the formulation of booking policy, and to enable it to make recommendations to the Cabinet of Ministers on booking matters;
– define an exhaustive list of grounds for revoking the status of a critically important enterprise and guarantee the enterprise’s right to prior notice, to provide explanations, to receive a reasoned decision and to appeal;
– define clear and measurable criteria for criticality, in particular the concept of ‘verifiable indicators’ and the wage threshold, and regulate the treatment of tax debt that is the subject of an ongoing appeal or for which a payment plan has been granted;
– carry out a mandatory assessment of the economic, fiscal and labour market implications of the proposed changes, including their impact on defence capability, critical infrastructure, employment and budget revenue.
In order to develop balanced solutions in a timely manner, we propose establishing a working group comprising the Ministry of Economy and Environment of Ukraine, the Ministry of Defence of Ukraine, the think tanks that have signed this appeal, and leading business associations. We consider it appropriate to utilise the mechanism of the Interdepartmental Working Group on Small and Micro-Businesses under the Ministry of Economy as a ready-made platform for this work, expanding its membership to include relevant representatives as necessary.
The think tanks are ready to join this effort and provide expert support. We are convinced that the involvement of the state, the business sector and independent experts will make it possible to simultaneously combat abuses in the procurement sector, meet defence needs and preserve Ukraine’s economic stability.
Sinncerely,
Think Tanks:
Center for Social and Economic Research – CASE Ukraine
Institute for Economic Research and Policy Consulting
Institute for Socio-Economic Transformation
Center for Economic Strategy
Ukrainian Institute for Legal Policy
“ANTS” Network for the Protection of National Interests
Growford Institute
Institute for Tax Reforms
Association of Tax Consultants
Institute for Economic Leadership
Advanter Group Think Tank
Office of the Chief Economist of the Coalition of Business Communities for the Modernization of Ukraine
Analytical Group of the Economic Expert Platform
Institute of Finance and Law
“Technologies of Progress” Analytical Center
Kyiv Foresight Foundation