Competitors during the 27th Ukrainian Firefighting Championship in Kharkiv, Ukraine. Photo by Vyacheslav Madiyevskyy/Barcroft Media/Getty Images.
1. Introduction
Democratization often leads to decentralization as greater political pluralism generates societal demands for a redivision of power between the central and subnational levels of government.1 Before the 2013–14 Euromaidan protests, or ‘Revolution of Dignity’, state power in Ukraine was highly concentrated.2 Administrative capacity to deliver public services was inadequate, and the country combined centralism and weak local self-government with severe territorial fragmentation. Large inter-regional disparities also persisted in terms of economic development and public administration. Despite occasional gains under the old system – such as improvements to the functioning of some cities, and partial fiscal decentralization – the enormous imbalance between the power of the centre and that of municipalities was a fundamental obstacle to the creation of a sustainable, functioning state.
Only after the Euromaidan did genuine devolution of power begin.3 In 2014–15, reformers launched a battery of simultaneous changes aimed at improving multi-level governance, promoting subnational democracy and fostering local economic development. Their ambitious and comprehensive decentralization plan aims to empower local self-government, as well as to redraw the country’s administrative-territorial map so as to improve the state’s capacity to deliver public services.4
The Ukrainian decentralization process, though informed by foreign examples – especially by somewhat similar reforms in Poland in the 1990s5 – and backed by Western technical support, is a largely domestically grounded and nationally developed transition.6 The reform builds mainly on lessons learnt from previous – mostly failed – attempts by Kyiv to improve governance at the subnational level.7
This paper outlines the main achievements and key shortcomings of decentralization since 2014. It highlights the presence of a limited window of opportunity for completing the first phase of these reforms by 2020. It also identifies challenges around the second stage of decentralization, which started in early 2019 (see Section 5).
The principal challenge for Ukraine’s decentralization has been the gap between reformers’ ambitious agenda and the limited institutional capacity available for making and implementing policy decisions within the initially suggested timeframe of 2014–17.8 Post-Euromaidan policymakers demonstrated political acumen and will to embark on reform, despite enormous external security threats and related internal challenges to Ukraine’s territorial integrity. Yet continuing resistance from some parts of the elite, especially in parliament, has impeded efforts to embed decentralization in the constitution, and thereby to fully establish a new administrative structure and territorial divisions. While reform has brought some notable changes at the local level, it has not yet led to a corresponding legal reconstitution of the state.9
Decentralization’s main achievement so far has been to start a territorial consolidation of municipalities and an accompanying empowerment of local self-government. In late 2014 and early 2015, fiscal decentralization was introduced and the fusion of small local municipalities into bigger and more self-sustaining ‘amalgamated territorial communities’ (ATCs) began. These new entities have gained considerable tax-raising powers and now benefit from direct transfers from the central state budget. Following the example of Baltic and Scandinavian countries, ATCs receive 60 per cent of personal income tax collected. This has generated a new social contract between local companies, citizens and self-government bodies, and has incentivized the latter to preserve and extend their tax bases – i.e., to retain and attract businesses.10 The ATCs are also taking on additional responsibilities for delivering public services and fostering infrastructural development.11
An essential feature of decentralization to date is that it has taken place on a voluntary basis – thus contributing to the development of local democracy. Although local communities decide for themselves – at least for now – whether or not to amalgamate into ATCs, once they commit to amalgamation, they are required to follow detailed procedures set by the central government.12 The administration in each oblast (region) prepares, and its council approves, a ‘perspective plan’ for ATCs in its region. This plan then requires approval by the Cabinet of Ministers. Proposed ATCs need to meet certain criteria in order to be acknowledged by the government as ‘self-sustaining’ or ‘capable’ (spromozhni). Only then can they reconstitute themselves by creating new bodies for self-government, and obtain additional funds and powers.
The largely grassroots approach to the design and creation of ATCs, and to the oblast-level development of ‘perspective plans’,13 means that since 2015 many Ukrainians have gained valuable experience in organizing collective action and resources. They have conducted often-robust debates on local issues, and have taken responsibility for joint decision-making. Once new ATCs are established, local elections are held for more powerful bodies of municipal self-government responsible for distributing public funds, and for performing many regulatory functions previously carried out by regional and subregional state bodies.
Over the past five years, the decentralization drive has changed provincial Ukraine from the bottom up. By July 2019, there were 925 new ATCs across the country, covering an area housing 28.3 per cent of Ukraine’s population.14 Since May 2018, rural and urban municipalities, including many ‘cities of oblast significance’,15 have joined the voluntary amalgamation process.16 The ATCs vary enormously in terms of population: the number of residents ranges from around 1,000 to around 373,000, with an average of slightly over 10,000.17 Certain ATCs cover territories so large that they duplicate the boundaries of rayony, i.e. upper subregional administrative units. Due to their increased tax-raising powers and direct budgetary relationships with the central government, the ATCs are now strong enough to take responsibility for the delivery of public services previously overseen by the (centrally guided) administrations of the rayony.
A second phase of decentralization, announced in January 2019, envisages a radical decrease in the number of rayony through amalgamation and the establishment of entirely new upper subregional units. The central government is seeking to change the institutional framework for rayony and oblasts, by allowing directly elected councils (the self-government bodies that already exist) to create their own executive committees and by formally enshrining this new arrangement in the Ukrainian constitution. During the first half of 2019, however, there was little progress on these goals, because policymakers were preoccupied with presidential and snap parliamentary elections.
Nevertheless, prospects for a continuation of the reform of local governance look bright. It is unlikely that the deep transformation already under way can be halted or reversed. Continuity in the process seems to be the most likely scenario over the next four to five years.
1 See, for example, in relation to Mexico, Grindle, M. S. (2009), Going Local: Decentralization, Democratization, and the Promise of Good Governance, Princeton, NJ: Princeton University Press. We use ‘decentralization’ in this paper as a loose summary term for various interrelated processes, and as the antonym of centralization. ‘Decentralization’ can – depending on the context – mean the devolution, deconcentration or downward delegation of prerogatives, competencies and responsibilities.
2 For example, OECD (2014), OECD Territorial Reviews: Ukraine 2013, Paris: OECD Publishing, doi:10.1787/9789264204836-en (accessed 5 Aug. 2019).
3 Among the first relevant English-language comments were: Myerson, R. and Mylovanov, T. (2014), ‘Fixing Ukraine’s Fundamental Flaw’, Kyiv Post, 7 March 2014, https://www.kyivpost.com/article/opinion/op-ed/fixing-ukraines-fundamental-flaw-338690.html (accessed 5 Aug. 2019); VoxUkraine (2015), ‘Decentralization: second try’, 16 July 2015, https://voxukraine.org/2015/07/16/decentralization-second-try/ (accessed 5 Aug. 2019); and Lukerya, I. and Halushka, O. (2016), ‘10 Ways Decentralization Is Changing Ukraine’, Kyiv Post, 7 December 2016, https://www.kyivpost.com/article/opinion/op-ed/ivan-lukerya-olena-halushka-10-ways-decentralization-changing-ukraine.html (accessed 5 Aug. 2019).
4 Among the first deeper German-language explorations were: Werchan, R. (2015), ‘Dezentralisierung: Der Weg zu einer effizienteren Regierung, Wirtschaftswachstum und dem Erhalt der territorialen Integrität?’ [Decentralization: The Road to a More Efficient Government, Economic Growth and Preservation of Territorial Integrity?], in Bakalova, E., Endrich, T. and Shlyakhtovska, K. (eds) (2015), Ukraine – Krisen – Perspektiven: Interdisziplinäre Betrachtungen eines Landes im Umbruch, Berlin: WVB, pp. 187–212; Shapovalova, N. (2015), ‘Mühen der Ebenen: Dezentralisierung in der Ukraine’ [Troubles of the Plains: Decentralization in Ukraine], Osteuropa, 65(4): pp. 143–52, https://www.jstor.org/stable/44937301?seq=1#page_scan_tab_contents (accessed 5 Aug. 2019); Baller, O. (2017), ‘Korruptionsbekämpfung und Dezentralisierung auf dem Prüfstand des Reformbedarfs in der Ukraine’ [The Fight against Corruption and the Decentralization in View of the Need for Reforms in Ukraine], Jahrbuch für Ostrecht, No. 2: pp. 235–68; and Hanuschtschak, J., Sydortschuk, O. and Umland, A. (2017), ‘Die ukrainische Dezentralisierungsreform nach der Euromajdan-Revolution 2014–2017: Vorgeschichte, Erfolge, Hindernisse’ [The Ukrainian Decentralization Reform after the Euromaidan Revolution 2014–2017: Prehistory, Successes, Obstacles], Ukraine-Analysen, No. 183: pp. 2–11, http://www.laender-analysen.de/ukraine/pdf/UkraineAnalysen183.pdf (accessed 5 Aug. 2019).
5 Levitas, A. and Herczyński, J. (2003), ‘Decentralization, Local Governments and Education Reform and Finance in Poland: 1990–1999’, in Davey, K. (ed.) (2003), Balancing National and Local Responsibilities: Education Management and Finance in Four Central European Countries, Budapest: CEU Press, pp. 113–91; and Levitas, A. (2017), ‘Local government reform as state building: what the Polish case says about “decentralization”’, Studies in Comparative International Development, 52(1): pp. 23–44, doi:10.1007/s12116-015-9203-5 (accessed 5 Aug. 2019).
6 On the historical background to decentralization reform in Ukraine, see Tkachuk, A., Tkachuk, R. and Hanushchak, Yu. (2012), Reforms in the Administrative and Territorial Structure of Ukraine: Lessons of History 1907–2009, Kyiv: Civil Society Institute, https://www.csi.org.ua/wp-content/uploads/2012/05/hist-atu-1.pdf (accessed 5 Aug. 2019).
7 Martinez-Vazquez, J. and Zeikate, S. (2004), Ukraine: Assessment of the Implementation of the New Formula Based Intergovernmental Transfer System, Andrew Young School of Policy Studies Working Paper, No. 8, https://www.academia.edu/19727028/Ukraine_Assessment_of_the_Implementation_of_the_New_Formula_Based_Inter-Governmental_Transfer_System (accessed 5 Aug. 2019); Bezsmertnyi, R. (2005), ‘Derzhava, yak i budivlya, pochynayet’sya z fundamentu’ [The state, just like any building, is based on a foundation], Uryadovyi kuryer, 22 April 2005, http://crimea-portal.gov.ua/kmu/control/uk/publish/printable_article?art_id=15884111 (accessed 5 Aug. 2019); and Romanova, V. (2011), ‘The role of centre–periphery relations in the 2004 constitutional reform in Ukraine’, Regional & Federal Studies, 21(3): pp. 321–39, doi:10.1080/
13597566.2011.578801 (accessed 5 Aug. 2019).
8 Ministry of Foreign Affairs of Ukraine (2014), ‘Concept of the Reform of Local Self-Government and Territorial Organization of Government in Ukraine’, https://mfa.gov.ua/en/news-feeds/foreign-offices-news/21459-koncepcija-reformuvannyamiscevogo-samovryaduvannya-ta-teritorialynoji-organizaciji-vladi-v-ukrajini (accessed 5 Aug. 2019).
9 Rabinovych, M., Levitas, A. and Umland, A. (2018), Revisiting Decentralization After Maidan: Achievements and Challenges of Ukraine’s Local Governance Reform, Kennan Cable, No. 34, https://www.wilsoncenter.org/publication/kennan-cable-no-34-revisiting-decentralization-after-maidan-achievements-and-challenges (accessed 5 Aug. 2019).
10 Bernard, M. (2015), ‘Decentralization: A Bottom-up Path Toward Functioning Institutions and Economic Prosperity’, VoxUkraine, 25 August 2015, voxukraine.org/en/smart-decentralization-a-bottom-up-path-toward-functioning-institutions-and-economic-prosperity/ (accessed 28 Aug. 2019).
11 Sydorchuk, O. (2016), Decentralization: Results, Challenges and Prospects, Kyiv: Ilko Kucheriv Democratic Initiatives Foundation, https://dif.org.ua/uploads/pdf/1612493278588b59033d6c45.07093670.pdf (accessed 5 Aug. 2019); Jarábik, B. and Yesmukhanova, Y. (2017), ‘Ukraine’s Slow Struggle for Decentralization’, Carnegie Europe, 8 March 2017, http://carnegieendowment.org/2017/03/08/ukraine-s-slow-struggle-for-decentralization-pub-68219 (accessed 5 Aug. 2019); Levitas, T. and Djikic, J. (2017), Caught Mid-Stream: ‘Decentralization’, Local Government Finance Reform, and the Restructuring of Ukraine’s Public Sector 2014 to 2016, Kyiv: SIDA-SKL, http://sklinternational.org.ua/wp-content/uploads/2017/10/UkraineCaughtMidStream-ENG-FINAL-06.10.2017.pdf (accessed 5 Aug. 2019); Dudley, W. (2019), Ukraine’s Decentralization Reform, SWP Research Division Eastern Europe and Eurasia Working Paper, No. 1, https://www.swp-berlin.org/fileadmin/contents/products/arbeitspapiere/Ukraine_Decentralization_Dudley.pdf (accessed 5 Aug. 2019); and Romanova, V. and Umland, A. (eds) (2019), Ukraine’s Decentralization: Challenges and Implications of the Local Governance Reform after the Euromaidan Revolution, Stuttgart: ibidem-Verlag.
12 Cabinet of Ministers of Ukraine (2014), ‘Postanova vid 8 kvitnya 2015 r. No. 214, Kyiv, ‘Pro Zatverdzhennya Metodyky Formuvannya Spromozhnykh Terytorial nykh Hromad’’ [Decree issued on 8 April 2015 No. 214, Kyiv, ‘On Approval of the Methodology for the Formation of Capable Territorial Communities’], https://zakon.rada.gov.ua/laws/show/214-2015-%D0%BF#n10 (accessed 5 Aug. 2019).
13 The full legal term is ‘perspective plan for the formation of amalgamated communities’. Each oblast has such a ‘perspective plan’ for all of its ATCs. The plan is formulated, in the first instance, by the respective state administration (in accordance with criteria set by the central government), then approved by the directly elected regional council of the region concerned, and finally approved by the central government. Decentralization (2019), ‘Reform / Glossary’, https://decentralization.gov.ua/en/glossary?letter=P (accessed 5 Aug. 2019).
14 Decentralization (2019), Monitorynh protsesu detsentralizatsii vlady ta reformuvannya mistsevoho samovryaduvannya stanom na 10 lypnya 2019 [Monitoring of the process of the decentralization of power and the reform of local self-governance as of 10 July 2019],
https://storage.decentralization.gov.ua/uploads/library/file/425/%D0%9C%D0%BE%D0%BDi%D1%82%D0%BE%D1%80%D0%B8%D0
%BD%D0%B3__10.07.2019.pdf (accessed 5 Aug. 2019).
15 The status of ‘city of oblast significance’ allows a city to establish direct budgetary links with the central government, and to enjoy essential tax-raising powers. Residents directly elect a mayor and a city council, the latter of which, in turn, establishes an executive committee.
16 On 3 April 2018, Ukraine’s parliament approved amendments to the law on the voluntary amalgamation of territorial communities, thereby allowing ‘cities of oblast significance’ to participate in amalgamation. The amendments came into force in May 2018.
17 Decentralization (2019), ‘Obyednani hromady: Perelik ta osnovni dani’ [Amalgamated Communities: List of ATCs and Key Data], https://decentralization.gov.ua/gromada (accessed 5 Aug. 2019).