"Odesa’s windows of opportunities": instruction for the proper use

Author : Serhiy Hrynevetsky

Source : 112 Ukraine

Another change of power in Odesa region raises again many question. Since 2005, Odesa region has changed ten heads of administration
14:57, 14 November 2016

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Such frequent changes of managers did not contribute to solving the key problems of the region. The "political component" played negative role, by which the heads of local administrations became the main party leaders and agitators.

Now the situation in a stalemate. Half of the regions do not have heads of administrations, and most of them regional council expressed lack of confidence. Perhaps, in this situation it would be logical to those same councils to put forward their nominations heads of executive power.

My personal code of ethics stipulates that it is not necessary to give a public assessment to predecessors and followers. So let me express my views, abstracting from individuals.

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I need to start answering the question: do the local authorities have enough executive powers and tools to make a difference at the regional level? I am convinced that it is enough if skillfully use it. Thus, in recent years there was some progress in the system of power, and above all - in the field of fiscal decentralization. Continuing a controversial and often questionable from the legal point of view the process of unification of communities. But the system of decision-making and governance remains the same. And given the balance of power in Parliament, and in general in the country, there is a chance that it will remain unchanged at least for a few years yet.

So until new laws are not approved, it is necessary to ensure effective implementation. Let us start with the Constitution.

According to Article 119 of the Basic Law, the local administration provide, in particular, "the implementation of national and regional socio-economic and cultural development programs of environmental protection", "preparation and execution (!) of the regional and local budgets", "report on the implementation of respective budgets and programs. " Isn’t it enough?

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In Odesa region program of socio-economic and cultural development in 2016 has not been developed and approved. Some would say that this is an empty formality. But that's the thing that the work of state institutions just consists of a number of formalities without complied with any document can become a worthless piece of paper, and any decision - the good wishes.

Let us turn to the classics. Max Weber formulated the basic principles of rational bureaucracy, among which are the following:

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- construction of hierarchical organization that includes subordination of lower rank and higher employee responsibility not only for their own actions but for the actions of subordinates;

- the division of labor in accordance with clearly defined rights and obligations of employees assigned to official documents;

- a clear system of rules and procedures, ensuring uniformity of implementation of production processes;

- a system of promotion and tenure based on skills and experience.

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Over the past three years, Odesa region has never held the board of governors. But the board involves the participation of all heads of departments, heads of district administrations, representatives of local government. Some may argue that it is a formality. But this formality is one of the mechanisms of feedback. And this applies not only to relations between the "area-region." It is a natural question: how often are heads of regional state administrations invited at a Cabinet meeting or the National Security and Defense? Another key point. Politics is the art of the possible, and to achieve a goal you should be able to negotiate, to seek compromises, build a system of relations with local government and central authorities. And to work with the Cabinet of Ministers there are some appropriate tools provided by applicable law. Thus, the Law "On Stimulation of Regional Development" provides for the signing of regional development between the Cabinet and the Regional Council. Itprovides "order, the amount, form and terms of financing joint activities defined by the parties, according to the State Budget of Ukraine and local budgets" and "responsible parties to the agreement for failure or improper fulfillment of her actions." Is it an empty formality or "window of opportunities"?

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If formality, why is it not fulfilled, if the "window of opportunities", why no one uses it? Why there is no agreement between the Government of Ukraine and Odesa Regional Council? Why doesn’t it deal with the development of Ukrainian Danube, construction of waste treatment plants (remember that Ukraine has ratified the Paris agreement on combating global climate change), the use of such a unique recreational resource as Kuialnyk? It is only a short list of problems that region had to settle with the government.

Such a deal would be a signal to investors. We should not forget about the Law "On public-private partnership." For example, according to it, the state support can be carried out including through "funding from the state or local budgets and other sources in accordance with national or local programs." But these powers belong to RSA!

 The art of management is a means by which certain objectives are achieved. And with the objectives we have the same problems. Loss of Crimea and the war in the east of the country significantly affected the economic development of Odesa region, and all coastal regions. So, speaking of the strategy, we must consider the long-term impact of these factors to understand what effects they can have.

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What we have today? First, a significant reduction of transit potential of coastal regions. A number of important international infrastructure projects such as transport corridor project around the Black Sea, which was planned to implement within the Black Sea Economic Cooperation, are out of agenda.

Second. The war and political instability in southern Ukraine, as well as terrorist attacks in Turkey have attacked the development of cruise tourism, which is developing dynamically in recent years. If in 2013 Odesa was visited by 106 cruise ships, the 2014-th – by 32, 2015 - only by 13, and today - by 4.

Third. Decreased investment attractiveness of regional economies through increased risks, political instability and corruption. Along with the fall of investment attractiveness continuing increase in military spending. This in turn leads to a reduction in social spending, investment in education, science, culture and general human capital.

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Fourth. Changes in the structure of foreign trade. On the one hand, restrictions on certain groups of Ukrainian products on the Russian market are introduced, on the other - the Free Trade Area with the EU is not working yet. In 2013, exports from the Odesa region in Russia amounted to almost 153 million dollars, while its share in total exports - 9.4%. In 2014, exports to Russia fell by half and reached almost 89 million (4.9%) in 2015 - almost 73 million (4.2%). Most likely, this trend will continue in the future.

Naturally, agricultural producers in terms of the new conditions have got the best opportunity to reorient exports. Among them, of course, and coastal regions - Odesa, Mykolaiv, and Kherson regions. Export switched to the countries of Asia and Africa.

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Back in 2014, the sales of foodstuffs and agricultural products came out on top, taking 30.2% of total exports. In 2015, they were already 38.2%. That is, all other types of industrial goods exported only 1.5 times more than farmers and Food Industry.

In some sense, there are reasons to stay happy. The agricultural sector got out of the "pit" in which it has been since the 90's. However, against the background of the optimistic data of the AIC looks more like a spoon of honey in a barrel of tar. If this trend continues, the consequences can be miserable. If we analyze the top ten groups of goods exported in 2015 (their share in total exports is about 47%), it is easy to see that the vast majority are a raw material and products with low added value. Agricultural production may not have the level of profitability comparable to the industrial production. And export performance tell us most about de-industrialization of the economy of Ukraine.

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It might happen that Ukraine’s rich land resources will be hostage. This phenomenon was named "resource curse". Clearly, this concerns Ukraine as a whole, but also directly affects Odesa region. And this is only the most striking economic threat. Obviously, it is necessary to think not only of the use of the old competitive advantages - such as an increase in transit capacity through the development of port infrastructure and quality of logistics. More important is to think about creating new advantages. For example, on finding answers to climate change. South of Ukraine is in a zone of risky agriculture. So now we need new varieties of crops that are adapted to climate change. In the South, in the same Odesa region, there are large research institutions such as the Odesa Institute of Selection and Genetics and the Institute of Vine and Wine University.

Not enough attention is paid to the possibilities of creative economy. Odesa region has its film studio and numerous theaters and museums. There are areas for festivals and competitions. Coastal areas have significant potential for the development of energy from renewable sources (solar, wind, biomass based). Some localities of Odesa region with the support of international donors have implemented projects using local resources to community needs. This is only the first consideration. And in fact, the "windows of opportunities" are wide enough, despite the crisis and war.

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