Local Government

and Public Service

Reform Initiative

MASTERING
DECENTRALIZATION
AND PUBLIC ADMINISTRATION
REFORMS
IN CENTRAL AND EASTERN EUROPE
Edited by

GBOR PTERI

MASTERING DECENTRALIZATION AND PUBLIC ADMINISTRATION REFORMS IN CENTRAL AND EASTERN EUROPE

OPEN SOCIETY INSTITUTE

LOCAL GOVERNMENT AND PUBLIC SERVICE REFORM INITIATIVE

Address
Ndor utca 11.
H-1051 Budapest, Hungary

Mailing Address
P.O. Box 519
H-1357 Budapest, Hungary

Te l e p h o n e
(36-1) 327-3104

Fax
(36-1) 327-3105

E-mail
lgprog@osi.hu

We b S i t e
http://lgi.osi.hu/

ISSN: 1586 4499

ISBN: 963 7316 76 0

OSI/LGI, 2002
All rights reserved.

Copies of the book can be ordered by e-mail or post from OSI.

Printed in Hungary, April 2002.
Design & Layout by Createch Ltd.
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Contents
Gbor Pteri, Violetta Zentai
Lessons on Successful Reform Management ....................................................................................... 13
Introduction ................................................................................................................................. 15
Articulation of Reform Concepts ................................................................................................. 16
Domestic Political Context .......................................................................................................... 19
Economic Conditions .................................................................................................................. 19
Professional Expertise ................................................................................................................... 22
Governments Reform Management Capacities ........................................................................... 24
Public Support ............................................................................................................................. 25
Conclusions .................................................................................................................................. 28
About the Project ......................................................................................................................... 29
Notes ............................................................................................................................................ 30

PART I.
DECENTRALIZATON AND PUBLIC ADMINISTRATION REFORM ........................... 31
Kenneth Davey:
Decentralization in CEE Countries: Obstacles and Opportunities .............................................. 33
Introduction ................................................................................................................. 35
Elements and Stages of Reform .................................................................................... 35
Territorial Structure: The Municipal Tier ............................................................. 35
Territorial Structure: Higher Levels ....................................................................... 36
Assignment of Competencies ................................................................................ 37
Finance .................................................................................................................. 38
Property Rights ..................................................................................................... 39
Vested Interest .............................................................................................................. 39
Opportunity ................................................................................................................. 40
Preparedness ................................................................................................................. 40
A . J . G . Ve r h e i j e n :
Removing Obstacles to Effective Decentralization:
Reflecting on the Role of the Central State Authorities ................................................................ 43
Introduction .......................................................................................................... 45
Linking the Worlds of Administrative Reform and Decentralization .................... 45
Structural Problems in Public Administration and Their Implications
for Fecentralization Policies ................................................................................... 46
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MASTERING DECENTRALIZATION AND PUBLIC ADMINISTRATION REFORMS IN CENTRAL AND EASTERN EUROPE

A Lack of Progress in Rethinking the Role of the State .................................. 46

Leftover Elements of the Previous System Reduce the Scope
for the Re-allocation of Scarce Resources ....................................................... 47
Lack of Vertical Coherence in Policy Sectors
Reduces Reliability and Predictability ............................................................ 47
Weakness of Inter-sectoral Coordination Makes the Adoption
of Strategic Approaches More Difficult .......................................................... 48
Limited Strategic Capacity Leads to Over-reliance on Outsiders ................... 48
Conclusions: The Problematic Nature of Structural Reform
and its Implications for Decentralization Policies .......................................... 49
The Role of Civil Service Reform .......................................................................... 50
Thinking About Local Government in Administrative Reform Processes:
Creating Better Conditions for Successful Decentralization .................................. 51
References ............................................................................................................. 53
Notes ..................................................................................................................... 54
M i r o s l a v B e b l a v y :
Management of Civil Service Reform in Central Europe ............................................................. 55
Introduction ................................................................................................................. 57
Key Factors Influencing Civil Service Reform and its Management ............................ 58
Heritage of Communism ...................................................................................... 58
Governance and Public Administration Reform ................................................... 59
Labor Code Reforms ............................................................................................. 60
Institutions Responsible for Civil Service Reform Management
and Effects of the Choice ............................................................................................. 60
Interior Ministries ................................................................................................. 61
Labor Ministries .................................................................................................... 61
Single-purpose Agencies ........................................................................................ 62
Other ActorsIncentives and Roles ............................................................................ 63
Civil Servants ........................................................................................................ 63
Foreign PartnersEU and Others ........................................................................ 63
The Media and the Public ..................................................................................... 64
Political Parties ...................................................................................................... 65
Trade Unions and Other Interest Groups ............................................................. 65
Timing in Reform Management .................................................................................. 66
Timing of Civil Service ReformWhen to Start Reform ..................................... 66
Sequencing of Components of Civil Service Rreform ........................................... 67
Is There an End to Civil Service Reform? ............................................................. 68
References .................................................................................................................... 70
Notes ............................................................................................................................ 71

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PART II.
COUNTRY STUDIES ..................................................................................................... 73

Bulgaria
Aleko Djildjov:
Methods and Techniques of Managing Decentralization Reforms in Bulgaria ............................. 75
Introduction ................................................................................................................. 77
Typical Reform Trajectories .......................................................................................... 77
Review of the Past Decade of Decentralization ..................................................... 77
Aims of the Reform ........................................................................................ 78
Stages of the Reform ...................................................................................... 78
Decentralization and Public Administration Reform ..................................... 79
Legal and Constitutional Basis of the Local Self-government ............................... 80
Structure and Operation of Local Self-government .............................................. 81
Management of the Reform Process ............................................................................. 82
Adjustment to Political Changes, Election Cycles ................................................. 82
Domestic and International Professional Capacity to Prepare Reforms ................ 83
USAID, FLGR, Associations of Municipalities .............................................. 83
KPMG ........................................................................................................... 84
International Monetary Fund ........................................................................ 85
UNDP ........................................................................................................... 85
Council of Europe .......................................................................................... 85
Accession to the EU ....................................................................................... 86
Economic Conditions ........................................................................................... 86
Currency Board and Decentralization ............................................................ 86
Decentralization and Privatization ................................................................. 87
Regionalization and Local Self-government ................................................... 87
Administrative Capacity to Manage the Reform ................................................... 87
Policy Lessons ....................................................................................................... 88
Annex ........................................................................................................................... 90
Basic Laws on Local Government ......................................................................... 90
References .................................................................................................................... 91
Notes ............................................................................................................................ 92
Julian Boev:
Bulgaria: Decentralization and Modernization of the Public Administration .............................. 93
Introduction ................................................................................................................. 95
New Vision of the State ............................................................................................... 95

MASTERING DECENTRALIZATION AND PUBLIC ADMINISTRATION REFORMS IN CENTRAL AND EASTERN EUROPE

Historical Review .................................................................................................. 95

Policy for the Establishment of a Modern Administrative System
in the Republic of Bulgaria ................................................................................... 98
Conditions and Necessity ............................................................................... 98
Concept for the Distribution of Governmental Powers ................................. 98
A Model for Organization of the Administrative System ................................ 99
Unified Civil Service .................................................................................... 100
Other Elements of the Strategy .................................................................... 101
Realization of the Policy for Modernization of the State Management
and the Administration .............................................................................................. 101
General Framework of the Process ...................................................................... 101
Establishment of the New Model for Organization
of the Administrative System ............................................................................... 103
General Review of the Process ...................................................................... 103
Administrative-territorial Reform ................................................................. 104
Organizational, Functional and Staffing Strengthening
of the Local Self-government ....................................................................... 104
Introduction of Uniform Civil Service ................................................................ 105
Publicity of the Administration and its Activities ................................................ 106
Governance of the Process of Modernization of the Administration .......................... 108
General Governance of the Process ..................................................................... 108
Methods and Techniques for Implementation Planning and Monitoring ........... 109
Evaluation of the Realization ..................................................................................... 111
Conclusion ................................................................................................................. 112
Annex 1 ...................................................................................................................... 114
Matrix of Status ................................................................................................... 114
Annex 2 ...................................................................................................................... 115
Main Challenges with which the Process of Establishing
of a Modern Administrative System of the Republic of Bulgaria Faces ............... 115
Factors for Success ........................................................................................ 115
Conditions, Referred to the Whole System
of the State Administration .......................................................................... 115
Internal Conditions within the System of the Executive Power .................... 115
Impact of the Processes for Extensionof the European Union,
NATO and the New Tendencies in the Worldwide Development
of the Interstate Relations ............................................................................ 116
Notes .......................................................................................................................... 117

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Croatia
Te o d o r A n t i c :
Decentralization of Public Administration in the Republic of Croatia
Reform Process Management ..................................................................................................... 121
Introduction ............................................................................................................... 123
Reform Guidelines, Activities, Results ....................................................................... 125
Guidelines and Initial Activities .......................................................................... 125
Conducted Activities and Accomplished Results ................................................. 126
Projects ......................................................................................................... 126
Regulatory Framework ................................................................................. 127
Current Situation ................................................................................................ 129
Problems in the Implementation of Decentralization ................................................ 130
Limiting Factors in Relation to Local Self-government ....................................... 131
Recommendations for the Future Implementation of the Process ............................. 132
Notes .......................................................................................................................... 134

Hungary
Pter Szegvri:
Methods and Techniques of Managing Decentralization Reforms in Hungary .......................... 137
Preface ........................................................................................................................ 139
Components and Procedures of Decentralization ...................................................... 139
Typical Reform Trajectories ................................................................................. 139
Management of the Reform Process .................................................................... 142
Adjustment to Political Changes, Election Cycles ........................................ 142
Domestic and International Professional Capacity to Prepare Reforms ....... 143
Economic Conditions .................................................................................. 145
Administrative Capacity to Manage the Reform .......................................... 146
Areas of Reform Policies ............................................................................................ 148
Lessons and Recommendations .................................................................................. 150
Annex ......................................................................................................................... 151
1057/2001. (VI. 21.) Government Resolution
On the Plan of Governmental Tasks Concerning the Continued Development
of the Public Administration System in 2001 and 2002 ..................................... 151
I.

The Review of the Tasks and Spheres of Competence of the System ..... 151

II. Other Tasks ........................................................................................... 153

III. Legislative Tasks Affecting the Development of the System
of Public Administration ....................................................................... 156
IV. Final Provisions ..................................................................................... 159
Notes .......................................................................................................................... 161
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Latvia
Svetlana Proskurovska:
Structural and Organizational Reform: The Experience of Latvia .............................................. 163
Introduction ............................................................................................................... 165
Structural and Civil Service Reform in Latvia in 19931997 .................................... 166
First Program of Reform of Public Administration in Latvia .............................. 166
Early Transformation of Public Administration .................................................. 168
Establishment of Civil Service. Training ............................................................. 168
Commercialization of the Public Sector. State Non-Profit Companies ............... 170
Administrative Territorial Reform ....................................................................... 170
Evaluation of Implementation of the First Reforms (19971998) ............................ 172
Fragmentation versus Centralization ................................................................... 172
Unified or Decentralized Civil Service ................................................................ 173
Transparency, Accountability and Steering of Public Bodies ............................... 174
New Public Administration Reform Program ..................................................... 175
Models of Management of Public Sector Reforms ..................................................... 177
Ministry of State Reforms ................................................................................... 177
Changes in Reform Management Model during 19952000 ............................. 177
Optimal Reform Management Model ................................................................ 179
Functional Reviews .................................................................................................... 180
Objectives of Functional Reviews ........................................................................ 180
Management of Functional Reviews ................................................................... 180
Lessons Learned .................................................................................................. 181
Proposed Structures for Managing and Sequencing
of Public Administration Reforms ............................................................................. 181
Conclusions ............................................................................................................... 185
Bibliography ............................................................................................................... 186
Notes ......................................................................................................................... 187
Poland
Michal Kulesza:
Methods and Techniques of Managing Decentralization Reforms in CEE Countries:
The Polish Experience ................................................................................................................ 189
Transformation in Poland After 1989 ........................................................................ 191
Decentralization and Public Administration Reform
as a Reinventing Factor for the Political System in Poland ........................................ 192
Course of the Reforms ............................................................................................... 193
Implementation Issues (19982000) ......................................................................... 203

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Factors of the Success ................................................................................................. 204

Final Remarks ............................................................................................................ 206
Annex ......................................................................................................................... 208
Resolution No. 101/97 of the Council of Ministers Concerning
the Principles for the Preparation and Implementation
of the Public Administration Reform [Preamble] ............................................... 208
Bibliography ............................................................................................................... 211
Notes .......................................................................................................................... 213
Slovakia
V i k t o r N i z n a n s k y J a r o s l a v P i l t :
Public Administration
Reform in Slovak Republic: Management of the Process

Introduction ............................................................................................................... 217

The Chronology of the Development in 19902001 ................................................ 217
The Description of the Public Administration Reform Management Process ........... 221
Period of 19901992 .......................................................................................... 221
Period of 19921998 .......................................................................................... 222
Period of 19982001 .......................................................................................... 224
The Summary ............................................................................................................ 228
Notes .......................................................................................................................... 231

PART III.
List of Contributors .......................................................................................................................... 233

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