On the Action Plan for Implementing the Recommendations of the European Commission and Its Implementation in Regional Development

 On February 9, 2024, Order No. 133-r approved the Action Plan for implementing the recommendations of the European Commission (EC) as presented in the 2023 Communication on EU Enlargement policy on Ukraine. This Plan contains several recommendations from the EC that Ukraine is expected to address. Specific measures and deadlines have been set for the implementation of these recommendations. While everything appears formally correct, it is important to closely examine how the proposed measures align with the recommendations. In May 2024, we already analyzed the status of the implementation of the recommendations.

 

Recommendation One: “Update the State Strategy of Regional Development and modernise the State Fund for Regional Development to align them with the recovery and reconstruction process, principles of multi-level governance and a territorially based regional policy.”

 

Comment 1: The emergence of this recommendation is due to several reasons:

1. The State Strategy for Regional Development 2027 was developed before the full-scale war and does not take into account the new challenges that have arisen as a result.
2. The reconstruction of destroyed in Ukraine requires alignment with the strategic goals of regional development and must consider the new situation in the development of regions and territories caused by the ongoing war.
3. The State Fund for Regional Development (SFRD) in its current version, in the current version of Article 24-1 of the Budget Code of Ukraine, also does not account for the changes that have occurred. For 2024, the SFRD is not funded at all.

 

In addition, the European Commission’s recommendation addresses two other important considerations: the formulation and implementation of regional policy must consider the interests and ensure the participation of different levels of governance, and the policy itself must be territorially based. A territorially based policy includes, among other things, an assessment of the territorial impact of executive decisions on the development of communities and territories, as well as the impact of sectoral policies or projects on communities, territories, and regions.

 

Under this recommendation, the Government has approved the following measures:

1. Develop and submit to the Cabinet of Ministers of Ukraine proposals for amending the State Strategy for Regional Development for 2021-2027, approved by the Cabinet of Ministers’ Resolution No. 695 of August 5, 2020, to update and align it with the recovery and reconstruction process, principles of multilevel governance, and territorial regional policy (deadline – March 2024);
2. Develop and submit to the Cabinet of Ministers of Ukraine a draft act on the modernization of the State Fund for Regional Development with the introduction of new principles:

• People’s governance through voting for projects on the Diia Portal;
• Performance-based funding;
• Lending according to priorities of state, regional, and local regional development

(deadline – December 2024)

 

Comment 2:

Firstly: It turns out that our response to the European Commission’s recommendations is not to change existing policy, nor even to adopt a specific regulatory act stemming from the recommendations, but merely to develop a draft and submit it for government consideration. I don’t know how to explain to our European partners that the focus is not on achieving the results they have clearly outlined but merely on the process so they perceive it as an achievement.

 

Secondly: It’s already August, and the draft of the updated State Strategy for Regional Development (SSRD) has yet to be submitted for government consideration. The key reasons for this delay are not just the dismissal of the Minister of Community Development, Territories, and Infrastructure of Ukraine but also the content of the revised strategy project. There are many obvious problems, from identifying new challenges to defining and formulating operational objectives and tasks, as well as incorporating the territorially based approach that the EU emphasizes. I would like to remind you that Civil Society Institute conducted a detailed analysis of this draft in a timely manner and published it to assist the previous ministerial team. You can find it here.

 

We also prepared our version of the possible updated SSRD 2027, taking into account new challenges and territorially oriented state regional policy. More details can be found here

 

Thirdly: It should be noted that what is written in the plan regarding the principles of SFRD reform completely contradicts the European Commission’s recommendations. The proposed approach emphasizes “super-democratic” voting in Diia instead of “aligning with the recovery and reconstruction process, principles of multilevel governance, and territorial regional policy.” This approach completely undermines the very idea of strategic planning, prioritization, and coordination of planning documents at different levels, viewing reconstruction/recovery merely as a phase for future development, rather than a self-sufficient element. The result should not just be the allocation of funds but understanding their further use for growth. If such changes are adopted, we will not meet the EC’s recommendations and could receive a conclusion about a lack of progress, which would hinder our European integration.

 

Recommendation Two:

“Adopt necessary measures to bring into practice the law on principles of regional policy, in particular given the varying impact of the war on Ukrainian regions.”

 

Comment 3:

For the European Commission experts who prepared these recommendations, it is quite clear that different regions of Ukraine have been affected by the war differently. Their losses are not the same, and their economic opportunities also vary, based on a factor like security, which in turn depends on their location relative to the front and the Ukrainian-Russian/Belarusian border. The Law “On the Fundamentals of State Regional Policy” opens up possibilities for a new macro-regional mapping of Ukraine, based on the security criterion, and establishes general approaches to synchronizing recovery and regional development planning documents. However, the necessary government acts have yet to be adopted in the implementation of this law, and there are obvious contradictions with other existing laws, particularly with the Law “On the Regulation of Urban Planning Activities.”

 

The response also to this EC recommendation is quite general:

“Develop and submit to the Cabinet of Ministers of Ukraine draft legal acts to create conditions for the recovery and development of regions and territorial communities” – deadline June 2024.

What these acts were supposed to be in substance and how they were supposed to address the above-mentioned problems remains unknown. The deadlines set by the Plan have also been missed.

 

Recommendation Three:

“Strengthen the capacity of regional and local administrations to prepare related development projects.”

 

According to the government plan, this recommendation should be addressed as follows:

“Develop and submit to the Cabinet of Ministers of Ukraine a draft act on the introduction into pilot operation of a Unified Digital Integrated Information and Analytical System for Managing the Reconstruction Process of Real Estate, Construction, and Infrastructure” (deadline – December 2024).

 

Comment 4:

In general, it is difficult to find the logic in how the problem of strengthening the capacity of bodies to prepare development projects can be achieved with an information and analytical system for “managing the reconstruction process of real estate, construction, and infrastructure.” After all, the capacity of any body is primarily the capacity of its employees, their level of competence. This includes the availability of quality recommendations and templates for project development, as well as methodological support and consultation from the ministry or other entities.

 

Recommendation Four:

“Strengthen the coordination framework within regional policy to ensure systematic and inclusive engagement of regional and local stakeholders, a coordinating role for the Ministry for Restoration, and an adequate regional angle for the Agency of Restoration.”

 

The coordination of policy and stakeholder engagement, according to the initiators of the proposals to the Plan, should be ensured as follows:

“The launch and use of a geographic information system for monitoring and evaluating the development of regions and territorial communities” (deadline – December 2024).

 

Comment 5:

As with the third recommendation, it seems that there is a substitution of concepts. The recommendation actually addresses the problem of coordinating regional policy and involving stakeholders in this process. After all, the Inter-service Coordination Commission, which is supposed to coordinate the implementation of state regional policy, is not functioning, even though it is provided for in the law. Therefore, in this situation, it would be logical, for example, to review the composition of this commission, possibly amend its regulations, or consider and adopt an appropriate act to establish similar commissions at the regional level. Instead, a measure related to GIS is proposed, which has been developed for many years with donor funds but has not been implemented.

 

Conclusion:

It appears that the measures included in the Plan, approved by Order 133-r, regarding regional policy and prepared by the Ministry of Infrastructure, do not address the issues highlighted in the EC recommendations. Furthermore, all these measures are incomplete and lack indicators of success. Therefore, it is doubtful that the formal implementation of these measures, as reported by government officials, will be accepted by EC experts who will assess Ukraine’s progress toward EU membership in this important chapter as a whole.

 

In our opinion, in the current situation, it is necessary to work out real measures promptly to progress in bringing Ukrainian regional policy closer to the principles of EU cohesion and regional policy. However, the unresolved issue of restoring the Ministry of Regional Development hinders such work and essentially makes it impossible.