Institutions –
The Stabilizing Anchor
of Democracy
Vira Nanivska
Beirut
22 June 2011
1
Any Revolution demands a different role for
government—and civil rights
The key challenge is how to transform the
rule of power into the rule of law
2
Lessons from Ukrainian transformation:
1 The rule of power has kept its institutional
2
basis.
Political and economic reforms were very
fast, but public institutions remained
untouched.
This incongruence is killing Ukraine even today.
3
20 years after independence
7 years after the Orange revolution
Internally and abroad Ukraine is blamed vigorously for:
No protection for private property and competition
rights.
Government ignores rule of law, transparency and
public participation in decision-making.
Corruption is widely and openly practiced with
impunity.
The legal system is unstable, adding to investment
risk.
Decision-making procedures allow any official to
legally block resolutions without accountability.
There is no established penalty for violating
procedures.
4
A year after the last election, the government is
facing the most challenging tasks imaginable:
An empty State Budget
A reform strategy not supported by voters
Nearly total corruption
The collapse of communal services
Terrible conditions for investment
5
Why Ukraine appears to be failing
It’s not mentality, cultural nor political
history, the wrong leaders, or an East-West
conflict.
It’s unfinished democratization of
institutions.
In 1948, the World Bank wrote that one
country would never adopt democracy.
That was Japan.
So “mentality” is really never the obstacle.
6
How theory shaped reality
The 1990s approach to transformation showed how bad theory
can distort a country’s development.
A theoretical debate raged between Jeffrey Sachs’s shock therapy
and Josef Stiglitz’s institution-building approach.
Sachs’s theory won out and no democratic and market institutions
were built during rapid liberalization and privatization. At the
World Bank, “institution” was a taboo word. The free market was
supposed to make institutions grow on their own, in due time.
They did not. Despite billions in aid money, there is still no legal or
institutional protection of property rights, human rights or fair
competition.
In 2000, Stiglitz was “consoled” with a Nobel Prize — but the
victims of the wrong theory have had no compensation.
7
Ukraine is the only FSU country that has
managed to maintain democratic liberty
Only Ukraine has had 4 elections in which
the opposition won
All other FSU countries that underwent
shock therapy and had no EU institutionbuilding program have rejected liberalization
reforms and restored the centralized,
authoritarian model
8
The lack of democratic government
institutions is an obstacle for the reforms
There are two historical models of reforms:
– The totalitarian: political leadership has total power and
can force decisions through.
– The democratic: political leadership has limited power,
with rivals, interest groups and public policy procedures.
Without such procedures, consistent policies and
consistent enforcement are impossible.
The democratic capacity for reforms is absent in the
government institutions
President Yanukovych radical reforms are at risk
9
How deep is the problem?
Democratic reforms remain unfinished.
The state machine does not match free market
democratic principles.
10
Totalitarian political system
Separation of 3 branches of power
Unreformed executive branch
One center of power
legislative+ executive + judicial legislative
One political party in power
All property in the hands of one p
Ministry
Government
Community
councilparty
no
Regional
executive office
executive
judicial
Left Party
Center Parties
Right Party
Private
Property
Private
Property
Private
Property
Political leadership
Administration
Executive committee
Regional State Administration
Executive committee
Community
council no
District
executiveparty
office
District State Administration
Executive committee
Executive committee
The community council of towns and villages
Town’s and Village’s community
council, Executive Committee
11
Fires Occur at All Levels, Between the Unreformed State Machine
and Newly Established Institutions
legislative
executive
judicial
Left Party
Centre Parties
Right Party
Private property
Private property
Private property
Political leadership
Central administrative machine
Community council no
executive committee
Community council no
executive committee
Regional State Administration
Executive committee
District State Administration
Executive committee
The council community of towns and villages
12
The problem obviously is the
unreformed executive branch
But what makes the Ukrainian
executive administration so different
from democratic countries?
13
The Principle of Separation of Functions in a
Democratic Executive Body
Supervisory
Body
Body of
Statistics
PolicyMaking
Body
Monitoring
and
Inspection
Body
Body of
Evaluation
and
Training
Employer
Arbitration
14
Ukraine has not yet separated functions in the
Executive Branch
Ukraine’s public
service governing
body
• Supervision
• Employer
• Policy-making
• Evaluation and training
• Statistics
• Inspection and control
• Handling complaints
Democratic executive
Supervision
Body
PolicyMaking
Body
Body of
Statistics
Inspection
and
Control
Body
Body of
Evaluation
and
Training
Employer
Arbitration
15
Separation of Functions in the German Executive
lead
Federal chancellor
Federal
President
responsible for making public
policy in public administration,
reports to the Federal President
Federal Government
Higher profile instances, the
Federal Ministry that are
responsible for specialized
training of civil servants
Ministry of Internal
Affairs
Office of the Federal Chancellor (Chancellor support)
Minister for Internal Affairs
Abstract 111
Personnel Department of the Federal Chancellery (information on
the use and distribution of high-level public servants)
Immediate embodiment of their
own, taking responsibility of
actions, making public policy in
public service sphere
Abstract 112
Budget, organization and control
Abstract 115
service delegations, training and skills development; office of complaints
procedures
Abstract 132
Federal Ministry of the Internal affairs (except sports)
Office of reducing bureaucracy
Department of Public Servants
units: basics of public services, national and international legal base of
the public services sphere; financial and tariff regulations
Main Department of
Public Service
Department of state, constitutional and administrative
legislation.
Units: state, constitutional, European and and international law;
administrative legislation
Department of modernization and organization of public
administration.
sectors: organization and modernization, bureaucracy elimination,
deregulation, corruption prevention, international cooperation.
accountable
Parliamentary Secretary
Parliamentary Secretary
Secretary of State
Secretary of the Federal
Government for the
Information technology
support
create
Advisory Board
Federal Ministries
responsible for carrying out
personnel policies and
establish procedures for
candidate selection
Federal Ministry’s Personnel
Department
develop standards of hiring, career
advancement of S.C.
Federal High School of political
administration
Target non-technical education in such
areas for those who wish to join the
public service: general internal
management; administration of labor
activity, foreign affairs, the federal
police, the management of the armed
forces, finance, criminal police,
agricultural social security;
information service; social security;
meteorological service.
Federal commission of
personal staff
receives appeals of public
servants, decides training
issues
Federal administrative agency
cooperation with the executive
authorities of Engineering. issues
of modernization, advice on the
effective work.
Federal Academy of Public
Administration
central inter-ministerial institution
of training public servants of federal
authorities. Provides training p.s.,
newly appointed education, training
senior management personnel,
providing consulting services in
selection and career development
staff
Policy Planning Staff analysis
of the implementation of the
coalition agreement,
government programs
Coordinator of the Federal
Government on reducing
bureaucratic costs and
improving the legislative
activity
16
Separation of Functions in the Canadian Executive
Supreme Court
Commission on
conflict of interests
Prime Minister
Advisory
committee on
public service
Public service commission
control over the selection of
personnel, evaluation of the
annual activities of ministries
and departments, audit,
investigation, decisions
regarding personnel.
Agency for public
service
Main Department
Federal Court
General Governor
Cabinet of Ministers
Prime
Minister's
Office
Tax Court
Privy Council
Office
The governments
of the provinces
and territories
Secretary of the Privy
Office of
General Auditor
/ Inspector
of
Council –
First deputies of Ministers
Ministries,
departments
(with training
institutes and
centers)
Public Service
Ministry of Finance
(policy of government
revenues and
expenditures,
coordination of
decision-making)
Treasury Board
President - responsible for the
APC and CSPS (APC head)
Secretariat of the
Treasury Board
Government
Management Board
agency of cooperation
with ministries and
agencies
- negotiations concerning
public servants employment
- evaluation of personnel
policy
- management of budget
preparation
Head of public service
Committee of the Privy
Council
-budget management and
credit
-- to coordinating the
preparation of budgetary
estimates
Department of
public service
employment
Trade unions
Agency of human
resources management
in public service of
Canada
- disclosure of abuses in
public sector
- protection of those who
exposed abuses
- providing fair process
for the accused
Canadian School of
Public Service
17
Separation of Functions in the Polish Executive
The highest chamber
of control
Seym
Higher disciplinary commission of
civil services
Prime Minister
Prime Minister’s
Office
Department of public
and State
Mainservice
Department
personnel reserve
Public Service
of
Department of
control and audit
Central anticorruption bureau
Regional School of
public administration
Council of
public
service
18
Separation of Functions in the US Executive
Legislative Branch - Congress
Executive Branch - President
Senate
Administration of the President
House of representatives
Judicial Branch
Personnel
department
Federal Bureau of
Investigation
(FBI)
Office of Management and Budget
General
Accounting
Office
(GAO)
Office of Management
and Budget
Office of
Inspector General
Chief Human Capital Officers
Council
of Personnel of
MainOffice
Department
Management
Public Service
Merit System
Protection Board
(MSPB)
Senior
Executive
Service
Equal Employment
Opportunity
Commission
The union of American
government officials
American Federal
Government Employees
Office of
Government Ethics
Cabinet Departments and
Federal Agencies
The system of educational institutions for training civil servants
MPA, BPA University Programs
Office of Personnel Management Programs
VETERANS
PRIVATE SECTOR
19
Separation of Functions in the French Executive
Standing Committees
Commission of statutes - is considering bills
on the p.s.
Claim Commission - considers claims
against decisions on sanctions against the
public servant, decides and approves the
texts of their deviations or motivational
recommendations
Higher Council of Civil Service –
p.c. on state level
- p.c. on territorial level
- p.c. on health services
Training and social promotion commission
Service of
the Prime
Minister
Prime Minister
Chairman of the
Council of Ministers
Ministry/Government
Mediator of the Republic
(Ombudsman)
EUROPE
EU and European Council
Constitutional
Council
The General Secretariat of Government
Commission of monitoring hygiene and
safety
Ministry of Health,
Youth and Sports
Ministry of Labor,
Social Affairs and
Solidarity
Main inspection of
social affairs
Service of general
economic and financial
control
Court of financial
discipline
Ministry of Budget, public
accounts and public
service
Ministry of
Economy,
Finance and
Employment
State Secretariat of Civil
Service
Main finance
inspection
Ministry of the Internal
Affairs and Overseas
Territories
Main inspection of
administration
Central body of
corruption
prevention
Ministry of Foreign Affairs,
European Relations and
affairs of the Frenchspeaking population
Main inspection for
foreign affairs
Ministry of
Military
Supervision
Inspections in other
areas in the
ministries
State
Council
Service of control over
budget and calculations
Court of accounts
and budget
Ministry of
Justice
Main Department of
National Center
Department
of
Public
Service
for Regional
administration and public
service
Advisory Board of
employment in the state
apparatus
Commission of social
interaction of
ministries
public service
(CNFPT)
Independent commission
The Supreme
Court in
criminal cases
Commission of
professional ethic
Commission of equivalence
classification of EU citizens
and other members of the
European Economic Area
National school of
administration
(ENA)
Commission of financial
transparency of political life
5 regional institutes of
administration
(IRA)
Higher body of fighting with
discrimination (HALDE)
Center of European
studies (CEES)
Адміністративні паритарні
комісії (CAP) 4 рівнів
20
Financial Control in the Ukrainian Government
HEAD
The head of an agency (e.g. minister) is the sole arbiter of financial matters
regarding the budget and the law.
Decisions are ratified by that same official’s subordinate(s).
21
Financial Control of Public Bodies in France
Report
www
Ministry of
Finance
Ministry
of Budget
Permanent
accountant
of the Ministry
Report
www
Report
www
Branch
Inspections
External audit
expert
HEAD
Internal
audit
Permanent
Inspector
of the
Ministry
Financial
Inspection
Report
www
Report
www
External reviews
private companiesReport
www
Report
www
Financial operations are controlled by Ministry of Budget and Ministry of Finance
permanent representative on a daily basis;
Mandatory ongoing internal audits and oversight of independent state inspections
and external private audits.
22
Institutional Control of Public Service Within the Executive Authority
Poland
Republic of France
Inter-ministerial inspections
The highest chamber of control
(subordinate of the Seym)
The highest control body, that
controls public authorities, local
governments - from the standpoint
of legality, accordance and
diligence. Department of
Control and Supervision
• coordinating control activities of
the Prime Minister regarding
government administration.;
• provides oversight bodies that
are directly subordinates of the
Prime Minister;
• implementation of internal
control in the Cabinet;
• improving controlling methods.
Central Anti-Corruption Bureau
Special service, main purposes:
•exposing and overcoming abuse of
authority in state and local
governments;
• fighting corruption in the commercial
sector, mainly in circulation of stocks;
• analysis of income declarations of
parliamentarians and senior civil
servants.
•The General inspection of finance
• General administration Inspection
• General Inspection of Social Affairs
Competency spheres:
•monitoring and verification of
procedures execution, the effectiveness
of all units receiving public funds;
•audit and evaluation of the
implementation of efficiency and strategic
solutions to help institutions to improve
their strategies, to improve service quality
and to improve resource management;
• advisory assistance for the
implementation of the recommendations
provided by the Inspection.
Financial control
• Service of general economic and
financial control (SCGEF) - inspector in
every ministry
• Service of control over the budget and
accounts (SCBC) – inspector I n every
ministry
•Committee of Internal-ministry Audit
Programs (CIAP)
• Board of Finance Directors of the State
(DAF)
•Parliamentary commission
Anti-corruption control
•Central department of corruption
prevention;
•Commission of financial transparency in
politics.
Board of modernization in public
policy Audit program of public policy to
rationalizing public spending through
improved quality of public policies and
their adaptation to society's demands.
Federal Republic of
Germany
Political control
Policy Planning Staff
• Carries out political supervision
over the activities of the Federal
Government, analysis of the
coalition agreement and
government programs
implementation.
Office of the Federal Chancellor
• Control over coherence of
ministries position with the Federal
Chancellor policy and the general
policy of the Federal Government.
Financial Audit and Control
Council of the financial planning at
the Federal ministry of finance
• Maintains of the fiscal discipline in
the use of federal budget and
determines the main expenditure
articles.
Canada
Civil Service Commission
• Established in 1908 to prevent
political corruption, has 900
employees, control over the selection
of staff;
• Annual assessment of ministries and
departments activities;
• Audit and investigating issues
relating to personnel.
Commission on Conflict of
Interests
• Created to prevent economic
corruption
• Controls deputies activity,
overseeing the supremacy of law in
the conflicts resolution
Office of the Government
Administration Council
monitoring (СРК)
• internal control
Ministry of Finance,
Committee of the Privy
Council, Treasury Board
Secretariat
• control over the budget process
Board of legal labor relations
in civil service
• control over collective agreements
accomplishment
Human resources
management agency of
Canadian civil service
• Revealing of abuse in public sector;
• Protecting those who revealed it;
• Secures the due process for the
accused.
United States of
America
General Control
Office of General Inspectors
• The general inspector
supervises the audit of HR
department programs and
activities;
• Overseeing the rule of law
within the HR department
activities;
• Implementing OPM
contracts with companies
from the private sector and
local organizations. Federal
Bureau of Investigation (FBI)
• Preventing corruption and
other abuses in public
bodies.
Financial control
The Committee of
management and budget
• Carries out control over the
use of finance, human
resources and
implementation of state
programs.
General accounting
chamber
• Carries out control over
spending budget funds,
reporting, law enforcement
and policy achievement.
CENTRALIZATION REFORM
IS AS IMPORTANT
CENTRALIZATION
Oversee compliance with the
Constitution, human rights,
national interest, the national
budget, territorial integrity and
national security.
Unifying legislation at the
national level and bringing it in
line with European standards.
DECENTRALIZATION
Responsibility for the socioeconomic development of
territorial communities lies with
local elected bodies.
Executive capacity is delegated to
local level to plan and spend local
budgets.
Local communities have capacity to
solve their most urgent problems
themselves.
24
The main obstacle to reforms in Ukraine today
is an unreformed, unaccountable civil service
The civil service has not changed since the Brezhnev era—only
liberalized. Civil servants are not engaged in the reform
process, are unable to translate policy into procedure, and are
not intellectual leaders of reform.
The government machine has no capacity to transform policy
decisions into a public activity involving voters in the reform
process and allowing all interest groups to express their
needs, influence decisions and be ready to support them.
Policy decisions, the reasons for adopting them, documents
that explain policies and make clear what is being done, what
problems need solving, and what the cost of non-doing is, are
not available to voters.
25
What’s the cure?
The only working model of democratic institutional market
transformation is the EU Acquis based accession process
European principles of effective legislation, taboo to autocrats
because they undermine rule of power, are indispensable to
rule of law because they:
–
–
–
–
expose violations and establish penalties for them;
prohibit bureaucrats making decisions at their discretion;
enshrine the independence of inspection bodies from subjects;
require regular inspection, auditing and monitoring of public
organizations, procedures and standards;
– require audits of the effectiveness of rules and regulations on an ongoing
basis;
* Support for Improvement in Governance and Management (SIGMA). Source:
http://www.oecd.org/dataoecd/4/58/829242.pdf
26
These five legislation principles,
which undermine totalitarian systems
and the rule of power,
are indispensable for the rule of law.
27
For reforms to go through, an effective
implementation instrument is needed
Build Government institutional capacity to manage reforms.
Present reforms publicly through standard documents and
procedures: Green/White Papers and consultations.
Determine and publicize:
–
–
–
–
–
–
What we hope to get in the future?
What problems face us today?
What is the cost of delaying solutions?
What kinds of effective solutions are there?
What obstacles stand in the way?
Who are the key interest groups and their positions?
Draw up and publicize a clear timetable for implementation.
Include procedures to oversee and monitor the timely fulfillment
of the plan.
28
Following this method, ICPS completed a
study called “Capacity assessment of the
Government to organize implementation
of the EU-Ukraine Association
Agreement.”
This study presents the mechanisms for
planning reforms to adapt to EU norms
and standards, using the market
surveillance system as a model.
29