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Ukraine’s Subregions in Transition: Misalignment of Funding and Mandates

Image: Valentyna Matsuzato

BY VALENTYNA MATSUZATO

On July 17, 2020, Ukraine’s Verkhovna Rada reduced the number of subregions (raions) from 490 to 136, in line with the agenda of the post-2014 decentralization reform. This decision allowed the election of subregional councils during the 2020 local elections in 119 out of 136 new raions within the government-controlled territory of Ukraine. However, the division of power between new substate authorities still remains unclear, and domestic policymakers should solve this issue as quickly as possible to avoid undermining state capacity from the bottom up.

The 2020 local elections, held on October 25, allowed voters to elect local and subregional councils within the new territorial boundaries largely because of parliament’s decree No. 3650, “On Establishing and Dissolution of Subregions,” which approved the list of 136 raions and 1,469 amalgamated territorial communities (ATCs). As a result of all reforms of the past six years, Ukraine’s administrative-territorial units include 27 regions (including the annexed Crimea and parts of two Donbas oblasts), which have remained the same since independence; 136 newly introduced subregions; and 1,469 ATCs, which were established in 2015–2020.

Only 238 MPs supported the decree that changed the administrative and territorial divisions at local and subregional scales, mostly MPs from or aligned with the pro-presidential Servant of the People party. All other factions gave zero votes to support the decree, including Petro Poroshenko’s European Solidarity party, even though the former president had been one of the initiators of the post-2014 decentralization reform. Moreover, MPs from Yulia Tymoshenko’s Fartherland party asked the Constitutional Court of Ukraine to look into the legality of parliament’s decision.

Parliament’s limited political will to amend Ukraine’s administrative-territorial divisions is not entirely surprising. In 2018–2019 the Verkhovna Rada failed to approve a law on the administrative-territorial divisions in Ukraine. To avoid a similar epic failure by the parliament elected in 2019, the MPs developed a plan B: they deferred approval of the law but approved the parliamentary decree, thus making it possible to elect substate councils in new territorial units during the recent local elections.

The Pros and Cons of Establishing New Raions

The proponents of introducing new raions refer to the 2014 concept of decentralization reform, which suggested amending the administrative-territorial divisions to improve public service provision at substate scales. Opponents of this measure either criticize the design of the new raions or claim that reducing the number of subregions makes public services less accessible for ordinary people.

It is worth noting that domestic policymakers designed the new raions using the demographic criteria for establishing territorial units at the level of NUTS-3 in the EU. This is evident from the government’s guidelines for establishing raions, approved in 2019. On the other hand, the design of the new raions is not perfect, as witnessed by the striking difference between the least and most populated raions: 30,479 and 1,753,679 residents, respectively. This makes the design of the new raions appear to reflect the interests of local stakeholders. 

The second criticism, the one referring to the quality of public service provision, has its strengths and weaknesses too. After 11,250 localities were merged into 1,469 ATCs in 2015–2020, the latter assumed responsibility for most of the public services that subregional authorities used to take care of prior to local amalgamation. Thus the subregional authorities in the 490 old raions lost the opportunity to do a large share of their jobs but remained on the public payroll. This is why domestic policymakers had to reconsider the number of raions and the functions of the respective authorities.

As a result of these changes, the smaller number of raions is expected both to make public administration at the subregional level cheaper for the state and to improve the way the government functions and interacts with local government at substate scales.

What Happens Next?

Amending the responsibilities of public authorities at subregional and local levels, in accordance with the new administrative-territorial divisions and with the aim of fostering further decentralization, is urgently needed.

Recently parliament introduced new fiscal decentralization rules, which decreased the public funding available for subregional authorities to direct to ATCs. There is no longer a hierarchical division between raions and ATCs in terms of funding. However, parliament did not at the same time recharacterize the functions of subregional and local authorities in keeping with the new funding levels. If the MPs do not solve this problem, the newly elected subregional councils will receive less money in January 2021 but will still be obliged to perform those numerous duties that the 1997 law on self-government prescribes for them.

To prevent similar situations from arising in the future, it is important to introduce comprehensive legal norms and to do so in a timely fashion. This will help to ensure state capacity and avoid a power vacuum at subregional and local levels. It was the parliament’s duty to introduce the rules to amend existing laws on substate administrations and subregional councils, and to do so prior to the October 25, 2020 local elections—people had the right to know the functions of the authorities for whom they cast their votes. However, the required draft law on subregional executives was only registered in the parliament on October 30, 2020. It is vitally important to improve the pace of decision-making with respect to new raions. Without that, there will be limited legal room for the newly elected subregional councils to carry out their responsibilities.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.

About the Author

Image: Valentyna Matsuzato

Valentyna Matsuzato

Member, Japan Council for Russian and East European Studies
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Kennan Institute

The Kennan Institute is the premier U.S. center for advanced research on Russia and Eurasia and the oldest and largest regional program at the Woodrow Wilson International Center for Scholars. The Kennan Institute is committed to improving American understanding of Russia, Ukraine, and the region through research and exchange.  Read more