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EUROPEAN UNION Kyiv, 30.01.2012 Dp/DP/JRLL Subject: 18Th EU EUROPEAN UNION DELEGATION TO UKRAINE Operations Section II Kyiv, 30.01.2012 Dp/DP/JRLL Subject: 18th EU Ukrainian PCC Meeting Briefing contribution on Regional Development 1. Reforms in the Area of Regional and Local Development in Ukraine - The Strengthening of the functioning of local and regional self-government is one of the priorities defined in the Association Agenda which should bring Ukraine closer to the EU. This process is seen not only in the perspective of ameliorating the Governance of the whole country, but only in the context of a broader and more balanced economic and social development of the regions and municipalities. - Within the National Indicative Programme (NIP) for the period 2011-2013, the EU is offering substantial technical and financial support to the Ukrainian Government to reform the Regional and Local Development system (70 M euros). The priority given to Regional Development is also underlined by the fact that a Memorandum of Understanding has been signed between the Ministry of Regional Development and Construction of Ukraine and the Directorate General Regional Policy of the European Commission in 2009. - The ambitions in the EU side therefore exist, but for the time being, the real efforts of Ukraine to enhance and align its system of regional and local development with the EU have not produced tangible results. This dynamic is still very asymmetric. 2. State of play in Ukraine - The current Ukrainian system of Regional Development can be characterized as rather fragmented and ineffective. As inherited from history, a top-down approach with too many inconsistent and uncoordinated policies and strategies elaborated and hardly ever implemented is still the prevailing policy mechanism. - Regional and local administrations face an extremely narrow income base and lack powers to expand it. As a result, they have been heavily dependant on transfers from the central level and ended up distributing delegated expenditures in the framework of annual budgets rather than pursuing comprehensive and forward-looking policies in the delegated spheres. - The division of responsibilities and the allocation of powers between the different levels of the Ukrainian State Administration do not follow the principle of subsidiarity and are frequently unclear. Legislation is not fully harmonized with the European Charter of Local Self Government signed by Ukraine in 1996, in the framework of the Council of Europe. Experts estimate that 80% of the powers of local governments are duplicated by the powers of regional state administrations, which is controlled and financed by the central state. Kruhlo-Universytetska 10, Kyiv-24; Ukraine 01024 Telephone: switchboard +380 (44) 390 8010. Fax: +380 (44) 253.4547. - Increasing social and regional disparities create risks of social discontentment in a country with notorious cultural and political regional and local cleavages. Worth noting is that not only interregional disparities are growing, but also disparities between urban and rural areas and, within urban areas, between the wealthy and prosperous districts (generally located in the centres of big cities) and the outskirts (sleeping towns, etc.). These developments will have important political effects in the short and medium term. - The Ukrainian government has declared its interest in approximating its policy to EU Regional Policy. In various political declarations and decisions (for example of the Council of regions, 3.06.2011), President Yanukovich has instructed the Government to develop a programme to reform the "management system for regional development", one of the mandatory elements of which is the establishment of the State Fund for Regional Development following the model of EU Structural funds. - Several important documents, including an update of the 2005 approved National Strategy for Regional Development until 2015 and a law on State Regional Policy are under elaboration. A State Fund for Regional Development has been included into the code budget, the law needs to be signed by the president. The provisions on the fund foresee some improvements to the planning process. However, the fund seems to provide an umbrella to all financial mechanisms that have been used in Ukraine in the last decade and proved not to be efficient. Therefore, there is a risk that the financing of uncoordinated programmes will continue. 3. Current and future EU activities in this sector - The EU supports bottom up as well as well as top down approaches to Local and Regional Development with various projects. Projects include a technical assistance project to support legislation and a financial instrument on the national level as well as cooperation projects with regional authorities and municipalities (e.g. on topics like strategic planning, energy efficiency, water quality etc.). - In addition, the EU is also supporting interesting initiatives at local level funded by the Cross Border Cooperation Programme and the Community Based Approach Programme (jointly managed with UNDP). Some examples for Ivano-Frankvisk are mentioned below. - From Mid 2012, it is foreseen to support Ukraine with the programme "Support to Ukraine's Regional Development Policy" with a budget of EUR 20 million. The programme is part of a series of several actions and a response to the Pilot Regional Programmes under Eastern Partnership. The action will be divided into two components. The first component will be carried out by a technical assistance project which will provide institutional support and capacity building. The second component provides a budget to support the financing of regional policy of Ukraine and, most specifically, regional and local development programmes in the country, in regions and municipalities duly identified in accordance with relevant criteria pertaining to the best standards of a regional development policy. - As a budget support is premature in the current environment, the EU is planning to provide additional financing for call for proposals from 2013 in the amount of EUR 10 million. In case the eligibility criteria are met and Ukrainian regional policy provides Kruhlo-Universytetska 10, Kyiv-24; Ukraine 01204 Telephone: switchboard +380 (44) 462.0010, direct line +380 (44) 293.2239.102. Fax: +380 (44) 230.2390. the basis for an acceptable, reliable and transparent implementation, negotiations for a budget support will be started. 4. Projects in Ivano-Frankivsk 4.1 Community based approach programme - “mісцевий розвиток, орієнтований на громаду” - The Programme is funded by the European Union and is co-financed and implemented by the United Nations Development Programme (UNDP). The budget 2007-2011 was 13,5 EUR Mio for the first phase. More than 1.2 million citizens from over 1000 communities from all the regions of Ukraine have benefit from the CBA Programe. - The EU has decided to finance the second phase of this programme in the next 4 years with another €17 million (June 2011 – June 2015). - The project has, with the support of local communities, changed local citizens' lives. It has rebuilt health centres, supplied street lighting, provided school buses, replaced windows in schools and hospitals and ensured the supply of clean water. - This has all been done with the support (including substantial financial support) of organised local community groups. Local participation has been dynamized. - Micro Projects are co-financed by the local communities. 50% co-financing is provided by the EU/UNDP, the local budget – 45%, and the communities – 5%. - This programme has also successfully worked in Ivano-Frankivsk. 55 micro-projects have been realized in this region, many kindergartens and schools have been renovated, locals health posts improved. - The project will continue to support local communities to address urgent problems and stimulate development. 4.2 Cross-Boarder Cooperation Programmes - The main idea that drives all territorial cooperation is the deep conviction that the blockage of borders can be overcome and that borders should not be an obstacle to a balanced development. Cooperation between regions in general and especially also between neighboring regions can accelerate regional development, support the internationalization of the regions concerned and increase their competitiveness on global markets. Sharing ideas and cooperation across borders is one of the most important factors contributing to innovation, which is seen as a key contributor to achieving sustainable growth and jobs. - Ivano Frankivsk is eligible for the cross boarder cooperation programmes Hungary- Slovakia-Romania-Ukraine and, as adjacent area, also in the Poland-Belarus-Ukraine programme. - Projects in all CBC programmes are selected based on a competitive procedure (calls for proposals). - According to Ukrainian authorities, the Hungary-Slovakia-Romania-Ukraine programme is working much better than other CBC programmes as all partnerships projects must consist of at least one partner from Ukraine. In other programmes, Ukrainian authorities have complained about unfair treatment and limited involvement of Ukrainian partners since the EU has decided to de-concentrate the role of contracting authority to member states authorities neighbouring Ukraine. - In the Hungary-Slovakia-Romania-Ukraine programme, the Third Call for proposal has been launched: 30 September 2011 - 31 January 2012. The indicative budget of this Call: 8,000,000 EUR. Kruhlo-Universytetska 10, Kyiv-24; Ukraine 01204 Telephone: switchboard +380 (44) 462.0010, direct line
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