Decentralization as a Precarious Component of Contemporary European Governance: From Concepts to Practice (2016)

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Ivan Koprić*

Decentralization as a Precarious Component of Contemporary European Governance: From Concepts to Practice

1. Introduction

Decentralisation is considered to be a component of contemporary European governance. Administrative, political, and fiscal decentralisation are the main types of decentralisation, while federalism, regionalism, and vertical de-concentration may be added as the connected concepts. European governance, similar to the concurrent concept of the European Administrative Space (comp. Koprić, 2014), is a dynamic and complex phenomenon encompassing numerous principles, elements, policies, issues, and considerations. Although based on several basic principles which should serve as its pillars, European governance is from time to time hit by urgent reactive measures and conflicting policies. They are the European Union’s responses to serious changes of policy challenges in a turbulent environment. Many almost unpredictable external and internal processes cause the policy inconsistencies and make the European governance complex, versatile, and heterogeneous. In such circumstances even decentralisation as one of the basic features of the European governance may be endangered (comp. Hlepas, 2016; Göymen & Sazak, 2014). Values and concepts connected with decentralisation, as well as the challenges, processes, trends, and circumstances which influence and may endanger decentralisation in Western and Eastern Europe will be discussed in this paper. By writing this article, I would like to give credit to the academic and expert work and to substantial contribution of Professor Gérard Marcou in the field of decentralisation.

*

Ivan Koprić, Full Professor and Head of the Chair of Administrative Science at the Faculty of Law, University of Zagreb, and president of the Institute of Public Administration, Zagreb, Croatia

2. Decentralisation: Values, Concepts, and Reforms

In many parts of the world, decentralisation has traditionally been seen as not only a technical transfer of powers, public tasks, and resources from central institutions to local governments, but also as a value and a standard, maybe even as one of the preconditions of a democratic society. Treating decentralisation as a value has been rather widespread along the ideological ladders, including left socialist, anarchists, Marxists, libertarians, democrats, and many others. Many of them put in focus local communities, in the same vein in which Alexis de Tocqueville stresses “municipal spirit which sustains and gives … life” to municipal institutions (1960: 63). In other words, local communities of citizens are pre-existent with regard to wider communities and the institutions through which such institutions function and live. This is also, not surprisingly, the position of the proponents of subsidiarity principle. Among other meanings, following the famous quotations of Pope Pius XI from his Encyclical Quadragesimo Anno, this principle instructs that “it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do” (79). Normally, the principle of subsidiarity has a prominent role in today’s political and administrative considerations, orienting sensitive search for balance among local, regional, and national competencies and powers. This includes not only specific national settings, but also the European Union multi-level space, in which the principle of subsidiarity has a pivotal role, at least formally. It is established in Article 5 of the Treaty on European Union, which is supplemented by Protocol No 2 on the Application of the Principles of Subsidiarity and Proportionality. Decentralisation is also supported by Protocol No 26 on Services of General Interest which confirms “the essential role and the wide discretion of national, regional and local authorities in providing, commissioning and organising services of general economic interest as closely as possible to the needs of the users”. However, it is important to note that “the principle of subsidiarity does not mean that action must always be taken at the level that is closest to the citizen” (EU, 2015). Despite passionate and widespread advocacy, decentralisation has been in a precarious situation many times in history, in various national settings. De Tocqueville, for example, observed that “a push towards decentralization” in the beginnings of the French Revolution of 1789 ended with “an extension of centralization” after the first few years. Such a developmental pattern of historical waves of “recurring centralization” in the French history was well observed by Viven Schmidt (1990/2007). Other European countries have experienced different tracks and trajectories of decentralisation and local government development. Until the last decade of the 20th

century, the role of local units in Europe was principally determined by the tradition, ideology, and political system of specific countries. For example, strong centralization and central state tutelage over local units were the main features of the French system for quite a long time. On the other hand, in some socialist countries (as in the former Socialist Federal Republic of Yugoslavia) the primacy of local political communities and their selfmanagement had been emphasized until the breakdown of socialist regimes. Apart from the French model, several other models or types may be distinguished: British, Scandinavian, German, and East European. A closer look and more refined comparative analysis may reveal additional subtypes (comp. Koprić et al., 2014: 257-258; Kuhlmann & Wollmann, 2014; Hendriks et al., 2011; etc.). Similar to the rest of the public sector, local government systems are dependent on value changes in their societal frames. Values and expectations derived from the values are an integrating force of governance systems because these systems should gain legitimacy in their social environments. The public sector is not a simple value area with a single value dimension. There are not less than five groups of values: political (democratic), legal, social (welfare), economic, and ecological (Kickert, 2001: 33; Koprić, 2011: 5-6). Predominant value orientation influences the conceptualisation of local self-government and the development of prevailing societal role of municipalities. Some of them stress pure administrative tasks and propose confined, narrow autonomy of municipalities, which ought to be under strict central influence and control (administrative decentralisation). Others advocate for much broader political autonomy of local governments, see local selfgovernment as an instrument of the (vertical) division of power, and put forward democratic and other advantages of political decentralisation. Certain more radical concepts have even searched for possibilities of establishing the whole political system on extremely powerful and autarchic local communes which could be loosely coupled into voluntary networks of such basic communities (Koprić et al., 2014: 249-254). Local governments may have many administrative tasks, transferred to them by the central state, in which case they act similarly to deconcentrated offices of state administration. Quite differently, they can be seen as the schools of democracy, specific political institutions for improving political legitimacy of the state in the front line. In many countries, local governments are delivery agents and providers of many public services. They can be subsumed to rigorous rules of financial control and cost-efficiency and economy. Moreover, they may well be harnessed into economic development on their respective territories. After decades of industrial development accompanied with massive agricultural interventions, energy and ecological challenges, and pollution, municipalities in many countries are confronted with the ultimate task of protecting and healing the environment. These five roles of local governments, administrative, political, service delivery, economydevelopmental, and ecological are widespread in contemporary Europe, regardless of persisting traditional and certain new differences (Koprić et al., 2014: 254-257).

On top of that, despite differences in institutions, concepts, legal regulation, and paths of decentralisation, certain degree of local government harmonisation in Europe has been observed in many other regards. The Council of Europe and its Congress of Local and Regional Authorities have played a prominent role in harmonization based on the European Charter of Local Self-Government (1985) and other legal documents prepared with the purpose of influencing and consolidating local democracy throughout Europe. The strength of such influence was significantly increased during the post-1990 integration of the former socialist countries of Central, Eastern, and South Eastern Europe into the European Union. Since the meeting of local democracy standards is among the criteria for the EU accession, there is a role of the Congress and the Charter in spreading the influence of the EU. Moreover, the Congress has been eager to widen the coverage of the Charter both territory-wise and content-wise, to intensify monitoring, and to boost the significance of the Charter (Himsworth, 2015: 189-193). Along with that, some authors have found evidence of harmonization with regard to local scope of responsibilities and public affairs (Norton, 1994), institutionalizing direct elections of mayors (Magnier, 2006; Koprić, 2009), influence of the new public management on the manner of providing local public services (Wollmann & Marcou, 2010), attempts to heal local democracy trough improved citizen participation (Koprić & Klarić, 2015), and some other aspects of municipal autonomy and local democracy. The consequence is that the basic principles of decentralisation are not questionable, at least at the formal level and on legal surface. Decentralisation trend has been spreading in European countries since the last decades of the 20th century. On the general level, consolidated democracies have been primarily oriented towards the improvement of welfare services delivery, firmer support to economic development, and better yet cheaper performance of traditional administrative tasks of municipalities. The immediate task of decentralisation in the post-socialist, transition countries has more or less been the strengthening of political role and significance of municipalities in building new, democratic political systems. Differences in the decentralisation reforms in Western European countries and countries of the European East are well documented (see for example in Wollmann et al., 2016; Reynaert et al., 2005; Baldersheim et al., 2003; Kersting & Vetter, 2003; Kandeva, 2001; Horváth, 2000; etc.). However, the problem of democratic deficit Western European countries are faced with has provoked the development of new democratic institutions and the restoration of political role of their local self-government systems (Kersting & Vetter, 2003: 349; Koprić, 2008: 9698). Similarly, shortly after the first clash with the mammoth task of democratisation, former socialist countries dealt with an uneasy task of fulfilling the economic criteria for EU accession and entering the Eurozone. Moreover, after a short while they were suddenly struck with sovereign debt crisis and austerity measures. All these new economic challenges directed the pressure towards economy, cost-efficiency, and effectiveness in their local sectors, similar to those in Western Europe. Therefore, one can again observe mutual

convergence of decentralisation reforms and increasing similarities of local democracy institutional paths in consolidated democracies and in post-socialist countries (Wollmann, 2007). Although decentralisation is today considered to be a standard of civilization, and differences among traditional models of local self-government have been diminishing, Europe is still far from being able to burst forth with a new, harmonized model of decentralisation. The reality is that continuous challenges may easily ruin common features and institutions of local autonomy and democracy. All sorts of instabilities and crisis, from financial meltdowns to refugee problems, are potential threats to the acquired standards of “good European local democracy” (comp. Lhomme et al., 2016). Therefore, these challenges as well as the trends and circumstances which influence and may endanger decentralisation efforts, processes, and reforms in contemporary Europe are worth analysing briefly. Several main issues and theses about interconnectedness of decentralization and European governance in a time of overall complexity and wicked governance problems are presented in the paper in order to illustrate the precarious position of local self-government.

3. Precarious Decentralisation in Contemporary Europe1

Local governments function in the environment which imposes (too) many challenges. The challenges of contemporary societies and public governance are more and more frequently called “wicked problems” (Head & Alford, 2015; Harrison, 2000/2009; etc.). The main characteristics of the environment in which local governments have to function are complexity, dynamics, and non-linearity. Because of that, local governments can hardly predict the situation and its developments. Let us just mention local consequences of massive migrations, pollution, or natural disasters such as floods or massive wildfires. In addition, there are many new actors that play significant roles in society, which may use various competitive and – occasionally – aggressive strategies (for example, large multinational companies). Some of them want to take over the functions and certain roles which have traditionally belonged to the local self-government. The consequences with regard to the prices of services, pollution, environment protection, and the like may be farreaching not only for local governments, but also for citizens and local communities. In such circumstances, local governments can no longer employ strategies such as traditional administration of particular local tasks, old-fashioned management of local utilities, and slow distillation of local interest into locally important political decisions. They must have the capacity for quick reactions to sudden stressful events which may cause long-term and 1

This part of the paper is to a degree based on Koprić, 2016.

profound consequences not only on their respective territories, but also on the broader areas. The term ‘capacity’ in this case encompasses coordination with other relevant actors, horizontally and vertically. After being one of the core values of a democratic political system, decentralization is becoming an instrument for solving problems. Local self-government was for decades treated as a value per se, as an important component of democratic political system. In the past few decades, its role has become increasingly instrumental. Thus, we can distinguish between old, fully-fledged and new, more narrowly defined types of decentralization. It is true that there are many serious arguments opposing genuine decentralisation even in older literature. However, the majority of authors saw local self-government as the institution which enables and enhances the democratic state, and substantially adds to people’s democratic political education. Such a standpoint was defended, more passionately than today, by great authors like John Stuart Mill (1861), Alexis de Tocqueville, and many others. Further, local governments do not have the same role and have not been treated in the same manner in different European models of local self-government (see above). What is more, municipalities throughout Europe have been given such instrumental tasks as administrative services (issuing documents or licenses, and similar), social service delivery, safeguarding public order and protecting safety at the municipal level, and the like (comp. Marcou, 2007; Parrado, 2005; Norton, 1994). However, a substantial change of perception is connected with the New Public Management doctrine. NPM has not been fully successful in imposing many new management techniques or the techniques borrowed from the private sector, but it has influenced the discourse of scholars and even more notably that of practitioners and politicians. Because of that, discussions about decentralisation are influenced and infected by the NPM categories, concepts, and way of thinking about the whole public sector, including local self-government (comp. Kuhlmann & Wollmann, 2014; Hendriks et al., 2011: 740; etc.). Considerations related to economy, service delivery, and economic and social development at the local level are overturning considerations about public governance, social solidarity, and ecology in municipalities. Cost-effectiveness and efficiency, performance management, and overall policy success, are the basic concepts today. A large number of evaluation studies about local service delivery have been produced. Local governments are supposed to fulfil not only their traditional democratisation, administrative, and social roles, but also a new, developmental role (Romeo, 2012). Managerial reforms have emphasised economic impacts of local governments: local politics, local provision of public services, everything local has its price. Value for money, financial and other resources and their usage, budgeting, savings, rationalisation, performance measurement, etc. are but some of the new and relevant issues (comp. Callanan, 2005). Economic crisis in the major part of Europe, along with the European sovereign debt crisis

have put heavy weight on the shoulders of many municipalities (comp. Wollmann et al., 2016). In times of economic crisis, it is important for local self-governments to create an attractive investment environment and to boost economic development on local level. Consequently, a range of managerial techniques such as strategic planning, city branding and marketing, local entrepreneurship, public-private partnership, encouragement of competition between municipalities, etc. have found their place in the development of cities and other local governments (comp. Péteri & Horváth, 2003). Therefore, themes such as urban, rural, and regional development (Ploštajner, 2000), local innovations (Giguère, 2007), or local business climate (Lidström, 2007) are inevitable and have to be taken into account when researching contemporary local government systems. Although the problems of public governance, legitimacy, solidarity, and ecology are not suppressed by the considerations about economy and savings, in the bulk of current literature they are not as prominent as one might expect. Privatization may diminish the role of local governments and reduce the quality of services. Privatisation has become one of the fancy words. Some authors take it as a panacea, a cure for all public sector diseases. The private sector has been advocating for better efficiency, more rationality, and cheaper provision of services. European policy with regard to the services of general economic interest reflects on several services that have traditionally been considered a part of the local public sector, such as water and energy supply, waste collection and treatment, transport, and many others. Local scope of affairs has been strongly affected and shrunk by this EU policy. Even in so-called non-economic, non-commercial services of general interest, such as welfare care, health, education and similar, privatisation is an important issue in many European countries (Wollmann et al., 2016). Despite some positive impacts, privatization may cause problems with the standards, quality, access to and affordability of services. However, in its main documents adopted at the end of the 2000s, the Lisbon Treaty and the additional protocols, especially Protocol no. 2 and Protocol no. 26, the EU guaranteed the subsidiarity principle and recognized the essential role and wide discretion not only of the national, but also of regional and local authorities in providing, commissioning, and organising services of general economic interest as closely as possible to the needs of the users. Along with certain examples from various countries, that motivated some authors to coin a new word, re-municipalization, in order to indicate the reverse trend, the trend of regaining control over local services delivery by local governments (Wollmann & Marcou, 2010). The most recent analyses show that it is not possible to confirm the re-municipalization trend in most parts of Europe (Wollmann et al., 2016). What is clear from empirical insights is that privatisation undoubtedly diminishes the role and discretion of local governments. Local governance and internal decentralisation are becoming much more important than the traditional balance with central governments. Traditionally, local self-government was

seen as the form of vertical division of power, by which the central state authorities were limited and the competences of local councils and other local bodies affirmed. The relations between the central state and local government were the main axis around which various issues and institutions were conceptualized, legally regulated, and designed. Among them one can mention general clause for delimitation of municipal powers and tasks, state supervision over local governments, legal protection of the right to local self-government, local share of public revenues, calibration of the local authority to levy the taxes, and many other institutions for balancing central-local relations (Koprić et al., 2014). Internal dimension has become increasingly important parallel with focusing on good local governance (Lhomme et al., 2016). We may call it internal decentralization, with decreasing importance of the hierarchical type of governance. Many new actors, apart from citizens, tend to be included into local governance networks and partnerships, such as civic and professional organizations, businesses, academia, and others. Introduction of directly elected mayors, representation of minorities and independents in the local councils, establishment of youth councils and local partnerships, ensuring wide participation of citizens by local meetings and hearings, recall procedures, referenda, petitions, e-democracy, local civil society, local media, openness, local transparency, freedom of information, and integrity of local officials, are among the new or refreshed medicaments for healing local democracy and boosting legitimacy of local institutions (comp. Koprić & Klarić, 2015; Koprić, 2012; Reynaert et al., 2005; etc.). Sharp central-local interplay is becoming a more complex game of European multi-level governance. In comparison to traditional dichotomy between central and local governments, there is a constantly evolving tendency towards multi-level governance. The majority of European countries have more than one subnational territorial level standing in relation of mutual dependence, cooperation, competition, impact, influence, supervision, and control with national and EU authorities. In addition to local, national, and European levels, an important role in the governance processes in Europe belongs to regional governments and sub-municipal units (neighbourhoods, territorial committees, urban districts, wards, boroughs, etc.). The policy of subsidiarity and decentralisation promoted by the EU and the Council of Europe contributes to the tendency of regionalisation in Europe (Marcou, 2014; 2002). EU regional and cohesion policies are directed at strengthening economic, social, and territorial cohesion throughout Europe (Palne Kovacs & Profiroiu, 2014). The role of sub-municipal level is especially important in large, consolidated local governments and in big cities (Koprić & Klarić, 2015; Bäck et al., 2005). Sub-municipal units also play a significant role in integrated urban governance. Thus, there is a new governance picture in the whole Europe: the EU level – national level – regional level – local level – sub-municipal level. Within this new, complex architecture each level has its importance and role. There are many cooperation arrangements, including

European territorial cooperation in which all governance levels may cooperate horizontally and laterally regardless of national borders. However, in such a multi-level world of governance, the importance of decentralization to basic local authorities and widening local discretion is decreasing. Overall governance counts, local governance counts only as part of a wider, multi-level picture. Multi-level governance is blurring the traditional central-local dichotomy and reducing the importance of the basic local level.

4. Implications for Decentralisation Research, Practice, and Theory

Researching decentralization has to refocus from structures and institutions to outcomes and impacts. There is a task for everyone dealing with decentralization and European governance to answer the question about the harmonization of local governance in Europe. Is European harmonisation of local government systems a myth or a reality? There is a huge effort of the CoE and the EU to promote common standards of local autonomy throughout Europe. Because of the exchange of best practices, conditionality policy of the EU, and intensive mutual learning processes, differences between traditional models of local self-government have been diminishing. In spite of the observed harmonization trend, there are still significant differences between them. It seems that local government systems differ particularly in territorial organisation and average size of local units, local finances, relations between political and executive bodies, state supervision, and many other structural and institutional issues. Because of that, for more refined results regarding decentralization in the contemporary European governance frame, researchers should focus on the results, outcomes and impacts of local governments as well on the outcomes and impacts of decentralization processes and reforms, rather than on reform designs, structures and institutions. This may be more scientifically productive than following and analysing only basic structural and normative changes. A more practical view on decentralization, whose core question is management of decentralization i.e. management of local governance reforms (decentralization in practice), has to be accepted. Refined theoretical knowledge has to be used to improve management of decentralization because those who are in charge of implementing decentralization reforms should be fully aware of the complexity and non-linearity in the contemporary European context. Their approach has to be systemic and evidence-based. A systematic decentralisation process comprises detailed planning, piloting, legal regulation, formation (reformation) of the various segments of local self-government, monitoring,

evaluation, and corrections of the process of decentralisation. The mentioned segments of local self-government systems relate to local authorities and competences, financial autonomy, administrative capacity, political legitimacy, central-local relations, and the change of territorial structure. A continuous analysis of the achieved results is important for evaluation, possible corrections, and adjustments of the processes of decentralisation as well as for identifying good practices suitable for mutual exchange and learning (Koprić, 2008; Péteri, 2002). ‘Decalogue’ for local government reform and development of local governance can be a useful tool as a checklist for all those dealing with practical aspects of decentralisation.2 This list encompasses the following tentatively formulated lessons and recommendations for practitioners: 1. Integrated local governance (joined-up local governance) is needed where you have to cope with fragmented institutional settings. 2. Strong local political leadership (boosted by direct election of mayors and by strengthening of their executive competences) may positively influence the capacity of local governments to cope with the wicked problems of today’s world. 3. Strengthening the participation of citizens by new democracy instruments and reasonable usage of the traditional ones may significantly improve local governance, the legitimacy of local self-government, responsiveness, and policy capacity. 4. Open government concept (transparency, access to public information, e-services, ethical standards and codes of ethics of local officials and servants) may help to reduce corruption. 5. Cooperation, both horizontal and vertical, within the European multilevel governance settings increases local capacities. 6. Recognition of urban units’ potentials contributes to polycentric economic and social development. 7. Protection of rural areas and support to their preservation and development has many positive effects on the environment and demography. 8. Introduction of regional self-government (or giving political autonomy to the already established regional administrative or statistical units) based on viable regions may improve regional development and give a real purpose to the EU structural and cohesion funds, and can significantly contribute to the national capacity to use them. 9. Introduction of modern managerial tools and instruments (strategic planning, performance management, quality instruments, delegation of tasks to local agencies, private companies and civil sector organizations, etc.) and their usage when and where appropriate ought to strengthen local capacity, improve cost-efficiency, and add to the quality of public services.

2

I presented and discussed this ‘Decalogue’ with the participants of the EIPA Winter School on Administrative Decentralisation for Good Local Governance: Innovations and Best Practices in Barcelona, 2-5 November 2015.

10. New governance arrangements based on partnerships and links with the business and civil sectors, and academia improve local planning, autonomous decision-making and local public policies. The very definition of decentralization (decentralization in theory) needs rethinking in current European context. A massive comparison of decentralization efforts and their consequences in European countries has to be undertaken. All the five main roles of local self-government have to be researched: administrative, political, social, economic, and ecological role. A new theory of decentralization, which would incorporate particular European circumstances and most recent experiences, is necessary. Research and scientific rigour and fairness are of ultimate importance. Is there a new, common European model of local governance or local democracy? What does the current European model of governance mean for local self-government, local democracy and public service delivery? Is decentralization endangered by the European multi-level model? Will local authorities be able to use contemporary risks as challenges and transform problems into innovative solutions? Answering these questions is a common future task of the European researchers and scholars. European dimension must not be neglected when thinking about decentralization, because multi-level environment of the enlarged European Union and huge efforts of the Council of Europe in the field of local, regional, and urban governance will probably have an even stronger influence in the future, despite important and far-reaching challenges.

5. Conclusion

European governance is complex, versatile, and heterogeneous, constituting a complex and non-linear environment for decentralisation processes and reforms in European countries. This means that one of the basic features of European governance could be endangered, and shows the precarious situation of local governments, their autonomy, and democracy therein. Value orientations, decentralisation concepts, and local reforms in contemporary Europe are briefly discussed. Several challenges, trends and circumstances which may endanger decentralisation are described:  

Local governments function in the environment which imposes (too) many challenges; After being one of the core values of democratic political systems, decentralization is becoming an instrument for solving problems;



  

Considerations related to economy, service delivery, and economic and social development at the local level are overturning considerations about public governance, social solidarity and ecology in local units; Privatization may diminish the role of local governments and reduce the quality of services; Local governance and internal decentralisation are becoming much more important than the traditional balance with central governments; Sharp central-local interplay is becoming a more complex game of European multilevel governance.

Implications for decentralisation research and practice are also mentioned in the paper. Researching decentralisation has to refocus from local structures and institutions to outcomes and impacts of decentralisation. A more practical view on decentralization has to be accepted, in which the core question is management of decentralization reforms based on the refined knowledge about decentralisation reforms. ‘Decalogue’ for local government reform and development of local governance as a checklist for all those dealing with practical aspects of decentralisation has been offered. At the end, the very definition of decentralization needs rethinking within contemporary European context, based on the most recent insights into and evidence about the development of European governance.

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