Rural Russia Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized in RuralRussia and CivicEngagement Local Self-Government COLLECTION OFARTICLES THE WORLD BANK 1 The fi ndings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily refl ect the views of the World Bank, its Executive Directors, or the countries they represent. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgement on the legal status of any territory or the endorsement or acceptance of such boundaries. 2003, The World Bank Eastern Europe and Central Asia, ECSSD 600 19th St. Washington, DC 20433 Astro-Plus Publishers 61 Svoboda St., Bldg. 1 Moscow, Russia 125634 The current book was created under the framework of the pilot project L ca S- G a c a d Cc E a Ra, which is implemented by the World Bank in partnership with the Government of the Russian Federation and the Russian Representative Offi ce of Charities Aid Foundation, UK. Cover photographs were provided by Z.V. Gushan. Photographs used on the cover were graciously made available from F da S Aaa R a d Ra D (R A F d). 2 CONTENTS ACKNOWLEDGEMENTS………………………………………………………………………5 FOREWORD……………………………………………………………………………………6 WHY LOCAL SELF-GOVERNANCE?………………………………………………………9 OUTLINE OF THE PUBLICATION……………………………………………………………13 Chapter 1 SOCIO-ECONOMIC DEVELOPMENT AND THE RURAL SPHERE……………………..17 Nikolai Mezhevich Rural Russia: Economic Aspects of Overcoming the Crisis ……………………………19 Lilia Ovcharova and Alina Pishnyak Rural Poverty in Russia……………………………………………………………………...27 Liubov Ovchintseva The Current State of the Social Sphere in the Village …………………………………..38 Chapter 2 LEGAL FOUNDATIONS OF RURAL SELF-GOVERNANCE………………………….....53 Olga Savranskaya Legal Aspects of Developing Local Government in Rural Russia……………………....55 Chapter 3 FISCAL FOUNDATIONS OF RURAL SELF-GOVERNMENT…………………………….87 Nataliya Golovanova Fiscal Challenges and Opportunities……………………………………………………....89 Chapter 4 PRIVATE FINANCING………………………………………………………………………..97 Nina Medvedeva Rural Credit Cooperation as a Basis for Socio-Economic Development………………99 Anatolii Maximov Reducing Rural Poverty: The Role of Micro-Finance…………………………………...109 Alexander Rodin Providing Consulting Services: The Association of Farmers and Small Agricultural Entrepreneurs (AKKOR) in Rostov-On-Don………………......116 Development of a Regional Credit Cooperation System………………………………118 Chapter 5 LOCAL SOLUTIONS………………………………………………………………………..119 Alexander Balobanov Case Studies on Rural Development……………………………………………………..121 3 Contents Larissa Avrorina Social Partnership Experience in Small Towns and Rural Areas……………………...122 Liubov Ovchintseva Developing Rural Self-Government………………………………….…………………...128 Gleb Tiurin House of Hope for Zaozerie……………………………………………………………….131 Victor Chernenko Local Self-Government Participation in Rural Community Development………….....134 Magomed Mirzaliev Organizing the Rural Budgeting Process………………………………………………...135 Armen Grigorian and Sergei Tarasov Sustainable Development in Russian National Parks and Biosphere Reserves…….136 Zaneta Liutikiene Participatory Development………………………………………………………………...139 Chapter 6 WORLD BANK EXPERIENCE AND COMMUNITY DRIVEN DEVELOPMENT IN POST-SOCIALIST COUNTRIES…………………………141 Boris Popadyuk Moldova Social Investment Fund…………………………………………………………143 Svetlana Demchenko Ukraine Social Investment Fund…………………………………………………………..145 Cristina Vladu Romania Social Development Fund……………………………………………………...148 Nils Junge Self-Governance in Armenia……………………………………………………………....149 Appendix 1: FEDERAL PROGRAMS IN RURAL DEVELOPMENT…………………………………...151 Appendix 2: LIST OF AUTHORS………………………………………………………………………...157 4 ACKNOWLEDGEMENTS The editors of this volume are deeply grateful to all of our friends and colleagues, who have supported and who continue to support the project for the development of L ca G a c a d Cc E a Ra Ra. We would like to thank Julian Schweitzer for his support of the project while still in its early stages. William Reuben, Julian Schweitzer and Yelena Zotova all made important contributions to the work of two roundtables held in St. Petersburg and Smolensk. Tatyana Vinogradova (St. Petersburg Center Saa) organized the fi rst roundtable in St. Petersburg in a talented and professional fashion. Olga Mikhailina (CAF Russia) expertly coordinated the two subsequent roundtables in Rostov-on-Don and Smolensk. We would particularly like to thank the numerous participants of the roundtables for their innovative presentations and active participation in discussions. Your comments have strengthened our belief that the Russian village possesses the rich and diverse resources necessary for the success of independent local self-governance. Alexander Balobanov, Olga Mikhailina and Leah Cohen masterfully edited and formatted the Russian and English versions of the publication. We are especially grateful to the Ministry of Economic Development and Trade for its energetic and warm support of both the project and this publication. The fi nancial support of the Japanese Government for the project L ca G a c a d Cc E a Ra Ra is gratefully acknowledged. All errors and omissions are ours. 5 Foreword PERSPECTIVES ON THE DEVELOPMENT OF LOCAL SELF-GOVERNANCE The birth of local self-governance as a public institution in Russia dates back to the nineteenth century, although some of its elements can be traced even earlier. In Soviet times, however, local self-governance was transformed into a powerless branch of the State. The rebirth of local self-governance occurred at the beginning of the 1990s with the restructuring of the economy. Under the constitutional reform of 1993, local self- government was declared to be an independent structure in the system of government. The new 1995 federal law O G a P c Oa a L ca S- G a c Ra Fda provided fresh impetus to the development of local government. The law introduced new terminology and concepts pertaining to local self-governance, determined its functions, and established its fi scal foundations. In 1998 Russia signed the E a Ca L ca S-G . The standards of The European Council and other cooperative programs with the Russian Federation infl uenced key aspects of the establishment and development of local self-governance in Russia. Local self-government is one of the cornerstones of the constitutional structure of the Russian Federation; it stands closest to the population and provides the most immediate protection of the public interest. Those interests are based on the life of the community and its interaction within a given territory. Local self-governance is an important mechanism for the formation of civil society in Russia, and has a unique place in its development. A true people’s government involves members of the local community in the process of public decision-making. Analysis of the development of local self-governance in Russia during the past decade demonstrates that the most important constitutional right of the population – that of independent problem-solving at the local level – has not yet been realized on a national scale. For a number of years, the Federal government largely ignored the problems of local self-government. This disregard has directly affected the standards of living in both the city and the village over the long term. Russia is now faced with the need to fundamentally restructure its system of local self-government. In order to accomplish this successfully, a reformation of the entire system of public government is needed. In this regard, the year 2003 marks a turning point. A new draft resolution of the Federal Law O G a P c Oa a L ca S-G a c Ra Fda is now under discussion in the State Duma. The law is based on the division of legal and fi nancial authority between federal and regional power structures and local governments, eliminating the vagueness surrounding these relationships. The main provisions of the draft resolution are related to changes in the principles of territorial organization of local government; only those clauses of the resolution which have proved to be viable in practice will be adopted. At the same time, the law also takes into account the pre-revolutionary experience of Russia in local self-governance. The reformation of local self-government is closely related to the problem of fi nancing local government activities. Municipal revenues and expenditures must be balanced. The problem of creating an adequate fi nancial base for local government in Russia has always been acute. Lawmakers, scholars, and municipal experts both from Russia and 6 Foreword from abroad have been invited to work on the problem. A great deal of help has also been provided by the World Bank. The proposed restructuring of local government and the realization of its envisioned powers strives to eliminate existing boundaries between regional and federal structures and the population. Local government in its new form will be close to the people, making local self-governance a reality throughout the Russian Federation. To achieve these goals, it is necessary to train qualifi ed administrative specialists, the kind of specialists whose skills are equal to the scope of reforms. They will, without doubt, receive the support of the Federal Government. Public effort created the new principles of local self-governance and provided for their implementation as set down in the new

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