Decentralization in Ukraine: pros and cons

25.06.2021

There is a phrase that claims to be a traditional Chinese curse – “May you live in interesting times”. While seemingly a blessing, the expression is normally received ironically in the meaning that life is better in ”uninteresting times” rather than in the interesting ones. This statement can also be used as the main characteristic of the modern history of Ukraine.

On August 24, 2021, there will be a great anniversary- thirty years since Ukraine has declared its independence and has started its transition to a democratic state with a strong market economy and the rule of law. However, this road was not as easy as some might have thought at the beginning. Soviet Union authorities always used to treat people as immature, who cannot make another choice in their life, rather than to rely on the communist party’s vision. The collapse of the Soviet Union led to the creation of a completely different political and social environment. After seventy years of paternalism and the monopoly of the communist party, Ukrainians finally had to take responsibility for their future, the future of their families, and the future of their country. Throughout the last thirty years, Ukrainians have tried to solve five main tasks. The first was to define our national identity and our place in the world; the second was to form the national political elite; the third was to build a market economy; the fourth was to create a class of professional public servants, and the fifth was to adjust the administrative-territorial structure of our country. The last one was especially important.

In the vision of that time Ukrainian leadership, it was considered necessary to retain as much power as possible at the central governmental level, even though some western Ukrainian cities had a tradition of self-governance, which could be traced back to the XIX century when the Magdeburg right was introduced.

The total decentralization and reluctance in developing self-governance in Ukraine had caused many negative implications, such as significant regional dependence on the central government; low investment appeal of the regions; financial and infrastructural disorder; budget deficit; rural degradation; complex demographic situation; low quality of public services; high level of corruption; maladministration; serious decrease in the number of tourists. Moreover, Ukraine became one of the poorest states on the European continent.

The Revolution of 2014 and the signing of the Association Agreement with the European Union gave a very important impetus to solve old-time problems. It became very clear that Ukraine must move towards strengthening the role of territorial communities, as they serve as “the foundation of European prosperity”, as Robert Marjolin, the first Secretary of the Organisation for European Economic Cooperation, used to say.

On April 1, 2014, the Cabinet of Ministers of Ukraine approved the “Concept of the local government reform and territorial organization of power in Ukraine” to seek a new balance of power and interests between the central government and local communities. This process was concentrated only on delegating the power and financial resources to the lower level of governance only within fields that were connected to the daily life of their communities. Sometimes western experts misinterpret decentralization as a federalization. But they are completely different. The essence of the decentralization was to share responsibility and power between different institutions which would secure the sustainable development of Ukraine. Furthermore, after Russia annexed Crimea and started the war in the Donbas region, the term “federalization” became quickly associated with different separatist movements and the Russian hybrid war.

Before 2014, Ukraine consisted of over 11, 000 small and dispersed communities. These communities were required to address the central authorities, represented by Rayon and Oblast administrations, whenever a need that would demand any type of resource arose.

The decentralization paved the way for the amalgamation of small communities into a lower level of self-governance called Amalgamated “Hromada” (hereinafter AH). If communities chose to form an AH, they had to elect their own new local government. They were also granted the power to make executive decisions on their own and to collect an important share of the taxes paid locally. Not only did this ensure that income accrued within the community stayed in this community, but it mostly allowed for public goods and services to be provided more efficiently. Building inclusive, healthy, and resilient amalgamated “hromadas” remain to be a prerequisite for the integration of Ukraine into the European Union.

Amalgamated “Hromada” is the first tier in the system of local governance. AH are united in Rayons, which are different from Rayons, which existed before. Newly established Rayons are not only bigger but are also more economically efficient. Rayon’s political leadership has to act as an honest broker by bringing the interests of different “hromadas” in line with the Rayonian strategy of development.

The third tier within the local system of governance is the Oblast, whose authorities mediate relations between Rayons and central government to create an atmosphere of mutual understanding between different institutional stakeholders. Also, Oblast’s authorities represent the position of state institutions and the position of the President of Ukraine.

There are several challenges, which I think, would prevent the effectiveness of the decentralization in a long-term perspective. The first one is the status of members of the AH Councils. Till today, members of AN Council do not receive remuneration for their activities comparing to MPs from Verkhovna Rada, Ukrainian Parliament, who receive not only a fixed monthly salary but have many other social benefits. At the same time, members of AH Councils have to cover expenses on their advisors, etc. This situation has to be improved. Members of AH Councils as well as their advisers, have to receive a fixed salary. Secondly, the election process. Still, participation in elections is not affordable for the ordinary person. In practice, the cost of a campaign can be so high, so the nominee has to search for funds to cover expenses. This situation provokes political corruption. Thirdly, the salary of public servants who work in different departments on a local level has to be dramatically improved. In other cases, we won’t get the best grades in a municipal office. Fourthly, the distribution of seats in AH commissions regardless of professional criteria, only in full accordance with political reasons. This situation has to be improved.

To sum up, I would like to share with you my assessment of the decentralization reform. Generally, this reform is highly successful, however, we need to learn to live in new circumstances which also means that people who come to the voting booths, have to make smart choices and not allow themselves to be cheated by candidates.