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Assessment of Intergovernmental Relations and Local Governance in the Republic of Uzbekistan

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Assessment of Intergovernmental Relations and Local Governance in the Republic of Uzbekistan ASSESSMENT OF INTERGOVERNMENTAL RELATIONS AND LOCAL GOVERNANCE IN THE REPUBLIC OF UZBEKISTAN Prepared for Prepared by Peter Epstein Matthew Winter With Munira Aminova Andrei Makarikhin Central Asian Republics Local Government Initiative Phase II Clare Romanik United States Agency for International Development Contract No. EEU-I-00-99-00015-00, Task Order No. 811 The Urban Institute February 2004 UI Project 06901-017 THE URBAN INSTITUTE 2100 M Street, NW Washington, DC 20037 (202) 833-7200 www.urban.org ACKNOWLEDGEMENTS Preparation of this report has drawn on a variety of primary and secondary sources. It could not have been completed without the patient, often surprisingly frank assistance of many experienced Uzbekistanis working both inside and outside of government to whom we are most grateful for their time, information, and insights. Indeed, most information provided in this assessment has been gleaned from interviews with these local observers, though in most cases the authors endeavored to verify each fact at more than one interview. In the body of the assessment, the authors have indicated where specific information is based on interviews with a small number of people. In respect to secondary sources, the chapter on Uzbekistan written by Kuatbay Bektemirov and Eduard Rahimov as a contribution to the Open Society Institute’s Local Governments in Eastern Europe, in the Caucasus and Central Asia: Developing New Rules in the Old Environment served as a valuable point of departure for understanding the complexities of local government in Uzbekistan, which we have sought to elaborate further in this assessment. The present authors’ understanding of the structure of intergovernmental finance in the country benefits from Alex MacNevin’s July and October 2003 reports for Bearing Point on building oblast level revenue capacity and a draft works in progress by the Center for Economic Research in Tashkent. A complete list of secondary sources consulted is appended as Annex A to this report. TABLE OF CONTENTS ACKNOWLEDGEMENTS ..............................................................................................................i NOTE ON TERMINOLOGY..........................................................................................................v ABBREVIATIONS ........................................................................................................................vi I. INTRODUCTION AND SUMMARY ................................................................................... 1 Assessment Scope and Purpose .................................................................................................. 1 Uzbekistan Local Governance in a CAR Perspective................................................................. 2 Some Distinctive Features of Local Governance in Uzbekistan................................................ 4 Implications for USAID and Other International Donor Assistance .......................................... 8 II. A VIEW THROUGH THE PRISM OF THE EUROPEAN CHARTER ........................ 11 III. LEGAL FRAMEWORK: COMPOSITION AND STATUS ........................................... 29 IV. TERRITORIAL STRUCTURE AND STATE ADMINISTRATION ............................. 34 Territorial Administration: Three Tiers Plus One..................................................................... 34 Dual Subordination and Functional Assignments..................................................................... 35 Other Examples Of Dual Subordination In The State Government Structure.......................... 39 The Court System and Judicial Oversight of Local Government Administrative Practices..... 40 The Status of Karakalpakstan................................................................................................... 41 Tashkent City............................................................................................................................ 42 Conclusions ............................................................................................................................... 43 V. LOCAL GOVERNMENT COUNCILS, CITIZEN’S SELF-GOVERNMENT BODIES, AND RELATED GOVERNMENT-NGO HYBRIDS ................................................................. 47 Local Councils of People’s Deputies and State Executive Encroachment ............................... 47 Local Council Elections............................................................................................................ 49 Legislating the Mahalla: Modernization of an Indigenous Institution or State Cooptation? ... 51 Town and Village Mahalla Coordination Councils.................................................................. 53 The Modern Day Mahalla as an Instrument of State Administration...................................... 55 Mahalla Finances...................................................................................................................... 57 The Problematic Relationship between Mahallas and Housing Association (TSJs)................ 59 The Mahalla Foundation and Hierarchy of Mahalla Coordinating Councils........................... 59 The Shirkat in Modern Uzbekistan........................................................................................... 61 Conclusions Regarding Local Councils of Deputies ................................................................ 62 Conclusions Regarding Mahallas ............................................................................................. 63 Implications for Technical Assistance ...................................................................................... 63 VI. INTERGOVERNMENTAL FINANCE........................................................................... 69 Macroeconomic Context for Local Government ...................................................................... 69 Transfers And Mutual Settlements ........................................................................................... 70 Shared National Taxes and “Local” Taxes ............................................................................... 70 Revenue Structure Of Provinces, Districts And Cities ............................................................. 73 Own revenues............................................................................................................................ 74 Reform Efforts in the Tax System............................................................................................ 75 Expenditure Responsibilities .................................................................................................... 76 Conclusions ................................................................................................................................ 77 VII. LOCAL BUDGETS AND FINANCIAL MANAGEMENT............................................ 79 The Budget Process................................................................................................................... 79 Budget Implementation............................................................................................................. 82 Discretionary Spending by Local Executives: The Reserve Fund, Privatization Proceeds and Extra Resources......................................................................................................................... 84 Budgetary Entities’ Development Funds .................................................................................. 85 Treasury Functions.................................................................................................................... 86 Audits and Monitoring.............................................................................................................. 87 Conclusions ............................................................................................................................... 87 VIII. URBAN SERVICE DELIVERY AND RELATED FUNCTIONS.................................. 89 Reorganization of the Communal Service Sectors ................................................................... 89 Rate-Setting In The Communal Service Sector ........................................................................ 90 Billing, Collections, and Financial Reporting........................................................................... 94 An Additional Note on the Water Sector.................................................................................. 95 An Additional Note on Solid Waste Management ................................................................... 96 An Additional Note on District Heating / Hot Water ............................................................... 97 An Additional Note on Housing Management and Maintenance............................................. 98 Recap of Organizational and Budgetary Status of Communal Service Companies ................. 99 The Urban Transportation Sector.............................................................................................. 99 Local Governments and Social Protection.............................................................................. 101 Urban Property, Development Permitting, and Cadastral Records ........................................ 103 Conclusions ............................................................................................................................. 104 IX. RELATED PUBLIC ADMINISTRATION TRAINING CAPACITY.......................... 108 The Presidential Academy .....................................................................................................
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