Ge­org Mil­bradt: "De­cen­tral­iza­tion changes how peo­ple think"

“De­cen­tral­iza­tion changes how peo­ple think”

The Ukrainian Week - - CONTENTS - In­ter­viewed by Olha Vorozh­byt

Ger­many's spe­cial en­voy to

Ukraine on re­form in gov­er­nance and de­cen­tral­iza­tion on Ger­man govern­ment as­sis­tance in the im­ple­men­ta­tion of re­forms, suc­cesses and dif­fi­cul­ties faced in this process

The Ukrainian Week spoke with Ger­many’s spe­cial en­voy to Ukraine on re­form in gov­er­nance and de­cen­tral­iza­tion, Ge­org Mil­bradt, about Ger­man govern­ment as­sis­tance in the im­ple­men­ta­tion of re­forms and about the suc­cesses and dif­fi­cul­ties faced in this process.

Ukraine’s For­eign Min­is­ter, Pavlo Klimkin, has stated that your ap­point­ment as a spe­cial en­voy to Ukraine is an ac­knowl­edg­ment of the close co­op­er­a­tion be­tween our two coun­tries. Tell us some­thing about your ob­jec­tives on this mis­sion.

— This mis­sion arose within the frame­work of an agree­ment be­tween Petro Poroshenko and An­gela Merkel. Most likely be­cause Ukraine is al­ways be­ing crit­i­cized, it was nec­es­sary to send an ex­pe­ri­enced politi­cian from the G-7. Ini­tially, we had a long list of ob­jec­tives, but even­tu­ally the Ger­man side set­tled on three main ar­eas: de­cen­tral­iza­tion, qual­ity gov­er­nance, and the civil ser­vice. The way things cur­rently look and within the con­di­tions that the re­form process is tak­ing place, I be­lieve, and those who are in­volved in it on both the Ukrainian and Ger­man sides, that de­cen­tral­iza­tion is the most sig­nif­i­cant. It’s very im­por­tant be­cause it will change the way peo­ple think and act. They will be re­spon­si­ble for them­selves and, at the same time, the sys­tem in which all ini­tia­tives come from the top and trickle down will be bro­ken. De­cen­tral­iza­tion means that cit­i­zens will have to in­de­pen­dently work to re­solve their prob­lems lo­cally.

I also be­lieve that this will strengthen democ­racy in Ukraine, as or­di­nary Ukraini­ans will be­gin to un­der­stand that they them­selves can make some things bet­ter. At the high­est level, in Kyiv, it’s not al­ways easy for in­di­vid­u­als to have the nec­es­sary in­flu­ence, whereas in smaller com­mu­ni­ties it will be much sim­pler to re­solve is­sues. I think that

this will also con­trib­ute to the bat­tle against cor­rup­tion. Al­though this re­form will also de­cen­tral­ize cor­rup­tion, it will be much eas­ier to com­bat it in this new for­mat. This has been proved in in­ter­na­tional stud­ies and Ukraine is un­likely to be dif­fer­ent.

De­cen­tral­iza­tion is the na­tional pri­or­ity to­day. Ukraine com­mit­ted it­self to in­sti­tute proper lo­cal govern­ment back in the 1990s and even signed the Euro­pean Char­ter to this ef­fect, but the nec­es­sary re­forms never took place. Then you tried again af­ter the Orange Rev­o­lu­tion, but un­der the Yanukovych Ad­min­is­tra­tion this process stopped com­pletely. What’s in­ter­est­ing is that ex­perts con­tin­ued to work on this in Ukraine all that time. By the time the sec­ond Maidan was over, their draw­ers were filled with the nec­es­sary blue­prints, so the Govern­ment was able to adopt a pretty clear pro­gram by April 1, 2014. This could never have been done from scratch in just five weeks, which means that ev­ery­thing was ready on the Ukrainian side and the Govern­ment be­gan to work.

Next was the mat­ter of sup­port­ing all this fi­nan­cially, but on con­di­tion that it would be by amal­ga­mat­ing strong, func­tional lo­cal units. Work­ing to­gether, it’s pos­si­ble to have an im­pact. Once the amal­ga­ma­tion of new com­mu­ni­ties took place, it be­came pos­si­ble to equip and ren­o­vate schools and fix roads. Other things also got bet­ter in the lives of these ter­ri­to­rial merg­ers, in­clud­ing pub­lic ser­vices, and those is­sues that con­cerned such things as kinder­gartens could also be re­solved. I would say that things are mov­ing along quite quickly. Still, there are suc­cesses as well as prob­lems in the de­cen­tral­iza­tion process. So far, only one third of com­mu­ni­ties have vol­un­tar­ily united and are prop­erly func­tion­ing. In or­der to get the rest mov­ing, some kind of in­cen­tive is needed, such as more lo­cal rev­enues and ad­di­tional pow­ers, or else some new ter­ri­to­ries will have to be forcibly united. Ukraine has so far cho­sen to do this on a vol­un­tary ba­sis.

One prob­lem is that ter­ri­to­rial com­mu­ni­ties most of­ten join forces where there are ma­jor cor­po­ra­tions, and so, of course, they look suc­cess­ful, be­cause they take in the cor­po­rate profit tax from these man­u­fac­tur­ing com­pa­nies. In the past, 60% of the rev­enues from these com­pa­nies went to the oblast. What are your thoughts about the UTC for­ma­tion process? What would you sug­gest to help smooth out the un­even­ness?

— The de­cen­tral­iza­tion of tax rev­enues has been very suc­cess­ful. There’s also a com­pen­satory sys­tem that re­duces the dif­fer­ences be­tween wealth­ier and poorer com­mu­ni­ties. Still, the mu­nic­i­pal fis­cal sys­tem needs to con­tinue to be im­proved, such as by re­form­ing and im­prov­ing the prop­erty tax.

Lo­cal rev­enues are also im­por­tant in or­der to be able to hire qual­i­fied per­son­nel. This is why a law on the Civil Ser­vice is needed. Un­for­tu­nately, the Verkhovna Rada and the pres­i­dent have not been able to agree and the first at­tempt to pass it failed. There needs to be a sec­ond at­tempt.

It’s not just money that will play a ma­jor role for these com­mu­ni­ties, but also the fact that UTCs are masters in their own homes, so to speak. I mean that not in the sense of own­er­ship but in the sense that they are re­spon­si­ble for what hap­pens there and so they are able to plan au­tonomously. And so, state prop­erty will partly be turned over to these com­mu­ni­ties.

This is just the be­gin­ning of the path, when some county pow­ers del­e­gated to the new com­mu­ni­ties. County-level govern­ment also needs to be re­formed. Right now, we’re see­ing com­mu­ni­ties emerge that are as large as a county. The peo­ple who are in the county ad­min­is­tra­tions are aware of this and they are re­luc­tant to see big­ger com­mu­ni­ties be­ing formed. Of 490 coun­ties, 130 have not taken a sin­gle step to­wards set­ting up UTC, mean­ing that not a sin­gle com­mu­nity has been ini­ti­ated in these coun­ties. Too of­ten the county ad­min­is­tra­tions them­selves even ham­per this process. In part, this hap­pens at the oblast level, too, but gen­er­ally it’s at the county level, where peo­ple are afraid to lose their jobs. And so, in or­der to con­tinue with de­cen­tral­iza­tion, this seg­ment has to be de­ci­sively re­struc­tured. In a coun­try as large as Ukraine, coun­ties are nec­es­sary and so they, too, should be­come larger and gain new pow­ers so that there are prospects for their peo­ple. This means that the next ma­jor step, af­ter larger com­mu­ni­ties are formed, is ter­ri­to­rial and func­tional re­form at the county level.

Be­sides this, there’s yet an­other is­sue. The coun­try’s eco­nomic en­gine is not just vil­lages but also oblast-level towns, so they should grow to­gether with their out­skirts. A law to this ef­fect has al­ready been passed and signed by the pres­i­dent, and it al­lows large cities to par­tic­i­pate in the pro­gram. This is a very sig­nif­i­cant step.

The process is on­go­ing. The ques­tion now is what can be ex­pected af­ter lo­cal elec­tions in 2020. Will there be enough of these com­mu­ni­ties who have merged to work ac­cord­ing to a sin­gle sys­tem or will there con­tinue to be a ‘two-class” sys­tem: new com­mu­ni­ties with new rights and old ones that, un­like the UTCs, will re­main de­pen­dent on the county. It’s dif­fi­cult, but this prob­lem has to be re­solved.

As to the other as­pect of my work, the Civil Ser­vice, the Verkhovna Rada has adopted the nec­es­sary doc­u­ment amend­ing cer­tain leg­is­la­tion re­gard­ing the Civil Ser­vice. Now it needs to be prop­erly en­acted. This means set­ting up more ed­u­ca­tional projects, which we are do­ing to­gether with the Coun­cil of Europe. We’re on the right path, but we’re look­ing at 5-10 years to reach this ob­jec­tive. The adop­tion of the law can­not change ev­ery­thing. To change the men­tal­ity, it will prob­a­bly take an en­tire gen­er­a­tion. The Na­tional Academy of Pub­lic Ad­min­is­tra­tion has signed a co­op­er­a­tion agree­ment with in­ter­na­tional part­ners who are pre­pared to of­fer fund­ing and ex­pe­ri­ence.

Qual­ity pub­lic ad­min­is­tra­tion is the next im­por­tant topic. Here, we’re look­ing at a new way of or­ga­niz­ing it, of mak­ing it more struc­tured. For in­stance, Ukraine has se­ri­ous prob­lems be­cause the soviet sys­tem es­tab­lished a huge num­ber of state le­gal en­ti­ties, and of course they cre­ate a tax bur­den. This phe­nom­e­non needs to be rad­i­cally changed.

Other com­pli­cated mat­ters are cor­rup­tion and the court sys­tem. And, of course, the pri­va­ti­za­tion of state compa-

nies. Given that they are cur­rently sus­pended some­where be­tween the Govern­ment and the mar­ket econ­omy, they are es­pe­cially in­clined to­wards cor­rup­tion. It’s not easy to fig­ure this one out, be­cause the ques­tions arise: who should pri­va­tize them, what can for­eign­ers ac­quire, what is Ukraine sell­ing, and so on. Ukraine also needs to have a free land mar­ket, but the Rada keeps waf­fling on this is­sue. As to other ques­tions, such as in­vest­ments, when for­eign in­vestors want to put cap­i­tal into some­thing, they should be able to feel that their money is safe in Ukrainian banks. There are even more ar­eas that I’m in­volved in, but it’s im­pos­si­ble do ev­ery­thing at once. I’m just one per­son, so I’m con­cen­trat­ing on those ar­eas that are strate­gi­cally im­por­tant, which means de­cen­tral­iza­tion.

I’ve come here at the re­quest of Ukraine. I’m not a teacher, and the coun­try needs to de­cide for it­self what it wants. My job is to sup­port the coun­try, and so I try to per­suade peo­ple. I talk to deputies to get them to sup­port this re­form. I think that de­cen­tral­iza­tion is quite pop­u­lar among or­di­nary Ukraini­ans, al­though peo­ple here gen­er­ally don’t see re­forms as some­thing very pos­i­tive be­cause re­forms tend to mostly make things worse at first.

In one of your in­ter­views, you men­tioned that de­cen­tral­iza­tion could ac­tu­ally change peo­ple’s way of think­ing. What was your ex­pe­ri­ence with re­forms in East Ger­many, when you were PM of Sax­ony?

— Of course it changes. And it would not have hap­pened with­out a tran­si­tion at the lo­cal level. East Ger­many had its own back-story: op­po­si­tion to the old regime pro­voked by stolen lo­cal elec­tions. In 1989, they were ob­vi­ously fal­si­fied and now it’s un­der­stood.

The first thing the new govern­ment did af­ter the rev­o­lu­tion was to hold new lo­cal elec­tions. The re­sult was that com­pletely dif­fer­ent peo­ple were elected. East Ger­many had the same prob­lem as Ukraine: the size of com­mu­ni­ties needed to be re­duced. It also be­came clear that in or­der to carry out their new func­tions, the min­i­mal size of these com­mu­ni­ties had to be ap­pro­pri­ate. A vil­lage of 500 can­not en­sure proper self-govern­ment. Of course, this leads to changes, as democ­racy goes from the bot­tom up. I don’t be­lieve that you can man­age a democ­racy from the cen­ter.

At the UTC level, it’s sim­pler for NGOs to have in­flu­ence as well. In Ger­many, com­mu­ni­ties are not that ma­ture in terms of par­ties and pol­i­tics. And I think it will be the same case in Ukraine. De­cen­tral­iza­tion is what changes how peo­ple think.

If we con­sider de­cen­tral­iza­tion re­forms in Poland and East Ger­many, which ex­am­ple do you think suits Ukraine bet­ter?

— Ev­ery coun­try has its own his­tory and tra­di­tions. The Poles had a gen­eral plan for ev­ery­thing, from the prov­inces to the coun­ties, cities and mu­nic­i­pal­i­ties. It was a ma­jor law that took ev­ery­thing into ac­count. I don’t think that Ukraine could do the same as in Poland, al­though there are peo­ple who would like to see just that. I think that de­ci­sions have to be made step by step to achieve suc­cess. There are other ex­am­ples in Europe where, on the con­trary, they avoid merg­ing com­mu­ni­ties.

For in­stance, France there are 35,000 com­mu­ni­ties that have to work with one an­other. Each of them is united by a par­tic­u­lar goal. The ad­min­is­tra­tions of these com­mu­ni­ties are called mille­feuille, be­cause of their many­lay­ered struc­ture. But their num­bers can­not be in­creased. I was talk­ing about this in Ukraine not in or­der to sug­gest a new ap­proach but to look truth in the face and make the right de­ci­sion.

The process of uni­fy­ing com­mu­ni­ties is go­ing very slowly. What about forc­ing things along, which you talked about?

— From the very start, Ukraine chose the path of vol­un­tary de­ci­sions, so it should con­tinue along that way. Once you have a crit­i­cal mass of uni­fied com­mu­ni­ties, then it will be pos­si­ble to talk about fix­ing things so that there aren’t gaps in the na­tional map. In gen­eral, we set dead­lines, which was done in Ger­many as well. You need to have both a car­rot and a stick, but usu­ally you only need to wave the stick a lit­tle. Right now is not the time for it. By 2020, we should be able to see a lot of new struc­tures that merged will­ingly.

You also men­tioned a list of bills that need to be passed to make de­cen­tral­iza­tion re­ally work, yet the first one on the list, “On serv­ing in lo­cal govern­ment bod­ies,” was re­jected by the Rada on April 3. How is the draft­ing process go­ing and how much more time will it take to re­ally get this re­form go­ing?

— All the bills on my list are cur­rently be­ing re­viewed in the Rada. They have all been sub­mit­ted to the Govern­ment again. All of them are at dif­fer­ent stages. Some are close to sec­ond read­ing and could be adopted soon.

The trou­ble with de­cen­tral­iza­tion, in con­trast to, say, health­care re­form or ed­u­ca­tional re­form, which each have their main big law, is that de­cen­tral­iza­tion re­quires a huge num­ber of ex­ist­ing laws to be amended, and that will partly change other le­gal acts. If you take a look at these laws, you won’t nec­es­sar­ily be able to un­der­stand what they mean right away, be­cause they re­quire other le­gal doc­u­ments to be re­vised as well. So it’s bet­ter for these laws to be con­sid­ered in sev­eral passes.

How do you see de­cen­tral­iza­tion even­tu­ally go­ing in Ukraine?

— In Ger­many, we be­gan by re­struc­tur­ing coun­ties and set­ting up new ones, which took three years. To­gether with lo­cal govern­ment re­forms, how­ever, it took eight years. Re­forms took just about the same amount of time in Poland. With Ukraine, the prob­lem is that 25 years have passed and I don’t think the coun­try can af­ford as much time as Poland or East Ger­many. It’s also hard to com­pare to sim­i­lar re­forms in other post-com­mu­nist coun­tries like Slo­vakia or Es­to­nia, given that Ukraine is so much larger. Poland is a good com­par­i­son, but ht had demo­cratic and de­cen­tral­ized struc­tures even in com­mu­nist times, which was a ma­jor ad­van­tage. And self-govern­ment had been go­ing on in much of its ter­ri­to­ries for a very long time. So, if we’re talk­ing about chang­ing men­tal­i­ties, there was self­gov­ern­ment in Poland and Ha­ly­chyna prior to WWII. Within the Greater Lithua­nian Prin­ci­pal­ity, many Ukrainian towns had Magde­burg rights, which is es­sen­tially self­gov­ern­ment. Here Ukraine can find sup­port in its his­tory. By con­trast, the czarist and com­mu­nist sys­tems re­jected self-govern­ment.

SO FAR, ONLY ONE THIRD OF COM­MU­NI­TIES HAVE VOL­UN­TAR­ILY UNITED AND ARE PROP­ERLY FUNC­TION­ING. IN OR­DER TO GET THE REST MOV­ING, SOME KIND OF IN­CEN­TIVE IS NEEDED, SUCH AS MORE LO­CAL REV­ENUES AND AD­DI­TIONAL POW­ERS, OR ELSE SOME NEW TER­RI­TO­RIES WILL HAVE TO BE FORCIBLY UNITED

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