Support to Ukraine's Regional Development Policy

Укр / Eng

Remarks by Graham Meadows at the SURDP closing conference

14/12/2016

Ukraine’s regional policy – as its decentralised policy for economic development – is an important part of its administrative reform.  In, decentralising its economic development policy, Ukraine is behaving like the European Union, which also operates a decentralised economic development policy (or regional policy, to give it its more usual name).  It may be useful, then, if I mention some of the things we have learned in the almost thirty years that have passed since we decentralised.

But let me stress that these are things we have learned.  And in many cases, we’ve learned our lessons the hard way.  We’ve encountered difficulties – some due to economic and social conditions, some due to bad decision-making, some due to mistakes.  You nearly always make mistakes when you’re doing something new.  If there is a rule for decentralising an economic development policy it’s that you have to stay alert, try to spot trouble before it becomes a crisis, and be ready to be flexible.

Except in one thing.  You must never be flexible about your overall objective.  The aim of our policy like yours is to improve the life quality of our citizens and to do it consistently and quickly.  On these elements – the goal, the manner, and the deadline – there can be no compromise.

The EU decentralised its own policy for internal economic development, its regional policy, in 1989.  We had had a policy called “regional policy” before then, but it was not regional, nor was it a policy.  It was really just a fund managed from the centre and from member state capitals, investing on a project by project basis, mainly in public infrastructure.  It was not decentralised and it was not a success.

We kept operating it for about 15 years and towards the end began to experiment with decentralisation.

We chose a few regions;

  • promised them finance;
  • encouraged them to sit around the table with a partnership of socio-economic actors (regional, city, and local authorities; training providers; universities and researchers; environmental agencies; and so on);
  • asked them to make a multi-year strategy that integrated investments in infrastructure with investments in people and that integrated actions at the different levels of government;
  • talked with them until we all agreed in a consensual way that the strategy was as good as we could make it; and then
  • handed them the power to decide which projects should be financed within the strategy.

And it worked.  We got better results than we had before.  But, even more than that, we felt we had arrived at a system that matched power and knowledge.  Project decisions were taken where the necessary knowledge was greatest.  Some decisions were taken in Brussels, some in member country capitals, some at the regional level, some at the local level – and we felt we had invented and transformed into law an administrative system that stitched all the levels together into one coherent whole.

Getting the administrative system right is not always easy.  As I say, we had lived for about 15 years with a system that took decisions in member state capitals – with national ministries deciding things that would have been better done at the regional or city level.  And in our experience since then, we have come across cases where the regions choose to use their time and resources to do things that would be better done at the local level.  This is not satisfactory and certainly not optimal.  And we try to prevent it.

It’s worth telling you that we revise the law every seven years and have done so four or five times since the start.  But we have never wavered from decentralisation, never wavered from the principle that each level of governance should a) do what its best at, and b) let the other levels of governance do what they’re best at.  This is important.  We feel we have created an administrative system that delivers the policy honestly and as intended.

Each level of governance has to fix its eyes on what can best be done at its level.  An oblast that spends its time and resources doing things that cities or hromadas can do – and probably do better – is wasting its potential.  Its job is to discover and decide what it can do, at the oblast level, to accelerate the development of its region.  Cities and hromadas must maintain the same discipline: cities devise projects to develop their socio-economic potential as a city; villages as villages. The same is true for rural areas as for urban areas.

That’s one thing we got right, despite the fact that member country politicians were not enthusiastic at giving up some of their power.  I heard Mr Groysman say on Monday at the International Mayors’ Congress that he wanted oblasts and hromadas to take up the tasks of decentralisation and regional development and to make these reforms a success.  And I thought, the oblasts and hromadas in Ukraine are lucky to have a Prime Minister who is supportive and pushing them to succeed.  You have a fantastic opportunity to make rapid progress and release the country’s potential through better governance in which you all play your part.       

So, now, for thirty years, as I say, the EU has operated its internal development policy in a decentralised way, with its almost 300 regions at the forefront, and this regional policy has become central to the Union.  Operating in all parts of the Union and for all people in the Union, with 90 per cent of its finance being allocated between regions on the basis of an objective formula that reflects socio-economic conditions.

And, as I say, the main features of the policy are: decentralised decision making within a framework established at the centre;

  • projects selected for finance by the regions or cities or at local level within the framework of a previously agreed development strategy;
  • strategy and projects decided at these different levels of government by consensus by socio-economic partners sitting around a table; and
  • regular evaluation to make sure that the things we are doing are having the desired effects.

Now when we use jargon like strategy, evaluation, partnership, and so on – you might think it sounds like complicated bureaucracy.  No, the bureaucracy is simple.   The arrangements for delivering the policy, as long as they are properly conceived and properly and fairly managed, are not the problem.  They can be easily understood.  It’s the task of economic development that’s complicated.  We all know that, don’t we ? It’s the same everywhere, devising and implementing policy for economic development is more complicated than rocket science.

For example, the administrative task of preparing an oblast or hromada strategy reduces to three or four questions, doesn’t it.

  • The first is, What is the present state of our oblast ?  What are its weaknesses ?  What are its strengths ?
  • The second is What is our vision ?  Where do we want our oblast to be in ten years’ time ?  What do we need to do to maximise our socio-economic possibilities ?
  • And the third is How do we get from where we are now to where we want to go ?  What are our priorities ?  What should be the sequence of our actions and projects ?  

Simple questions and once you’ve answered them you have your oblast, or city, or hromada strategy.  Easy-to-understand questions, yes, but the answers can be difficult to find.  In the Union, our regions (oblasts) discuss their strategies with the European Commission and this helps to deepen understanding of different issues.  The better the strategy, the better the effect for citizens.   

Let me, by way of conclusion, say the same things but in another way.  Let’s look briefly at five questions.

First, has the European Union learned anything over the last twenty-seven years that may be useful for Ukraine ?  Put another way, have we made mistakes that we could tell you about ?  In a word, yes we have made mistakes and we’re still making  them.  As I say, mistakes are inevitable when you’re doing something new.  The important thing is not to let them deflect you from your goal.

Second, you have a wonderful window of opportunity with a Prime Minister who is not playing power games with you.  He’s holding open the door and saying, “We can only achieve a miracle for Ukraine’s citizens by working together.  Let’s do so.”  But you also understand that he will not be able to hold the door open for ever.  He is redistributing power – and there are automatically some who are trying to stop him, who don’t want to give up their power.

Three, who are the main actors in Ukraine’s decentralised economic development policy ?  Your decentralisation reform and your regional policy are building multi-level governance, a power-sharing system.  The central government, oblasts and hromadas must all play their distinct parts.  Each has its role – an oblast that behaves like a hromada is wasting its chance.  An oblast is not doing its job if it uses its development finance for small-scale local development projects.  Remember, central government, oblasts and hromadas have distinct roles, different concerns and different priorities.

Four, what cements central government, oblasts and hromadas together in this common task ?  It is the urgent need to raise the life quality of Ukraine’s citizens and the belief that citizens deserve better lives.

Five, is there a perfect regional development policy for Ukraine ?  I don’t know.  All I can say is that we haven’t found the perfect regional development policy or the perfect decentralisation policy for the European Union.  But we have found a good one.  We operate it as best we can and keep trying to improve.  And that is all that our citizens can ask.

Time is short, isn’t it ?  If you’re unemployed, or you have bad health care facilities, or you can’t find good schooling for your children, you want change.  And you want it now.  We must not be perfectionist.  We must not fall into the trap of letting the best be the enemy of the good.  If you’re hungry, half-a-loaf today is better than a whole loaf next week.  Time is our scarcest resource.  Our citizens must not be made to wait.