Ukraine’s Slow Struggle for Decentralization – Carnegie Endowment … – Carnegie Endowment for International Peace
This publication is part of Carnegies Reforming Ukraine project and is supported in part by grants from the Center for East European and International Studies (Zentrum fr Osteuropa- und internationale Studien, ZOiS), the Konrad-Adenauer-Stiftung, and the Open Society Foundations.
The decentralization reforms that began in 2014, although incomplete, have already brought significant change to Ukraine. After two decades of power being concentrated in the capital, new regional administrations now have more responsibility for local services. Many of these authorities have larger budgets than their predecessors and are using these funds to improve roads and schools. The new administrations have greater prospects for economic development and enjoy more respect in Kyiv.
However, there remain many bottlenecks that prevent the successful completion of the reforms. The decentralization process has proceeded without a political consensus on what the role of the state should be in Ukraine in the wake of the 20132014 Euromaidan revolution. Civil society regards decentralization as a means of reducing the influence of what it perceives as a captured state on Ukrainian public life. Western donors, who have provided technical and financial assistance to help implement the changes, see decentralization as a tool of democratization that the country badly needs to reverse attempts by the administration of former Ukrainian president Viktor Yanukovych to appropriate power. The central authorities in Kyiv, wary of relinquishing too much power, do not show the same commitment to the reforms as do their Western partners.
The process is especially unpopular in Ukraines parliament, the Rada, where some opposition politicians allege that decentralization is an underhand effort by the administration of Ukrainian President Petro Poroshenko to exert new power over the regions via the appointment of presidential prefects across the country.
A further complication is that for many of Ukraines Western partners, decentralization is an instrument they believe can fix the problem of Russian-backed separatism in Ukraines southeast. That is why the constitutional amendments required for decentralization were put in the same legislative package as the proposed legal changes stipulated in the controversial Minsk agreements, which aim to end the war in southeastern Ukraine. But this move has helped make the reforms a target for opposition politicians. It is now highly unlikely that the ruling coalition will be able to muster the 300 votes it needs in the Rada to pass these constitutional amendments.
In this political context, Ukraines decentralization reforms have lost momentum. However, as the process is already delivering results on the ground, the government needs to find creativity to pursue it, even if it cannot be underpinned by constitutional changes.
Discussion of decentralization reform is as old as independent Ukraine. In 1991, the new country inherited a centralized state model that gave local councils very few responsibilities. Administrative divisions made for small and unviable territorial units. Ukraine had 24 oblasts (regions) as well as three areas with a special status: Crimea, Kyiv, and Sevastopol. At the next level down, there were 490 rayons (districts), including 458 towns, 783 smaller settlements, and 10,279 villages.
Several Ukrainian governments attempted decentralization reforms, but with limited success. Until 2010, most of the efforts were focused on fiscal rather than political and regulatory decentralization. A new budget code, introduced in 2001, established a system of direct fiscal transfers between the central government and regional administrations and a transparent formula for the allocation of intragovernmental transfers.
However, constant political infighting and a persistent reflex in Kyiv to maintain central control blocked the political devolution local authorities needed to manage their own spending. The Yanukovych administration, which took office in 2010, simply recentralized power, transferring important responsibilities back from rayons and oblasts to central ministries.
The Euromaidan revolution reenergized the decentralization process. Both post-Euromaidan governments have declared decentralization to be one of the pillars of their reform agenda. At least on paper, progress has been swift. The main legislative framework for decentralization was outlined in the concept note on the reform of local governance that was approved by the Cabinet of Ministers on April 1, 2014. The initiative was justified by the need to address poor living standards, especially in rural areas, ineffective use of resources, and a lack of institutional capacity in Ukraine to provide services to the population.
The plan envisaged a country with the same 24 oblasts and three special areas as before, as well as approximately 100 rayons, while 1,500 hromadas (communities) would be created out of the towns, settlements, and villages. Each administrative tier would have both elected councils and administrative representatives appointed from above. The proposal included constitutional amendments that would replace the old local administrations with prefects appointed by the president and would confirm the rights of territorial communities to levy local taxes and fees.
Then, international pressure on Kyiv to adhere to the Minsk agreements complicated the issue. Separate legislation regulating local self-government in Ukraines eastern Luhansk and Donetsk regions, which are currently outside the control of the government in Kyiv, was added to the draft constitutional changes on decentralization. The amendments, which had already been approved by the Constitutional Court of Ukraine, were passed by the Rada in a first reading on August 31, 2015. But the process was effectively halted the same day when violent protests erupted outside the parliament building and four guardsmen were killed in a grenade attack. The violence vividly illustrated how fragile the political consensus in Ukraine is on these questions.
In May 2016, the Cabinet of Ministers attempted to get the process back on track by including decentralization measures in an ambitious five-point action plan. Using its executive power, the government has even sponsored draft bills to implement the constitutional changes whenever they are eventually approved by the Rada. The plan set the objectives of establishing viable local self-government by amalgamating small communities into larger ones, trimming the functions of higher-level regional administrations, and pledging adequate funding for local self-government, especially in the fields of health and education. A greater challenge is the as yet distant goal of giving communities the right to manage their agricultural land resources.
Several parties in the Rada continue to strongly oppose some of the changes. Opposition is focused on the proposed institution of presidential prefects who, after the constitutional amendments, would take over functions previously held by regional administrations and would oversee decisions made at the local level. Samopomich (Self-Reliance), a party in the first post-Euromaidan government coalition, has strongly criticized the proposal as a new form of presidential centralization. For this and other reasons, Samopomich has joined with other opposition groups in the parliament such as former Ukrainian prime minister Yulia Tymoshenkos Batkivshchyna (Fatherland) party and the Opposition Bloc to vote down the governments proposals to institute this change.
Against all the odds, the technical implementation of decentralization reforms has moved forward, thanks in large part to Western financial and political support.
The first positive step was a 2015 law on the voluntary consolidation of hromadas, which allows for the amalgamation of existing communities into bigger units. So far, 367 new hromadas have been formed, or around 25 percent of the planned total. These newly amalgamated communities have received new responsibilities and are permitted to determine the size and structure of their own executive administrations, even though the central government still decides on the salary levels of local employees.
Support for this process varies widely across Ukraines regions. City, village, and settlement heads who were elected to office in 2015 and want to serve out their full terms are resisting the merger of their districts with others. Some mayors who enjoy popularity and are in conflict with local councils are more willing to start the amalgamation process to speed up the reelection of those councils.
Fiscal decentralization has set new rules for the allocation of taxes to local budgets. A total of 60 percent of personal income tax, 100 percent of state duty, and 100 percent of the fees for administrative services are now paid into local budgets. Meanwhile, the overall size of local debt should be lower than 200 percent of the average annual projected size of a budgets development revenue (or 400 percent in the case of Kyiv). In a radical change, local administrations have gained the right to levy a local property tax and a local excise tax on alcohol, tobacco, and fuel. They are also allowed to borrow larger sums than before from the central government and banks to finance their spending projects.
Fiscal decentralization has brought opportunities and fresh challenges. In 2016, the budgets of the 159 communities amalgamated in 2015 increased by 49 percent on the previous year, to 132 billion hryvnia ($4.9 billion). Ukraines 2017 budget foresees a 23 percent increase in local budgets. Yet, there are concerns that the revenue base of these communities may not be sustainable, due to the climate of political uncertainty.
Moreover, the reforms have cut central subsidies to some areas and may widen the already-large inequality gap between different regions. The early winners are small western Ukrainian cities, and the losers are those that depend on heavy industry. Many people have criticized the process on the grounds that smaller settlements are losing out.
Most of the new funds have been spent on the repair of roads or on educational and cultural institutionsa rare treat in Ukraine. The repair of the countrys notoriously poor roads, made possible by a central subsidy for local infrastructure projects worth 1 billion hryvnia ($36.9 million), is probably the most visible and welcome result so far of the fiscal decentralization process.
In another significant change, the New Ukrainian School program gives local hromada administrations responsibility for primary and secondary education, including the provision of preschool places. A new network of high-quality hub schools is set to be created, to take on children from a wider geographical area and consolidate resources for providing better-quality education. Local hromadas are also due to be given responsibility for primary healthcaredoctors, paramedics, clinics, and obstetric centerswhile secondary care will be provided on the basis of new hospital districts formed to correspond with new larger rayons.
Bigger budgets pose another challenge to local authorities, as they require greater managerial competence, which is often lacking. Local governments need professionals in public health, education, infrastructure, communal services, energy efficiency, and economic development. However, depopulation and urbanization make it very difficult for small rural communities to attract qualified personnel. International technical assistance projects aim to tackle this problem, but Ukraine needs a long-term overall improvement of its education system to train the necessary public administration professionals.
Much work is needed to see the decentralization process through to a successful conclusion. The current plan for the creation of new hromadas does not contain a clear sequence of steps, and there is no clarity as to when the voluntary amalgamation of communities becomes a compulsory process. A more concrete implementation plan with clear deadlines for each stage of reform is necessary. Policymakers also need to improve the constitutional framework for decentralization and streamline the legislation for the amalgamation process to allow the merger of territories from different rayons. Yet in the current fragile political situation, there is little hope of the Rada passing the relevant legislation. That puts a responsibility on the executive to move the reforms forward on its own.
The government needs to communicate more effectively the importance of the reforms to the public, which supports the process in general terms but does not understand it properly. The government should also send stronger messages on the sequencing of the reforms and the need for clear deadlines. The Central Reform Office for Decentralization can play the key role in managing this process and making it accountable to donors.
Another problem is that the legal status of the powers delegated to local communities has not yet been defined, because the necessary constitutional amendments have not been passed, leaving the reforms that have been enacted so far vulnerable to changes in the political climate. Moreover, under current rules, hromadas from different neighboring rayons are not allowed to merge. A draft law allowing the amalgamation of 28 hromadas across rayon boundaries was voted down in the parliament on December 6, 2016.
A paradox of the decentralization reforms is that while most of the Ukrainian public supports it, the majority of those same people hold a paternalistic outlook and expect the central government to take care of them. Polls show that only 32 percent of citizens are ready to engage in local-level decisionmaking, and just 15 percent believe that they can influence the situation in their own municipality.
Ordinary Ukrainians are cautious in part because politically and economically strong patrons are emerging or reemerging in the regions, using the decentralization process to benefit themselves and their clients. Local oligarchs still have the most resources to compete in and win elections.
Yet at least local government enjoys a higher level of trust among Ukrainians than do national institutions, which are regarded with cynicism. More than half of Ukrainians support the delegation of more authority to the local level. Anecdotal evidence suggests that citizens in amalgamated communities tend to engage more in public hearings and community meetings to discuss local issues than those in nonamalgamated areas. According to a report by the EUs Committee of the Regions, local citizens are particularly engaged when it comes to issues that are of paramount importance to individuals, families and communities, such as schooling, public safety and the environment.
On the local level, the new amalgamated communities now face the challenge of how to properly manage the extra funds they have been allocated. They have a chance to increase economic development in their regions and make them economically sustainable. But this will not happen without necessary data collection and monitoring of the process by both the central government and Western donors. A more transparent process should in turn spark more engagement from local citizens.
Ideally, decentralization reforms would press forward against a background of political consensus at both the national and the local level. However, this is not feasible, unfortunately. The current ruling coalition is too weak to push the reforms forward, while the Poroshenko administrations main immediate objective is to conserve the present political rule.
The key may lie in public engagement. If the Ukrainian public can get behind the decentralization efforts, this will inspire the government and civil society to expend more energy on the process and save these reforms from being aborted by political infightingas has happened on previous occasions over the last two decades.
Yulia Yesmukhanova is a Ukrainian expert on decentralization reform and good governance.
- A Landscape of Death: Whats Left Where Ukraine Invaded Russia - The New York Times - July 12th, 2025 [July 12th, 2025]
- Ukraine-Russia war latest: Trump to send weapons to Kyiv after Putins forces kill two in drone attack - The Independent - July 12th, 2025 [July 12th, 2025]
- Russia attacks west Ukraine with drones and missiles, kills two - Reuters - July 12th, 2025 [July 12th, 2025]
- Trump said he'd end Ukraine war in 24 hours. Now his patience with Putin is wearing thin. - USA Today - July 12th, 2025 [July 12th, 2025]
- US is selling weapons to NATO allies to give to Ukraine, Trump says - AP News - July 12th, 2025 [July 12th, 2025]
- Russia Intensifies Its Air War in Ukraine - NPR - July 12th, 2025 [July 12th, 2025]
- Trump expected to deliver weapons to Ukraine through Nato allies - The Guardian - July 12th, 2025 [July 12th, 2025]
- 2 dead as Russia attacks Ukraine overnight with almost 600 drones, Kyiv says - ABC News - Breaking News, Latest News and Videos - July 12th, 2025 [July 12th, 2025]
- Senate Backs Ukraine Aid In Draft Military Spending Bill Ahead Of Trump's Statement On Russia - Radio Free Europe/Radio Liberty - July 12th, 2025 [July 12th, 2025]
- Trump Says NATO Countries Will Buy Weapons to Give to Ukraine - The New York Times - July 12th, 2025 [July 12th, 2025]
- Senators want safeguards on Hegseth meddling with Ukraine aid in new defense bill - USA Today - July 12th, 2025 [July 12th, 2025]
- How do Russians think the war in Ukraine will end? - BBC - July 12th, 2025 [July 12th, 2025]
- Russia-Ukraine war: What are frustrated Trumps next options with Putin? - Al Jazeera - July 12th, 2025 [July 12th, 2025]
- Rubio slams Russia over 'lack of progress' toward peace in Ukraine - Politico - July 12th, 2025 [July 12th, 2025]
- U.S. weapons flowing again to Ukraine, but not fast enough to stop Russia's drone and missile strikes - CBS News - July 12th, 2025 [July 12th, 2025]
- Putins war in Ukraine may cost him control of the south Caucasus - The Economist - July 12th, 2025 [July 12th, 2025]
- Trump says he struck deal to send US weapons to Ukraine through NATO - CNN - July 12th, 2025 [July 12th, 2025]
- Putin Escalates His War Against Ukraine, Undeterred by Trumps Words - The New York Times - July 12th, 2025 [July 12th, 2025]
- 'Russia's tactic is obvious' Shahed drone 'terror' now reaches all of Ukraine - The Kyiv Independent - July 12th, 2025 [July 12th, 2025]
- Conference commits over 10 bln euros to Ukraine rebuilding, Italy says - Reuters - July 12th, 2025 [July 12th, 2025]
- Russian drone and cruise missile attacks kill at least 2 in Ukraine - AP News - July 12th, 2025 [July 12th, 2025]
- Rubio says US and Russia have exchanged new ideas for Ukraine peace talks - AP News - July 12th, 2025 [July 12th, 2025]
- Leonardo may offer drone tech but has no plans for plant in Ukraine, CEO tells paper - Reuters - July 12th, 2025 [July 12th, 2025]
- Trump resumes weapons deliveries to Ukraine - politico.eu - July 10th, 2025 [July 10th, 2025]
- Russia batters Ukraine with more than 700 drones, the largest barrage of the war, officials say - AP News - July 10th, 2025 [July 10th, 2025]
- Unhappy with Putin, Trump and Congress move closer to Ukraine - The Washington Post - July 10th, 2025 [July 10th, 2025]
- Trump unloads on Putin after promising more military aid to Ukraine - NBC News - July 10th, 2025 [July 10th, 2025]
- Chinese father and son detained in Ukraine, accused of trying to smuggle out info on guided missile system - CBS News - July 10th, 2025 [July 10th, 2025]
- Ukraine's Zelenskiy to hold more meetings with US officials in Rome - Reuters - July 10th, 2025 [July 10th, 2025]
- Largest Russian Long-Range Drone Onslaught Of The War Rains Down On Ukraine - The War Zone - July 10th, 2025 [July 10th, 2025]
- Italy opens Ukraine rebuilding conference as doubts of US defense help remain - AP News - July 10th, 2025 [July 10th, 2025]
- Russia launches largest drone attack on Ukraine as Kyiv pushes US for air defense aid - ABC News - Breaking News, Latest News and Videos - July 10th, 2025 [July 10th, 2025]
- Trump Asked About Not Knowing Who Paused Ukraine Weapons: 'I Would Know' - Newsweek - July 10th, 2025 [July 10th, 2025]
- 'Trump should fire him': Jeffries reacts to Hegseth reportedly pausing Ukraine weapons - CNN - July 10th, 2025 [July 10th, 2025]
- Trump says U.S. will resume sending weapons to Ukraine after pausing last week - NPR - July 10th, 2025 [July 10th, 2025]
- How Ukraine is Adapting, Enduring, and Striking Back - War on the Rocks - July 10th, 2025 [July 10th, 2025]
- Trumps sudden shift on weapons for Ukraine takes the war back to square one - CNN - July 10th, 2025 [July 10th, 2025]
- Trumps Frustration With Putin Preceded Resumption of U.S. Weapons to Ukraine - The New York Times - July 10th, 2025 [July 10th, 2025]
- How I Changed My Mind About the War in Ukraine - learnliberty.org - July 10th, 2025 [July 10th, 2025]
- 2 killed, 16 injured as Kyiv slammed with drones, ballistic missiles in Russian mass attack against Ukraine for 2nd night in row - The Kyiv... - July 10th, 2025 [July 10th, 2025]
- Europe's top rights court finds Russia responsible for downing of MH17, rights abuses in Ukraine - Reuters - July 10th, 2025 [July 10th, 2025]
- Russian Minister Who Had Led Region Later Invaded by Ukraine Is Found Dead - The New York Times - July 8th, 2025 [July 8th, 2025]
- In Sumy, Ukraine, the front line is drawing near but we refuse to leave - Al Jazeera - July 8th, 2025 [July 8th, 2025]
- Ukraine war briefing: US to resume shipments of weapons for Ukrainian defence - The Guardian - July 8th, 2025 [July 8th, 2025]
- Trump embarrasses the Pentagon with a U-turn on Ukraine - The Economist - July 8th, 2025 [July 8th, 2025]
- Trump says U.S. will send more weapons to Ukraine - The Washington Post - July 8th, 2025 [July 8th, 2025]
- Trump says US will send more weapons to Ukraine - Reuters - July 8th, 2025 [July 8th, 2025]
- Trump to Resume Sending Weapons to Ukraine - WSJ - July 8th, 2025 [July 8th, 2025]
- Opinion | The Case for Cutting Off Weapons to Ukraine - WSJ - July 8th, 2025 [July 8th, 2025]
- US to send more weapons to Ukraine, Trump says - Al Jazeera - July 8th, 2025 [July 8th, 2025]
- 'We have to': Trump sending weapons to Ukraine after expressing disappointment with Putin - USA Today - July 8th, 2025 [July 8th, 2025]
- US backs Natos latest pledge of support for Ukraine, but in reality seems to have abandoned its European partners - The Conversation - July 8th, 2025 [July 8th, 2025]
- Trump says US will send more weapons to Ukraine: They have to be able to defend themselves - New York Post - July 8th, 2025 [July 8th, 2025]
- Macrons U.K. State Visit: Migrants and the War in Ukraine Are on the Agenda - The New York Times - July 8th, 2025 [July 8th, 2025]
- What Is Trump Trying to Do With Russia and Ukraine Now? - Slate - July 8th, 2025 [July 8th, 2025]
- Trump says US will resume weapon shipments to Ukraine days after pause - The Independent - July 8th, 2025 [July 8th, 2025]
- US to resume delivery of 'defensive weapons' to Ukraine, says Trump - France 24 - July 8th, 2025 [July 8th, 2025]
- Trump says he'll send Ukraine more weapons: "They have to be able to defend themselves" - Axios - July 8th, 2025 [July 8th, 2025]
- The doctor fighting for women's health on Ukraine's front line - BBC - July 8th, 2025 [July 8th, 2025]
- US envoy Kellogg to attend Ukraine aid conference in Rome - Reuters - July 8th, 2025 [July 8th, 2025]
- Donald Trump says US will send Ukraine more arms - Financial Times - July 8th, 2025 [July 8th, 2025]
- Russia and Ukraine trade drone strikes as Kyiv signs deals to boost drone production - AP News - July 8th, 2025 [July 8th, 2025]
- As Ukraine awaits stalled US weapons, Trump says he's 'helping a lot' in war with Russia - The Kyiv Independent - July 8th, 2025 [July 8th, 2025]
- Opinion | Trump Is Disappointed With Putin on Ukraine - WSJ - July 8th, 2025 [July 8th, 2025]
- Through Fire and Faith: Stories of Resilience in Ukraine - CityWatch LA - July 8th, 2025 [July 8th, 2025]
- How Trump Can Help Ukraine Win The War And Make Russia Pay For It - Forbes - July 8th, 2025 [July 8th, 2025]
- Kellogg, Umerov set to meet, discuss resumption of US military aid to Ukraine, Politico reports - The Kyiv Independent - July 8th, 2025 [July 8th, 2025]
- 'They have to be able to defend themselves' Trump says US will send additional weapons shipments to Ukraine, criticizes Putin - The Kyiv Independent - July 8th, 2025 [July 8th, 2025]
- 11 injured as Russia attacks Ukraine with hundreds of drones - ABC News - Breaking News, Latest News and Videos - July 6th, 2025 [July 6th, 2025]
- Russia hits Ukraine with largest aerial attack as Trump talks to Zelenskyy and Putin - NPR - July 6th, 2025 [July 6th, 2025]
- Trump has good conversation with Zelenskyy after heavy bombardment of Ukraine by Russia - The Guardian - July 6th, 2025 [July 6th, 2025]
- Opinion | Dont believe the conventional wisdom. Ukraine can still lose. - The Washington Post - July 6th, 2025 [July 6th, 2025]
- Ukraine hits Russian airfield day after mass wave of strikes - dw.com - July 6th, 2025 [July 6th, 2025]
- Trump Hints At New Sanctions On Russia Amid Ongoing Fighting With Ukraine - Radio Free Europe/Radio Liberty - July 6th, 2025 [July 6th, 2025]
- Russia to Involve Laos Troops in Its War Against Ukraine. Heres What We Know - UNITED24 Media - July 6th, 2025 [July 6th, 2025]
- Dutch intelligence services say Russia has stepped up use of banned chemical weapons in Ukraine - AP News - July 6th, 2025 [July 6th, 2025]
- Ukraine's top general warns of possible new Russian offensive in northeast - Reuters - July 6th, 2025 [July 6th, 2025]
- Ukraine's Zelenskiy says latest phone call with Trump his most productive yet - Reuters - July 6th, 2025 [July 6th, 2025]
- Russia launches hundreds of drones at Ukraine just hours after Putin-Trump call Europe live - The Guardian - July 4th, 2025 [July 4th, 2025]
- Hegseth halted weapons for Ukraine despite military analysis that the aid wouldnt jeopardize U.S. readiness - NBC News - July 4th, 2025 [July 4th, 2025]