Decentralisation has been implemented in Ukraine for the fifth consecutive year. A lot has been done during this time, however, efforts are still needed to complete the reform.

Georg Milbradt, Special Envoy of the German Government for the Ukrainian reform in the areas of governance and decentralisation, told about his impression of the changes observed in Ukraine and reasons for Ukrainians to accelerate the local self-government reform in an interview to Ukrinform.

Decentralisation is a completely Ukrainian reform

- Mr. Milbradt, you have been observing the reform process in Ukraine for quite a while already. What do you think about the accomplishments of Ukraine?

- I have been visiting Ukraine since 2014, the Maidan revolution, and have been watching the decentralisation process from the very beginning. For me, decentralisation is a crucial strategic reform. This is not merely a reform that technically modifies the distribution of competencies or powers. For me, this reform transforms the way of thinking and mentality of the Ukrainians. It is important that the citizens themselves take over responsibility instead of waiting for someone on the top to make it right for them. This is what you can learn on the local level.

It is important that on 1 April 2014 the fundamental decision was made to start decentralisation. For me, it came as a surprise that after the Maidan it was decided so fast to launch the decentralisation process. It became possible, because the desks of top state officials were chock-full with similar concepts and proposals.

Prior to that, a huge preparation work had been done, including the 1990s and 2004. This shows that decentralisation is really a Ukrainian reform. This is not an idea that was imported to Ukraine. When I check the reaction (of the Ukrainians) to this reform, I see it is considered as the most successful and popular one. This positive perception is quite surprising, since many Ukrainians are scared by reforms, because they do not want things to get worse. Instead, decentralisation makes everyone feel improvement, though this reform has not covered the whole of Ukraine yet.

However, despite the high level of support, decentralisation is not over yet. A lot had been done to start it. However, there is also a lot to be done to complete it.

Citizens should understand: the taxes they pay they receive back in public services

- You travel a lot in Ukraine. In your opinion, are people living in AHs ready for self-government, are they ready to take over responsibility?

- For me, decentralisation is not merely about the transfer of functions, it is also about funding. Many Ukrainians think that the state is some kind of creature that someone feeds up in the sky somewhere and that everyone can use as a milk cow down here. Citizens should understand: what they pay (in taxes) they receive back. They must pay for everything they want to have from the state. This is how they become aware of their responsibility.

I can say that the mayors and heads of AHs whom I talked to are aware of this responsibility and perceive decentralisation as an opportunity. The key objective of the reform is to create capable hromadas that can handle their own problems. I assume that they are too small in rural areas compared to big cities to take over responsibility. This is exactly what I could see in the German Democratic Republic that proceeded in line with the principle “divide et impera” and established small administrative units that were easy to control. Hence, the key goal of the reform was to establish capable hromadas.

Amalgamation was the right solution for these hromadas in rural areas. Hromadas where money and relevant functions had come together were in position – for the first time in their history – to repair the local school or the kindergarten or to fix the main local road.

Local self-government can only take place if equipped with financial resources. It is impossible to delegate functions without transferring the needed funds. In the civil society, these are citizens themselves – not someone on the top – who must control what happens to their money.

Since people already see these changes taking place at the local level, their relationship to the mayor or the head of their hromada in a small village or settlement is much closer compared to some big city. People start to perceive the activity of local self-government in a completely different way. In addition, mayors who want to be re-elected consider their citizens as the customers they serve.

Citizens are already aware that they have the right to demand services from the authorities. Of course, the perception of the reform differs between senior and younger citizens. Of course, there are mistakes, but not each mistake is a criminal offence. If you send people to prison for every mistake, the prisons would be overwhelmed.

You should rely on local self-government. In Kyiv, I can often hear that the state gives money to the AHs and they merely deposit it at the bank. Maybe, in some cases the AHs were given more money than actually needed. Hence, one can have the impression that this or that mayor piles up money and does not spend it. But you also should understand the way the mayors think. Assume that an AH has some money and it must set up a plan, if it wants to invest it in something. For this, they need time and have to arrange tenders. If a hromada wants to implement some large-scale investment project, it must be able to save costs and to plan accordingly.

Decentralisation helps reduce the level of corruption

In some cases, mayors are just too scared to spend money, because they do not understand some legal details.

However, I think that this is mostly a problem of the transitional period. Of course, appropriate measures must be in place to control the activities of mayors and local councils and to ensure that they follow all regulations. As far as I can judge, the cases when official powers were abused or actions took place that are subject to criminal prosecution have been rather isolated. However, corruption is always where there is big money. Transferring money to the local level, you transfer corruption as well. But small corruption is easier to tackle than big corruption, because control mechanisms are better on the local level. You have the programme ProZorro that, in my opinion, is a model to everyone. That is why, decentralisation for me is also a way to fight corruption. It helps reduce the scale of corruption; it does not eliminate it completely, but puts it down significantly. This is what the experience of European countries tells us.

One more remark: local self-government only works, if money comes along not as a subsidy from the higher level, but is generated locally as tax revenues. All these subsidies provided against certain terms and obligations are a “golden” harness.

Now we have two types of hromadas in Ukraine: those operating in the old way and those grabbing new opportunities. It cannot last this way

- We already have AHs that can make money themselves and implement their own projects. Probably, they do not make as much money as they would like to, but still they make it. But there are also hromadas that have not amalgamated yet and depend on funding from the central government. Is it normal in your opinion? Are there regions in Germany that also receive subsidies from the central level?

- Subsidies, just like other benefits, are first meant for those who really need them. Poor regions do receive subsidies. But even the poorest community must have its own local self-government bodies.

Amalgamated hromadas receive 60% of the tax revenues, since they have taken over a few functions from the rayon authorities. Hromadas that have not amalgamated yet still follow decisions made by the rayon bodies that also manage the money.

Now we have two types of hromadas in Ukraine: those operating in the old way and those grabbing new opportunities. It cannot last this way: the state’s task is to direct hromadas from the old structures to the new ones.

There are two methods to make it happen: “carrot” and “cane”. You can offer money to make amalgamation more attractive, or you can just adopt legislation to enforce it. This is the decision that the government has to make soon, because Ukraine now has more than 800 AHs but also approx. 6.500 hromadas that have not amalgamated yet.

There is not a single place in Europe where amalgamation was absolutely voluntary. At some moment, you must show the “cane” and make it clear that amalgamation will be enforced by law. Based on my experience I can say that in most cases you do not have to use the “cane”, it is enough to show it. And this is the step the Ukrainian state must make. Of course, the timing is not very favourable now due to the upcoming elections, but this is what must be done.

Ukraine needs a new administrative and territorial order

- Do you mean the law on the administrative and territorial order?

- Yes, this law must be adopted.

To make the reform irreversible, changes in the Constitution are required

- Ukraine has adopted many regulations on decentralisation. Looking at the changes still pending, which are the most important ones?

- Let’s compare decentralisation with healthcare or education reforms. In these two cases, one comprehensive law was adopted covering all relevant aspects. It was hard to push it through the Parliament, but it was adopted after all, and the reforms were implemented. Regarding decentralisation, a different way was selected — there is no single law in place here. All in all, amendments to 30-40 legislative acts are required. At least 20 laws must be adopted.

To make the reform irreversible, amendments to the Constitution are required to establish these new structures – amalgamated hromadas – and to guarantee local self-government. All these changes were ready back in 2015. But they were linked to the Donbass problems. That is why, we must make one more try without this link. The sooner, the better.

Of course, it will be hard to amend the Constitution in the election year. The Parliament managed to adopt the recent amendments to the Constitution regarding the membership of Ukraine in the EU and NATO, but it will be more challenging for decentralisation.

And this is one more difference compared to the healthcare and education reforms. They did not need any amendments to the Constitution.

Also, talking about changes in the structure, we need a basis for the new administrative and territorial structure. The main act that determines the administrative structure of Ukraine is the resolution of the Supreme Council of the Ukrainian SSR dated 1981. This is not relevant anymore.

One more law that we need is the law on public service in local self-government bodies. All local bodies need qualified personnel. A similar law was adopted a while ago to regulate public service in central bodies. Now, the same legislation is required for the local authorities. New people joining the local authorities must have some clear guarantees and prospects in their work.

I can mention 2 or 3 more important laws. One of them is the law on the planning of hromadas’ territory. (draft law on amendments to certain legislative acts of Ukraine on the extension of powers of the local self-government bodies of hromadas on the entire territory of village, settlement and town hromadas — remark of the interviewer).

It means that a hromada should be entitled to decide what can be done on its entire territory and not in the respective location only. This point is crucial for hromadas willing to boost their economic development.

There is also the fourth law, a technical one, which I consider as very important especially concerning the prospective plans of AHs. All hromadas amalgamate in line with the prospective development plan of the respective oblast. However, only 80% of the territories in Ukraine are covered by such plans. In some oblasts like Zakarpattia, there are actually no such plans in place. If oblasts fail to adopt these plans, the Government shall be entitled to do it for them.

All these elements will make it possible to speed up the amalgamation process.

That is why, it is important to make the next step to define further concepts, especially for the rayon level. For instance, there are AHs now in Ukraine that cover the entire territory of the respective rayons as well as there are rayons that have one or two AHs.

The further the transfer of powers from rayons to AHs advances, the more pressing is the question about what to do with rayons. Do we need them at all? The employee of rayon administrations fear that the decentralisation process will cost them their jobs.

Rayons must stay, but not in their present form

- And how could we solve this problem?

- Ukraine is a big country, and it is hard to imagine that it can exist with two levels of administration only – oblasts and AHs. Most Ukrainian experts agree that some intermediate level is required. Certainly, rayons must stay, but not in their present form. They have already transferred the bigger part of their powers to AHs. Now we need to determine, what powers they will take over in the future; rayons must become bigger, and their number must be reduced. There is an idea to reduce the number of rayons from 500 to 100. This is the task of the law on the principles of the administrative and territorial structure to set the required number of these rayons. 100 is quite a reasonable number compared to other European countries. 

Your should not be preoccupied with yesterday’s problems, you should think 20 years ahead

- What powers could the rayon authorities retain? For instance, in healthcare or education you can hear complaints sometimes that there are too many intermediate sub-levels where the contact goes lost between the state bodies and the responsible persons.

- We could combine the overall decentralisation with decentralisation in the line ministries. There are many elements in their areas of responsibility where they have an intermediate level between AHs and oblasts. In the healthcare, for instance, it is impossible to found hospitals at the the local level. Also, it makes no sense to transfer them to the oblast level. Hence, we need some intermediate level here. All administrative levels must execute certain tasks; they shall not merely serve as errand boys (for the respective central bodies). Modern communication technologies make it possible for the ministries to maintain a direct contact to the responsible persons.

In this context, it is very important to keep pace with modern requirements – for instance, in the healthcare sector the Internet is very important for improving the quality of services, including the platform e-Health that accelerates communication between doctors and patients.

The Ukrainians should not be preoccupied with yesterday’s problems now, they should think 20 years ahead and find solutions in advance.

All this is listed in the Route Map presented by the Government in the end of December. The problems is to implement this Route Map in the election year. This is quite a special challenge.

- How, in your opinion, should the result of decentralisation look like?

- The best solution would be to finalize the reform prior to the local elections of 2020, so that the new councils are elected as representatives of the new hromadas. This is a very ambitious goal. However, neither the President, nor the Government can tell that the compulsory amalgamation starts tomorrow. They need a legislative basis for this — the laws which I have mentioned. The Parliament must play its part to implement the decentralisation reform.

Given that all political players always support decentralisation in public, it would be nice of them to put it into practice

- What would be the optimal timeframe for Ukraine to complete the reform? In addition, if the Parliament in its present configuration still fails to adopt all required laws and amendments, could it slow down or even terminate the reform?

- Unfortunately, I am not a prophet. Ukraine has already lost 25 years compared to other countries, including Poland that has already completed this process. In Poland, this reform took 8 to 9 years to implement. But can Ukraine afford 8 or 9 more years? It must hurry up. My second point: there is nothing worse than an unfinished reform, because it means that the risk of failure goes up. If the reform remains unfinished, we will be left with many reform elements that are not agreed; on the political level, they could say that all these elements make no sense. The sooner the reform is completed, the better. If you have a closer look at the list of the required legislation, you will understand that these are mostly technical regulations that shall not lead to any political discussions. There is no political force in Ukraine that opposes this reform in public. Everyone supports it verbally. Hence, if all political players support decentralisation in public, it would nice of them to put it into practice.

Interview conducted by Nataliya Molchanova

Photo by Hennadii Minchenko, Ukrinform