Decentralised countries are less exposed to corruption at local level, - Special Envoy of German Government on Ukrainian Reforms

Decentralisation is one of the most popular reforms in Ukraine. However, what risks does it have? Could it lead to the so-calledfeudalisationof regions controlled by locallords”? How can we prevent this? Given that only a half of the hromadas have amalgamated voluntarily, shall the state enforce the remaining ones to do the same? How can we keep the poorest hromadas involved, while affluent ones prefer to amalgamate with their peers? Where is decentralisation most successful?

In the “Very Important Broadcast”, we offer you our interview with Georg Milbradt who insists: it is only by controlling the local spending that citizens can understand the way politics is made and can get involved in the decision-making process.

Georg Milbradt is the Special Envoy of the Government of Germany on Decentralisation, Good Governance and Reforms in Ukraine. This position was established two years ago. Mr. Milbradt is a high-ranking German politician, from 2002 until 2008 he was the Minister-President of the Federal Land of Saxony. Presently, he teaches public administration at the university.

His work in Ukraine is not about providing advice in general – Georg Milbradt assists in passing concrete political decisions concerning the system of public administration. During his time in Ukraine, the German official has already visited most regions of the country ranging from Bessarabia to the Kharkiv Oblast.


For a year and a half already, you have been the Special Envoy of the German Government on the Ukrainian reform agenda. Your area of responsibility includes decentralisation, public administration and reforms. The Ukrainians do not quite understand what your job is about. Not many countries have to deal with special envoys like you. Could you please explain what your job is for?

My position was agreed by President Petro Poroshenko and Federal Chancellor Angela Merkel and became active in 2017. At that time, your President asked for political, not technical, support for the decentralisation processes, including changes in the legislation and steps to win citizens’ trust so they acknowledge the relevance of the reform.

My main task is to prepare the legislation and to implement the reform step by step, since decentralisation does not only concern villages and towns.

It is important to entrust the local level with legislative powers. On the one side, it is important to establish capable hromadas, and on the other side it is important to enable citizens to influence the decision-making process (it is easier to do at the local than at the national level).

Based on German experience, I can say that decentralisation will change the way people think. Citizens will not only rely on the central government, they will understand they have to do something on their own. They will become aware that they generate public funds by themselves.

Ukraine has a great system — you transfer 60% of the tax revenues to the hromadas. Thus, citizens know where their taxes go and know what they want in return.

I think that this shift in the way of thinking is the best reform for Ukraine.

 

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However, we have many hromadas that are still not involved in the process. The ambitious plan was to finalize amalgamation by 2020. You are travelling a lot and talking to hromadas, just like our journalists. They see that some people are happy and some are not. What success stories can you see? And what problems?

Decentralisation of public administration means that new people come to power. Many citizens are not sure that this is correct, since Ukraine has never had extensive experience in local self-government, except for big cities in the Polish-Lithuanian state.

Decisions have always been made at the central level, people got used to look up to their superiors.

Now, the Ukrainians are changing their country, people are taking power back. It is much easier to do in a small hromada with 9 to 10 thousand residents. You understand things better, and you do not need that much experience to influence the local politics.

It is also easier for civil organisations to see what is going on, to criticize or to try to change the local situation. All this is now unfolding in Ukraine. People in hromadas start to realize that they can influence the politics, not only elect the local council or the mayor.

Unfortunately, Ukraine does not have legislation on local referendums. Influencing the local politics through a referendum would be a new step forward. Second, there is more transparency at the local level, it is easier to see how money is spent. People know each other. If you visit a new small hromada that decides on its own how it should spend its money, you will see that its school is in a better condition, its local roads look better and that children enjoy more public care.

The next step would be to allow the local authorities to decide on the way their towns should develop and what role the local business should play. Local politicians should engage local economists as their partners to improve the business environment, to boost employment and to attract big companies.

Finally, hromadas would receive more taxes, the situation would gradually improve. Of course, it’s up to the mayor and the town council if they grab such opportunities or not. In Germany, it works out fine in 80-90% of the cases. However, of course, there are these 10% of hromadas that still do not have these opportunities.

Still, the decentralisation reform is rather popular.

And successful. I would say, popular and successful.

There are concerns, however, that are related to the specifics of the Ukrainian political landscape. For instance, people are anxious that too much control powers are passed not to the local, but to the middle level – to oblast governors, different important local persons instead of hromadas themselves. Hence, there is a risk that a kind of feudal territories can be established. I have also talked to international journalists who tell me that, for instance, in Greece there is a strong corruption on the local level resulting from the decentralisation reform and that the central government is now not able to tackle it on the national scale. I am not questioning the reform and the idea of decentralisation itself. However, you should take into account the existence of such “big guys” on the local level - land owners who are aware of their potency. How can the state deal with them?

If you have, say, 9,000 residents able to influence political decisions and a group of 10 to 20 people, the latter ones are much more capable to exert influence compared to the national level.

I think that on the level of Kyiv you deal with the structure, mechanism that is very difficult for ordinary people to understand.

Experience of many countries demonstrates that public governance improves, when you decentralise functions       that the local level can handle.

Just have a look at the way the healthcare system, schools or waste management should be organised. Citizens can influence this. We can see that hromadas that have a real power now and have elected their new mayors work more effectively and in a more democratic way compared to the old system where nobody could express her/his opinion.

If you decentralise the use of funds, you also decentralise chances for corruption. It is much easier to detect corruption at the local level compared to the national level where you have to deal with real “big guys”. Decentralisation can’t eradicate corruption once and for all, this is not my point, but decentralisation makes corruption easier to control and to tackle.

International experience proves that decentralised countries have less corruption at the local than at the national level.

You have a great tool in Ukraine designed to fight corruption - Prozorro. I would recommend my country to take over your system, since it is very transparent and you can trace the use of public funds.

 

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In your opinion, does it make sense to compel hromadas to amalgamate, if they are not willing to do this? There are quite a few of them. Is it necessary to set some deadlines, or should it be a national process? What are the risks? If people do not want it, how can we make them change their mind?

You can’t find a single case in Europe where the new territorial structure is based on voluntary amalgamation only.

The map of Ukraine was very much fragmented in the Soviet time. Small settlements could not manage themselves. Even if you decentralise to create municipalities that are not able to operate properly, you need a certain number of residents and additional revenues to be able to establish self-government. Self-government requires capable municipalities.

In most countries that ran through this process – first of all, in post-communist ones like Poland, in Eastern Germany and Czech Republic – a grace period was granted to amalgamate voluntarily, to see if it works out and, finally, to set some deadline.

After the deadline, compulsory amalgamation shall take place according to unified rules set by law. This is how it worked in my country. The deadline helped speed up the amalgamation process. Finally, amalgamation was voluntary in 90% of the cases, and in 10% of the cases only it had to be enforced by law. You do need a cane. But you only should make it visible to stakeholders, not use it. I think that the next step for Ukraine is to set a deadline for the voluntary amalgamation after which the remaining hromadas will have to amalgamate in line with the law.

I hope that by the time we will reach the phase of compulsory amalgamation 80% of the territory will have a new structure based on voluntary decisions.

Successful hromadas tend to amalgamate with their equally successful counterparts, which makes sense, actually. At the same time, less affluent, less creative ones can be left stranded. How can we deal with this?

Of course, you always can find small towns nobody wants to deal with, because they are very poor. This is the way it also happens in the normal life sometimes. That is why, the government or oblast councils must steer this process to avoid all gaps. The tool available to address it in Ukraine is called “perspective plan for the oblast territory or a part of it”.

Obviously, it is not amalgamation for the sake of creating a new hromada in this case, but rather amalgamation directed against this or that stakeholder. In cases like this, the state must intervene and make it clear that amalgamation in this form is unacceptable. You need not only voluntary decisions here, but also resolute decisions by state administrations. This is the tool required to prevent mistakes and abuses you mention.

 

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Elections in some amalgamated hromadas in Ukraine were postponed due to the martial law imposed in December last year. How does it affect the entire process? After all, it impedes fair elections.

The problem of Ukraine is that this process excessively bureaucratic. To make something happen, one needs to obtain many seals and approvals from numerous public bodies and persons. It can be organised in a less bureaucratic way. On the other side, there are people who do not like decentralisation, since it means less power will be in their hands. Look at the situation at the rayon level. New amalgamated hromadas are going to receive many competences and appropriate financial resources.

60% of tax revenues are transferred to the rayon level, if there is no amalgamated hromada in place.

People who are in power are scared to lose their power, their money and their jobs. Sometimes, they are not very useful in the organisation of the amalgamation process. We must persuade them that we have new functions for them.

For instance, the traditional functions of rayons have been transferred to the local level. But someone must take over certain functions at the level between oblasts and hromadas. We must look one level higher.

We must convince these people that they are not going to lose their jobs and positions, but will receive new competences and possibilities for development instead.

Unfortunately, the Parliament has not yet adopted the decision concerning the rayon level. Decentralisation in no way means separatism or federalisation. Out of my experience, the well-organised local level can improve the situation in the country and make it stronger. This is especially important for you, since you have the war going on in the East of Ukraine. You must make your country stronger, a properly implemented decentralization is a proper way to do this. It is an extremely needed and, at the same time, an extremely challenging process launched by Ukraine.

I also have a question about territories usually referred to as the “grey zone”. I mean rayons and villages located close to the frontline. How shall we decentralise those regions taking into account that people there must have the same rights as the citizens in the rest of the country, but, at the same time, bearing in mind the military risks?

People living close to the frontline find themselves in the most trying situation. We must respect the job of the army operating in the state of war. It is much more difficult to organise the decentralisation process that close to the frontline. Military administrations are not very good for decentralisation. However, there are only few municipalities available in this grey zone. Most hromadas that can be subject to decentralisation in the Donetsk and Lugansk Oblasts are located away from the frontline, and decentralisation is running there. Especially in recent months, many things have happened in the Donetsk and Lugansk Oblasts that I would never be able to imagine.

What exactly?

They are trying to find each other, trying to unite.

Originally, I assumed that decentralisation would start in the Western part of Ukraine with the East lagging behind.  But it came vice versa.

There are many interesting amalgamation processes running in the East. If you look at the map, you will see many gaps in the West as well. Decentralisation is not about dividing East and West, as many people tend to think. It depends on the people who are pushing, or not pushing, the process. There are two other regions with a number of issues. This is the Zakarpattia Oblast – only few hromadas have amalgamated there. And it’s also the Odesa Oblast, especially its Southern part - Bessarabia. We also see some problems in the Kyiv Oblast.

 

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There were fears indeed that the process would be progressing very slowly, since 2019 is the election year in Ukraine. The Parliament works in different ways. In many cases like, for instance, the land reform, nobody could expect the process to start prior to the election of the new Parliament in the end of 2019. What priorities, in your opinion, just can’t be postponed? And what makes you anxious given that things slow down in any country running through its election process?

It is natural that things slow down. We are talking about voluntary amalgamation, but, maybe, you need a cane and a carrot instead. The process can move forward in small steps, but it still moves forward. It takes too much time from the amalgamation process to the decision-making at the top level. But this problem is not that dramatic.

The real problem is that you need new laws to implement some tools, especially to restructure the rayon level.

The current laws are remnants of the Soviet times. The processes depend on decisions made by the Parliament. Unfortunately, as you say, the Parliament works at the extremely slow pace.

The law on illegal enrichment had been acknowledged non-Constitutional. It means that at least 60 cases of corruption will not be investigated. This is a huge disappointment for many people, especially taking into account the efforts made to fight corruption. This undermines the trust for the system and the reform process. What do you think about this?

I am not an expert in the constitutional law and do not know many details of this law ruled non-Constitutional, but the process of decentralisation and the reorganisation of the whole country is never easy.

As long as you make two steps forward and one step back, all is fine. I think this is how it looks like in Ukraine now.

 

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Sometimes, people say: I like everything, Germany is an excellent example. However, our salaries equal to few hundred USD cannot be compared with the salaries of public servants in Germany. The level of the Ukrainian economy is rather low. So, speaking, first of all, about public governance, how can one expect a better remuneration? The same question concerns hromadas. People feel poor, which they really are.

I can’t promise that public servants in Ukraine will enjoy the same salary as their counterparts in Germany. Public servants must have a salary that would be decent compared to the income of tax payers. Public service must be paid decently. I am not talking about some horrendous sums. You need competent employees, Ukraine acutely needs them – this is especially the case at the local level where new competences are arising. You need to re-train the existing and to train the new personnel. This process is running now.

However, you need a generation to transform the entire country. I am telling you this out of my experience in Eastern Germany. The situation there was somewhat better than in Ukraine – we used to have local self-government, so it was easier for us, but still… 30 years have passed since the re-unification of Germany, but we still feel mental differences between East and West. We must be patient. It is unrealistic to think that you can change the situation, the entire country and the society within several years. It doesn’t mean that we are not making any progress. But people just do not change that fast. They have their traditions and their fears. We should avoid reforms that are harmful for the citizens.

When Ukrainians hear the word “reform”, they think that nothing will change anyway.

We must clearly understand that the reform gives something to the community and to the citizens. For me, economic development and decentralization are two sides of one coin. The situation in Ukraine is complicated due to the war in the East, the devaluation of the Ukrainian currency and economic instability. I know all this, but I see the opportunity to develop local business at the local level. Of course, the Government and especially the Parliament must lay grounds for this at the national level, because it will be very difficult to foster the local level without any actions taken to develop the national level.

 

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Georg Milbradt

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Громадське Телебачення

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