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1 November, 2018
600 Years in the Defence Housing Queue
Anna Chabaray, Tyzhden.UA

Ukraine still lives under the Soviet housing legislation, which guarantees free housing to military personnel. However, those who apply for it fruitlessly expect for decades, and the queue is only growing. According to the Ministry of Defence of Ukraine, as of 2018, there are more than 47 thousand servicemen and women in the defence housing queue. From 2014, veterans of the war in the East of Ukraine have been added to the list. One of them is Ihor Stadnytsky, a Lviv citizen who fought in the 24th mechanized brigade, the 2nd anti-artillery, who survived the Izvarinsky ‘entrapment’. As a war participant, he has the right to some benefits, namely, to the priority in receiving defence housing. In 2014, during treatment at the hospital, Igor was placed in the queue for those waiting for an apartment in Lviv. He got number 19 in the so-called top-priority list of war veterans. But during the next four years, his place in the queue has not changed, although two apartment blocks were built in the city, where Stadnytsky could get an apartment.

"It disturbs me, because this situation is a problem not only for me, but for my friends with disabilities who are also in the top-priority queue, and theirplaces in the queue don’t move up. It is not clear who gets the apartments, there is no transparency, no publicity", says the veteran. He addressed the Lviv Mayor, the City Council, the Chairman of the Parliament and the President of Ukraine himself, but his place in the queue still hasn’t changed. Experts from the Independent Defense Anticorruption Committee (NAKO) explain that this is not a unique situation, and the reason for that is the obsolete system of defence housing. The situation is worsened by the lack of transparency in the planning, procurement and distribution of housing procedures, it increases the risk of corrupt schemes. NAKO published the research on "Poor Governance and Corruption Inside Ukraine’s Defence Housing System", where the corruption risks in the sector were analyzed, and recommendations for its reform were given. According to NAKO, during 2006-2016 there were no significant changes in the situation with the queue: the system satisfied the needs of no more than 5% of the families of servicemen and women, or 1% of all military personnel of the Armed Forces. Experts have estimated that under the current conditions, more than 600 years are needed to close the queue of 47 thousand service men and women. This applies both to service housing (married families hostels, barracks) and permanent ones.  

The Ministry of Defence needs significant funds to fulfil its obligations to servicemen and women. According to NAKO estimates, now it is about 54 billion UAH, without taking into account additional costs. However, according to experts, under current conditions, there is no link between funding and real housing - the efficiency of the use of funds is very low. According to Ihor Yaremchuk, a member of the Accounting Chamber, over the past two years, the Ministry of Defence has received 1 billion 247 million USD from the budget for the defence housing program. During this period it built only one 70-apartment house in Kropyvnytsky.

At the same time, considerable funds are invested in the long-term construction and purchasing of housing on the secondary market. ‘These funds could be used for construction, reconstruction, housing acquisition and monetary compensation. Other options provided by the current legislation to solve the defence housing issue such as investment construction, financing, financing from local budgets are practically never used by the Ministry of Defense’, said Yaremchuk. As a result, the defence housing program launched in 1999 was not successful at all, as the queue increased from 45 thousand to 47 thousand servicemen and women.

The representative of GolovKEU (the MoD department responsible for defence housing) Yuriy Lipko explained that bureaucracy is the reason for the problem with using the budget money in previous years. According to him, earlier the Ministry of Defence did not have the right to freely spend funds allocated from the budget as it was necessary to receive the corresponding order of the Cabinet of Ministers before that. As a rule, it took quite a lot of time: half a year or longer. ‘As a result, when the funds finally could be used, the winter came and it was difficult to build. Now, this has been changed, thus the Ministry of Defence has the opportunity to dispose of its funds after the Minister’s decree. I think that in the following years we will have about 50 objects of our own construction finished, he said.

James Wasserstrom, the former Head of the Supervisory Board of the UN Office for Co-operation in Kosovo and NAKO’s Co-Chairman notes that corruption is only one problem, whereas the other one is simply poor governance and negligence, and these things have to be distinguished. One of the problems of the current system is ineffective planning: the Ministry of Defence orders the construction of houses, pays for them, but they are not put in commission. Because the money is over, there is no proper supervision, and the deadlines for construction are postponed for indefinite time.

Also, NAKO points to the unreasonable overpayment by the Ministry of Defence: only one aparatment block cost $ 320 thousand more than its estimated value. The second problem is that the defence housing queue itself has significant violations. ‘It is often taken into account incorrectly who needs housing. It is necessary to work on improving this situation. The main problem is that the people in this queue often have to pay bribes in order to receive housing. These problems, along with the pace of the new housing construction, lead us to believe that Ukraine needs to review its defence housing system’, says Wasserstrom.

Meanwhile, developed countries use a completely different approach to defence housing. NAKO emphasizes that countries who are the leaders in the military sector use monetization to compensate the servicemen for service accommodation, food, and treatment. Such countries almost never provide permanent housing, only service one or reimbursement of its value at the time of retirement. After retirement, the state often pays the mustering-out pay which they can spend at their discretion. In the UK this assistance can reach $ 170,000. This is the model that Ukraine should try to follow guided by its aspirations towards NATO standards, Wasserstrom notes. However, experts offer temporary measures for five years that will facilitate the transition until the standards are in place. This model provides assistance in mortgages to those in need of housing, mustering-out pay, good quality housing, and finally, closing the queue. If, after a certain period time, the soldier acquires the right to housing, then he gets compensation for it – one-time or during a certain period. A similar model is suggested by the Project Office for the establishment of the Ministry of Veterans.

Office representative Alexander Tarasov said that instead of donating housing, the state should introduce the low-interest mortgages for veterans, which will stimulate them to work. NAKO suggests to the Ministry of Defence, first of all, to do the audit of the queue  to exclude those who have no legal grounds to stay there. And to make the management of the queue automatically-controlled, as much as possible, to reduce the number of staff involved in its service operation. After that, experts suggest canceling the queue at all, only then it will begin to gradually decrease. Ukraine will cease to accumulate obligations that can not be realized. According to Wasserstrom, the Ministry of Defence showed its interest in reforming the defence housing system, when the Minister asked NAKO to make such a study. The representative of GolovKEU added that this year the Ministry of Defense received over UAH 850 million to solve the housing issue.

‘I will tell you what we plan to get for this money: put in commission five apartment blocks which are constructed by the Ministry, 326 apartments each, continue construction of 49 transitional facilities and get 1061 apartments and 281 rooms in hostels in the following years. We also plan to buy 686 apartments on the secondary market and provide monetary compensation to 307 people’, said Lipko. Lipko also said that the Ministry of Defence is working on te new concept of providing defence housing. This concept implies that a man or woman who will come to service after 2020, will get a one-time cash assistance after 20 years to solve social issues. The amount of assistance will be fixed irrespective of the region of service or rank. Also the Ministry is working on the documents that address the defence housing problem at the legislative level.