18 June 2024

Next steps of local self-government reform: development of municipalities

Interview with Georg Milbradt, Special Envoy of the German Government for decentralization, good governance and public service reform in Ukraine

Interview led by Andrej Horvat,GIZ Deputy Programme Director, U-LEAD with Europe

A.H.: Dear Professor Milbradt, active support of the European Union and the German Government in general, and of you as Special Envoy of the German Chancellor for the decentralization reform in Ukraine during the last years in particular, were important contributions to the success of the amalgamation process. What are your feelings after the first local elections in Ukraine that were executed on the new territorial-administrative basis? Are you satisfied?

G.M.: Ukraine reached an important milestone, but not yet the final goal of establishing an efficient citizen-centred local self-government. As you know, Ukraine, as with the whole Soviet Union, was overcentralized and under-governed, and in reality, a “top-down” country. For a European development, we need more “bottom-up”. Therefore, the first step was to create capable hromadas as a precondition. Many Ukrainian settlements and villages were not able to fulfil the duties of self-governance because of the lack of competences, money and trained personnel. Especially in the countryside, ‘amalgamation’ or merger of villages and small cities into capable units was an essential step. It is a necessary, but not a sufficient condition. In the end, the new territorial structure of the local level had to be decided by the Verkhovna Rada because voluntary mergers alone could not solve the problem. However, for a forced amalgamation by law, consultations are indispensable. Because of the coronavirus-crisis, the government and the parliament could not organize this in a very extensive way. Nevertheless, in my opinion, this territorial re-organization of the local level was successful. That does not mean that every decision was indisputable. Compared with other European countries, Ukraine was farsighted and very courageous in creating bigger units. In some other Central or Western European countries, governments were not so courageous and did not dare to make such big steps forward. The second element was the decision of the Verkhovna Rada on the territorial re-organization of the rayon level. That was a necessary consequence of the territorial reorganization of the local level. Unfortunately, this reform was not so intensively discussed and connected with a structural and functional reform. Because of the current Constitution of Ukraine, it was only possible to create larger rayons. I think competences and internal structures of the enlarged rayons should be discussed later together with a constitutional amendment. I am not totally convinced that even the very large cities with oblast significance (500.000+) had to be integrated into the enlarged rayons. This makes the new rayon level very non-homogenous with big differences in size between the new rayons. Nevertheless, this discussion can only be solved with constitutional amendments and then by ordinary laws defining competences and the structure of this level. Because of capable local units. more of the old rayon competences can be transferred to the hromadas, but on the other hand there are certain elements even of self-government which cannot be transferred. Maybe some oblast competences could be given to the rayons and thereby closer to the people.


A.H.: I remember our experiences in Slovenia where I come from. During the EU accession negotiations, It took us up to 7 years to get better acquainted with the mindset of European values: the bottom-up approach, the importance of consultations, and the inclusion of the local population before decisions on important public and even private investments, and the way how local self-government should organize decisions on the local level. How long does it take in a country in transition before these values will be really lived by citizens, politicians, and administrations?

G.M.: It is all about people, you have to change mindsets. It is not enough to introduce new laws; all must get acquainted with this new approach. Many grew up with the old Soviet system. The old mentality has not vanished with independence. Therefore, we all have to learn a new system step by step. That takes the time of at least one generation. Ukraine had some experience with local self-government in the past; the Magdeburg law was introduced in cities during the Polish rule but was abolished during Russian rule and unthinkable in Soviet times. Ukraine’s development was different compared with other ex-communist countries in Central and Eastern Europe like Slovenia, Poland, or the Czechia. All these countries had elements of local self-government and sometimes very strong self-government before the war. For these countries, it was easier to re-introduce old structures because people remembered them. In Ukraine it is more difficult. The country lost the first 20 to 25 years after independence for real reforms and now must hurry to catch up with its Western neighbours. Therefore, it was an important first step to begin with voluntary amalgamation after the Revolution of Dignity. However, it was clear from the beginning that voluntary amalgamation alone will not solve the whole problem. It is the start of a solution, and therefore in the end you need to finish territorial re-organization by law. This was not done under the old government, Therefore, the new team had to solve this problem from the very beginning. The result is impressive. The next step is to define, guarantee, strengthen and protect local self-government: the legal environment beginning with amendment of the Constitution, amendment or revision of the laws on local self-government, local state administration, local civil service and other important laws to bring them in line with this idea of local democracy.


A.H.: The International Expert Exchange conference, organized by the U-LEAD with Europe programme, should not only promote the decentralization reform within Ukraine but also show countries outside Ukraine that this reform is something that they may learn from. Could one compare the decentralization reform here now in Ukraine with similar reforms that were done in some other countries, like Estonia, Poland, Germany? Are there some common points?

G.M.: All ex-communist countries had the same problem of over-centralization because of the communist doctrine, “democratic centralism”. All these countries had to re-organize their internal political, economic and social structures. For centuries, most parts of Ukraine were integrated in a centralized state. As other countries had different historical experiences and different cultures, the starting points and therefore the solutions are different, but the ideas are the same. One has to adapt them to the local conditions and this includes mindsets, tradition diversity, the size of the country etc.. One cannot compare a country like Estonia with 1.2 million people with Ukraine with around 40 million inhabitants. Therefore, Ukraine has to find its own solution and cannot copy and paste. The country can look to other countries and learn especially from others’ mistakes to avoid them. There is a similar discussion now in Moldova which has very similar problems as Ukraine. For the government and stakeholders in Moldova, Ukrainian reforms are very interesting. Belarussians are looking to Ukraine too and even Russians. If Ukraine has economic and social success with these reforms and becomes a very attractive country, then it will influence and maybe pressure these neighbours to introduce similar reforms. Then the people in these countries will look at Ukraine and say, well it is possible even with our background to establish local self-government and not only Russki mir.


A.H.: Professor Milbradt, you said that you are primarily speaking about post-Soviet and post-socialist countries, but isn’t there also maybe a difference between let’s say strong local self-government or much more centralized states? If we look to EU Member States, we have different solutions. France does not support the bottom-up approach so much. Are large countries more careful with strong bottom-up tendencies and therefore tend towards more centralized solutions? Do smaller countries promote self-governance as opposed to large countries? Or would this be too much of a simplification?

G.M.: Size is not as important as history and culture. Many Latin countries tend more to centralized solution. However, France of today is not the France of the French revolution and Napoleon 200 years ago. The country has changed. It began under de Gaulle in 1969 when the first attempt of regionalization failed. Later governments made important steps towards more decentralization. The regions and departments are not pure state administrations, like in Ukraine, but have self-government as well. A dual system exists, the prefect as head of the state administration and the president of the council as head of the self-government administration with executive powers. This dual system functions very well. However, France never re-organized the local level, still 35,000 local units exist, as they did not dare to execute a territorial reorganization of the local level. The French solution is many intermunicipal co-operations of different types. All European countries which were originally very centralized, including the United Kingdom, have moved in the direction of decentralization during the last 50 years. Even West Germany reorganized the local level, in the 1970s. The old territorial structures, some dating back to Medieval times were no longer capable of solving new challenges. West Germany had to solve the same problem as Ukraine – how to create capable units of self-government on the local as well as on the sub-regional level. The solutions are different, but the direction is the same in all European countries. The main ideas and all the different experiences were brought together in the European Charter of the Local Self-government in 1987. This Charter was signed and ratified by all European countries and became binding international law and a sort of “Bible”. As Ukraine has signed this Charter, it is the reference for further reforms, especially the legal reforms in Ukraine I have mentioned before.


A.H.: You mentioned the European Charter of the Local Self-Government as a good concept. But people understand the concept differently in place and in time. Are there differences in understanding this concept among the Ukrainian decision-makers? Is this simply our task, as foreign technical assistance, to support such discussions in Ukraine in order to understand each other and the concept better?

GM: Yes, I think more discussion in Ukraine make sense: what does local self-governance really mean, what does it include. It is not only about more money and competences itself; government must function and fulfil its tasks. In a real democracy, counterweighing powers are necessary. One needs transparency, more engagement and participation of the local population. One must introduce instruments that enable the local population to be heard and to be involved in the local decisions. We need better understanding of the new competences, checks and balances. If one gets competences, one gets also responsibility, and one has to be politically accountable as well, not to those above, that is the old structure – for example, to make reports to Kyiv - but to your local population. Citizens must be able to influence and control local politics. More transparency, new forms of accountability are necessary, a better understanding of the role of administration. The administration is not the lord, but the servant of the people. Ukraine must generally re-organise the administration, not only the local administration. The new rules should be incorporated in a law on administrative procedures. That includes for instance, transparency that the people get all the information concerning their case. One has to look at how money is spent. The ProZorro system for public procurement in Ukraine is a good example. In the end you need a new balance between the new competences and increased the influence of the local population in a self-controlled system. As an example, the income side of the budget and the expenditure side are logically connected, but often citizens do not take this into account. Therefore, local fees and taxes, and local shares of national taxes, like in the Personal Income Tax in Ukraine, are good means. It is not the anonymous state who pays but the local citizens. As it is their money, the local citizens are more interested in how and for which reasons it is spent. Decentralization combined with prudent rules and procedures, will improve the overall governance and lead to economic and social progress in Ukraine, which will make the country more resilient.


A.H.: You have mentioned that the reform is done for the people, it is not done for its own purpose. In August 2020, the State Strategy for Regional Development was adopted by the Cabinet of Ministers. In assessing the strategy, the Kyiv School of Economics recommended better coordination, vertical and horizontal, when preparing such state strategies. How do you see the pre-conditions for the local and regional development? Will the decentralization reform strengthen the endogenous potentials of the country and of its people at the local level for development?

GM: Decentralization with autonomy and responsibility will certainly improve local economic development. If, for instance, the mayors and the local council know that the hromada gets more local taxes through economic development, they are interested in local economic development. Hromadas will find solutions for small- and medium-sized businesses. The oblasts and the national government can concentrate their efforts more on large companies. This leads to some sort of fragmentation within the government and between levels of government. To overcome these difficulties, one needs not only vertical cooperation between the specialists on the different levels, but also improved horizontal cooperation beginning at the level of the Cabinet of Ministers. The staff of the different ministries should cooperate more closely and better understand the different goals, procedures, experiences, constraints and problems of their colleagues in other ministries. For instance, if there is a discussion about new structures for local self-government, one has to have in mind consequences for health – organization of hospitals, for education – organization of schools, or on courts, police etc. For coherent and successful strategies, more cooperation is necessary. The more competences are transferred and executed by organization with some degree of autonomy, the more cooperation is necessary. The country must find a new balance between autonomy, cooperation, and coordination. “Command and obey” may be used for military leadership, but for modern states, companies and societies one needs more to be successful, especially coordination, cooperation, and participation.


A.H.: When we are talking with local mayors, a lot of them still do not believe in the long-term success of decentralization. Without success of other important reforms, such as the reform of the court system, then all the other reforms may be endangered.  

GM: Decentralization is not a solution for all problems of Ukraine, it is only a step and decentralization will not function if the country does not have clear definitions of competencies which can be enforced by independent courts. In my personal opinion, decentralization is a very strategic reform for Ukraine and therefore, I would not underestimate the influence of the newly created structures for future development. That does not exclude that other reforms are necessary, especially the fight against corruption and a real reform of the judiciary. My hope is, that changing mindsets will facilitate other reforms as well. 


A.H.: Professor Milbradt, thank you very much for this interview.


Georg Milbradt


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15.12.2020 - 11:59
It is always interesting to see how people can talk around failures without really saying it. The decentralization reform in Ukraine has been a failure by objective criteria other than just reducing the number of local government units. After five years and over $200 spent by donors to implement decentralization in Ukraine it is largely failed. Voluntary amalgamation failed and mandatory had to be resorted to. Intermunicipal cooperation never achieved a significant level of use to overcome service delivery problems. There is little proof that fiscal sustainability has been achieved other than for a small number of Cities of Oblast Significance. The popular support if measured by the election turnout was dismal, 37% in the first round, and in the second rounds the turnout as less than 30%. Survey continue to show that people do not expect that the reforms will impact their lives for the better. Yet, we have the international experts still peddling this narrative that Ukraine has achieved a great success. Delusion and illusion are difficult to overcome with facts.
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16.12.2020 - 10:14
I meant to say that the donor community has spent nearly $200 million on supporting the decentralization reform in Ukraine over the past five years. This is just the main donor programs. This is probably the most expensive decentralization reform every undertaken. For What?
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