EECMD Roundtable on Decentralisation in Ukraine and Odesa Oblast

Analytical Note EECMD Roundtable on Decentralisation in Ukraine and Odesa Oblast Odesa, 16 November 2018

The Analytical Note has been prepared by: Dr.Sierhiei Sakhanienko, Odesa Regional Institute for Public Administration

The Eastern European Centre for Multiparty Democracy (EECMD) is a democracy assistance organization that promotes the deepening of democracy through interparty dialogue and capacity strengthening of political parties. Based in Georgia and Ukraine, EECMD is affiliated with the Netherlands Institute for Multiparty Democracy (NIMD), the organisation which works with over 200 political parties in more than 20 countries in Africa, Asia, Eastern Europe, Latin America, the Middle East and South Caucasus. Together with the political parties and the local implementing partners, EECMD contributes to inclusive and stable political systems in these countries. Furthermore, EECMD assists political parties to become more responsive and policy-focused. Special attention is paid to empowering members of marginalized groups. To foster the democratic culture in a country, EECMD also provides political education programs that focus on democratic values, knowledge and skills.

All views expressed in this analytical note are those of the authors and do not necessarily represent the views of the EECMD

Contents Introduction .................................................................................................................................... 4 List of participants........................................................................................................................ 5 Summary of the discussion ....................................................................................................... 6 Conclusions................................................................................................................................... 12 Round Table best interventions (thesis) ......................................................................... 13 Final recommendations .......................................................................................................... 14

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EECMD Roundtable on Decentralisation in Ukraine and Odesa Oblast Odesa, 16 November 2017 Analytical Note Introduction It’s often heard that decentralization is the transfer of authority from “top” to “bottom”. This would be acceptable but in Ukraine, unlike most European countries, in the “bottom” (at the level of oblasts, rayons, and even some settlements) there are not only local self-government bodies, but also state bodies (local state administrations, local offices of ministries). In the period of 2010-2013, within the governmental policy of “restoring the vertical of executive power”, the competences of local state administrations have been expanded largely. But it is obvious that the strengthening of these bodies “at the bottom” was not decentralized.

On the other hand, decentralization is identified with the local budgets ‘growth, which had been increased almost twice in the period of 2014-2017. However, the increase of transfers to local budgets for the implementation of state (so called “delegate”) functions is obviously not decentralized. It actually will not mean weakening but, on the contrary, strengthening the role of the state in the financial capacity of local selfIn order to assist in finding the right mechanisms of the constructive solutions, the Eastern European Centre for Multiparty Democracy initiated a round-table discussion on the prospects of decentralisation in Ukraine and the Odesa region in particularly. The main objectives of the roundtable were focused on introducing respective recommendations while debating theoretical and practical specifics of the current state, problems and perspective political solutions in order to proceed with decentralization reforms in Ukraine and Odesa region.

The present analytical note is a summary of arguments and propositions put forward by the experts during the roundtable in Odesa, which took place at the EECMD Odesa office on 16 November 2017.

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List of participants Andrii Karpenko, Head of Rozdilne district regional administration (Odessa Region) Andrii Perov, EECMD School of Democracy Andrii Semenovich, Public administration and regional studies department Andrii Zaychenko, Ukraine National Police, Head of the analytical department Dmytro Makoveichuk, Head of Ananyiv district regional administration (Odessa region) Ganna Panchenko, Public administration and regional studies department, ORIfPA Gennadii Zabolotnuj, Head of land contributions in Berezivska district regional administration (Odessa Region) Ihor Litvinyuk, Head of Ovidiopol district regional administration (Odessa region) Irina Lisyuk, PhD student of ORIfPA Ismail Halikov, Deputy head of Bilyavska district regional administration (Odessa region) Lina Savchuk, PhD student in ORIfPA Lyudmila Prihodchenko, Head of Public administration and regional studies department, ORIfPA Mykhailo Oganisyan, Public administration and regional studies department, ORIfPA Mykola Popov, 1st deputy director of ORIfPA, PhD in Public administration, Public administration and regional studies department Nataliia Kolesnichenko, Head of International audit Department in Belyaiska district regional administration (Odessa Region) Nataliia Pirozhenko, Public administration and regional studies department, ORIfPA Oksana Bilokopyta, Kyiv regional administration, the head of special apparatus Oleg Rogulsky, PhD student in ORIfPA Oleksandr Manda, 1st depty head Berislavska disrtict regional administration (Kherson region) Oleksandr Hapatnyukovsky, Deputy head of Savransk district regional administration (Odessa region) Oleksandr Kondratenko, 1st deputy head in Novotroitska district regional administration (Kherson Region) Olena Karabaza, 1st deputy head in Berezivska district regional administration (Odessa Region) Olena Lesuk, Public administration and regional studies department, ORIfPA Olga Malomuzh, Head of economic development and tourism Department in Ovidiopol disrtict regional administration (Odessa region) Polina Venka-Vedejkina, EECMD School of Democracy 5

Sergii Parpulyansky, Head of Arziz district regional administration (Odessa region) Sergii Glebov, EECMD School of Democracy Sergii Sahanenko, Public administration and regional studies department, ORIfPA, EECMD DS trainer Sergii Krasivsky, Deputy head of Zhovtneva district regional administration (Mykolayiv Region) Stanislav Draganov, EECMD School of Democracy Stepan Davtyan, Public administration and regional studies department, ORIfPA Svitlana Chizhova, Public administration and regional studies department, ORIfPA Svitlana Luposka, Public administration and regional studies department, ORIfPA Tetyana Romanenko, PhD student in ORIfPA Varvara Sokolova, EECMD School of Democracy Vladislav Dmitriv, Head of Berzneguvatska district regional administration (Mykolaiv Region) Yulia Kovtun, PhD student of ORIfPA Yuliya Bagachenko, EECMD School of Democracy

Summary of the discussion In order to cover a thematic agenda, the following questions for the Round-table discussion were proposed: •

What are the economic, political and policy rationales for the decentralization debate?

•

What are expected effects of further decentralization on political parties and political system?

In particular, how will the decentralization process affect the political parties’ electoral bases and strategies, membership and internal structures?

•

Shall the electoral system of Ukraine be adjusted accordingly? If so how?

•

What are the challenges of further decentralization and how local actors (local governments,

political parties, NGOs) shall respond?

To answer such questions, representatives of the regional think-tanks, local authorities, civic activists, policy analysts and practitioners with an expertise in the issues of decentralization were invited to take part in the round-table.

Following the discussion, it was widely shared, that decentralization is a way of optimization of public administration (i.e. creating the best system in a concrete time), when functions, competences and resources are transferred from the state to non-state institutions (local self-government, quasi6

autonomous non-governmental organization). At the same time, it became clear, that a genuine consensus system can be formed only under conditions of a certain level of economic and social development, as well as of a high level of local residents’ trust to local authorities. It is no coincidence that, according to the analysis, conducted by some participants, they are formed mostly at the level of towns (Balta, Bilyayivka), which became centres of CLCs. It is clear that the concept of “local political system” also implies the transition from a political system of one type to the other one. The component of the local political systems (which is formed by the effects of decentralization processes) is party systems and electoral processes associated with it. The consolidation of local communities has given an additional impetus to the development of local party systems.

During the discussion it was agreed, that: Firstly, political parties have been actively involved into the process of discussing plans for the voluntary consolidation of local communities, using their power or opposition potential.

Secondly, political parties to strengthen their positions at the local political arena, and in some cases used numerous elections to the local self-government bodies of the CLCs, as well as heads and praepostors (starostas), in general, the elections were the first “test” for some political parties.

Thirdly, the processes of decentralization have intensified the “weight” of the local offices of political parties and their leaders at the level of CLCs within the internal party relations, and at the level of rural CLCs, there was a possibility to form local offices.

Fourthly, an increase in the number of local self-government officials in the CLCs has allowed many political parties to nominate their representatives for administrative positions.

It was noted, that according to the current legislation, the creation of region parties in Ukraine is prohibited. However, many parties that have a national status are, in essence, regional parties. The processes of decentralization, on the one hand, has given regional parties new opportunities, and, on the other hand, elections to the CLCs clearly demonstrated that regional parties, even within their “own territory”, cannot nominate their candidates in all electoral districts (also their participation in election commissions, in the corps of observers, etc).

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As an example, it was pointed out, that the party named “Doverjay delam” (Do trust affairs) was created factually for the Odessa mayoral and City Council elections. Its inclusion into the Odessa Oblast Council was explained only by the presence of several districts for the election of oblast councillors in the city of Odessa. It is no coincidence that for the first elections of the CLCs in the Odessa oblast in October 2017 (12 local communities), this party did not register itself in the Central Election Committee for participation in the electoral process. This fact confirms its role as a structure for lobbying exclusively Odessa business elite and politicians related to it.

It was clearly accepted by the audience, that the processes of decentralization had influenced the development of the program framework of political parties, which had to form their attitude towards decentralization. As the result, one should pay attention to the dissonance between the internal structure of political parties in Ukraine and their program principles, which are mainly aimed at supporting decentralization processes.

It was also discussed, that all influential political parties in Ukraine are party organizations with a strong structure and vertical ties between its elements. The general structure of parties recreates the territorial structure of the Ukraine, despite the possibility to build it in another configuration. The developed territorial structuring leads to the formation of a complex central structure. As a result, local party offices can enter into relationships with each other only through “mediation” of higher party-centre. Such a system does not admit the development of any opposition within the party. The opposition of local party office cannot directly “infect” the neighbouring party units. Only through a delegate of a party unit, it can reach a higher level. In this case, the risk of “infection” is minimized by centralization. Under conditions of intra-party centralization, all decisions come from “top”, and the central party bodies periodically control their implementation on “bottom”. This is also supported by political experience. In Ukraine political success was pursued for a long time only by those parties that had a direct and strong structure with vertical ties and rigid centralization (“Batkivshchyna” since 1999; the Communist Party in the period of 1998-2014; the Party of Regions in the period of 1994- 2014).

It was also widely supported by the audience of the round-table that the parties with the decentralized structure, as a rule, succeeded for a short period, and were disappearing after that into “political non-existence”.

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Majority of the participants warned, that a threat of a centralized internal structure of a political party may have negative consequences for decentralization processes, since under the conditions of taking power there is a temptation to transfer its internal party system together with the appropriate party culture into the sphere of public administration.

On the other hand, it was also agreed, that decentralization processes should have an impact on the electoral system, both at the central and local levels. The reforming of the system of election to the Verkhovna Rada of Ukraine over the past few years is an integral part of the debate about the reforming of the political system of Ukraine. It is about the transferring of the current mixed system, when one half of the people’s deputies is elected in single-mandate constituencies, and the other half is elected according to “closed” party lists in a multi-mandate nationwide constituency.

In the opinion of some experts, the electoral system with “closed” lists corresponds to the centralized political system; the majority electoral system (in the parliamentary-presidential republic) pushes the political system to purely local problems (not nation-wide problems). The introduction of a proportional system with “open” lists as, in particular, in the current Agreement on the Coalition of Parliamentary Factions “European Ukraine”, will ensure the balance of centralization and decentralization in the governance system.

The transition to a proportional system during the election to the Verkhovna Rada with “open” lists will mean the abolition of the majority component of elections as well as the “opening” of party electoral lists through the formation of regional lists. As it was agreed, the consequences of this system will be: Firstly, the encouraging of local party offices to include into their lists the “worthy” candidates. That “opens the door” for authoritative people from the regions to the parliament.

Secondly, the strengthening of local business and political elites who have not found their place in the existing party structure. That, in turn, can lead to the emergence of new political projects, the programs of which will be based on the problems of local development.

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Thirdly, the emergence of new political forces focused on solving local issues in order to win elections according to a proportional system, will increase the impact of such issues as deepening decentralization, local development, strengthening local budgets, and so on in the political agenda.

Fourthly, the presumable emergence of peculiar “party holdings”, which will consist of both a parliamentary party and local parties. Thus, the chances for parties, which have a low level of popularity at the national level, but a significant source of support on local level, to fall into the Verkhovna Rada of Ukraine, may increase.

Fifthly, taking the system of “open” lists, influential and electorally popular local leaders will be the target of competition between parties. That may lead to the strengthening of local business-political groups and increase their political influence at the national level in case of their falling into the parliament.

During the round-table, the experiment on the introduction of an electoral system with the “open” lists was mentioned in a way that it was done in accordance with the current law of Ukraine “On local elections”, according to which the elections of councillors to oblast, rayon, city/town and city districts councils are held in accordance with the proportional electoral system in the multi-mandate district with the electoral lists of local offices of political parties. In the opinion of the participants, this system is not a fully-fledged system with open election lists. Generally, it does not correspond to the principles of developed local self-government. Among the reasons for this were named as follows: 

political parties are the part of a nation-wide political system, and therefore the

formation of local self-government bodies with their participation inclines these bodies towards national interests, not local ones; 

the councillors of the local councils should represent the interests of the entire

community, while the proportional electoral system will force them to represent the interests of a political party and its leadership; 

the councillors of local councils have a free mandate, and voting for them according

to party lists will mean the imperative mandate.

Hereof, as it was concluded, the majority electoral system of local election is more responsive and relevant to the model that should arise as a result of decentralization processes.

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One more consequence of decentralization for the national political system, consisting in the gradual formation of strong lobby groups in the form of associations of self-government bodies was mentioned. In particular, at the end of 2016 an Association of Consolidated Local Communities was formed. Together with the existing Association of Ukrainian Cities, the Ukrainian Association of Rayon and Oblast Councils, the Ukrainian Association of Village and Township Councils, it has broad rights provided by the Law of Ukraine “On Associations of Local Self-Government Bodies”, including the right to advise on draft law on state budget and other laws and state programs that affect the interests of local self-government. The formation in 2015 of the Party of Local Self-Government is not accidental in this case.

Finally, there are some findings regarding the prospects of decentralization, which came up on the surface during the round-table discussion. According to the extrapolated forecasts of the World Bank, the level of GDP in 2013 (and it is under the most favourable conditions) will be reached in 2024, and the level of GDP in 1990 – in 2035. At the same time, a significant part of GDP (namely, from 10 to 20 billion dollars annually or exceeding 4% of GDP growth) Ukraine will give a repay as a payment for loans within the agreement on the restructuring of debts. Thus, taken as a whole, the generation of those who are 30 and more will not have a decent standard of living even in terms of the average developed European country. In addition, the distinction will be differentiated between the regions and individual communities. All these processes will de-legitimize the state. The way out of this “loop” will be in centralization, that is in an attempt (at least somehow, within the framework of the electoral cycle) to ensure social and hopefully political stability using the mechanism of redistribution of resources. Thus, there is a high expectation that the pendulum of decentralization, leaning far to the left, will eventually be at least far to the right. This phenomenon of the recurrence of centralism after decentralization reforms is well described in political sciences’ research.

According to the further discussion it was also mentioned, that the draft 2018 state budget has showed the movement of the pendulum of the reform in the direction of re-centralization. It is assumed that the subvention to the regions will be distributed through the administrative vertical: the Cabinet of Ministers of Ukraine – oblast state administrations – rayon state administrations. It was warned, that this puts CLCs in a significant dependence on oblast and rayon state authorities. It was proposed to change the existing motivational mechanism of horizontal alignment in the budget package and to increase the amount of withdrawals from local budgets to the state budget from 50 to 80%. Such a system was operating until 2014, when 96% of local budgets were subsidized. Such 11

decisions on “centralization” of resources in socially important spheres will mean a “rollback” of a decentralization policy. In addition, this will trigger negative trends in the transfer of authority to a higher level.

Conclusions As an outcome of the Round Table, the following COCLUSIONS were made: "European Charter on Regional Democracy" (the old version is "European Charter of Regional SelfGovernment") adopted in 2008 by the Congress of Local and Regional Authorities of the Council of Europe needs its signing and subsequent implementation in the context of multilevel governance. In Ukraine the local level of decentralization policy is still replacing its regional dimension. The political actors of modern Ukraine treat the formation of regional self-government with caution, although decentralization policy in Ukraine will not become end-of-form without regional self-government.

Article 132 of the Constitution of Ukraine, which stipulates that the territorial structure of Ukraine is based on the principles of "unity and integrity of the state territory, the combination of centralization and decentralization in the exercise of the state power, and the balanced socio-economic development of regions taking into consideration their historical, economic, ecological, geographic, and demographic characteristics as well as ethnic and cultural traditions" needs its understanding and legislative development. This article envisages, first of all, the differentiated approach to the solution of all issues of local and regional development, which, unfortunately, are ignored in various areas of domestic policy of Ukraine, and are mostly based on solid unification.

The policy of decentralization has not so far influenced the legislative consolidation of some political instruments for the participation of territorial communities in governance. In particular, the law of Ukraine "On Local Referenda" weakens democratic procedures including voluntary consolidation of territorial communities.

Regional and local political cultures in Ukraine, as well as regional and local identities require their study and analysis. It is because they largely determine both the results of the elections and the local political regimes. The study of changes and dynamics in regional and local political cultures, regional and local self-consciousness are essential.

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The role of regions and local communities in implementing the European integration course of Ukraine, in particular, in the process of implementation of the Association Agreement between Ukraine and the European Communities, can become a promising problem for analysis.

The participants of the Round Table emphasized that (as the result of decentralisation policy in Ukraine) the model of so-called "consociational democracy" (by A. Lijphart) should be formed. It involves the representatives of all more or less significant groups into i) political decision-making, ii) broad groups' self-government for resolving their own internal interests, iii) consensus nature of political decisions, etc. Attention is drawn to the fact that decentralization can be a promising aspect of the European Union's policy of "Eastern Partnership".

Round Table best interventions (thesis) Andrei Perov, EECMD Democracy School: there is no experience in implementing decentralization.

Poland and the example of Polish experience: a scientifically developed strategy. Ukraine has no such experience - we have an experiment. There is lack of interaction between politicians and academy.

Public activity of citizens and the activity of state authorities are often incompatible.

Sergiy Sakhanenko, EECMD DS Trainer: There was well developed strategy by the experts since 2010. But there are factors that hampered the process. Lack of political will. Decreasing decentralization. Lack of funds. Opposing lobbysts. Big manufacturers are against. Separatism.

Armed conflict.

Mykola Popov, 1st deputy director of ORIfPA: Modern Ukrainian youth is very liberal, so these issues of decentralization are not clear. They are not state oriented. Society and territorial communities - living organisms - therefore painfully perceive the experiment of decentralization. The model for the country is France and Poland. But this is not the case. There is no such model anywhere - the Ukrainian way is unique, such a model does not exist - and that is not good. Focus on everything at once. It is impossible.

Gennadii Zabolotnuj, Head of land contributions in Berezivska district regional administration: Many things have not been taken into account. New has been done by old tools. The old electoral law. Communities are formed for private interests. Limited control of the outside, which 13

is not very good. There are no basics of real people's democracy. Have no money. The community budget is very limited. A huge problem is the provision of services. From medical care, where there are no doctors at all, for children and families, and so on. But there is a positive one. Education. It was difficult, but optimization goes. Payments are coming. Infrastructure is restored. Regional Development Budget formed: plumbing, lighting, roads, heating. Projects from USAID. Good budget balance at the end of the year. That was never was.

Sergii Parpulyansky, Head of Arziz district regional administration: Low political culture of the population. Does not accept decentralization. Low financial ability, therefore, vote for those who pay.

Do not know how to spend money. Bad roads. Problems with redistribution of land. No Doctors. The average age is 55. No one will be in 10 years. Schools: 35 vacancies. Importance of reforms and the importance of elections. District training program. Support for young teachers, doctors. No Chief Architect, no lawyer at the council.

Stanislav Draganov, EECMD DS participant: 1990ies are coming back. The destiny of the land is solved. Local business people are buying shares from farmers for nothing. In exchange, promise schools, etc. But: only declarations – no one will work on the land very soon. Businessmen will be left without work. Territorial reform should precede decentralization and community formation. May be a reverse process for centralization. Many related reforms have to take place. Comprehensive training of personnel. At the state level. Democracy.

Zaychenko Andrii, Ukraine National Police, Head of the analytical department: Decentralization is not on time? On time, but the volume and how – this is the question. Separatism and crime. Challenges: population is not ready to take on responsibilities. People do not understand decentralization, but there are no alternatives. If decentralization is not taking place, local communities could actually disappear. Decentralization is a mechanism to escape.

Final recommendations 1) There is an urgent need to continue with further efforts on informing citizens on the benefits of the decentralization; 2) There still is a necessity of finding proper balance of activities and responsibilities between united territorial communities and central power;

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3) Political parties should take a lead in the process of decentralization under supervision of the local electorate as their program responsibilities in the frame of the new electoral law to defend rights of the local communities on the all levels of the power vertical; 4) Civil society leaders and activists alongside with the regional and local power, including self-government bodies and law-enforcement agencies, should apply a strong control on the process of budgeting and expenditures from the local budgets in order to escape “feudalization� of the local territories; 5) Success of decentralization reform in Ukraine should be possible only in combination with other relevant successful reforms, therefore, it is important to analyze consequences on the current laws and future drafts of the bills on their supportive nature to decentralization in order not to confront its objectives; 6) It is essential to identify rights of the local communities in the process of decentralization in their area as an integral part of the democracy building process in the whole country.

The Analytical Note has been prepared by: Dr.Sierhiei Sakhanienko, Odesa Regional Institute for Public Administration

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