Research

Ukraine Enlargement Hub: Sectoral Policy Research

Assessing and managing the impact of the adaptation of Ukrainian legislation to the EU law

Laszlo Bruszt & David Karas (CEU Democracy Institute)
10.11.2025

I. Introduction

The goal of the research suggested below by the Enlargement Hub is to provide Ukrainian decision-makers with actionable policy proposals about the assesment and management of the impact of the adaptation of the Ukrainian legislation to the EU law.

There are two types of impacts of the implementation of EU rules. The first type of impacts are linked to the legal, institutional, infrastructural, fiscal and behavioural changes required to play by the EU rules. The second types of impacts are linked to investments in human and fiscal capital, institutional changes, capacity building programs that could allow economic players (firms, value chains, cities, regions, workers etc.) to live by and benefit from the EU rules. The first types of impacts are short-term and are easily measurable. The second types of impacts are long-term, they are shaped primarily by public policies, they depend on such factors like the nature of these policies, their inclusiveness, the breadth of the coalition of economic and political actors involved, or the types of resources mobilized. As a consequence, impact assessment in their case has to be based on alternative scenarios and have to include staged and structured deliberations among different categories of stakeholders.

The first group of impacts is linked to the Copenhagen criteria on the “capacity to effectively implement the rules, standards and policies” of EU, the second is linked to the Copenhagen criteria on the “ability to cope with competitive pressure and market forces within the EU”. The first of these criteria is non-negotiable and impact assessment has to consider all costs linked to get EU rules “on the books” and to implement them on the ground.

The EU approach to the second economic criteria is “minimalist”. It consists of the most elementary conditions of entering the Single Market and staying afloat there without requiring considerable use of state aid or EU transfers. Meeting these “minimalist” requirement might impose considerable costs on accession countries. But the most important lesson from the previous wave of Eastern enlargement was that those new member states, those sectors and those regions gained most from EU membership, and could withstand better the economic and political challenges of membership that went beyond the ‘minimalist’ requirements and have implemented early on policies that could improve the position and increase the gains of their firms, diverse categories of economic actors and sub-national units in the Single Market.

It was the key lessons of the previous wave of EU enlargement that without adaptive policies, rule transfer can lead to economic marginalization for a large number of domestic economic actors and increase of territorial disparities, empowering populist and Eurosceptic movements.
The Hub mobilizes researchers of the previous wave of Eastern Enlargement and the governance of the Single Market with the goal of helping the design of policies that could increase the range of winners from the taking of EU rules.

The research project focuses on the longer-term impact of implementing the required EU rules while it also aims at helping the assesment and management of the short-term impact of implementing the EU mandated rules. The two tracks of the projects while they will interact, will be timewise separated.

First track: In close collaboration with the State Research Institute for Informatization and Economic Modeling (SRIIEM) it will produce updated guidelines for the estimation of the short-term administrative and financial costs of rule taking. We will use the milk and forestry subsectors as pilots to help SRIIEM to finalize the design of the research strategy. This will be the faster track, we plan to start late November, early December 2025 and get the updated guidelines by the mid January 2026.

Second track:

  • In close collaboration with Ministry of Economy, EasyBusiness, SRIIEM, business associations and NGOs, the researchers of the HUB will prepare policy analysis and stakeholder mapping with a focus on the variable longer-term risks and opportunities, costs and gains of regulatory integration
  • With the help of the office of the Deputy PM and the Ministry of Economy, the Enlargement Hub research team provides materials for organizing discussions of alternative scenarios exploring links between different policy mixes and long-term outcomes
  • Contributes to the setting up of National Development Coordination Team (NDCT) and the Sectoral Change Teams that will oversee the creation of a National Implementation Plan and diverse sectoral plans and that will manage the policies shaping the long-term impacts of EU rule adoption. It provides background analyses for NDCT policy making.

 

Timeline:
We would like to start in November 2025 with matching our researchers with Ukrainian partners from research, policy advice and policy making. We plan to have a conference in Lviv in January to consolidate the workplan and coordinate collaboration between our researchers and the partners from Ukraine. We plan to start research in February 2026, have a first conference on the preliminary results in April, 2026, discuss in a separate meeting the first draft papers sometimes in June, 2026 and the final versions in late September 2026. In collaboration with our Ukrainian colleagues we will create a separate timeline to discuss the steps of collaboration for all the specific research programs listed below.

Areas of Research

1. Agri-Food Sector – Between Market Access and Exclusion

Policy dilemma

Regulatory alignment with EU rules can open major export opportunities but may also marginalize smaller producers unable to meet costly environmental and safety standards—potentially triggering social dislocation and anti-EU backlash.

Key Questions

  • How will EU regulatory alignment reshape market power among large agribusinesses and smallholder producers?
  • What forms of transitional or support instruments could preserve rural employment during compliance adjustments?
  • How might coalitions between Ukrainian producers and EU value-chain actors promote more inclusive integration?
  • How can opposition by EU farmers to Ukrainian agrifood exports be mitigated?

Expected Policy Insights

The research will help identify institutional and financing mechanisms—such as adaptive standard-setting, producer cooperation frameworks, or phased regulatory sequencing—that could mitigate exclusion risks and strengthen Ukraine’s position in the EU agricultural market.

2. Agriculture & Energy Business Coalitions – Managing Power Asymmetries

Policy dilemma

Agriculture and renewable energy illustrate opposing trajectories of EU integration. Agricultural exports face protectionist pushback and market asymmetries, while energy and renewables have achieved greater regulatory convergence but remain dominated by powerful business groups. The challenge is how to design sectoral developmental strategies that mobilize these actors for modernization without allowing them to capture policy outcomes.

Key Questions

  • How do entrenched business–state networks shape the adoption of EU rules in agriculture and energy?
  • Why does EU integration generate conflict in one sector but cooperation in the other?
  • What institutional or regulatory mechanisms could align dominant firms with broader public and developmental goals?

Expected Policy Insights

The research will clarify how EU rule transfer interacts with domestic business power and help identify governance options for building effective sectoral development plans under conditions of concentrated interests. Insights will support the design of participatory planning frameworks, transparent subsidy regimes, and accountability mechanisms that balance private influence with public developmental priorities.

3. Decarbonization and Defence – Managing Strategic Investment under EU Integration

Policy dilemma

Ukraine’s integration into Europe’s green and defence-industrial agendas brings access to major EU investment and reconstruction funds, but also the risk that these flows remain externally driven. The challenge is to design institutional arrangements that embed foreign investment, EU assistance, and domestic capacities within coherent sectoral development plans—turning inflows of capital and technology into sustainable local capabilities.

Key Questions

  • How can Ukraine structure joint ventures, procurement frameworks, and technology-transfer agreements in defence and decarbonization to ensure domestic value creation?
  • What institutional mechanisms—public–private partnerships, investment screening, coordination units—best align EU funds and industrial policy with Ukraine’s strategic priorities?
  • How do the governance and political dynamics differ between defence (security-driven, innovation-intensive) and decarbonization (regulation- and compliance-driven) sectors, and what can they learn from each other?

Expected Policy Insights

The research will clarify how to manage EU and foreign investment so that it strengthens Ukraine’s industrial base rather than creating enclave-style production. It will generate insights on institutional and legal frameworks—joint venture design, local content rules, technology-transfer conditions, and inter-ministerial coordination—that can embed foreign capital and EU assistance within domestic modernization strategies.

4. Defence-Industrial Upgrading – Military Production as a Technological Accelerator

Policy dilemma

In several middle-income economies, defence industries have unexpectedly become engines of industrial upgrading by generating technological spillovers and export revenues. For Ukraine, where the war has catalysed rapid innovation in drones, vehicles, and communications systems, the key question is whether this momentum can be channelled into broader industrial development—or whether it will remain confined to volatile, militarized niches vulnerable to political capture and import dependence.

Key Questions

  • How can defence procurement, export promotion, and dual-use R&D be structured to support broader technological diffusion and civilian industrial upgrading?
  • What institutional arrangements and financial mechanisms are required to sustain innovation while ensuring transparency and accountability in a high-rent sector?
  • What lessons emerge from other middle-income experiences—such as Brazil, Turkey, or South Korea—regarding the limits and possibilities of defence-led industrialization?

Expected Policy Insights

The study will clarify how military-industrial policy can contribute to Ukraine’s reconstruction strategy as a driver of innovation and skill formation. It will help identify governance models—procurement frameworks, export-credit arrangements, dual-use innovation programmes, and oversight mechanisms—that balance developmental ambition with fiscal discipline and democratic accountability. Ultimately, the research will assess how far defence production can operate as a technological accelerator in Ukraine’s late-industrialization context, and where its structural limits lie.

5. Critical Minerals – Balancing Geopolitics, Industrialization, and Environmental Justice

Policy dilemma

Ukraine’s endowment of critical raw materials (lithium, titanium, rare earths, graphite) places it at the crossroads of global industrial and geopolitical rivalries. These resources are vital for batteries, microprocessors, and defence technologies, yet mining them poses major social and ecological risks. The challenge is to leverage this strategic resource base to build industrial capacity while managing competing demands from global powers and protecting local communities.

Key Questions

  • Can Ukraine integrate its critical-mineral supply chains simultaneously into U.S., EU, and other regulatory and industrial frameworks, or will geopolitical alignment force exclusivity?
  • What industrial and investment policies could ensure domestic processing and technology transfer instead of raw-material export dependence?
  • How can environmental regulation, labour protections, and community participation mitigate the ecological and social costs of extraction?

Expected Policy Insights

The research will explore governance options for a strategic yet sustainable CRM sector—clarifying how licensing regimes, environmental and social safeguards, and industrial-policy tools can jointly shape value addition and accountability. It will help identify pathways for reconciling geopolitical integration with domestic developmental and environmental priorities, positioning Ukraine as an active participant rather than a passive supplier in global green and defence value chains.

6. Local Developmental Alliances – Territorial Cohesion under Integration

Policy dilemma

EU-funded transfers have often enhanced disparities between regions or strengthened centralization at the expense of regional bodies: reconstruction in Ukraine may deepen regional inequalities if regional and municipal bodies lack the capacity to plan, co-finance, and monitor developmental projects. If regional and municipal bodies are not active developmental actors, the central government cannot compensate for lacking local competences.

Key Questions

  • What fiscal and governance reforms would empower municipalities to absorb and co-manage EU funds effectively, linking them to regional development plans?
  • How can local alliances with civil society and domestic firms enhance accountability and learning?
  • How do EU cohesion and regional-policy instruments interact with Ukraine’s decentralization agenda?

Expected Policy Insights

The study will outline institutional arrangements—such as municipal development funds, city-to-city partnerships, and participatory budgeting frameworks—that could leverage EU assistance and transfers to consolidate differentiated regional development plans which build on different actor coalitions and asset specificities.

7. Development Finance Architecture – Coordinating External and Domestic Actors

Policy dilemma

Reconstruction financing is fragmented across multiple external donors and development banks whose differing mandates may weaken local ownership and strategic coherence. If Ukraine doesn’t have robust sectoral development plans, the investment decisions of external actors such as the EIB, EBRD etc. might be taken primarily for bankability, privileging already dominant firms, regions – without concern for the long-term developmental impacts of these investments for Ukraine’s national economy as a whole.

Key Questions

  • How does EU accession shape coordination among multilateral and national development banks?
  • What accountability structures can balance donor oversight with flexibility in high-risk sectors?
  • How can Ukraine align financial flows with national reconstruction priorities?

Expected Policy Insights

The research will identify governance models for a coordinated finance architecture—clarifying roles, transparency norms, and risk-sharing mechanisms between Ukrainian institutions, MDBs, and EU lenders.

III. Conclusion

These sectoral studies together will map how EU rule transfer reshapes Ukraine’s developmental landscape.

By clarifying the policy dilemmas, key questions, and potential governance lessons in each field, the research will equip decision-makers with the analytical basis to design reforms that expand the circle of winners from integration and anchor reconstruction in inclusive, sustainable development.

IV. Researchers of the Enlargement Hub

  • Cornel Ban, Copenhagen Business School (Copenhagen)

  • Laszlo Bruszt, CEU Democracy Institute (Budapest)

  • Fabio Bulfone, Faculty of Governance and Global Affairs, Leiden University (Leiden)

  • Aron Buzogany,  BOKU University (Vienna)

  • Donato di Carlo, London School of Economics (London)

  • David Karas, CEU Democracy Institute (Budapest)

  • Julia Langbein, Centre for East European and International Studies (ZOiS) (Berlin)

  • Gergo Medve-Balint, Institute for Political Science, ELTE (Budapest)

  • Dora Piroska, Central European University (Vienna)

  • Luuk Schmitz, Max Planck Institute for the Study of Societies (MPIfG) (Cologne)

  • Matthias Thiemann, Sciences Po, Centre for European Studies (Paris)

  • Mihai Varga, Institute of East European Studies, Free University Berlin (Berlin)

  • Clara Voluntiru, Department of International Business and Economics, at the Bucharest University of Economic Studies (Bucharest)

  • Visnja Vukov, Institute fur Politikwissenschaft, Universitat Wien (Vienna)