Not all roads lead to Kyiv. Ukrainian decentralisation and its political aftermath

One of the most important post-Maidan reforms in Ukraine—the local government reform—is coming to an end. The changes will strengthen the position of local governments in relation to the national authorities, which will result in new, more inclusive and competitive rules on the local political stage. It is also an opportunity for Polish and European local governments to work more closely with Ukrainian partners.

Although the need for decentralisation of power in Ukraine has been brewing for a long time, successive ruling groups have not taken any real steps in this direction. The presidential ‘vertical power’, which has existed since the times of Leonid Kuchma and extends to remote provinces, allowed the head of state to manually control the political and socioeconomic situation from Kyiv even in the most remote regions of the country. No wonder then that no ruler in Bankowa Street wanted to give up such privileges voluntarily. The situation only changed after Viktor Yanukovych’s escape—decentralisation was supposed to prevent the re-monopolisation of power in the future, and also to respond to the events in the Donbas at that time (it was widely believed that one of the main reasons for the tendency towards decentralisation in the east of the country was the excessive centralisation of power).

Outline of the reform

The local government reform involves the reorganisation of the administrative division and the establishment of a new distribution of power between local government authorities and the government administration. Ukraine inherited from the USSR an inefficient, three-tier system of territorial administration, comprising the following levels: regional (24 oblasts and the Autonomous Republic of Crimea), sub-regional (raions, or districts), and local (hromadas, or municipalities), as well as the separate cities of Kyiv and Sevastopol with oblast rights.

The fragmented municipalities do not have sufficient financial or organisational capacity to perform public tasks, so they will be consolidated (less than 1,500 out of the approx. 12,000 municipalities in 2014) and will gain financial independence and a wide range of responsibilities. At the district level (which will also be consolidated, with fewer than 140 out of nearly 500) and the oblast level, there are no local government executive bodies whose functions are performed by the state administration controlled by the president. The latter will therefore be liquidated, and in their place, local government authorities at both levels will finally be able to set up their own bodies. The municipalities and districts will appear in their new form after the local elections scheduled for October. Constitutional changes would be required to liquidate district and oblast state administration.

Internal aspect of decentralisation

The main consequence of the local government reform will be the strengthening of Ukrainian local authorities at the expense of the gradual erosion of presidential ‘vertical power’. Thanks to their new-found financial independence, the primary units of local self-government, i.e. consolidated municipalities, will no longer be dependent on the districts with which they had to negotiate the amount of subsidies every year (in practice, the municipalities were at the mercy of the central authorities, and the amount of subsidies depended on how much ‘backing’ the local authorities had in the capital).

Although the head of state will retain influence over the situation in the provinces thanks to the establishment of prefect offices in place of the state administration, their tasks will be limited primarily to controlling local self-government and coordinating the activities of local executive authorities.

Steering a larger stream of funds directly to the districts means that the existing rules of the game in Ukrainian politics will be changed to more inclusive and competitive ones. On the one hand, this will contribute to the further development of local political elites, which—now free of financial dependence from the capital—will be more and more willing to challenge the central government (which was clearly demonstrated by the numerous conflicts between the Ukrainian president and the governments and mayors of the largest cities over restrictions related to the COVID-19 pandemic).

On the other hand, combined with the new parliamentary election law (adopted at the end of last year) with open regional party lists, it will make it easier for local political activists to enter national politics. An effective and popularly supported chairman of a large, consolidated municipality will now have a sufficiently broad electoral base and ‘administrative resources’ to compete for the parliamentary seat in the district against the traditional favourite—a corrupt politician who (quite literally) paid for the top spot on the party list.

However, decentralisation will also contribute to the strengthening of local political and business systems, including oligarchic groups (not every political and business scheme is an oligarchic group, although every oligarchic group is a political and business scheme).

After all, they will also gain easier access to financial flows, often away from the watchful eye of the presidential administration. Although these funds will not be abundant enough to allow them to challenge the status of the main actors, especially Rinat Akhmetov, who has invariably been the first among equals, they will be sufficient to build separate principalities which need to be reckoned with by central authorities (e.g. the Transcarpathian clan of the Baloha brothers). Although the oligarchs permanently inscribed in the Ukrainian political landscape parasitise the state, in all fairness it should be added that in times of need they are often the last refuge of political pluralism.

Cross-border cooperation of local governments

Strengthening the local governments in Ukraine will enable even closer Polish–Ukrainian and general European-Ukrainian cooperation at the local government level. The Ukrainian local authorities, now stronger financially, will have more funds at their disposal than before for joint ventures with their Polish and European counterparts—business, cultural, sports, and more.

It will also be easier for them to contribute to projects co-financed from EU funds (e.g. under the Poland–Belarus–Ukraine cross-border cooperation programme, contributions must be financial ones, which not all Ukrainian local governments have been able to afford so far) or to cover the administrative costs of projects funded by the Ministry of Foreign Affairs of the Republic of Poland (e.g. as part of Polish aid or public diplomacy). Therefore, their credibility as bidders or partners will increase. Their financial independence will also allow them to plan their activities in the long run, which will be conducive to deepening the existing international relations and establishing new ones.

Meanwhile, new areas of cooperation will open up to local governments on both sides of the Polish–Ukrainian border, as Ukrainian local authorities will not only be strengthened financially, but will also take over responsibility for most local matters that may not have been their responsibility so far. Of course, not all Ukrainian local governments will be equally ready for it: many of them, especially the newly established ones, will only learn to manage effectively over time, while seeking technical support and expert advice from their foreign partners.

In this context, contact with Polish local governments will allow an exchange of experience, a search for effective solutions and inspiration, due to both the geographical and cultural proximity and—to some extent—a similar model of local government. It is possible that some Polish local governments will face the need to negotiate new agreements on this occasion, as their existing partners on the other side of the border (this applies to the level of municipalities and districts subject to consolidation) may cease to exist in the Ukrainian administrative division and become part of larger local government units after the October local government elections.

The Donbas question

Finally, the relevance of Ukrainian decentralisation goes far beyond the issues of organising local self-government and directly relates to the negotiations between Ukraine and Russia on ending the war in the Donbas, which have been ongoing since 2014. The second Minsk agreement of February 2015 provides that the constitutional changes regarding decentralisation should be accompanied by the establishment of a special status for ‘separate regions of the Donetsk and Luhansk oblasts’ (which is a euphemism for the territories of both oblasts currently controlled by the Russian army).

Such an artificial coupling of decentralisation with the regulation of the part of the Donbas not controlled by the Ukrainian government has been the obstacle inhibiting the local government reform from the very beginning. In 2015 the Ukrainian parliament did not adopt the constitutional changes necessary for decentralisation precisely because the Donbas issue was included in the draft amendment to the constitutional law (after all, the Minsk agreements are not legally or politically binding for the Ukrainian parliament).

It all came down to approval of the changes in the first reading only, and the aftermath of this decision—including the bloody riots outside the Supreme Council building. The amendment to the constitution was then postponed indefinitely out of necessity, giving priority to municipality consolidation.

The current Ukrainian authorities rightly reject the possibility of including this special status in the constitution, as in practice this would mean creating a Russian protectorate in eastern Ukraine and it would inevitably lead to an implosion of the state in the long run (it could trigger a domino effect, encouraging other districts to apply for a similar ‘special’ status). Moreover, there is also no societal consent to such a scenario: according to public opinion polls conducted in November 2019 by the Ilko Kuczeriw Democratic Initiatives Foundation—one of the most credible Ukrainian pollsters—over 53% of respondents were against any special status for Russian-controlled areas (with 30% in support of such a solution). Therefore, the issue of the future status of the Donbas will probably not be included in the new draft of constitutional changes on decentralisation.

Of course, the side effect will be that the Russian authorities will try to present this Ukrainian decentralisation—devoid of any reference to the Donbas’ status—as alleged evidence that Ukraine has broken the Minsk agreements, and thus a reason for the EU to lift the sanctions imposed on Russia. Russia will likely also threaten to withdraw from the Normandy Format, because in this way it has traditionally (and often successfully) pressurised Germany and France—as the endorsers of the second Minsk agreement—to force the Ukrainian authorities to make further concessions.

However, let us not be fooled by the Russian bluff; after all, negotiations aimed at settling the situation in the Donbas have long been at an impasse due to the lack of political will of the Russian authorities to withdraw troops from Ukrainian territory. Moreover, the status quo of a low-intensity war is more favourable to the stability of the Ukrainian state than an illusory ‘peace’ on Russia’s terms, as imposed by the Minsk agreements.

On the home straight?

After the October local elections, Ukraine will face the last political battle in the framework of decentralisation; the stakes will be the president’s future influence on the situation in the province. It would be naïve to think that the head of state would give up power without a fight, even if the limitation of his ‘vertical power’ is clearly implied in the imminent self-government reform. The president’s draft amendment to the constitution, which appeared last autumn in the parliament, was deservedly criticised for excessive competences of the prefects and had to be withdrawn under social pressure—as well as pressure from foreign partners supporting decentralisation with expert advice and funding. This does not mean, however, that the new proposal will be more moderate in this respect. Justifying his stance with the threat to national security, President Volodymyr Zelensky—like his predecessors—will try to maintain the greatest possible control over the districts. Although Ukrainian presidents change, the spirit of such a rule of everything and everyone is still doing well inside the walls of the headquarters on Bankowa Street. This time, however, the central authorities will share their power. The only question is when.

Polish version is available here.