Ukraine's Solution to Saving Democracy: Let the Towns Run Themselves

Ukraine's Solution to Saving Democracy: Let the Towns Run Themselves

Why you should care

Because transparent governance should be on every country’s agenda.

A few years ago, schools in the Ukrainian village of Dolyniany were in catastrophic condition. At night the entire place was dark, its streetlights long since burned out. Now, residents say, an influx of cash is helping repair local infrastructure, turning a once-blighted community into a more suitable place to live. “People feel supported,” the village leader told a television network. “The money is coming in.”

Sprucing up a school, replacing some light bulbs or fixing up a few roads may not seem like much, but it’s a big deal in impoverished rural Ukraine. The former Soviet republic has a long history of rigid, centralized rule — first under communism, then under its own national government. Since independence in 1991, political and economic marching orders have mostly come from Kiev, where many villages and towns have sent the bulk of their tax dollars. Precious little has been kicked back down to the local level.

Compared to other reforms going on in Ukraine, [decentralization] … is the most on track.

Yulia Yesmukhanova, deputy manager, Global Communities

Combined with widespread corruption, the results have been alarming. Hundreds, even thousands, of villages, towns and small cities across this vast country of some 45 million have languished in disrepair. Administrative buildings, schools and medical facilities are practically crumbling to the ground. The pockmarked roads connecting them are often in even worse condition.

That long-standing state of affairs makes the renovations in Dolyniany particularly encouraging. And this rural, nondescript community 350 miles west of the capital is far from alone. Since 2014, when Ukraine’s pro-democratic revolution overthrew a corrupt, pro-Russian autocrat, the country has embarked on a mission to devolve more power and finances to its two dozen regions. Decentralization is giving locals a greater say in how their communities are run, as well as access to purse strings as Ukrainians dismantle a clumsy bureaucracy that has long eroded confidence in the state.

The results are beginning to appear in the form of self-organized communities like Dolyniany, which have pooled newly distributed resources to launch local development projects. Observers hope the trend will eventually deliver a positive impact on the country’s broader struggle for transparency. “Compared to other reforms going on in Ukraine,” says Yulia Yesmukhanova, a deputy manager at Global Communities, which runs a decentralization program funded by the U.S. Agency for International Development, “this one is the most on track.”

Plans for decentralization aren’t new. They were first laid more than a decade ago, after the Orange Revolution in 2004, which succeeded in electing a pro-democracy president, but failed when he couldn’t deliver on his promises. They were later derailed when former President Viktor Yanukovych — the autocrat ousted in 2014 — sought to consolidate his power in a corrupt hierarchy. Now, the government is giving it another shot with wide-ranging support from the West, using the institutional framework that already exists.

The reform comprises two key elements: combining previously separate settlements into single administrative units called unified territorial communities, then funneling tax revenues back to these UTCs for local development projects. The new, streamlined UTCs receive 60 percent of local income taxes, as well as 100 percent of all excise taxes and local administrative service fees. The logic is simple: “The more citizens you have, the more taxes they pay,” says Balázs Jarábik, an expert on Central and Eastern Europe at the Carnegie Endowment for International Peace, “and the more money you’re actually going to get.”

So far, the results have been impressive. Around 400 UTCs have been created out of more than 1,700 villages, settlements and towns. Since 2014, local budgets have grown 107 percent, according to official statistics, and many rural areas are being developed in a way not seen in decades. The Zymnivsky UTC, for instance, in Ukraine’s northwestern Volyn region, is now home to what officials say is the country’s first village-level administrative service center. The medical clinic in Bashtanka UTC, in southern Ukraine, will soon receive a diagnostic center, including its own radiologist and pediatrician. In other places, roads are being paved for the first time ever.

To be sure, these are short-term gains, says Yesmukhanova, of the USAID-funded program, and many of them are supported by generous state and international grants. But she also expects a long-term payoff: “There will be more motivation to engage in local governance.”

Despite these small victories, there are still major roadblocks on the path to wider success. For one, communities must prove themselves capable of collecting and effectively managing tax revenues, a challenge in the many places where tax bases are small or virtually nonexistent, thanks to a lack of employment or mass emigration. Larger regions, meanwhile, have the resources to try to attract foreign investment, although it isn’t exactly pouring in, given the lingering, often unacceptable levels of corruption.

Then there’s the bigger political picture. Full implementation of the reform requires approval in Parliament through constitutional amendments. That’s partly because opposition parties believe one of the measures, which envisages the creation of presidentially appointed prefects, hands hidden power to President Petro Poroshenko. Also problematic is that decentralization is bundled into a legislative package that would grant special status to two separatist-held regions in war-torn eastern Ukraine, a move critics say amounts to capitulation.

Primarily for these reasons, it’s unlikely that decentralization will become fully enshrined in the constitution any time soon. “There is a political consensus that decentralization is necessary,” says Jarábik, the Carnegie expert. “The problem is that there has never been any consensus on what kind of decentralization is necessary.”

Still, the reform in its current state is already a significant step forward in a country whose population has long been used to rule — often incompetent and corrupt — from above. Decentralization gives citizens the power to change that equation, but the question remains: What will they do with it?

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