An off-the-peg decentralization solution to the complex problem of
development without effective physical and institutional infrastructure can do
Ukraine more harm than good
In the wake
of the annexation of Crimea and the continuing conflict in Donbas the
government of Ukraine has embarked on a radical decentralisation of power in
Ukraine based broadly on the model of local and regional government
reorganisation in Poland in the pre-accession period. The Verkhovna Rada,
Ukraine’s parliament, has already approved the first stage, which is to be
enacted by the autumn of 2015, and has established a constitutional commission
to bring forward proposals for changes will ultimately affect every level of
administration. Reform of this kind has been under discussion ever since
independence in 1991, but this is the first time such bold proposals seem
likely to be passed into law. Apart from its domestic objectives, the reform is
intended to give the European Union a signal that Ukraine is serious in its
wish to harmonise its system of government with what it understands to be good practice
in the EU. This article provides a brief summary of the current proposals, set
against the background of previous attempts to introduce decentralisation
reforms.
It goes on
to argue that it is a mistake to understand the planned reforms as a concession
to long-standing but frustrated pressure to decentralise power, particularly
stemming from the east of the country. Ukraine is in many ways a highly
centralised state but apart from the immediate post-independence period of the
early 1990s and during the time of the Orange Revolution in the winter of
2004/5, there has been little upward pressure for greater regional autonomy in
Ukraine. Indeed the balance of authority between the centre and the regions
under successive presidents has actually suited the interests of regional
elites rather well. Further, it is most unlikely that the Poroshenko
administration’s proposals for decentralisation will satisfy the demands of
separatists in the east of the country. The conflict in Donbas has gone well
beyond the point of resolution through administrative reorganisation. The
article also suggests that however well thought through and long overdue the
reforms may be, in the current context they will do little to address the major
blockages to Ukraine’s economic development and democratic consolidation and
the chronic dysfuntionality of its public institutions. In fact they may well
have quite the reverse impact.
Ukraine’s hybrid structure of sub-national government
First, some
background on Ukraine’s structure of regional and local government which has
changed little since the adoption of the country’s first independent
constitution in July 1996. Indeed in some important ways has not dramatically
changed from the Soviet structure of centre-local relationships which preceded
it.
The period
immediately following independence in 1991 up to the adoption of the new
constitution was characterised by centrifugal tendencies which seriously
threatened the disintegration of the newly independent Ukraine. There were
three attempted breakaways. The most serious was in Crimea but there were also
locally organised referendums on the issue of independence in the western
region of Zakarpattya and in the eastern oblasts of Donetsk and
Luhansk, collectively known as the Donbas. The movement for independence in
Zakarpattya was largely inspired by a feeling of isolation from the rest of
Ukraine and closer historical ties with neighbouring Hungary and Slovakia, a
feeling which survives to some extent today. In the Donbas the conflict with
Kyiv was a continuation of the tensions between the declining mining and steel
industries of the region and Moscow, which had been a feature of the late
Soviet period.
With the
adoption of the constitution in July 1996, Ukraine finally opted for a unitary
rather than a federal state structure but, as a concession to the pressures for
greater local autonomy, the constitution offered what was described as a
‘combination of centralisation and decentralisation in the exercise of state
power.’ Crimea was granted the status of an autonomous republic within
the Ukrainian state, with its own parliament and prime minister, and the cities,
towns and villages in all Ukraine’s 24 regions were to have their own locally
elected councils and the promise of enhanced financial autonomy from national
government in Kyiv. At the same time however, the so-called ‘state vertical’ of oblast and rayonstate
administrations was strengthened. This meant that at the wider regional and
district level within which self-governing towns and villages were located the
delivery of public services was the responsibility of de-concentrated units of
national ministries, responsible upwards to Kyiv rather than to the local
electorate.
This
uncomfortable hybrid system of local and regional government, with its set of
parallel responsibilities between appointed state structures and locally
accountable self-government is what has existed in Ukraine ever since. The
arrangement has an inbuilt tendency towards confusion and dysfuntionality, but to
place it in an international context, the hybrid structure was common in the
post-communist countries of Eastern Europe in the 1990s and, perhaps more
surprisingly, in France until the Mitterand reforms of the 1980s.
The key post
in the hybrid system is the regional governor, appointed by the President. To
understand how the system works in practice it may be helpful to draw an
analogy with the Soviet structure of regional administration, and with the post
of Obkom first secretary. In much the same way as the Obkom first
secretary, as the senior Party figure in the region, was in effect the boss of
both Party and state structures and as such the chief bestower and withholder
of patronage, so the regional governor is undoubtedly the key political figure
in the current structure and the main source of political power and patronage
in the region. City mayors, particularly in the larger cities, are inclined to
underline the importance of their elected status compared with that of the
appointed oblast governor, and in regions where city councils are
under the control of parties other than that of the President this has led to
considerable tension. In practice however there is little doubt where the
greater political clout lies.
Previous attempts at reform
Unsurprisingly
then, past efforts to introduce decentralisation reforms have focused largely
on reducing or eliminating the power of the state vertical, and in particular
the pivotal position of the regional governor. They have also attempted
to address the problem of Ukraine’s 15,000 or so small village communities
which are nominally self-governing but which do not have the resources to
deliver the services for which they are responsible. Prior to the current
package of reforms, there have been two major initiatives since 2,000 to deal
with these issues and to increase the autonomy of local government, both of
which were unsuccessful.
First was
the so-called Budget Code reform of 2000-2001, described by one Ukrainian
source as ‘the most striking attempt to fight against the pervasive feudalism
in centre-local relations’ (Maynzyuk & Dzhygyr 2008/9). Its principal aim
was to strike at the heart of the regional governor’s ability to exercise
patronage by bringing to an end the situation where governors were able to
control the distribution of all transfers from the state budget in Kyiv to
local governments in the region to assist with their revenue expenditure and
capital construction. The practice of ruchnoye upravleniye or
‘steering by hand’ had given regional governors immense scope to reward their
political friends and punish their opponents. The Budget Code reform by-passed
the governor entirely in the setting of local budgets, with the aim of
guaranteeing that elected local governments from the largest cities to the
smallest rural settlements had sufficient income to meet their responsibilities
in law. Although the reform was passed into law in 2001, oblast governors
successfully undermined its implementation in practice. Some years later the
process of financing of local government in Ukraine was described by the World
Bank as continuing to be an impenetrable ‘black box’ (2008).
The second
attempted decentralisation was even more sweeping and followed the accession of
Viktor Yushchenko to the presidency after the Orange Revolution of the winter
of 2004-5. The so-called ‘Reform for the People’, led by vice-premier Roman
Bezsmertniy, proposed the complete dismantling of the state vertical and the
replacement of appointed regional governors and district heads of administration
with locally elected councils with full executive powers. The reform also
envisaged the compulsory amalgamation of Ukraine’s 15000 village and settlement
communities into larger, more financially viable units of administration. The
‘Reform for the People’ proposals were never to reach the statute books. The
Yushchenko administration handled them badly and their introduction was
generally criticised for being too top-down and lacking proper consultation.
The proposed compulsory amalgamations at village level were regarded as
particularly heavy-handed. Crucially and somewhat paradoxically given the
current situation in the Donbas, the reforms were most roundly rejected in the
east of the country where many regional and city councils were under the
control of Yushchenko’s political opponents.
The Poroshenko/Yatsenyuk proposals
The current
reform proposals are more or less identical to those of the Yushchenko period,
with one important difference. They were first set out in a Concept of
Local Government and Territorial Organization of Power in Ukraine, which was
adopted by the Cabinet of Minister on April 1 2014. The Concept again proposes
an end to the state vertical and the granting of full executive powers to
elected regional and district councils. The post of regional governor is to be
replaced by a ‘President’s Representative’, whose power is limited to
monitoring and oversight of the legality of local government decisions, a role
based on the Voivode in Poland and the Prefet in France.
The Concept also again proposes a consolidation of the so-called primary units
of administration, the villages and settlements, into larger hromada or
communes but this time on a voluntary basis with financial incentives to those
who opt for amalgamation. The scale of the proposed reorganisation is very
considerable, with the abolition of all the 24 oblast and
approximately 500 rayon state administrations, a reduction in the
number of (now to be self-governing) rayons from the current figure to
about 120-150, and of the present 15,000 village administrations to 1,500-1,800 hromada.
The early
months of 2015 have seen an increased tempo in moves to implement the
decentralisation reform. In February the Verkhovna Rada adopted
legislation giving the go-ahead to the voluntary amalgamation of villages into
larger administrative units, with the target of achieving this by the autumn of
this year in time for elections to new self-governing councils who will be
responsible for the delivery of services in the new hromada. In March
the Rada introduced amendments to the Budget Code intended to ensure
that those who opt for consolidation into hromada receive sufficient
annual tax transfers from the state budget to meet their new responsibilities
for schools and pre-school education, for primary health care and so on. Also
in March President Poroshenko signed a decree establishing a Constitutional Commission
to bring forward proposals for wider decentralisation, including the 2014
Concept’s radical plan to dismantle the apparatus of the state vertical at oblast and rayon levels.
The process is being led by the Verkhovna Rada Speaker Volodymyr
Groisman, formerly mayor of Vinnytsia city and therefore with a background in
local self-government, who has risen quickly under the Poroshenko presidency
and Yatsenyuk premiership.
The response of the international community
The
international community has been quick to offer its enthusiastic support to the
policy of decentralisation, since it reflects a model of sub-national
government that the EU, the Council of Europe and others have been advocating
for Ukraine since the 1990s. For example the United States Agency for
International Development (USAID) is financing a ‘Dialogue’ programme in
conjunction with the Ministry of Regional Development and the Association of
Ukrainian Cities, and jointly with the Council of Europe (CoE) is supporting
the establishment of Offices for Local Government Reform Implementation in
every region. The CoE has unveiled a new Action Plan for Ukraine 2015-2017, in
which decentralisation of power to the regions is seen as a key plank in the
process of implementing the Minsk agreement.
Significantly
perhaps, while CoE Secretary General Thorbjorn Jagland has argued that models
of “differentiated devolution” in other European states are a relevant model
for Ukraine to learn from, President Poroshenko, in launching the
Constitutional Commission, was unequivocal in asserting that “We have to
preserve the integrity and unity of Ukraine. There should be no chances for
those who wanted the so-called federalisation or, in fact, the split of
Ukraine.” In any event it seems unlikely that the present proposals will have
any impact on the conflict in the Donbas, and it is tempting to conclude that
they are driven as much by a desire to demonstrate to the international
community Ukraine’s renewed commitment to democratic reform as they are by a
wish to satisfy the demands of a domestic audience.
But does decentralisation offer a solution to Ukraine’s current problems?
There is
good reason to be cautious about the enthusiasm of international organisations
for the decentralisation of government authority and its relevance to countries
like Ukraine. Decentralisation, like ‘good’ governance, is one of those
malleable concepts which are much favoured by the EU, the World Bank and
others, and which somehow manage to combine a variety of shades of meaning with
a strongly normative content. There is a plausible argument to be made that
Ukraine, although nowadays classified as a middle-income country, shares much
in common with poorer developing countries when it comes to the quality of its
physical and institutional infrastructure at regional level and below. And in
developing countries the record with regard to the benefits of decentralisation
policies is at best mixed.
For example
the State Strategy for Regional Development to 2020 states that an average 39%
of fresh water supply for domestic use is in an emergency state of disrepair
across the regions of Ukraine, and in some oblasts the figure exceeds
60%. In eight of the twenty-four oblasts more than a third of urban
households have no guaranteed regular access to running water, and in rural
areas the situation is much worse, with the village well being the only access
to fresh water in up to 90% of rural communities in at least five regions. In
cities the fresh water that is supplied is rarely of drinkable quality, and
residents habitually buy their drinking water in bottles from supermarkets and
grocery shops. 37% of the country’s waste water or sewage networks are reported
to be in a similar state of chronic disrepair with serious risk to public
health (GoU 2014). Meanwhile the quality of Ukraine’s municipal housing stock,
much of which dates from the Soviet period, is also very poor. The problem
derives largely from the rapid privatisation of communal housing in the 1990s,
under which the ownership of individual apartments was transferred to their
occupants at a stroke, while the fabric of the buildings remained the responsibility
of poorly resourced municipal administrations.
There is
little reason to believe that infrastructure regeneration challenges like
these, where international experience points to the need for major national
programmes of capital investment, will be satisfactorily addressed by a
programme of decentralisation. On the contrary the risk is that
decentralisation could provide an opportunity to devolve, and in effect
offload, the responsibility for the renewal of communal infrastructure to the
small towns and villages that are the intended beneficiaries of the reform.
It is hardly
coincidental that the process of decay in many of Ukraine’s essential
utilities, particularly outside the major cities, has been accompanied by a
steady growth in neo-patrimonial relationships between political, bureaucratic
and business elites at all levels of government, a phenomenon which grew out of
Ukraine’s post-independence institutional erosion in the 1990s (Fritz 2007) and
which reached its apogee under the presidency of Viktor Yanukovych. In a
perverse expression of the ‘centralised but also decentralised’ philosophy of
the 1996 constitution, practices such as those of smotryashchiy – the
supervisors acting on behalf of central government top officials, konvertatsiynyi
tsentr – money laundering centers, vidkat or kickbacks, and
khabar - bribes, have been organised and given protective cover from the
centre but regional elites have had more or less free rein to exploit these
strategies for their personal benefit on condition that a steady stream of the
proceeds found its way to Kyiv also. This is a plausible explanation for why
there has been so little organised pressure for decentralisation from the
regional level since the presidency of Leonid Kuchma, when these practices
began to flourish. Again, given the degraded state of Ukraine’s institutional
infrastructure at sub-national level and the associated risk of local state
capture, it is hard to sustain the argument that the bold decentralisation of
power currently proposed will go any way towards resolving the immediate
economic and political problems facing Ukraine.
The
concerted pressure of the international community on the Government of Ukraine
to proceed rapidly with what it regards as a long-overdue reform represents a
depressingly characteristic response of an off-the-peg solution to the complex
problem of development. It also reflects a flawed understanding of the roots of
the Maidan protest. The origins of the current crisis in Ukraine lie not
so much in inter-regional tensions over its future identity as an eastward or westward
looking state as in the comprehensive failure to address the criminality at the
heart of government in the generation that has passed since independence. The
spontaneous eruption of massed protest on Kyiv’s Maidan in December 2013, like
that of the Orange Revolution nine years earlier, was not about the abstract
and unwanted question of whether Ukraine’s destiny lies with the European Union
or with the Russian Federation. It was above all an outcry of collective anger
at the way the country has been misgoverned for the last 20 years, an issue
which has touched on the everyday lives of all Ukrainians and every region,
east and west. The policy of decentralisation, however desirable in the
longer term, is likely to be a distraction from the immediate task of building
strong, unifying government which shows that it is capable of addressing the
long-term collapse of the country’s physical and institutional underpinning and
is thereby able to regain the confidence of the Ukrainian people. At worst it
may even serve to subvert the achievement of that goal.
Bio
Duncan
Leicht was educated as an economist and worked for 15 years as a senior
manager in local government in London. Since 1993 Mr. Leicht has been working
first in Russia and since 2000 in Ukraine, mainly giving advice on local
government reform and regional development. He has recently completed a PhD
thesis on the influence of international assistance to regional policy reform
in Ukraine at the Centre for Russian, European and Eurasian Studies, University
of Birmingham
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