REGIONAL DEVELOPMENT POLICY FOR A BALANCED LOCAL DEVELOPMENT MARIA ORLOV & OXANA PAIERELE

Abstract: The excessive territorial fragmentation leads to low budget revenues and development potential at national, local and regional levels. Since the competences of central, regional, and local authorities are intertwined, competences of these administrative bodies ought to be defined clearly and legislated decisively so that they stand firmly against any future attempt to bend them. The processes of decentralization and regionalization are companions to economic and political reform. These policies are interlinked, therefore by clear division of responsibilities and competences; this will increase the institutional capacities of the local public authorities in terms of regional development policy and projects implementation. Eastern partnership countries’ aspiration to accession to EU calls for their transformation into competitive countries, able to ensure economic growth based on European trends. The desire for accession was an important factor for administrative and territorial reform processes (based on principles of regionalism, multi-level governance and subsidiarity) in most countries. Some of the countries chose regional development policy and division in regions, levels at which development is planned and implemented and levels at which is easier identifying the development possibilities, and stimulating and controlling development in harmony with national goals. Keywords: regional development; decentralization; local public authorities.

Introduction The public administration is an important force influencing the direction of development by being either a constructive force or one that prevents any obstructing development and transformation. In a highly centralized system, a reform imposed from the center has a high risk of not being accepted by the local authorities and therefore, not bringing any changes, but rather to strengthen central power. In the centralized system of managing public affairs, every wrong decision has serious repercussions for the whole country. A decentralized system defends these dangers, much safer, serving democracy and efficient resource management. Subsidiarity is one of the central principles of the EU, which states that political decisions in the EU should always be taken at local, administrative and political level and closer to citizens: Article 4, paragraph 3 of the Charter provides that the exercise of public responsibility should be decentralized. Established in 1992 by the Treaty of Maastricht, the term `subsidiarity` has been a key element since 1985, when the Council of Europe promulgated the European Charter of Local Self-Government.

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While issues like decentralization and local autonomy have been very promoted in recent years in Western Europe, most of the Eastern European countries are still in a reforming process, meaning that in the framework of certain local administration reforms or regional development policies are trying to redesign its public administration, territorial administrative policy. The long period of centralization marks the steps taken toward administrative decentralization and territorial regionalization and applied methodology in this regard. A good overview on motivations for regionalization in Eastern European countries is made by Jennifer A. Yoder (Yoder 2007): “In post-communist countries, regionalization was largely propelled by national policy makers. With few groups espousing either territorial or ethnic regionalism from below, and with a general weakness of civil society organizations to participate in the debates about regionalization, the main proponents for regional reform in postcommunist countries were in either the national executive or parliament. The debate often boiled down to whether a more centralized system would provide national stability and integrity during the transition, or whether a decentralized system would be more democratic and efficient.”

Administrative division impact on regional development. Republic of Moldova case Giving Moldovan example, it currently operates on an administrative division accomplished in 2001 (Law no. 764-XV/2001) with the amount of counties that fragments much the decision-making process. At the same time, strategic projects of regional importance are difficult to be implemented, due to disagreements between the districts presidents or lack of coordination, communication or partnership (Orlov & Buşmachiu 2016). The existing local public administration is a product of a reform that took place under the political principles and circumstances at the time. The administrative system is inherited from the communist system and represents a mixture of political and administrative functions, which created an unclear division of responsibility between political and administrative powers. As results of territorial reform from 2001 may be listed: • small settlements that cannot provide effective public services (roads infrastructure, water and sanitation, rehabilitation works, etc.) unless they associate with other local authorities; • limited financial resources that can only be diversified by additional state or international programmes; • a fragmented geographical distribution, which, in turn, reduces the quality of strategic and operational planning; and others.

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Generally, it affected the quality of local decision making process, strategic planning and implementation of local and regional initiatives. Overall, the regionalization process has been linked closely to the larger democratization and economic liberalization processes, therefore, together with EU aspirations, the administrative system must be reformed. Since the local development is very interlinked with the administrative organization of the territory, certain clarifications should be maid according to the existing legislation and researches. Referring specifically to the notion of “administrative-territorial organization” or “administrative organization of the territory”, this is considered the primary action which aims at establishing within the State for the first time, several administrative units, and having no importance on how many levels they are organized and what are the relations between them. Any other changes made later to this primary organization, can only be considered an improvement or an administrative reorganization of the territory. (Preda & David & Filip 2000, 520, Preda 2001, 136) European Charter of Local Self-Government1 contains no express provision relating to the size and number of local territorial authorities and local administration levels. It refers to this aspect indirectly through provisions related to responsibilities and local resources, referring more to the spatial extent of competences than to the territorial ones. For example, Article 4, entitled “Scope of local autonomy” and in particular Article 4 (5) which states that “Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions” (European Charter of Local Self-Government and Explanatory Report. 2000). Any State to be well led and managed divides its territory into administrative units, which are recognized as legal personalities and also gives them responsibilities for both private as well as public law. The functions and tasks of the state are so complex that they cannot be achieved throughout its territory only with the central authorities. From the perspective of the constitutional law, the territory represents the territorial dimension of the state. By the term `territory`, the state reaches out to those who live there, creates needed structures and realizes its sovereignty. Overtime, there were several administrative territorial divisions and administrative reforms in Moldova by which the state has been tried to adapt to the requirements of the time. The current administrative-territorial division, unfortunately turns out not to be able to maintain its viability in the new socioeconomic conditions. Given that there are small local communities dependent on help from the state or superior territorial-administrative unit, stimulatory 1

Like most of the European countries, Moldova has signed (in 1996) the European Charter of Local Self-Government, European Treaty Series – No. 122, European Charter of Local Self-Government, Strasbourg, 15.X.1985

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measures would be needed to encourage the voluntary association of territorial communities to address issues of common interest. A general scan of the local public administration system shows that its extreme fragmentation makes difficult the delegation of tasks that would have significantly supported the process of administrative decentralization. In the list of weaknesses may also be mentioned: the lack of local and regional capacity in developing and implementing the European financed projects (this being considered an important alternative to the insufficient local budgets); the insufficient promotion of integrated planning in the regional development (caused also by the lack of proper institutional architecture for enabling cooperation between local and central administrations); the unattractiveness of the regions to the private sector. The European documents which underpin regional autonomy (European Charter of Local Self-Government, Regions Community Charter, Declaration on Regionalism), do not contain provisions relative to the size of administrative-territorial units. Indirectly, however, they consider this issue by the wide range of provisions relating to skills and local resources. This also stipulates that local or regional authorities should be consulted before deciding changing territorial limits. Naturally metropolitan governments, regional administrations, smaller local municipalities do not have equal powers or capacities. Beside this, the multiplication of administrative territorial units is not only costly and inefficient, but inevitably lead to the weakening of local autonomy. Reducing their number should be preceded by feasibility studies and clear criteria for the categorization of regions accepted in European countries. Not less important is the structuring of towns in the region and their potential bias in the territory. In case a new reform of local government will be promoted, it should be considered also the possibility of forming on the territory of a sufficient amount of revenue to achieve regional financial autonomy and therefore, to ensure social and economic development of the territory. Currently, when regions are only economic planning units there are still promoted different stimulatory measures to promote inter-communal and inter-regional cooperation. This will prepare the territorial units for a new administrative architecture or at least will enhance the absorption of funds from European programs in the actual structure (as only regional and macro-regional initiatives are mostly eligible for EU programs). The decentralization and regionalization processes represent steps in building more efficient, transparent, and flexible political institutions that are responsive to citizens’ needs and provide avenues for citizen participation. Mechanisms for combining bottom up and top down approaches in the provision of national and local services should be established. Another likely reason for decentralization and regionalization is certainly related to economic revival, particularly as a means to develop long-neglected border regions and to

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unburden the state of some of its economic development tasks, such as promoting regional economic development. One could also argue that decentralization is more compatible with a market economy in that it promotes greater administrative efficiency and accountability. Decentralization trends make the cities and regions more ambitious to become a part of the competitive economic environment. National growth is influenced by the local, regional projects and has become more significant now than ever due to EU programs that support territorial development to be extended even to cross-border initiatives. When talking about administrative and territorial reforms, it should be considered that it might also represent a way of responding to sensible issues for greater autonomy, especially in countries with minority populations or with a strong history of regional autonomy. In the Republic of Moldova case, in 2016 here started the process of territorial inclusion in the regional development policy of the existing territorial autonomous unit Gagauzia (Gagauz-Yeri) (Law no. 344-XIII/1994, Orlov 2015). Until this year, it was focused only on 3 regions out of 6 established by law. Currently, it is an ongoing process - the institutionalization of the new development region Gagauzia. Generally, the meaning of region has been changing based on different dynamics, regions have been becoming more active. One of the reasons is also related to the increasing importance of space in development. In the EU region has not only become an economic but also a political actor: starting with the initial purpose to decrease the interregional disparities among the member countries, then giving some responsibilities by enabling the representations of regions with institutions (such as the regions committee). Furthermore, EU integration has directly influenced the concept of region. State seeks to ensure that the administrative-territorial organization can manage and govern society easier, while by regional development the state aims at achieving a balanced regional socio-economic development. The trend to lead through administrative-territorial structures was the cause of several ways of changing the administrative-territorial organization, under the influence of the political factor. These reforms have affected the autonomous management of local issues and the ability of effective realization of regional and local economic potential. The regional development policy at this juncture is a set of measures planned and promoted by local and central public administration authorities, in partnership with various actors (private, public, volunteers), in order to ensure that the necessary economic growth. International practice shows that in cases where the size of the territorial units could not be increased and thus reduce the number of basic and intermediate administrative units, voluntary association of local and regional communities was stimulated and incited to solve problems of common interest.

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26 Regional development based on EU practice and EU Association Agreement provisions

Problems of regional development represents one of the priority concerns of the EU today. Consequently, a country aspiring to EU membership must fit within the spirit and European realities, paying special attention to preparing its territory to meet the requirements formulated by the Union to its member countries, developing a coherent and active regional policy. Regions have an essential and irreplaceable role in the construction of Europe and the European integration process. Still, there are certain conceptual confusions – neither regionalization nor region has the same connotation in all countries. “Unlike a municipality, which is an institution with unequivocalties to administration and political structure, a region is not an institution, and moreover, it has a more ephemeral interpretation.” (Marcou 1998) Marcou singles out at least five types of regionalization: administrative regionalization, regionalization through existing local authorities, regional centralization, regional autonomy or institutional regionalization, and regionalization through federalism. In some Romanian sources (Brie & Mezaros 2014), the cooperative regionalization is detailed meaning that regions are created as institutionalized forms of cooperation between local territorial authorities – which is actually the case of Romania. All these types of regionalization interfere with the role that the state plays in the regional development process. Whatever type of regionalization, state and central government supervise the activity of management of regions. Regionalization in Europe is a process that is closely linked with policymaking and the administration of economic development. The term regionalization, as the region is covering different political and administrative realities in European countries, refers to a balanced development. No universal definition could be found for regionalization or region since it depends a lot on local evolution and the chosen way of local development. Sometimes, as well as in case of Moldova, states do not recognize to the regions the quality of governance level, and some make various distinctions regarding the nature and functions of the regions, on which they developed different concepts. Analysing the regional development (RD) policy specificity, it may be noticed that the most common goals of regional development policies in different countries are: reducing existing regional disparities, especially by stimulating balanced development and the revitalization of disadvantaged areas; meeting the criteria for integration into the European Union and access to financial assistance instruments for the member states (or to the European Neighborhood Programmes for countries as Moldova); better coordination of governmental sector development policies; fostering interregional cooperation.

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To perform a coherent regional policy, the state should have full and truthful information about the situation in the regions to be able to introduce timely adjustments in its macroeconomic reasons, fiscal policy, investment projects. To this end it is necessary to ensure adequate quality of regional statistics. Moreover, it is important to ensure public access, non-governmental organizations, entrepreneurship and research structures to the information needed for their work in this region. According to the Nomenclature of Territorial Units for Statistics (NUTS) identifying administrative units depending on the size of the territory, there are: the village, the department/county and regional level. In this respect, the Regions Community Charter states in Article 1 that in this book, region means a territory formed from the geographical point of view, a net drive, or a group of territories where there are similar continuity, in which population possesses certain common elements and wishing to keep the resulting specificity and develop in order to foster progress culturally, socially and economically. In the Republic of Moldova regional development policy is based on the national legal provisions in force designed precisely for RD but also on sector legislative and strategic documents that are interconnected with the regional development process, as it is considered a cross-sector process. In this regard, it should be mentioned: the Law No. 438-XVI from December 28, 2006 on the Regional Development in the Republic of Moldova; the Law No. 68 from April 5, 2012 on the approval of the National Decentralization Strategy, the Law No. 166 from July 11, 2012 on the approval of the National Development Strategy “Moldova 2020”; national sector strategies (such as: Water supply and sanitation strategy for 2014-2028, Small and Medium Enterprise Sector Development Strategy for 2012-2020) and other regulations. The main strategic tool for the RD in RM remains the National Regional Development Strategy (NRDS). Recently, a new NRDS for the 2016-2020 period was approved by the Government Decision 749 from June 10, 2016. It is a descendent of the previous middle term NRDS for the years 2013-2015, approved by the Government Decision No. 685 from September 4, 2013, but also of the Strategy approved by the Government Decision No. 158 from March 4, 2010. Starting with 2006, by law, the regional development policy has been conceived less as part of the administrative decentralization process and more to stimulate local and regional initiatives relying on an active partnership between the central government and representatives of local and district authorities and in to some extent (indirectly) private operators, trade unions, NGOs etc. The main focus was on reinforcing local public authorities. As stated in the NSRD, the legal framework in force largely corresponds to European norms and allowed the initiation of the regional development implementation process. Meanwhile, at the current stage, the legal framework provisions are to be adjusted to the provisions of the ‘acquis communautaire’ so as to give a new impetus to regional development.

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Considering the existing systemic weaknesses related to limited capacity of LPAs in managing large-scale projects, lack of capacities and confidence at local level in terms of developing partnerships, during the NSRD implementation, the focus will remain on the LPAs. Local and rayon public administration authorities will be the main suppliers of project proposals but also the main partners for project implementation, having the urban and rural communities, the organizations from the associative and private sectors as main beneficiaries of these regional development projects. The continuous cooperation and coordination process will be ensured due to the inter-sector nature of regional development policy and the involvement of a broad range of decision makers. After a first stage of guiding and implementing projects by regional institutions, to ensure the proper ownership and an effective management of regional development projects, the decentralization reform is needed. The ability of local public authorities to effectively participate in the development and implementation of regional projects requires an increase in their autonomy. The participation of local authorities in decision-making processes at the regional and national levels should be promoted. Local authorities and their institutions should be assisted by other spheres of government to determine local policy and strategic frameworks within the parameters set by national policies. In our country we cannot talk about regionalization itself, as it has been made only from the perspective of the developing regions as statistical units and not as administrative units with legal personality. Still, certain commitments have been done on the Governmental level based on the EU-Moldova Association Agreement, ratified by the Moldovan Parliament by Law No. 112 as of July 2, 2014 and included into the Government's Activity Program, which provides Moldova’s government policy framework for the years 2016-2018. Title IV, Chapter 20 “Regional development, cross-border and regional cooperation” states: The Parties shall promote mutual understanding, and bilateral cooperation in the field of regional policy, including methods of formulation and implementation of regional policies, multi-level governance and partnership, with special emphasis on the development of disadvantaged areas and territorial cooperation, with the objective of establishing channels of communication and enhancing exchange of information and experience between national, regional and local authorities, socio-economic actors and civil society. The dimension of territorial cooperation with European regions through trans-national and cross-border cooperation programs is also foreseen: Parties shall intensify cooperation between their regions in the form of transnational and cross-border programs, encouraging the participation of regions of the Republic of Moldova in European regional structures and organizations and promoting their economic and institutional development by implementing projects of common interest. It must be recognized that EU integration

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aspirations represent a great challenge for local public administration: new approaches in management, partnerships, project implementation procedures. Regionalization in EU accession is a politically correct topic, as one of the mandatory conditions. For candidate countries, the territorial reorganization in the region is one of European standards to be met in order to have access to structural funds. One third of EU funds are allocated to regional policy, thereby supporting EU policy areas that fall within certain statistical standards. Currently, Moldova has no such regions, which would mean that Community structural funds would not find their destination. Apart from external considerations, there are reasons of internal order in support of regionalization (decrease of disparities, increase in the financial capacity of the regions and thus, regional economic development, enhancing the quality of the statistical and regional planning etc.). Though not being an EU country and not having access to EU structural funds, aligning strategic provisions allows the designing process to be based on existing tendencies and to create new partnerships, as well as to de facto implement certain initiatives. In this regard the Territorial Agenda of the European Union in 2020 (Territorial Agenda of the European Union in 2020 2011) reaffirms the common objective of territorial cohesion and shows that smart, sustainable and inclusive growth can only be achieved if it is taken into account the territorial dimension. In this way, the agenda does not limit to promoting polycentric and balanced territorial development but also encourages integrated development in cities, rural areas and territorial integration in cross-border regions and transnational. Financial responsibility is a central component of decentralization. There is enough legislation to enable regions to achieve decentralized functions effectively, they must have the resources – either collected locally or transferred from the central level and the authority to make decisions on spending. Getting results from the regional policy, ultimately depends on the training of people who exercise it because it involves the responsibility of local government. Particularly needed is, first of all, the awareness of regional actors on the advantages of their involvement, through partnerships as broader, encompassing governmental and non-governmental, chambers of commerce and professional associations equally associations of businessmen, foreign investors, universities in the complex process of regional economic and social development, and identification of regional priorities. The reasons for (and against) decentralization and regionalization relate to the domestic politics, however, cannot be separated entirely from the international arena. It is useful to explore whether efforts to decentralize and regionalize are also linked to external developments, such as European integration and globalization. Beside the EU integration aspirations and conformation to EU mechanisms and structures, there is a possibility for building linkages to other countries and to the EU by promoting decentralization and regionalization in post-communist societies. In this regard, the cross-border cooperation and

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regional development efforts on the borders of East Europe and the EU are relevant to a discussion of regionalization (in order to promote economic development, intercultural exchange, and generally improve relations).

Conclusions Achieving unitary state power can prove its viability by this organization, which is based not only on space division but also the division of powers, which determine a successful planning and administration. An effective territorial organization helps provide a stable state, which is characterized by certainty economic, political and social, by the presence of influential and levers of control over individuals and businesses to manage them and make them follow the law. Such a result can only be reached only if some world practice criteria will be put on the basis of this process and thus demonstrate their contribution to the construction of models of administrative organization of the territory. It should be based also on its own precedent and historical peculiarities that would build trust and facilitate the operation of terms and structures of administration. Good territorial administration contributes to achieving effective regional development and the principles default; this is real if a rational territorial divisions, so that the duplication of development regions (in case they do not coincide with existing territorial units) do not meet difficulties. It is notable the dependence between these two phenomena. Since the competences of central, regional, and local authorities are intertwined, competences of these administrative bodies ought to be defined clearly and legislated decisively so that they stand firmly against any future attempt to bend them. Certain municipalities are so small in size and population that they may not be able to deliver the most basic services of a local administration. Therefore, the capacities of smaller municipalities should be strengthened via creative solutions like inter-municipality cooperation. To carry out the basic municipal services may be too costly for smaller units with smaller constituencies and limited allocations from the central budget. While the territorial administrative reorganization and the reform in public administration is needed, regional development policy keeps on promoting growth of local collectivity’s autonomy by participating at drafting regional strategies and participating at the implementation of regional projects by respecting the inter-municipal cooperation principles. Respecting the correlation between national, regional and local strategies gives the opportunity to diversify the limited local budgets funds. Local initiatives can be implemented by a series of national and international supported measures. From the analytical point of view, according to the concept of regionalization – one region is considered the best form of spatial organization

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of information and functional regions are considered as having importance for setting the objectives and development planning process. It is much easier when a single governmental body supports and monitors the implementation of actions and instruments to strengthen the administrative capacity of the administrative-territorial units and coordinates technical reform of central and local public administration, decentralization, regionalization and administrative-territorial reorganization of the country. In this case, regional development is an effect of multilevel interventions. Eastern partnership countries aspirations to accession to EU call for their transformation into competitive countries, able to ensure economic growth based on European trends. Even though experience has shown that regional development policy applies no benefit if it is based on the fragmented territorial structure, made up of small units that are not strong enough to fundraise and run complex development programs, Moldova had to consider its territorial units in the framework of a regional development policy with economic regions being mapped.

REFERENCES

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