REFORM OF DECENTRALISATION: ROADMAP. NOTES FROM THE CONFERENCE

On 7 November 2023, a conference on “Reform of Decentralisation: Roadmap” took place in Kyiv. The event was quite representative, lengthy, and included many panels for discussing agenda items, therefore it warrants a more detailed look.

In Lieu of an Introduction

1. Representation

This was probably the most representative event in recent years dedicated to decentralisation. The representation of donor organizations and Embassies was very respectable. As for the participants who represented territorial communities and regions, the situation was somewhat different. Among those who spoke about local self-government, there were no representatives from the territorial communities of affected, border, and de-occupied territories, and there was also a lack of representatives from places that have taken in a considerable number of internally displaced persons.

2. Central Government

At the conference, the Prime Minister of Ukraine and two Deputy Prime Ministers were present. This was a very high level of representation. However, Prime Minister Shmyhal’s speech seemed perhaps not quite as it should have been. Essentially, the head of the government presented a number of important tasks to the territorial communities regarding the support of the country’s defense, but did not answer with what resources they should do this, how the relationships between the leadership of territorial communities and military administrations should be structured, and what the prospects are for supporting territories that have lost their economic and social potential due to the war.

Strangely, there was no equal representation from the President’s office at the conference, and television cameras were also not noticeable.

This raises concerns about whether the Government and the President see approaches to local self-government in the same way?

3. Reform of Decentralisation.

The phrase “reform of decentralisation”, which has entered the lexicon of Ukrainian politicians and officials, is quite strange. Because if you look on the internet, you can find definitions of decentralisation as the process of transferring powers and corresponding resources from executive bodies to local self-government bodies, and reform as transformation, changing something. Therefore, one can talk about decentralisation in general, or about the reform of local self-government and territorial organization of power, as defined by Concept №333-r of 01.04.2014. Perhaps the phrase “reform of decentralisation” appeared as a result of translation from English, instead of “decentralisation reform” into “reform of decentralisation,” but the fact remains a fact. The use of this phrase is harmful to the reform itself.

Conference

Since the progress of the conference can be viewed on the Ministry of Infrastructure website, it’s not worth dwelling on what was, perhaps, more important to note on what additional attention should be paid to.

The presentation of the “roadmap” for the reform overall looked quite coherent and attractive. However, upon closer examination of its content, a number of questions arose that require answers.

First – can we now talk about reform without addressing the problems and challenges that have arisen for local self-government and territorial communities since the beginning of the war?

Second – should the “roadmap” for the reform respond to these challenges and problems today and have a vision for what to do with them in the medium term?

Third – how to ensure coexistence and partnership, rather than confrontation, of local self-government bodies with military administrations under the conditions of a protracted war with no end in sight?

Since these are, in our opinion, too important questions to neglect, let’s try to reflect on this.

Therefore, today territorial communities in Ukraine are facing a number of challenges, which are different for various communities and heavily depend on their location relative to the front line and the Ukrainian-Russian and Ukrainian-Belarusian borders.

1. In Ukraine, a traditional problem has been the complex demographic situation, especially in rural and peripheral territories. Today this situation has become much more complicated, but in different ways. Territorial communities that were under occupation, or are located along the front line or along the Ukrainian-Russian/Belarusian borders, have significantly lost population. For example, in Kherson or Beryslav, no more than a third of the pre-war population remains. Meanwhile, in the rear communities of the western regions, the population has in some places increased by 10-15%. Therefore, the problems of functioning of education, healthcare, and providing communal services in these communities are absolutely different.

Thus, clarifications are needed regarding the educational subvention, and new approaches to organizing the educational process in different types of territorial communities depending on their location relative to the front and the Ukrainian-Russian/Belarusian borders.

2. The Ukrainian budget has a very large deficit. Essentially, all state expenditures that are not defense-related are financed by foreign funds. In these conditions, one can understand the Government, which believes that local budgets should also bear a joint responsibility for the fate of the country and, accordingly, should limit their expenses. However, there is a fundamental difference between the state and local budgets, the former can rely on international borrowing and can afford to have a significant deficit, the latter cannot do this, especially when it comes to affected territories. Ukraine’s economy has shrunk by a third, the significant decline is again and especially along the front. Hence, the ‘civilian’ Personal Income Tax (PIT) in such local budgets is minimal, while their main incomes are the ‘military’ PIT. Automatic withdrawal of ‘military’ PIT from all territorial communities will lead to very large disparities among budgets, some local budgets will not be able to support the viability of communities even at a minimal level. Changing the method of crediting PIT by the place of residence of a person will not solve the indicated problem due to significant displacements of people (officially about 4.7 million people are IDPs and live outside their place of permanent residence). It is doubtful that today one can find a single fair formula for budget equalization for all territorial communities across the whole territory of Ukraine.

It seems that under these conditions, the best solution may be a special state program to support the affected territorial communities and communities along the front line and the Ukrainian-Russian/Belarusian borders.

3. The “road map” of the reform states the need to adopt a law that would define the capability of territorial communities. In our view, this now seems somewhat strange since in the formation of territorial communities, approaches were used to ensure that the community being formed was capable of exercising local self-government powers. This did not address its economic component of capability as the main element for the formation of a community. In territorially large countries, there will always be territories whose economic capability is significantly lower than the national average.

For such territories, development support instruments and various subsidies are used, not limiting their self-government rights. In Ukraine, the war produced and continues to produce new and new problems that weaken the capability of certainly hundreds of communities, they need support and special regulation of requirements for the use of lands, communal property, ensuring the educational process, etc. Amalgamating such communities into mega-territorial formations will only accelerate the degradation of significant territories.

4. Expanding the participation of community residents in its governance is indeed an important element of self-governance. However, it should be noted that in the preparation of decentralisation in terms of community formation, issues were discussed in detail not only regarding the minimum population of the community but also the maximum size of its territory. The maximum size of the territory for a capable community was defined as up to 400 square kilometers. At the same time, in order to simplify access for residents of remote settlements to public services in the community, these settlements were to have their own representatives, who would communicate with the local self-government bodies of the community and would have certain own governing powers. There were concerns that there would be too many starostas (village heads) and that the workload on starosta would be different in different villages. After all, a village of a thousand people and one of 10 people – are completely different workloads. Solving this problem did not seem so difficult.

Starosta was not supposed to be an official of local self-government. It was proposed to establish additional pay for extra workload. Moreover, in European countries, this is how even a significant number of mayors work – they are not on a salary, but only receive additional pay (reimbursement). However, when making the decision, starosta was turned into an official of local self-government, later their number was reduced. Today there are communities where starosta districts consist of many settlements over large territories. Therefore, it is necessary to review the status of starosta, the procedure for their election, the establishment of their salary, and their interaction with the bodies of self-organization of the population, the creation of which in peripheral settlements will be an effective element of involving their residents in solving various local problems in the community.

5. The issue of supervision over the legality, actions, and inaction of local self-government bodies in Ukraine has not been resolved for many years, among other things due to the position of certain associations of local self-government. This has led to the fact that in practice, territorial communities and especially their heads have lost any protection against the arbitrariness of various state bodies, which primarily through the hands of judges, for misdemeanors not related to the activity in office, remove legally elected leaders from their positions. In addition, there is not always a reasoned introduction of military administrations. That is why the issue of supervision today should be considered together with the ordering of the introduction of the institution of military administrations when normally functioning bodies of local self-government are in place, review the judicial practice of depriving mayors/village heads/town heads of their positions, and eliminate all legislative gaps that allow for influence on local self-government contrary to the letter and spirit of the Constitution of Ukraine.

6. A separate issue that has become topical in Ukraine, but for which there is also no legislative and political certainty. Digital solutions introduced over the last year have shown themselves quite well in organizing the assessment of damages, payments to families for damaged housing, and the creation of relevant registries. However, in the system of planning a full-fledged recovery, not of individual objects, but of territories, there are many gaps and contradictions. First of all, there is a need for a sensible solution to the order of determining the territories for recovery (unfortunately, the current order is not perfect), as well as reducing the number of recovery planning documents. It is especially important to determine such a complicated issue as who (which body) and under what circumstances makes decisions about not restoring individual settlements or parts of settlements, and what actions should precede this. This responsible political decision cannot be replaced by any digital system.

Instead of a Conclusion

It is important that the measures related to Ukrainian decentralisation are attracting the attention of our foreign partners. This gives hope that we will continue to have their support in this direction. It is very good that many young people are involved, bringing new digital solutions to various instruments.

However, we must understand that digitalization is an aid to people, not a replacement, and decisions must be made by a specific person with the authority to do so. It is regrettable that many decisions, which have already been approved or are ready to be adopted, have not been pre-modeled, thus there is a risk that solving one problem may cause the emergence of several others.

Ukrainian decentralisation, among other things, has shown that capable communities were able to quickly stand up in defense of Ukraine, especially in the first days of the invasion, when parts of the executive bodies, security structures in the territories just disappeared. Therefore, we need to continue to support territorial communities, care for their development, self-improvement, self-sufficiency, and not try to push through new centralisation.

Decentralisation is not only about the result but also about the process, which provides tools for development – local and regional, and consequently national. Therefore, resolving various issues to improve the capabilities of local self-government has a very positive impact on accelerating the growth of communities and regions, which in turn is a guarantee for creating a comfortable and safe environment for people.

Reforming local self-government cannot be carried out separately from the formation of state regional policy. Especially now, as Ukraine is preparing to become a member country of the European Union, where regional policy (cohesion policy) is a key investment policy for ensuring the harmonious development of all EU countries and achieving territorial social and economic cohesion within the Community. The tasks that will allow us to respond to current challenges and strengthen local self-government in Ukraine must be necessarily considered in the third objective of the State Strategy for Regional Development in 2021-2027 “Building effective multi-level governance.”

Anatoliy Tkachuk, 08.11.2023