Parliament

Decentralization Policies: No Clear Outcomes, No Specifics and No Numbers

21.10.2014
Ivan Sikora

Along with the fight against corruption, decentralizationis the second most popular promise of political parties that have a chance to overcome the 5% barrier. Decentralization is, above all, about the authority, resources and responsibility of the officials for specific delegated powers.

The abstract talksabout the financial support of local budgets and delegated authorities are pointlesswithout specific indicators, numbers and interest rates. However, the analysis of the election programs of 9 leading political parties revealed the lack of the calculationsof social, economic or political decentralization benefits.

The issues of decentralization benefits and consequences, the winners and the losers remain opened.

IvanSikorahas published an article on the decentralization promises of politicians in ‘Ukrainska Pravda’.

What to start with?

Decentralization was the key priority of the government, the public and the media for more than six months.

Decentralization as the increased powers and the financial base of the local communities was a response to Yanukovych’s increased centralization of financial flows. All local failures were easily assigned to inefficient bureaucrats in the abstract ‘Kyiv’. Instead, the transfer of powers and financial resources to the community level wouldmake it easier to find responsible person for the bad roads, poor housing, health care or educationservices.

Enormous financial resources were initially collected from local budgets, and then partially returned through grants. This scheme was quite costly for the taxpayers. According to various estimates, the corruption risks in the budget funds were worth UAH 200 billion as of January 2014 due to the ‘kickbacks’, tax and customs exemptions, VAT frauds and excise evasion.

The increased state budget deficit led to a systemic practice of delayed payments by the State Treasury to local budgets. All these suggested the need for decentralization of authority and financial resources.

April 1, 2014can be considered a start of decentralization. The Concept of the reform of local self-government and territorial organization of power in Ukrainewas adopted. Yatsenyuk’s government submitted a package of draft laws on decentralization to Parliament, including the projectson voluntary association of local communities, the amendments to the Budget Code and the Tax Codeduring the summer months and in September.

Despite the urgency of decentralization the programs of all political partieslikely to get to Parliament (Petro Poroshenko Block, Oleg Lyashko’sRadical Party, ‘Batkivschyna’, ‘Narodnyy Front’, ‘GromadyanskaPozyciya’, ‘SylnaUkraina’, ‘Samopomich’, the Opposition Block) contain no clear measurable promises onthe issue. Addressing the voters without specific indicators provides the room for populism, arbitrary interpretation and adjusting promises to the political needs.

Significantly, the programs of the parties in the2012 Parliament convocation(the Party of Regions, ‘Batkivshchyna’, ‘UDAR’ and ‘Svoboda’)contained more specific promises on power transfer to the local councils. The election agendas mentioned specific key taxes to remain in local budgets. The Party of Regions has promised to "smother their own voice" and provide 60% of the consolidated national budget to the local councils. The opposite has happened, however. Yet, at least this intention was noted by the voters and provided an opportunity to evaluate this political party.

What’s behind the promises of decentralization?

The voters are not interested in fashionable ‘decentralization’notion.

It is important to get the answers specifically in terms of voter’s income, the quality of public services (education, health care, social services, housing, roads, etc), new jobs and infrastructure in villages, towns, cities, rayons and oblasts. Also, it is necessary to understand how the promises of decentralization by political parties and blocksdiffer.

Instead of specific promises the election agendas focus on the generalizations.

These aim to reduce the authority of local state administrations (or even eliminate them) and delegate the powers to the executive committees of local councils. What financial framework and powers will the local authorities possess? How will theterritorial reform be implemented? The answersremain unclear.

At the same time the package of relevant laws is pending inParliament. The government has proposed different approaches. These can either be accepted or reasonably criticized. Unexpectedly even ‘Narodnyy Front’ led by Prime Minister Yatsenyuk somehow ‘forgot’ to mention at least some specific commitments in the area of decentralization in their election agenda.

Petro Poroshenko Block

Interestingly enough, the election program of Petro Poroshenko Block (PPB) does not specify presidential powers at the local level.

PPB promises the communities “more rights and more funds for the implementation of the powers". "The executive power in oblasts will not belong to the ‘governors’ appointed from above, but also to the executive committees formed by the councils elected by the people" – the agenda states.

However, the question of suggested options to replace the‘governors’remained opened. What additional rights and resources should the communities get for implementing the new powers?The questionremained unanswered as well.

‘Narodnyy Front’

The promises of ‘Narodnyy Front’ led by Prime Minister Arseniy Yatsenyuk were even more general and less measurable comparing Poroshenko’s Blog.

The members of ‘Narodnyy Front’ promise the decentralization and true local self-government. They believe that "communities have to become a major element of the whole design of the state. The local governments [have] to obtain a stable financial framework for the implementation of the expanded powers."

What powers will be transferred to local governments? Which revenues will form "a stable financial framework”? The questions remained opened. Possibly, the financial framework will be stable, but not sufficient for the delegated authorities.

Ironically, the political analysts of ‘Narodnyy Front’preferred the general formulations, despite Yatseniuk’sgovernment had initiated the process of decentralization and submitted a package of relevant laws to Parliament before.

Perhaps, no one in the government has calculated the effect of decentralization.

‘Batkivshchyna’

The European Charter of Local Self-Government was the framework for ‘Batkivshchyna’s’ promises"to reform the local government, extendits rights and financial independence".

Although Ukraine has signed the European Charter long time ago, the document’s provisions have not been performed. Legal, organizational and financial autonomy of local government remained questioned. The Charter providesfor ensuring the financial autonomy of local governments and local authorities' right to own and manage their own funds, sufficient to perform their functions and powers.

It is also unclear how ‘Batkivshchyna’ will uphold and interpret the European principles of local self-government in Parliament.

‘Batkivshchyna’s’ agenda did not explain how the rights and financial autonomy of local governments will be extended.

‘GromadyanskaPozyciya’

The promises "to eliminatethe local state administrations" and transfer their powers to the executive committees, formed by oblast and rayon councils were common for ‘Batkivshchyna’, ‘GromadyanskaPozycija’, ‘Svoboda’ and the Opposition Block.

At the same time, ‘GromadyanskaPozyciya’ proposed to limit "the representations of central government with supervision, control and coordination of national programs functions", which suggests the framework for powersof the current President of Ukraine.

The program of AnatoliyGrytsenko’sparty did not specify thenecessary functions and powers, material and financial resources to be transferred to local governments.

‘Svoboda’

‘Svoboda’s’ election program promised to dissolve the local state administrations and transfer their powers to the executive committees of local councils. It also suggested the election of "local judges with local community, the appellate judges –with the Congress of local judges, the judges of the Supreme Court – with the Congress of Judges of Ukraine". This, probably, was designed to increase confidence in the judiciary.

‘RadykalnaPartiya’

The promises of Lyashko’s Radical Party were difficult to measureas well.

The members of the party have promised to decentralize the power and "allow the freely elected head of the community to make all the important decisions for the people without any guidance from the capital". They have promised that "the community will become the manager of the land, the buildings and the equipment."

At the moment, however, the communal land and property are being managed by the relevant local councils. Thus, it is not clear which land, buildings and equipment were referred to in this promise. Did they mean the land in the state property?

The promise of "collected taxes to remain at the local level" and "be used responsibly by the communities"was relatively specific. However, the percentage of the taxesto remain at the local level was unclear. If the authors meant local taxes and fees, it did not solve the issue of financial self-sufficiency of local budgets.Such approach, however, provided this young party an opportunity for maneuver in Parliament.

Lyashko’s promises "to give the communities the right to hold a referendum to decide on important issues"suggested another set of questions.What important issues can be voted in a referendum? Can this be used for the purposes of disintegration in some areas of Ukraine? These questions are open.

‘Samopomich’

The program of ‘Samopomich’ was the most concise in terms of decentralization. The party promisedthe"decentralization of powers and taxes, so that the community has sufficient powers, means and mechanisms of responsibility for own development."

The details of proposed decentralization, the authority and taxes to transfer to the community level, as well as the specificities on what is sufficiency, are not clear from the program of the party.

‘SylnaUkraina’

The decentralization promises of ‘SylnaUkraina’ were predominantly declarative, although more specific.

The promise on the right of communities in urban areas and rayons to"dispose their property and most of the budget funds collected on their territory" is quite specific. However, the party’s position on villages and towns was not indicated in the program.

The promise "to regulate the local tax rates depending on the needs of the region" is also specific. However, given the extremely low proportion of local taxes in the structure of revenues of local budgets (only 7%), without specifying exactly which state taxes should become local, the promise hardly allows the improvement of financial security of the oblasts and rayons.

How will local communities influence the appointment of heads of local law enforcement and regulatory authorities? The question remains open.

Tigipko’s party proposed limiting the functions of presidential representatives in the regions and narrowing these to monitoring the compliance with the laws of Ukraine.

The agenda also suggested to "elect the executive bodies (the executive committee members and the chairman)", although it did not provide any further details.

The Opposition Bloc

The Opposition Bloc was not too specific in electoral promises as well.

This political actor has inherited the legacy of the Party of Regions. It would be logical to build its campaign on the decentralization benefits to local communities and regions. Their ‘predecessors’ (the Party of Regions)were more specific in their promises during 2012 parliamentary campaign. The Party of Regions too back then haseven specified the percentage of the consolidated national budget dedicated to the budgets of local councils. They acted opposite, however.

Perhaps because of this the current ‘opposition’ was trying to avoid the specifics. Their election agenda contains the general promises of the "transfer of functions, powers and finances to local communities, forming the executive bodies of local councils, eliminating the rayon state administrations."

How will they do it? The answer remains unknown. This approach does not distinguish the oppositionists from the other parties. Some promises (the elimination of rayon state administrations) are the same as those of ‘Svoboda’, ‘GromadyanskaPozyciya’ and ‘Batkivshchyna’.

The only difference is thedeclaration of necessary right of citizens to elect regional leaders and recall them by direct vote.For over a year Mr. Medvedchuk and Mr. Putin have not been able to push this modified version of ‘federalization’ in Ukraine in a peaceful manner.

Why do thedecentralization promises lack the specificity?

Obviously, the political actors react to thevoters’ demand for decentralization. A fairly uniform set of promises on decentralization was caused either by the lack of calculations, or fear of saying something that voters dis like, or fear of the ‘predecessors’ fate.

In such situation, the choice of political partyjudging by the promises on "decentralization"becomes a lottery.

It is clear, however, that decentralization has its winners and losers. The densely populated, industrialized and urbanized areas in the east and the south of Ukraine will benefit the most from the governmental amendments to the Budget and Tax Codes.

Obviously, the general promises provide a lot more room for maneuver.

Do thevoters need the politicians learning from own mistakes, manipulating the promises and hiding whose interests they represent?

How long do the voters have to wait for the responsible politicians with clear and properly prescribed programs, with the deadlines and indicators of success? The question remains unanswered.

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