Ukrainian mayors are ready
for a municipal revolution
By Inna Vedernikova, Zerkola Nedeli*

4 December 2007: Many mayors in the Ukraine are angry about the lack of progress of reforming the relationship between central and local government. They accuse the government of neglecting the needs of cities, towns and villages to protect the interests, and often bank accounts, of their business supporters. Now local leaders call for a municipal revolution to follow on from the country’s Orange revolution.

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Inna Vedernikova spoke to two young mayors, Volodymyr Groysman mayor of Vinnytsya (a regional center with a population of nearly half a million) and Pavlo Kozyrev, mayor of Ukrainka (a small town 40 km south of Kiev) as well as to Myroslav Pitsyk, executive director of the Association of Ukrainian Towns.

Redistribution of property is the main drag on local government reform
Question: There has been so much talk about the need to reform the local government system in Ukraine, but nothing actually happens…

Volodymyr Groysman, Mayor of Vinnytsya: In my opinion, there are three obstacles. First, there is no awareness of the necessity of this reform. Second, there is no political will. Third, nobody wants to distribute authorities between the central government and local governments. All power is concentrated in the center and local governments have very limited rights to independent decision-making. This basically concerns the use of resources.

Question: Would you please tell exactly who has no political will to put this system in order?

Volodymyr Groysman: Laws are passed by parliament that affect many people. In this case, I mean the leaders of the political parties who hold on to levers of influence at the local level. They don’t want to decentralize authority. They don’t want to provide local governments with sufficient resources needed for exercising authority. We hear that 47 per cent of funds in the national budget belong to local governments, but it’s a lie. Mayors have to deal with problems of public utilities, education, and health care, but they can’t draw up even medium-term plans. A city’s success depends exclusively on the mayor’s capabilities and city hall’s competence rather than a balanced system of interaction with the central government.

Question: Is the Ukrainka mayor of the same opinion?

Pavlo Kozyrev, Mayor of Ukrainka: I am deeply convinced that administrative-territorial reform has been stalled by the ongoing redistribution of property. It’s only because the key decision-makers in Kyiv (Kiev) are directly interested in this redistribution that power remains centralized. I mean land, natural monopolies, and public utilities. Everybody knows that these are the main drags on reforms.

Question: As the mayor of a town located very close to the capital, you must have felt the large impacts of this redistribution…

Pavlo Kozyrev: Here’s just one example: the Kyiv Regional Administration allotted 99 hectares of our forest land to a dubious company of 72 people – free of charge! Everybody knows that this land has long been reserved for a local construction project. On one hand, there is the local community that has its own plans for developing the town. On the other hand, there is the governor who has the final say. The community stays low, but this status quo seems to suit all officials. Isn’t that a breeding ground for corruption?

Amending the the Constitution may take too long. It’s better to start with laws
Question: Our politicians often say that it’s impossible to launch reform without amending the Constitution. It looks like they are simply trying to cover up the actual reasons.

Pavlo Kozyrev: Can anybody tell me what exactly we should change in the Constitution to reform our local governance system? It got into this doghouse thanks to laws, so why not pull it out with the help of laws?

Parliament passed a bill on local elections. Lawmakers introduced a so-called ‘proportional model’ by which members of local councils represent political parties rather than communities. This model has proven to be disastrous for our local governments. The Constitution says that people’s representatives “shall represent and promote the interests of local communities”, but whose interests do our council members represent? They represent the interests of the capital or administrative centers. Before the election model was changed, 17 out of 30 members of the Ukrainka town council were from the local power station and the rest were teachers and medics. They lived in this town and had nothing to do with business. Now the council’s composition is entirely different. Two members have a criminal record and seven live in other towns. Is this what they call local governance? Isn’t it possible to put things right simply by re-instating the previous election model?

There is also the problem of the Budget Code and the Land Code: they benefit big cities like Vinnytsya but leave small towns empty-handed. There are concrete and feasible proposals on that issue, and they don’t need any amendments to the Constitution. Why not follow our President’s advice and hand power over to local communities? Don’t we need “a country of strong communities and total self-governance”? Why are decisions of vital importance for local communities made by district administration heads and governors who don’t depend on the communities a priori?

Volodymyr Groysman: Take, for instance, communal enterprises: they pay taxes according to the general scheme while private ones – according to a simplified scheme. The specialization is the same, but private enterprises pay less. Why not pass a law that would put them on par as taxpayers and allow communal enterprises to develop?

The same is true for regulatory provisions for bringing salaries out of shadows. Of course, the lawmaking process takes some time and has several stages, but we still haven’t moved an inch from from the initial stage.

Question: Do you share this opinion, Myroslav Pitsyk?

Myroslav Pitsyk, Executive Director, Association of Ukrainian Towns: The administrative-territorial reform is a complex process. In fact, it is a new philosophy, a new approach to state-building. This process should involve not just a separate group of people who call themselves politicians or a few business groups, which those politicians represent. A prosperous state can only be built by millions – through local self-governance. The whole world already knows that intensive and rapid development of any state requires more than eggheads, no matter how much you pay them for their ideas. The reform we are talking about should involve millions of people.

Whenever I travel to other countries, I am sorry for the Ukraine. Aborad, people are building a prosperous future and we are still regulating the system of additional revenues to our financial-industrial groups. We must own up to this fact and say openly that personal interests are above all in this country and that our political leaders, very unfortunately, are not educated enough to realize the scale and urgency of the problem.

Question: Do you mean they have reached the limit of their capability?

Myroslav Pitsyk: Yes, I think so. I think amendments to the Constitution could be the shortest way to transformations, but we could just as well act through laws. Nikolai Azarov [First Vice-Prime Minister and Finance Minister – A.B.] says that 47 per cent of funds in the national budget were for local governments. In fact, he simply includes all social subsidies as part of local budgets. By correct calculations, the share of local communities is a mere five per cent! That’s the lowest figure in Europe.

We need to change the Budget Code. We need a law on local taxes and duties. We need laws on land and immovable property. We urgently need a land cadastre. It’s urgently necessary to delimitate land! The land of a community is limited by the boundaries of a village or town. All land that lies beyond such boundaries is under control of the governor or the district administration head, and that’s a big problem. For example, there is not a plot left in Vinnytsya to construct a modern hypermarket. Very soon the city will need a new large residential area, but all land plots have been distributed to private owners.

Question: Other cities have the same problems.

Myroslav Pitsyk: And look what’s going on in village and town councils! Through their representatives, political parties lobby for their interests and divide what hasn’t been divided yet. Do they care about the needs of the community? In one town, the mayor and the town council majority have been in a state of war for a long time. The businessmen who sit on the council grant land plots to their protégés instead of selling them through auctions, replenishing the local budget and investing in infrastructure. The mayor cries for help and protection from his town council! That’s how the law on local elections works.

Volodymyr Groysman: Additional nonsense is the norm by which the so-called “development budgets” are supposed to accumulate funds with proceeds from the sale of land and other communal property. We sell the last plots of land and buildings and then spend that money on replacement of water or sewage pipes.

Question: Are you against selling land?

Volodymyr Groysman: Yes, I am. In plain language it’s like this: you live in your flat and you can’t make ends meet, but instead of looking for a job, you sell your refrigerator, furniture and all, and then you sell your flat. But that’s not a renewable resource!

Question: Do you suggest stopping it? Your colleague has just said that our political leaders are irresponsible and greedy and that we can’t move further until we distribute property.

Volodymyr Groysman: Maybe we should stop it, because it’s impossible to develop with instruments that invalidate development. The instruments we have for replenishing local budgets are imperfect and ineffective.

Question: What about investments?

Volodymyr Groysman: They could be a good instrument, but there are sectors where nobody would invest in. Who would invest in construction of roads or hospitals? Besides, we have practically run out of land resources.

Question: Is it about Vinnytsya as well?

Volodymyr Groysman: If it’s about operational enterprises in the city, we sell them the land they stand on – it’s their lawful right. We have revised the price of land in the city. Now the land occupied by an industrial enterprise costs five times more than before and we plan to sell each unoccupied plot exclusively through auction. But generally speaking, it’s wrong to blame Ukrainian oligarchs for becoming oligarchs.

Question: Do you mean they are innocent?

Volodymyr Groysman: An oligarch is a clever and enterprising type. has simply used his intellect and earned his capital with the state’s permission. It is the legislation adopted by the state that grants him the right to become rich.

Question: This means no moral restrictions – one can steal as far as laws allow him to steal…

Volodymyr Groysman: No. it’s not so. We shouldn’t identify an oligarch as a man who disregards the law. He is a man whose goal is to develop his business. If there is a law that allows him to use land or other communal property to his ends (even to the detriment of the community or national interests), then what can we do about it? Today anyone can lease or buy two hectares of land for farming and then build a residential area there.

Question: …Anyone who has authority…

Volodymyr Groysman: Surely. But why did the state create such conditions? Why did the lawmakers allow a district administration to hand out hundreds of hectares with the stroke of the pen? However, it’s senseless to blame district administration heads, governors, or mayors. They may be poor managers, but why not deprive them of the right which they abuse?

Pavlo Kozyrev: The land issue is very painful. Land is stolen in Kyiv, Vinnytsya, and everywhere across Ukraine. We appealed to the Prosecutor General Office, the Security Service, the Prime Minister, and the President, but haven’t received even a formal reply.

On the other hand, there are depressive regions where nobody wants to buy land. Such regions need a different policy. Perhaps, it would be better to grant land to industrial enterprises and leave taxes in the town instead of transferring them to Kyiv.

Small towns seem to be forgotten. The mass media only concentrate on Kyiv and several other administrative centers. And what about us? Small towns make up the overwhelming majority in Ukraine. Do we have to wait for a big economic boost from the capital city? What should the mayor of a small town do today?

There are other systemic problems. The new Tax Code leaves them as they are. Unlike in developed economies, profit and property taxes haven’t become the resource basis of local self-government in Ukraine. It looks like nobody is going to introduce property tax at all. All we hear is about the “great” ideas of hotel duties or pet taxes… That’s just ridiculous…

We are all on the brink of a catastrophe. I’m afraid we will have systemic changes only under the pressure of disasters – like the accident in Dnipropetrovsk. Authorities never heed any other arguments. They don’t seem to understand that the one who lives in his house knows better how to fix the roof, where and how to teach his children, and what furniture to buy. We know better if our mayor is good or not and how to make him answer… In towns like Ukrainka we talk to people right on the street. Admittance to the town hall is free. Actually, that’s the way most communities live in this country. In Kyiv, it’s different.

Referendum is the only way to protect the community from bad mayors
Question: What powers should the state, which decided to decentralize power and make local communities independent, assign to local governments? In order to protect the citizens from the demands and incompetence of bad mayors?

Volodymyr Groysman: The power should be well-balanced. When the balance of state power is upset, chaos starts. Just like today. Certainly, if local communities receive additional power, then their activities should be controlled very thoroughly. First of all, the state should control how local officials follow the law. Second, it is necessary to check the level of their professionalism and competence. If some local officials do not meet these two standards, then they should be made responsible right up to instituting criminal proceedings against them. And there shouldn’t be any complicated procedures for that. Just responsibility.

Question: But we have the laws today. However, this does not stop local officials from violating them and the Constitution - and the central authorities do not notice that.

Pavlo Kozyrev: I do not agree with your statement. It turns out that if matches can cause a fire, then let’s stop producing them. If Kyiv is a problem territory then a concrete decision on Kyiv should be made. Why should we destroy the entire local self-governance system in the country? Besides, there is no difference in who exactly is going to spend the billions of Kyiv’s funds. Both the city administration and the state might become corrupted then.

Volodymyr Groysman: We need to define the main issues here. If we talk about the law, then the question is about the law only and not about a concrete person. Whether this person is a capital’s mayor or the head of the village administration. If today’s Kyiv City Administration allocates 100 hectares of land in the city center then it does it so according to the law. And we start to shout that the mayor should be dismissed. But, actually, the law should be changed. The system should work. When the system works, the city mayor is just an element of the system. We don’t sell land in Vinnytsya because I and the members of our local council have the same opinion on this matter. I am lucky.

Myroslav Pitsyk: I would like to admire the work of my young colleague. If today’s Kyiv City Administration cancelled the decision on land sales through actions, then Vinnytsta, on the contrary, has made the opposite decision.

Volodymyr was among those mayors who together with the Association of Ukrainian Towns lobbied for the law on city land sales and rent through auctions. We convinced many politicians and deputies… But, finally, the President vetoed the law. We can only imagine who influenced the President. However, some mayors have passed decisions on auctions in their cities and towns. Thus, they don’t give away land for free in Vinnytsya.

Question: What could be a form of community control over local governments?

Volodymyr Groysman: Referenda.

Pavlo Kozyrev: The possibility of holding a referendum is the only way to protect the community from unfair mayors. If people were mistaken in electing a mayor, then they should have the opportunity to correct their mistakes. There should be a new law on referenda that would limit the influence of the mayor and the local council in the process.

Mayors are ready to revolt
Question: What, in your opinion, is going to happen in the future? Who will lobby for local government reform?

Pavlo Kozyrev: I am sure that political leaders will continue to keep control over local governments and won’t give away their influence in the regions. This will continue until they divide all property and land between each other. Only after this will our local governments be able to work efficiently. This is the way it works in Austria, Germany… However, it will take more time for that in Ukraine.

Volodymyr Groysman: We are still living under a kind of post-Soviet syndrome. In the Soviet Union, we were under the control of the state party, today, we are under the control of a group of prosperous people. In this situation, the laws on local governance and on related matters are passed without considering the opinion of local communities. In such discriminating conditions, it is very hard and meaningless to talk about reform.

That’s why the Association, which was created 15 years ago by Ukrainian mayors, should get an opportunity to influence these processes officially and on all levels. It is necessary to pass a law on the Association of Ukrainian Towns that would give us definite rights and powers.

If the opinions of local governments and the Association’s members are ignored and the next coalition continues to imitate reform, the situation might get out of the hand and explode. The mayors are ready to revolt. They are ready to talk about this in public. If it will be necessary, they will go to the streets!

Question: Your suggestion may become Ukrainian know-how. A revolt of mayors is an interesting idea…

Myroslav Pitsyk: Three years ago, the Ukrainian people wanted to force our state to follow the law. It didn’t turn out this way. That’s why there will be another revolution in Ukraine. A municipal revolution. Perhaps it wouldn’t be as strong as the Orange revolution. But the bomb will explode.

We demand from parliament, the coalition and the government to pass a law regulating the relationship between the central state power and local power. We demand the law because do not believe in promises and words anymore. If there are tasks and authorities – there should be necessary recourses. If there are no resources then the official responsible for this sector should answer. If the mayor is not coping with his tasks – he must answer for it.
* http://www.mw.ua/