Competitors during the 27th Ukrainian Firefighting Championship in Kharkiv, Ukraine. Photo by Vyacheslav Madiyevskyy/Barcroft Media/Getty Images.
5. Next Steps and Challenges Ahead
In early 2019, the central government in Kyiv announced the start of a second phase of decentralization.49 This new action plan aims to complete the main parts of the reform agenda in 2019–21. One of the principal objectives is to increase the pace of amalgamation, so that this second phase can be completed before scheduled nationwide local elections in the autumn of 2020.50
Key to achieving this goal is quicker approval of ATCs’ ‘perspective plans’, so that all relevant territories in all oblasts are eventually covered. To this end, in 2019 parliament will have to pass Law No. 9441, currently in draft form, which would allow the Cabinet of Ministers to approve ‘perspective plans’ independently of regional councils.
Even if this happens, it will still be a challenge to amalgamate the many small communities – corresponding to approximately two-thirds of the original number – that remain unconsolidated. By mid-2020 or so, existing small units of self-government in 6,684 old villages and towns will have to disappear in their current form.51 So far, approximately 900 ATCs have been established. This is out of a planned total of either around 1,200 (according to the above-mentioned 2014 ‘Concept of the Reform of Local Self-Government and Territorial Organization of the Government of Ukraine’) or 1,600–1,800 (according to a 2018 presentation by the then prime minister, Volodymyr Hroysman).
By mid-2020 or so, existing small units of self-government in 6,684 old villages and towns will have to disappear in their current form.
This means that anything from 300 to 900 additional ATCs will have to be established within one year. Such a goal appears overambitious. A number of cities and existing ATCs can probably simply ‘annex’ certain small communities in the surrounding areas. Yet such a process, and the desired rapid consolidation of remaining small hromady into ATCs, would have to be effected in many cases through administrative pressure from above rather than voluntarily. Given the large number of communities remaining to be amalgamated, entrenched vested interests and the suddenness of such an enforced unification process, local resistance would be considerable.
In early 2019, the Ukrainian government hinted that it might conduct a comprehensive assessment of the performance of the ATCs, so as to inform the planned amendments to their final design. However, as of July 2019, the criteria for such modifications had not been announced. Features of the assessment could include testing ATCs’ financial sustainability (including the share of local taxes in their budgets), and checking their success in terms of local development and delivery of public services.
Getting the second phase of reform on track has been complicated by the political calendar in 2019, which has seen three rounds of nationwide voting in presidential and parliamentary elections, as well as a subsequent rotation of personnel in the legislature, executive branch and parts of the judiciary. Even if draft Law No. 9441 is adopted swiftly, its implementation will take time. The pace at which territorial communities are amalgamated will depend on the central government’s willingness and ability to push through further decentralization.
The second phase of decentralization also includes another fundamental change of Ukraine’s administrative and territorial division, at the level of the rayony. As indicated, amalgamation has shifted a considerable degree of responsibility from the rayony to municipalities. Under Ukraine’s current constitution, directly elected upper subregional councils are responsible for representing the joint interests of localities in the rayony. However, amalgamation often results in the establishment of relatively large and powerful ATCs that do not need administrative support from councils or executives (e.g. heads of subregional state administrations) at the rayon level. Thus, many rayony have already devolved extensive responsibilities and financial resources to the ATCs.
Another crucial decentralization-related legal document has been submitted for parliament’s consideration. Draft Law No. 8051 ‘On the Basics of the Administrative-Territorial Structure of Ukraine’ identifies key principles and procedures for changing the boundaries of administrative-territorial entities. This draft law represents a legal framework for redesigning rayony, in line with criteria applied in the EU. It proposes the transformation of the existing 490 rayony, which have an average population of approximately 25,000 (but sometimes have less than 10,000 residents), into around 100 new ones, each with around 150,000 residents, without the need for a time-consuming constitutional amendment. The prime motivation for such far-reaching consolidation of the rayony is to increase the effectiveness and reduce the expenditures of public administrations. However, these aims may not be as easy to achieve as some reformers assume.52
Most international and domestic decentralization specialists have assessed draft Law No. 8051 positively, though the Council of Europe’s legal experts have laid out minor concerns.53 If the law is adopted, the rayony could be swiftly amalgamated by the centre.54 Their new boundaries would be determined in accordance with the modified functions of the new upper subregional branches of government.55
So far, certain stakeholders in parliament have hindered the adoption of this law. Although the government submitted it to parliament back in February 2018, as of July 2019 it had still not passed its first reading – despite having been included four times in the parliamentary agenda following the presidential election in the spring of 2019.
The draft laws clarifying the new responsibilities of upper subregional executive committees and councils are still being prepared by the working group of the Ministry of the Development of Communities and Territories. As of July 2019, it was too early to say what exact functions will be allocated to the new amalgamated rayony. The working group has been conducting fieldwork in a number of districts and collecting evidence in order to define the criteria for establishing the enlarged rayony. It is as essential to identify the functions of the future institutions as it is to determine their territorial design.
The second phase of reform will thus extend the renewal of subnational self-government from the local level to the oblast and rayon levels. This will eventually require a constitutional amendment to change the entire structure and functioning of regional and subregional self-government bodies and their executive organs. Elected councils would establish their own executive committees, in a similar way to regional authorities in most EU member states. Thus, the councils would no longer delegate implementation of decisions to state administrations at the oblast and rayon levels. Prefects, rather than the current heads of regional administrations, would carry out the control functions of the centre. As a result, the rights and responsibilities of regional executives and self-government bodies would no longer conflict with one another.
The second phase of reform will thus extend the renewal of subnational self-government from the local level to the oblast and rayon levels. This will eventually require a constitutional amendment to change the entire structure and functioning of regional and subregional self-government bodies and their executive organs.
In summer 2015, parliament attempted to adopt a constitutional amendment similar to the one currently foreseen. The proposed amending law, however, also contained an unrelated controversial sentence related to implementation of the widely disliked Minsk Agreements with Russia. This short clause granted ‘special status of local self-governance’56 to the separatist-controlled territories in the Donetsk and Luhansk oblasts. Due to public discontent, violent clashes in Kyiv and fierce opposition from key stakeholders, parliament failed to pass the constitutional change.57
During his failed re-election campaign in 2019, President Petro Poroshenko reminded policymakers and voters of the need to introduce executive committees established by regional and upper subregional councils. And during the 2019 parliamentary campaign, the then prime minister, Volodymyr Hroysman, presented a draft constitutional change. As of July 2019, Ukraine’s newly elected president, Volodymyr Zelenskyy, had not made known his official position on this issue.
However, the manifesto of Zelenskyy’s Servant of the People (Sluha narodu) party for the parliamentary elections prioritized the promotion of decentralization in accordance with EU norms.58 It also promised to devolve power to the executive committees of subnational councils. After Sluha narodu gained an absolute majority of seats (254 out of 450) in the new parliament elected in July 2019, Zelenskyy’s team announced its commitment to decreasing the number of rayony from 490 to 100, and to introducing prefects instead of state administrations in regions and subregions. These announcements indicate the party’s readiness to implement the administrative-territorial reform envisaged by the government of Hroysman in draft Law No. 8051. Should the law be adopted in 2019, the central government may still be able to establish enlarged rayony and make rapid progress in merging the remaining non-amalgamated local communities by mid-2020. It would then be possible to elect newly empowered councils for all already reformed subnational levels of self-government in October 2020. The appointment of prefects and the introduction of executive committees to regional and subregional councils would also require parliament to amend the constitution.
Another draft law ‘On Service in the Bodies of Local Self-Government’ (No. 8369) proposes amending the scope and functions of public service in local self-government bodies, and increasing the salaries of public servants employed in such bodies. There seems to be little controversy among the political elite over this law. It has generally been assessed positively by the Council of Europe, especially for differentiating between professional and elected officials. Professional personnel would be recruited through open competition and carry out their duties with a certain degree of expert independence.59
A final issue for decentralization reform concerns the system of centrally provided development funds for municipal infrastructure projects and innovation. There are already some success stories in local economic development, and there is a pressing need for improvements to many types of municipal infrastructure, including primary schools, city roads, administrative buildings and waste facilities. So far, however, there remain too many opportunities for local politicians to direct development funds towards personal, clan, party or corporate interests.60
The most fundamental infrastructure challenge in Ukraine remains the absence, dilapidation, outdated state or low quality of trans-regional highways, country roads and railways. Despite some improvement in recent years, it remains arduous to travel or transport goods around the country. All regions and localities suffer from the effects of the poor national transportation network. All would benefit from faster and more convenient ways to move people and goods across Ukraine. Forty-five per cent of Ukrainians expect decentralization to improve the maintenance of roads.61
As long this basic issue is unresolved and local diversion of central funds remains a problem, public investment initiatives in support of small local development projects will remain of questionable value. In the opinion of the authors, it would be more useful to invest the bulk of currently provided developmental funding from the central government into building and improving national roads, railways, ports and airports. This would benefit not only the country as a whole, but also, in one way or another, each local community.
49 Cabinet of Ministers of Ukraine (2019), ‘Rozporyadzhennya vid 23 sichnya 2019 No. 77-p. Pro zatverdzhennya planu zakhodiv z realizatsii novoho etapu formuvannya mistsevoho samovryaduvannya ta terytorial’noyi orhanizatsiyi vlady Ukrayiny na 2019–2021 roky’ [Order issued on 23 January 2019 (No. 77-p). On Approving the Action Plan for a New Phase of Reforming Local Self-Government and the Territorial Division of Power in Ukraine in 2019–2021], https://www.kmu.gov.ua/ua/npas/pro-zatverdzhennya-planu-zahodiv-z-realizaciyi-novogo-etapu-reformuvannya-miscevogo-samovryaduvannya-ta-teritorialnoyi-organizaciyi-vladi-v-ukrayini-na-20192021-roki (accessed 5 Aug. 2019).
50 Decentralization (2019), ‘Obyednani hromady: Perelik ta osnovni dani’.
51 See also the section ‘Osnovni napryamy zabezpechennya podal’shoho efektyvnoho postupu detsentralizatsiyi’ [Main Directions for Securing a Continuously Effective Advancement of Decentralization], in Zhalilo et al. (2018), Detsentralizatsiya vlady, pp. 19–20.
52 Roesel, F. (2017), ‘Do mergers of large local governments reduce expenditures? Evidence from Germany using the synthetic control method’, European Journal of Political Economy, 50(1): pp. 22–36, doi:10.1016/j.ejpoleco.2017.10.002 (accessed 5 Aug. 2019).
53 Council of Europe (2018), Legal Opinion on the Draft Law of Ukraine ‘On Principles of Administrative Territorial Structure of Ukraine’, http://www.slg-coe.org.ua/wp-content/uploads/2019/06/CoEOpinion_principlesofadministrativeterritorialstructureofukraine_CELGR-LEX20184.pdf (accessed 5 Aug. 2019).
54 Shutka, N. (2018), ‘Yu. Ganushchak o detsentralizatsii: Yesli gosudarstvo vozglavit avtoritarshchik, budet popytka vse vernut’ nazad’ [Yu. Hanushchak on Decentralization: If the State Is Run by an Authoritarian Leader, There Will Be an Attempt to Reverse Everything], ZIK, 29 October 2018, https://zik.ua/ru/news/2018/10/29/yuganushchak_o_detsentralyzatsyy_esly_gosudarstvo_vozglavyt_avtorytarshchyk_budet_1436531 (accessed 5 Aug. 2019).
55 Tkachuk, A. and Hanushchak, Y. (2017), Transformatsiya rayoniv v protsesi ta za pidsumkamy detsentralizatsii [The Transformation of Rayony in the Process and as a Result of Decentralisation], Ukraine Crisis Media Center, 10 May 2017, http://decentralization.uacrisis.org/ (accessed 5 Aug. 2019).
56 This amendment is a part of Ukraine’s commitments within the Minsk Agreements. A special law would allow local elections to be held in the separatist-controlled territories, in accordance with Ukrainian law, as well as the appointment of prosecutors and judges in cooperation with the local authorities. Also, that law would allow the establishment of a local police force separate from Ukraine’s National Police. One of the most controversial points of the law is that Ukraine guarantees not to prosecute ‘the participants in the events on the territory of the Donetsk and Luhansk regions’, i.e. participants in the pseudo-civil war in eastern Ukraine since 2014.
57 Verkhovna Rada of Ukraine (2015), ‘Proekt Zakonu pro vnesennya zmin do Konstytutsiyi Ukrayiny (shchodo detsentralizatsiyi vlady)’ [Draft Law ‘On Amendments to the Constitution of Ukraine (Regarding the Decentralization of Power)’], http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55812 (accessed 5 Aug. 2019).
58 Sluha narodu [Servant of the People] (2019), ‘Predvyborna prohrama’ [Pre-Electoral Programme], https://sluga-narodu.com/program.
59 Council of Europe (2016), Assessment of the Draft Law of Ukraine on Service in Local Self-Government Bodies, CELGR/LEX (2016)4rev, http://www.slg-coe.org.ua/wp-content/uploads/2016/07/CoE_Assessment_onservice_Eng.pdf (accessed 5 Aug. 2019).
60 Accounting Chamber of Ukraine (2019), Zvit pro rezul taty audytu efektyvnosti vykorystannya koshtiv Derzhavnoho fondu rehional noho rozvytku [Report on Effectiveness Audit Results on the Use of the Funds of the State Fund for Regional Development], https://rp.gov.ua/upload-files/Activity/Collegium/2019/7-1_2019/Zvit_7-1_2019.pdf (accessed 5 Aug. 2019); and Ott, M. and Kalachova, G. (2019), ‘Unparalleled Generosity: Who Spends the National Budget on Local Development and How’, VoxUkraine, 9 July 2019, voxukraine.org/en/unparalleled-generosity-who-spends-the-national-budget-on-local-development-and-how/ (accessed 28 Aug. 2019).
61 Council of Europe (2019), ‘Reports: annual national opinion polls on decentralisation and local self-government reform’.