Challenges for local democracy in South-East Europe - CG (11) 7 Part II

Rapporteur:
Stefan Sofianski, Bulgaria
Chamber of Local Authorities
Political Group: EPP/DC

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EXPLANATORY MEMORANDUM

INTRODUCTION

There has been extensive co-operation developed between the Congress and the relevant authorities in the countries of South East Europe. To promote and foster local democracy and local governments and to assist drafting and to support the implementation of new legislation, the Council of Europe and the Congress have designed and conducted a number of activities. Major partnership programmes were developed and implemented through the local democracy agencies. However, despite this close and continued co-operation, there are still some, often major problems with local democracy.

This report was designed to provide a brief overview of common and individual trends of local and regional democracy in the selected countries of South East Europe and to point out some directions in which further Congress activities and assistance would be the most demanded and useful.

For the purpose of this report, focus was made on local democracy, which represents a basic level of decentralisation. The report represents an effort of bringing together and analysing issues of concern as well as positive developments to allow further in-depth study.

Most of the countries in this region have recently developed new or amended the existing legislation with regard to local and regional authorities thus trying to make it compliant with the Charter. However, the implementation of this new legislation has proved to be difficult and sometimes inconsistent. The report provides a brief survey on issues related to decentralisation, financing and ownership and service supply to the citizens. These topics were chosen, mainly on the basis of monitoring reports, as ones that attract particular attention in every country and deserve to be highlighted.

Also it should be particularly emphasised that collecting accurate information was an extremely difficult task and should this report be further developed, contact visits to the countries concerned should be envisaged.

EXECUTIVE SUMMARY

A major challenge for the municipalities of the region remains, that is to say the gaining of political independence from central authorities. The actual powers of local authorities, yet declared by laws, are not solid enough due to the adoption of special laws and to limited financial and human resources. However, technically independent municipalities remain weak, their resources being highly restricted in an unfavourable environment.

The population, often discouraged by the performance of local authorities sometimes not attributing them an important political role, shows low interest in local elections. Further on, a partisan approach to issues of local self-government was detected in many countries as well as the difficulties encountered by some opposition mayors.

The degree of autonomy of local authorities varies considerably from one country to another. Legislation in this regard often does not provide clear definitions. When tasks of municipalities and eventually regions are defined, these broad definitions do not suffice to identify clearly, in operational terms, the powers assigned to local authorities.

The need for stronger local government is generally recognised and the reform process is in progress. The necessity of transfer of responsibility from central government to local authorities is recognised as well. However, in many cases the transfer of responsibility did not necessarily mean transfer of additional resources and administrative back-up.

All in all, powers delegated to local authorities are substantial and relevant in most of the countries concerned. However, the central authorities do not often consider how expensive the services that local authorities cater for are. In the absence of necessary resources, local authorities become unable to ensure the functioning of certain services and to maintain public facilities up to the set standard.

Heavy financial dependence on the state can be identified as one of the principle features of local authorities in South East Europe. However, this dependence varies according to the importance and size of the municipality, which means according to its ability to raise revenue from taxes and local taxes, fees, municipal commercial activity, the privatisation of local businesses, and other sources of its own. It is also clear that transparent budgeting procedures and revision of the relations between central and local governments regarding financial transfers are preconditions for reform.

Local authorities should be provided with incentives to run their communities responsibly, economically, openly and in accordance with the will of the citizens, who expect them to conduct their activities in a correct, equitable and helpful way. Responsibilities should be clarified and access provided to permit citizens to challenge government actions which they disagree with and to deter official misconduct by reminding public officials of their accountability.

Effective citizen involvement is essential to good governance and can play an important role in governing local community. Therefore, it is crucial for local government to promote and sustain a responsive citizen's involvement. Public participation can be seen as ranging from information sharing to consultation or to active forms of participation, which influence public services and policies.

According to the experts, effective management at local level is key to ensuring peaceful coexistence through the meaningful participation in public life of each ethnic community in any context. In South East Europe, local actors face particular challenges as they usually operate in systems with limited finances and post-conflict situations, where inter-communal tensions are strong and reconciliation processes still have some way to go. Yet, local authorities and civil society can play an absolutely crucial role in ensuring that various communities coexist peacefully, and that the fundamental rights of all persons are respected.

POLITICAL AND LEGAL FRAMEWORK

Local democracy in South East Europe is developing very fast. It is extremely complicated to produce a general overview of a political or legal framework for local self-governments as the situation varies from country to country, but nevertheless, some similar issues remain of concern in every one of them.

The majority of the countries of South East Europe have ratified the European Charter of Local Self Government during the last five years and have put a significant effort into the modification of the

legal framework and the updating of their legislation in order to meet the requirements of the Charter. As, in general, the newly drafted and newly adopted legislation seems to satisfy the requirements and appears compatible with the Charter, numerous expert and monitoring visits revealed, sometimes major shortcomings in local democracy. In most cases the problems are linked to the implementation of the Charter as well as with the implementation of the new or newly amended legislation on local administration.

A major challenge for the municipalities of the region remains the gaining of political independence from central authorities. In terms of the Charter, local authorities are considered as political bodies that exercise the right to local autonomy on the basis of political mandate given through free local elections and, therefore, administrate and execute local policy and manage public affairs at local level. The actual powers of the local authorities, yet declared by laws, are not solid enough due to the failure to harmonise sectoral legislation with the principles of newly adopted local government legislation and to limited financial and human resources. However, technically independent municipalities remain weak, their resources being highly restricted in an unfavourable environment.

Local authorities attempt to gain political ground making the best use of newly adopted legislation and of the reforms that are being carried out. However, they largely remain perceived as administrative and not political entities. To this end the responsibilities of local authorities vary considerably as well, but it is often the case that municipalities are still not regarded as a real local authority. Yet another problem, which emphasises the weakness of local authorities, was unstable territorial division and creation of new municipalities (Bosnia and Herzegovina, "the former Yugoslav Republic of Macedonia", etc.) and/or regions (Albania, Croatia). These new municipalities and regions are very often created without any appropriate support measures for which they are suffering.

Often the legislation does not provide clear indication of the distribution of powers, the relations between local and regional/central level and the regulations governing the financing of local authorities. It is characteristic that some states clearly prefer to maintain competencies in the functioning of local self-government (Croatia) and some have practically none (Bosnia and Herzegovina).

Also many countries are trying to find the right balance between institutions at local level. In terms of the Charter, a local assembly elected in free elections should set out political goals, which the local executive body has to implement. As this idea is generally accepted, a certain instability of electoral law, that may change from election to election, does not contribute to the fulfilment of this goal as well as a necessity of an effective control of the assembly over the executive which is sometimes not clearly set out in legislation. This absence of clarity was frequently used for political purposes.

The population, often discouraged by the performance of local authorities sometimes not attributing them an important political role, shows low interest in local elections. Generally, turn out is low and abstention rates are rising. It is, therefore, difficult to bring the public into implementation of local policy or local policy-making.

Furthermore, a partisan approach to issues of local self-government was detected in many countries as well as the difficulties encountered by some opposition mayors. This approach should be avoided and local government officials should remain politically neutral.

GUARANTEES FOR LOCAL AUTONOMY, LEGAL PROTECTION OF LOCAL SELF-GOVERNMENT

The right of citizens to local self-government and guarantees for local autonomy and legal protection of local self-government are provided for by the countries’ Constitutions. In most cases a clear definition is provided.

In all countries concerned, the principles of local self-government are stipulated in relevant legislation, which quite clearly provides that municipalities are autonomous and have the right to exercise their constitutional and regulatory functions. Formally, municipalities are not subjected to state authorities in matters within their legislative and constitutional jurisdiction.

Relevant legislative provisions grant the local authorities general powers to deal with matters of interest to local communities. Usually, local authority organisation is determined by the statutes and other acts adopted by the local authorities themselves. On the basis of these statutes, local authorities have legal status and exercise their functions. However, the best guarantee of independence is an acknowledgement and legal definition of powers and resources of local authorities provided by the State in respect of local self-government. Generally, the constitutional provisions provide an acceptable basis and guaranties for the functioning of the local self-government.

As a rule, the right of local authorities to judicial remedies is secured. Disputes concerning the legality of the acts of municipalities are to be referred by the state’s authorities to the Constitutional Court or to another competent judicial body. However, it remains doubtful as to whether the Constitutional Courts are the most appropriate courts to deal with questions concerning relations between municipalities and central government.

The primacy of international law is recognised and, therefore, it is possible for the European Charter of Local Self-Government to be relied upon in courts in the countries which ratified the Charter.

DEGREE OF AUTONOMY AND POWERS CONFERRED

The degree of autonomy of local authorities varies considerably from one country to another. The legislation in this regard often does not provide clear definitions. When tasks of municipalities and eventually regions are defined, these broad definitions do not suffice to identify clearly, in operational terms, the powers assigned to local authorities.

The autonomy and powers of local authorities seem to be secured by various legal means, but their implementation in practice represents a major challenge. In general, the powers of local self-governments cover matters of local importance, mainly in the fields of culture, sport, social security, welfare, pre-school and primary education. In some countries, local authorities are also responsible for public services, urban planning, public information, environment, legal assistance, disaster relief, tourism and sport. The municipalities are clearly responsible for the management of municipal administration and for municipal organisation and planning. Rather exceptionally, Montenegrin legislation refers to promoting local economic development.

Generally, the legislation assigns the municipalities’ responsibilities in different fields, but a whole series of specific laws overturn many of the relevant provisions. As a rule, specific laws enacted in areas of education, culture, health, etc. attribute powers to the central executive authorities, which overlap with those of regional/municipal authorities. It is particularly advisable for legislators to oversee the drafts on this issue in order to clearly define the competencies of different levels of authorities and to stipulate the means to be allocated to local authorities. In reality, few responsibilities transferred to the municipalities primarily correspond to the decentralised implementation of activities managed at central level. Accordingly, the municipalities have exclusive competencies for a limited number of responsibilities initially assigned to them.

In some cases the situation is complicated by the existence of regions and regulations regarding their competencies and interaction with the municipalities. For example, in Albania the competencies of the regions are being defined vaguely and are not enumerated in the Constitution, nor are they elaborated in the law, which repeats a rather vague formulation. At the same time, law underlines the principle of subsidiarity attributing the majority of competencies of local interest to municipalities and regional councils which administer over local issues only within their jurisdiction.

In Romania, according to the Constitution and Law on Local Self-Government, competencies of counties are rather modest and are related with the co-ordination of activities of basic local authorities.

The Croatian legislation, though defining the regions as representing natural, historic geographic, social and self-government unit, does not clarify their relationship with the municipalities and leaves responsibility for the joint spheres of competency rather unclear. The competencies such as education, health, urban and spatial planning, economic development, transport, and development programs in mentioned fields of activities are by law the responsibilities of regions. However, similar competencies are attributed to municipalities as well.

Contrary to trends of regionalisation in some neighbouring countries, in Serbia and Montenegro some large municipalities delegate a certain degree of autonomy to smaller scale communities. These local communities are free to adopt their statutes, may have legal status and raise funds.

All in all powers delegated to local authorities are substantial and relevant in most of the countries concerned. However, the central authorities do not often consider how expensive the services that local authorities cater for are. In the absence of necessary resources, the local authorities become unable to ensure the functioning of certain services and to maintain public facilities up the set standard.

Most of the countries of South East Europe face a serious population poverty problem. The funds collected by municipalities are miserable, which leaves municipalities to very much rely on funds allocated to them. The responsibilities that municipalities assume are subject to resource availability. In rather difficult economic situations, the powers attributed to local authorities do not correspond to practical reality.

CO-OPERATION WITH AND SUPERVISION BY THE CENTRAL AUTHORITIES

The concept of supervision played a key role in the functioning of the former totalitarian systems. Among other things, it allowed purely administrative matters to be included in an all-embracing management approach, justified by the principle of discretion. With the establishment of democracy and a state based on the rule of law, supervision admittedly continues to have a role, but its nature has now changed drastically, and in terms of legislation, its scope is limited to control over the legality of the acts of the bodies of local government only when authorised to do so by law.

The need for stronger local government is generally recognised and the reform process is in progress. The necessity of transfer of responsibility from central government to local authorities is recognised as well. However, in many cases the transfer of responsibility did not necessarily mean additional transfer of resources and administrative back-up. The consequence of these shortcomings was that local authorities were not able to take care in an appropriate manner of transferred services. Wherever such transfers have taken place, it has proved to be an extremely delicate and complicated process. Before transferring or creating new services to local authorities, central authorities should indicate the source of finances to be used within a coherent strategy of decentralisation. Responsibilities and objectives should be clearly fixed.

A common trend in the countries concerned is that the new legislation does not seem to substantially change the powers attributed to local authorities. It certainly improves the previous one, but also adds many additional details, which are often directed at limiting their responsibilities. The line between the powers of State and those of local authorities remain unclear. Sometimes the situation does not improve with "re-writing" the law on local self-government. Political freedom and self-government are not only a quantitative matter of competences and resources, however, sometimes local authorities, due to insufficient means to finance their actions, remain under de facto control of the State. For the same reason the State allows itself to interfere in the local authorities’ domain.

One of the main problems remains the overlapping of local authorities’ responsibilities with those of central/regional authorities. These responsibilities are generally prescribed and must be exercised in conformity with the law. However, the law itself is rarely clear on this subject. In order to resolve this problem, legal provisions should make it perfectly clear what powers local authorities have, their scope and their limits, whether they are mandatory or optional, the obligations attached to them in respect of other administrative authorities and the general public, and how these powers coincide with those of other public authorities.

Lack of funds is another aspect, which does not contribute to gaining more independence from central authorities. Heavy financial dependence on the state can be identified as a salient feature of local government. However, this dependence varies according to the importance and size of the municipality, which means according to its ability to raise revenue from taxes and local taxes, dues, municipal commercial activity, the privatisation of local businesses, and other sources of its own.

Attributing of additional competencies to local authorities is directly linked to the ability of municipalities to raise funds and capacities of municipalities are considered, when any additional powers are delegated to them. Some municipalities receive up to eighty percent of their income from their own resources, while the remainder comes from the state budget. At the other end of the scale, there are small municipalities that depend almost entirely on financial assistance from the state. Between the two extremes there is a huge diversity. It is sometimes the case that the municipalities do not have any means of collecting their own taxes and revenues. The state taxation authorities collect the taxes and subsequently pay the yield to the municipalities, which therefore relies, from an organisational point of view, on the state for collection of local taxes and charges.

To overcome the existing problems, national strategies fixing the overall decentralisation priorities should be drafted and implemented. These strategies should, in particular, consider the lack of co-ordination in the implementation of the relevant laws, the lack of consultation and communication programmes at local level and the discrepancy between the political ambitions of central authorities and the reality at local level. Monitoring procedures should be established and particular attention should be paid to (re-)training of personnel at the local level.

INTER-MUNICIPAL CO-OPERATION AND ASSOCIATIONS OF MUNICIPALITIES

It is sometimes the case when municipalities are facing a situation where regardless of all their efforts and goodwill, the central authorities cannot be credible interlocutors for local authorities. Therefore, the municipalities are attempting to open new avenues for action outside the current administrative framework. Until recently, there has been relatively little recognition not only on the part of public authorities, but also of citizens themselves, of the importance of associations and less formal groupings. However, the importance of associations has been recently recognised and they are seen more and more as closest to the citizen and best placed to favour sustainable cohesion in a multicultural context.

Municipalities often make use of the fact that legislation allows them to co-operate in implementing their development plans and programmes to cater for the needs of the community by pooling together their resources or services. Legislation also allows for municipalities to form associations and join international organisations of local authorities, and to co-operate with local authorities in other regions. Thus, a series of municipal associations has been created on a purely geographical basis, others taking into consideration common interests.

Associations are formed in practically every country. One example of such co-operation could be Bulgaria, where as well as the national association of Bulgarian municipalities, smaller scale associations were formed as well (Association of Bulgarian Danube Riparian Municipalities, Association of Black Sea municipalities, The Rhodope Mountains Municipalities Association, etc.). In the Republika Srpska an Association of Towns and Municipalities has a current membership of fifty-nine municipalities out of a total of sixty-four. Through the Association, Republika Srpska mayors can exercise political pressure and negotiate for better allocation of revenues. In the Federation of Bosnia and Herzegovina there is an Association of Municipalities and Towns of Bosnia and Herzegovina. Contacts between the Association of the Republika Srpska and the Association of the Federation contribute positively to the development of co-operation between the entities and with the international organisations. A co-ordination body of the Associations of Towns and Municipalities of the two entities has been established to start discussing common problems and facilitate co-operation between their municipalities.

Local and regional authorities of South East Europe still need to pay particular attention to the issue of refugees and displaced persons. Promoting the sustainable return of refugees or integration of displaced persons is also a pre-condition to ensure that these victims of the past conflict be part of the local community.

Associations of municipalities perform various activities, both at representative and organisational levels. At the representative level, the associations’ most important goal is to be recognised by the central political institutions as the real voice of the municipalities. The associations try to act as lobbyists of the government and the parliament. At the organisational level, the associations organise training programmes for mayors and elected representatives, provide specialised help for their members and create networks for the exchange of information between municipalities. They disseminate information and issue bulletins of all the member municipalities' decrees, orders and regulations and undertake joint activities.

At the instigation of the Congress of Local and Regional Authorities, a network of "Local Democracy Agencies" has been established which comprises several "Agencies" based on intermunicipal and interregional partnerships, functioning in Croatia, Bosnia and Herzegovina, Serbia and Montenegro and Kosovo and in "the former Yugoslav Republic of Macedonia". These Agencies work as local focal points for the implementation of economic, social and cultural development projects, in partnership with municipalities and other public and private partners in the region as well as in Europe1.

PROBLEMS OF POVERTY AND LACK OF PUBLIC FUNDS

The social and economic changes in South East Europe led to public administration reform. At the beginning, reforms were concentrated on the central level of administration and only later did they touch upon local level. The issues of decentralisation had to deal with reform of property and transfer of ownership.

Economic downturn during the years of transition and consecutive high unemployment rates are characteristic for every country concerned. This situation combined with low tax revenues and poor state grants made local authorities think about new sources for economic development. However, at the current stage of development it is not easy to find purely common characteristics. All these changes were taking place under condition of economic crisis in all countries of South East Europe. Also numerous elements of reform both at central and local levels were ignored.

Local government finance reforms are being constantly discussed. Local finances suffer from the general shortage of public resources. Most of the countries experience serious problems of poverty among its population. The municipalities, therefore, are in the front line when it comes to catering for public needs. People expect municipalities to take action in the fields of education, health, housing and welfare, but municipalities’ poor budgets often do not allow maintaining even public facilities and the functioning of certain services is no longer up to set standard.

One of the main difficulties for local authorities is the huge disparity between the economic situations of different municipalities. It is an extremely difficult task for local authorities to get the local economy off the ground. Even when the tax system appears to be generous to municipalities, in view of current economic situation, the taxes do not produce much revenue. Another solution should be envisaged as citizens' power to contribute is limited, there is no point in simply granting municipalities the right to levy new taxes in addition to those already collected by the State. The reform of local finance should include the genuine assignment of sources of income from the State to the local authorities. The establishment of various institutional platforms to ensure that local and regional authorities are consulted on the manner in which their own resources are assigned to them and transfers allocated. Moreover, local authorities should also have the right to be consulted on all legislative changes which would affect the legal arrangements governing local government finance.

Local finance reform process involves more than the establishment of new institutions, it should also respond to development of local service provision that responds to economic and social circumstances. It is difficult to simply copy models of western countries and try to make them applicable to the situation, which the majority of the countries concerned is facing and in which specific policies for economic stabilisation cannot be avoided.

The financial autonomy of a given territorial authority depends on its ability to decide alone on its activities and to implement them within the framework of its available resources. Therefore, since all activities incur expenditure, local and regional authorities should be in a position to plan, implement and finance their activities themselves. The right of authorities to draw up their own budget on the basis of financial resources that can be planned and apportioned as they wish is essential for any financial autonomy. In some countries the municipalities' budgets are fixed by the state legislation, and the legislation on the limitation of public consumption expenditure sets out a list of maximum items of expenditure authorised for each municipality. However, the limitations on local authorities' discretion to regulate local finance are sometimes necessary for stabilising the expenditure level, reducing public deficit, ensuring price stability and firmness of national currency. The development of fiscal decentralisation has to take account of such legitimate considerations, but also guarantee the necessary means to local authorities.

The majority of the countries have adopted a grants system to replace subsidies, which does not necessarily limit state’s involvement in local finance. Normative regulations are generally decided by the parliaments and local governments must apply for support in accordance with prescribed conditions. Apart from normative general grants, special grants have been introduced for particular purposes. However, this system remains imperfect as huge differences between municipalities do not allow to equalise the state grants and increasing the level of state grants leads to higher state budgets and grants often do not correspond to the needs and are too tightly controlled by government, which sometimes adjusts its funding depending on political context.

In view of the extremely difficult economic situation in some countries, a solution and access should be found to sufficient resources to perform their duties in an independent manner. Unfortunately, present systems of state grants, tax regulations and voluntary contributions do not allow this to happen. The revenues from taxes are insufficient, voluntary contributions are low and grants are uncertain. This constant unpredictability sometimes does not allow municipalities to plan their budgets.

PROPERTY AND INFRASTRUCTURE

The European Charter of Local Self-Government, though it does not explicitly state, links local authorities’ property and ownership rights to their right and ability to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.

The real power of local authorities depends very much on financial autonomy and financial autonomy depends on ownership. Property transformation was one of the most important elements of change to the market economy and democracy. This transformation required crucial changes in the structure of property relationships, which affected local governments in various aspects, but mainly turned them into real owners liable for their actions.

During previous regimes local authorities were not entitled to own assets and all property used to belong to the state. The years of transition were marked by continuous transfer of property and use of municipal property to improve the financial situation of local governments. In many cases, when local governments were created, they had no property and the central authorities had to undertake legal steps to make legitimate the property decentralisation and local government ownership. To differing degrees, each country had to deal not only with the restoration of municipal property nationalised by previous regimes, but also to transfer other property needed for the performance of new functions assigned to municipalities.

In all countries concerned, the municipalities are considered as legal persons and as such can own assets. Some states have only one form of municipal ownership (i.e. Croatia) and some have two forms (i.e. Albania, Bulgaria, "the former Yugoslav Republic of Macedonia", Romania). Regardless of the form of municipal ownership, local authorities may dispose freely of the assets in accordance with the above-mentioned principles of local self-government. It is generally considered by the experts that the equality of treatment between the state and local authorities with respect to forms of ownership is a positive element that must be retained.

The legislative provisions differ but, in general, there is no special form of local authorities' ownership. All property issues are regulated by the same legal basis and the ownership of public legal persons such as the state and municipalities is regulated by civil law, the main difference lays in purpose of ownership (property of public legal persons is used for public benefit). In the majority of states, local authorities can own all types of tangible and intangible property. However, in some countries certain assets can only be owned by the state (Albania, Bulgaria, Romania). In Albania, the central government is, for example, an owner of all immovable properties that are considered of public interest (Law No.8652 «On Organisation and Functioning of Local Government »), however, the municipalities may as well own tangible and intangible, movable and immovable property. In "the former Yugoslav Republic of Macedonia", local public services can also be owned by the municipalities. Also according to the 2001 Construction Land Act, municipalities can own streets, local roads, sewerage, water pipes, green and cattle markets, etc. These items could also be found as part of the property of local authorities in other countries together with administrative buildings, local public amenities and institutions and movable items needed for administrative activities. Bosnia and Herzegovina represents a rather exceptional case as patrimony over formerly BiH State assets, municipal assets, public utilities and other forms of communal ownership has not been settled, in essence creating uncertainty regarding many sources of municipal revenue and economic development potential.

In general, the approach to the transfer of property is strongly criticised by the municipalities for its slowness and complexity. In some countries up to eighty per cent of property is still controlled by the government and state enterprises. The municipalities have their own assets, but the process of identifying and efficiently transferring municipal property is unsatisfactory.

There is a pressing need for legislation on the apportionment of property between the state and the municipalities, in accordance with the principle of subsidiarity and subject to the allocation of adequate resources. Such legislation should also clarify issues of ownership in the private sector so as to avoid unnecessarily complicating direct investment by foreign undertakings. In reality the situation varies from one country to another. For example in "the former Yugoslav Republic of Macedonia", central authorities took over many items of municipal property, including assets funded by municipal resources, such as the sports facilities at Skopje (Monitoring Report 2000 CPL (7) 8 Part II). Only a small proportion of this property has been returned to municipal ownership. In principle the state should have met the cost of maintaining that property. The municipalities complain, however, that they are themselves having to finance even the most urgent repairs.

SOURCES OF INCOME

Heavy financial dependence on the state can be identified as one of the principle features of local authorities in South East Europe. However, this dependence varies according to the importance and size of the municipality, which means according to its ability to raise revenue from taxes and local taxes, fees, municipal commercial activity, the privatisation of local businesses, and other sources of its own. It is also clear that transparent budgeting procedures and revision of the relations between central and local governments regarding financial transfers are preconditions for reform. One of the most important incentives defining local integrity is establishing clear rules that avoid systematic bailouts of local governments by regional or central government when these encounter financial problems and particularly if financial problems are generated by corruption.

Taxes remain the principal source of municipal income, but sometimes the municipalities do not have any means of collecting their own taxes and revenues. The state taxation authorities collect the taxes and subsequently pay the yield to the municipalities, which therefore rely organisationally on the state for collection of local taxes and charges. Also, in view of the current economic situation in the countries concerned, neither of these taxes produce much revenue - they produce no revenue at all in some municipalities - and on no account do they provide sufficient funds to meet the needs of local authorities.

The principles of the redistribution of funds by the state also appear to be extremely vague. State grants and transfers represent a substantial source for funding local budgets and correspond to the share of public functions. They provide income to the municipal budgets and compensate for the performance of new powers and responsibilities delegated to the local authorities. This allows municipalities to carry out a competence that may exceed their own capabilities. Also municipalities are provided with targeted or specific grants, which are usually earmarked. Another purpose of transfers is to compensate for inequalities arising between municipalities as a result of their size and local tax potential. However, the grants are rarely based on objective criteria that take into account the characteristics of the municipality. Therefore, it is quite clear that a dividing line between state and local authority competencies should not be altered without at the same time considering the allocation of financial resources.

According to the experts, the ratio between the municipalities’ own resources and state grants is clearly unbalanced in favour of grants, especially for small and medium-sized municipalities. Consequently, their own resources do not always appear. On the other hand, resources, including state grants, do not always seem to be appropriate with a regard to the responsibilities placed on the municipalities, particularly with regard to shared competences. In this respect, the municipalities complain they have to implement projects without possessing the requisite financial resources. It has also been noticed by the experts that some municipalities are favoured for their political views, which reflected the quantity of grants and transfers from the central level.

TRANSPARENCY AND ACCOUNTABILITY

There is still no clear understanding of local government transparency and accountability. Many local governments carry with them a legacy of acting as agents of the central government and have to overcome a culture of closed government. However, transparency and access to reliable and easy to understand information by the public represent an important condition for the building of a local integrity system. It is important to promote good governance and reduce corruption on local level by increasing transparency and accountability in local government bodies. 

The lack of capacity of local government is often cited as the primary reason not to undergo fiscal, political and functional decentralisation. Poor fiscal control contributes to a weak macroeconomic environment with high inflation and high interest rates, poor budget management can lead to inefficient services or corruption and poor policy planning often results in public spending on low priority items.

Transparency must not stop at the level of elected assemblies but extend to the individual citizen as its principal addressee and guarantor. Mayors elected by the public must report to the public as well as to central government. However, according to the experts, at least three factors define the level of information that is made public, which are political will, financial cost and technical viability of producing information and mandated reporting standards. Typically national governments have very low reporting standards that do not push local authorities to transparency either. As a rule, local authorities that provide high level and quality information to the public do so under their own initiative.

Regional non-governmental organisations, media and different interest groups are rather passive. They seem to believe that government should be responsible for transparency and accountability and that they have no power to do anything about it. Civic participation in local decision-making is low and public control over the government is weak. This situation provides an excellent ground for corruption and declines the effectiveness of local government and reforms in general.

Local authorities should be provided with incentives to run their communities responsibly, economically, openly and in accordance with the will of the citizens, who expect them to conduct their activities in a correct, equitable and helpful way. Responsibilities should be clarified and the access provided to permit citizens to challenge government actions with which they disagree and to deter official misconduct by reminding public officials of their accountability.

Providing greater accountability and improved service delivery requires engaging civil society in evaluating the quality of the services they receive. The principles of transparency and democratic accountability are of utmost importance in institutional reform. Public and democratic accountability of government at various levels is a precondition for any major improvement of public sector performance. Accountability can be seen as the attempt to increase citizens' participation and how the citizens can use participation to hold a local government responsible for its actions. Local elections are seen as the most common and powerful form of accountability, but other mechanisms such as citizen councils can have an influence as well.

The state has transferred many tasks to the local authorities, while at the same time reserving rights of supervision and instruction with regard to the ways in which they implement them. However, a great number of the delegated tasks are not only heavily regulated, but also part-financed by the state. It becomes impossible for the average citizen and sometimes even for the local council to determine who decided what and can accordingly be held accountable. Therefore, clarity of action and access of citizens to information are of the utmost importance. The level and detail of such information should be sufficient to hold the government accountable for the sources and uses of funds including both aspects of corruption and efficient production of services by the local government.

International and local non-governmental organisations could also positively contribute on the issue of transparency and accountability to the public. For example, on the basis of the outcomes of the national integrity system survey, Transparency - Serbia has identified evaluation of national anti-corruption strategy implementation and assistance to the ministries in preparing anti-corruption action plans, assistance in the implementation of Conflict of Interest Law and Code of Conduct, public awareness campaign and lobbying for free access to information, monitoring of the implementation of Political Party Financing Law and public procurement practices for its forthcoming activities. In "the former Yugoslav Republic of Macedonia" a major programme on the strengthening of local self-government institutions through capacity development, transparency and financial accountability is being implemented by the Government in co-operation with international partners and is aimed at enhancing the capacities of local self-government employees in accountable and transparent fiscal management, as a critical precondition for effective decentralized management and participatory local governance. Similar programmes are being implemented and various international and non-governmental organisations are also active in this field in other countries of South East Europe.

A vibrant and well-informed civil society is the catalyst for good governance. The reluctance to disclose information is certainly rooted in the authoritarian tradition, which placed the state on top of society. The right of citizens to inspect public records should be secured in legislation. In most of the countries no legislation on freedom of information has been passed. Persons requesting these documents need not give any reasons why they want the documents or explain what use they will make of them. Government agencies can withhold requested documents only when their disclosure would seriously damage the public interest or constitute a clear breach of personal privacy. Therefore, the right to access government information is crucial for the transparency of public administration and for detecting official misconduct and corruption.

In general, executed and programmed annual budget, roster of all employees with total salaries including bonus, disclosure of assets, open tendering procedures, mandated unitary costs and standards of public works, monthly or quarterly financial position, performance indicators for the delivery of key services should be publicly available. This information should be provided in an easily understandable manner, so that the general public would have no doubts about its sense. Unfortunately, such information, if available, is of poor quality and people, therefore, become uninterested. Therefore, the imposition of certain obligations on local authorities to report to and consult with their citizens is justified and needed.

CITIZENS PARTICIPATION IN LOCAL DECISION-MAKING

Decentralisation is often seen as the instrument to increase citizens’ participation in public policy decision-making, as a means to further democratisation, improved credibility of the state and as a social guarantee for efficiency and effectiveness of public policies. Newly drafted legislation provides citizens with an opportunity to actively participate in local decision-making. However, many obstacles exist and new strategies and approaches are needed.

There are different ways that individuals can participate in local government and influence decision-making. Local authorities should develop a corresponding strategy to enhance governance processes that provide citizens with a real feeling of being able to influence the decision-making processes and outcomes.

Effective citizen involvement is essential to good governance and they can play an important role in governing local community. Therefore, it is crucial for local government to promote and sustain a responsive citizens involvement. Public participation can be seen as ranging from information sharing to consultation or to active forms of participation, which influence over public services and policies.

Participation of national minorities deserves particular attention as international and Council of Europe instruments contain provisions particularly relevant to local governance, and the right of minorities to effective participation in public life. Creating conditions for full and effective participation of minority communities in the wider societies is essential to functioning democracies, and the needs disadvantaged of groups, such as minority women and children, should be considered in this respect. For instance, Article 15 of the Council of Europe’s Framework Convention for the Protection of National Minorities requires State Parties to ‘create the conditions necessary for the effective participation of persons belonging to national minorities in cultural, social and economic life, and in public affairs, in particular those affecting them’. The Explanatory Report recommends measures, which State Parties could promote to create such necessary conditions, including consultation with minority communities on matters affecting them, minority involvement in preparation, implementation and assessment of development plans and effective participation of minorities in decision-making processes at local level.

Local and regional authorities of South East Europe still need to pay particular attention to the issue of refugees and displaced persons. Promoting the sustainable return of refugees or integration of displaced persons is also a pre-condition to ensure that these victims of the past conflict be part of the local community.

According to the experts, effective management at the local level is key to ensuring peaceful coexistence through the meaningful participation in public life of each ethnic community in any context. In South-East Europe, local actors face particular challenges as they usually operate in systems with limited finances and post-conflict situations, where inter-communal tensions are strong and reconciliation processes still have some way to go. Yet, local authorities and civil society can play an absolutely crucial role in ensuring that various communities peacefully coexist, and that the fundamental rights of all persons are respected.

Local Democracy Agencies (see supra) can be instrumental in reaching these objectives. They have carried out, in the last ten years a number of initiatives to improve the participation of citizens, young people, and minorities into public life, notably with the support of the Confidence-Building Measures Programme of the Council of Europe. Pilot projects on development of democratic citizenship and responsive leadership at local level in Bulgaria and Romania have also been developed by the Council of Europe; awareness-raising and needs assessment action on community engagement and good leadership in Serbia and Montenegro and Bosnia and Herzegovina are currently being carried out.

ROLE OF THE MEDIA

The role of media in the development of local democracy cannot be underestimated. Moreover, with the development of modern techniques of communication, information dissemination and exchange via means of media becomes very important. It is through the media that many political messages could be sent and inter-municipal or transfrontier could be established more easily.

The media have an important role to play in the development of local democracy in South East Europe. All countries in South Eastern Europe have commercial television stations, both nationally and locally, providing news and entertainment. The number of radio stations increased drastically, particularly on a local and regional level. New newspapers were founded and Internet penetration is rising quickly.

The fundamental principles of journalism require, among other things, that there be independent verification of information, an open mind on any given subject, and no rush to judgement or to press until the facts put the issue to rest. Failure to practice the profession in accordance with these accepted principles invariably leads to rumours, false accusations, shoddy reporting and, at worst, propaganda. Also it must be realised that sometimes, leaving things to rest and not making certain things public is good for general population and that transparency is not always the correct answer. Television news programs can provide us with valuable exposés and special reports that bring insight to the public. But with that special capability also comes the potential for abuse and deliberate misinformation. It is, unfortunately, the case that some of the media would seem to be more determined to paint a picture of lies and hatred, to advance the sales of newspapers, rather than to simply report the facts.

Democratic reforms in the field of freedom of expression and of the media certainly require time to be accomplished. This is a process that requires a long-term commitment and a strategic approach. Despite positive developments, the media in South East Europe are still hampered by political influencing, economic dependence, lack of journalism training, weak professional structures and, in many cases, an unclear and unfinished legislative framework.

The Council of Europe pays particular attention to media developments in South East Europe. The Media Task Force is one of the six core-objectives of the Stability Pact for South Eastern Europe. By forging co-operation between donors, international organisations and recipients, assistance was provided to independent and professional media from Moldova to Albania.

The Council of Europe conducts a broad range of related activities in the framework of its Stability Pact programme. The following three areas were considered of specific importance: broadcast legislation, defamation laws and implementation of Access to Information laws, to achieve greater transparency and expose corruption.

Council of Europe programmes are designed to establish a regulatory framework for freedom of expression and for the media in line with Council of Europe standards. To ensure that this framework is in line with Council of Europe standards is an important step to facilitate development of professional and independent media that promotes a climate of tolerance and mutual understanding.

All governments in the countries concerned have committed themselves to establishing public service broadcasting services. Legal framework, which regulates mass media issues, is necessary to secure freedom of expression, protection of sources, access to information and pluralism of media groups, and was developed in the majority of the countries of South-East Europe. New media laws package, adopted in Montenegro in 2002, could be quoted as one of the most recent legislations in this area. In Serbia, two new laws on telecommunications and public information have recently been adopted.

Transition of state into public broadcasting service is a dynamic process. Independence of broadcasting authority should be guaranteed by law and provided through its structure, procedure of recruiting and election of its members and through financing. It is very important to provide regular and diverse financial sources for public broadcasting services but at the same time to prevent unfair competition of public broadcasting services against private broadcasters on the market. Non-governmental organisations working in the media field in the region of South East Europe need to make a more proactive effort to ensure that the intergovernmental organisations are informed about the situation and able to intervene when necessary.

To complete the process, the countries in the region should adopt freedom of information legislation whereby everyone is entitled to free access to government held information. The accessible information should not be limited to the information of public interest or held by some public authorities, but should embrace all the information in the hands of all the authorities. Once such laws are enacted, steps should be undertaken to ensure implementation.

TRANSFRONTIER CO-OPERATION AND EUROREGIONS

For decades, intermunicipal co-operation between many cities and towns of the region took place within the boundaries of a single, federal state. The break-up of the Socialist Federal Republic of Yugoslavia and the emergence of a number of independent countries meant that the continuation of pre-existing co-operation had to overcome a number of new obstacles linked to the establishment of international borders. Also, the conflicts that plagued the area for years left a heritage of mistrust and fear that took time to overcome. Finally, as some countries of the region showed more dynamism and resolve than others in embracing political reforms and economic liberalisation, some areas emerged as real magnets for local and regional authorities interested in developing international co-operation that challenged the traditional division into the "centre" and the "periphery".

This translates into some new features for the whole region. The first one is that, although legislations pertaining to municipal competences and responsibilities do not differ radically from country to country – subject to the successful outcome of legislative reforms under way in a number of countries: Bosnia and Herzegovina, Serbia, Montenegro, Croatia – transfrontier co-operation between municipalities is still relatively limited. Lack of resources and limited capacity to manage municipal affairs rather than different competences seem to be the main reason for the somewhat limited development of inter-municipal co-operation. In this connection, the absence of a clear legal framework for transfrontier co-operation is perceived as a major obstacle by municipalities. The Madrid Outline Convention does provide the required legal certainty; however, as it has not been ratified as yet by some of the countries of the region ("the former Yugoslav Republic of Macedonia", Serbia and Montenegro, Bosnia and Herzegovina), their respective municipalities and territorial communities lack the adequate legal basis for entering into formalised agreements and partnerships with their neighbours.

The second feature is the rapid development of forms of co-operation between various partners, both institutional and societal, that have led to the establishment of a number of so-called "Euroregions". A non-exhaustive account puts their number at 10. One can quote as recent examples of Euroregions, Eurobalkans (Nis-Skopje-Sofia), Danube 21 and Nestos-Mesta to which could be added the relatively older euroregions DKMT (Dunav-Kris-Mures-Tisza) and the Danube-Drava-Sava, while the Prespa-Ohrid euroregion is still being discussed. Euroregion Belasica, established in Kilkis, is a unity of three non-profit cross border organisations which are in fact networks of Local Authorities, Entrepreneurial and Social Partners of the common border between "the former Yugoslav Republic of Macedonia", Greece and Bulgaria. It is one of the few active Euroregions in the Balkan area and one of the very few Euroregions consisting of EU - member and non-member countries. Other examples to be commended are such Euroregions as Dunav-Kris-Moris-Tisa, Drina-Sava-Majevica, etc.

Euroregions represent the response of local and regional authorities to the lack of progress in institutional co-operation between countries of the region and their search for original solutions to slow economic and social development. In spite of a sometimes imperfect or incomplete legal architecture, euroregions constitute an original attempt at building new solidarities and social, economic and cultural ties across the borders, involving political, economic and educational actors: counties and provinces, municipalities and their associations, sometimes established on an ad hoc basis with limited geographical membership, chambers of commerce, universities, NGOs, etc.

Euroregions do not have political powers and their work is limited to the competences of the local and regional authorities which constitute them. Within the limits of their geographical scope of co-operation, the transfrontier structures are arrangements for co-operation between units of local or regional government across the border in order to promote common interests and enhance the living standards of the border populations.

Euroregions with more integrated structures seem to have a more general objective of promoting common interests through transfrontier co-operation. Transfrontier activities extend not only to socio-economic development and cultural co-operation, but also to other areas which are of general interest to frontier populations, such as social affairs, health care, education and training, waste management, nature conservation and landscape management, tourism and leisure, co-operation in the case of natural disasters and transport. Euroregions also differ in the practice of transfrontier activities. Some of them are limited to exchanges of information, consultation and undertaking studies, others seem to have the capacity to manage and implement concrete projects.

If not all countries of the region have so far signed or ratified the Madrid Outline Convention and its protocols, especially the Additional Protocol on the legal status of transfrontier co-operation bodies, one of the reasons is the worry that neighbouring municipalities or authorities could establish co-operation bodies on the basis of ethnic affinities and interests.

This preoccupation needs to be taken seriously; however the response lies not in the current limitation of municipalities’ funds and capacity to conclude agreements but in the conclusion by the states concerned of interstate agreements that would specify the areas and the scope of the co-operation open to local authorities.

The Political Declaration adopted on 5 November 2003 at Chisinau by the Committee of Ministers of the Council of Europe acknowledges the positive role of transfrontier and interterritorial co-operation in overcoming recent divisions and promoting reconciliation and co-operation between the countries of South Eastern Europe and their neighbours. It encourages the countries concerned, in addition to signing and ratifying as appropriate the Madrid Convention and its Protocols, to negotiate and conclude interstate agreements on a number of subjects, with a view to fostering the social and economic development of the region and reducing the obstacles that the existence of international borders puts on their citizens (need to carry passports instead of identity cards, visa requirements, limited number of border crossing facilities, inadequate infrastructure at border crossing points).

Initial talks between the countries concerned have been held at the initiative of the Secretariat of the Council of Europe, as the Declaration aptly advocates. It is to be hoped that this work will lead to the identification of concrete subjects suitable for the conclusion of interstate agreements between the countries concerned, both bilateral and multilateral as necessary, covering the priority areas of co-operation such as culture and education, protection of the environment, spatial planning, the movement of goods and individuals etc.

Both the Stability Pact - through its Working Tables I and II – and a number of NGOs, such as the Soros Foundation and the East-West Institute, have addressed the issue of transfrontier co-operation and engaged in direct co-operation with local authorities and euroregions. The conclusions of the conference held in Osijek (Croatia) on 18-19 November 2002 point to the need to pay attention to the development of the institutional framework of the so-called euroregions and to the search for adequate recognition of the "euroregional factor" by the states of the region and the European and international agencies involved in the further stabilisation and development of the area.

More recently, both the communication of the European Commission on the New Neighbourhood Initiative and the 2003 Report on Cohesion in the European Union (the Barnier Report) suggest that solutions will have to be found to the problem of promoting balanced economic and social development of the areas along the new external borders of the enlarged European Union, involving the neighbouring authorities. This means paying renewed attention to the role of Euroregions and the ways and means of making them capable of playing a significant role in the managing of developmental projects.

PARTICULAR REMARKS

The logic of this report is to oversee general trends and situations in the field of development of local democracy in South East Europe and does not aim to concentrate on any particular countries. However, in the course of the last few months there have been developments, which were considered worthwhile as mentioning in this chapter.

In "The former Yugoslav Republic of Macedonia", after months of delay, the three Laws of Local Self-Government began their parliamentary process. It is encouraging to report that in accordance with Article 5 of the European Charter of Local Self-Government, a full and comprehensive public consultation concerning draft Law on Territorial Organisation of Municipalities exercise is underway. The referendums were, in many cases, supporting the need for small municipalities to be retained. In a few others, it has unfortunately revealed ethnic reasons for opposing change in the boundaries. In some municipalities the current majority ethnic group, will become a minority ethnic group in the organisation proposed. It is also noted that in some areas there has been a boycott of the referendums by ethnic communities. The government reaffirmed that, before the final proposals are placed before parliament, they will take into account the consultations, and referendums which have taken place. Concerning the draft Law on the City of Skopje there is a mixed response from mayors to the re-drawing of municipal boundaries in Skopje. Mayors from opposition parties both Albanian, and Macedonian, are opposing the changes proposed for Skopje. Other mayors recognise that there will be financial benefits for Skopje in the new law. There are some areas of the proposed law which require clarification. The mayors of Skopje accept that they will not have the same competencies as mayors of other municipalities, but they believe all mayors in "The former Yugoslav Republic of Macedonia" should be of the same status. The final number of sub-municipalities is not yet resolved, with some Albanian parties requesting the inclusion of municipalities outside of Skopje to be included within the City. Concerning the draft Law on Local Government Finance there are still some issues which are unclear in this law, particularly in relation to the finances of the Skopje sub-municipalities. Further work will be undertaken by the Ministry of Finance, and possibly Council of Europe experts, prior to the second reading of this law.

In Serbia and Montenegro there seems to be a general agreement on the need to implement the legislation on local self-government effectively and the importance of decentralisation and democratisation of the local government is highlighted by various international actors. Montenegro has quite recently enacted an ambitious set of laws that establishes the framework for decentralisation and local governmental autonomy, in Serbia this process is underway. However, the reforms in this field are going rather slowly and there is a strong necessity to further develop the legislation in the field of local government in order to build a truly representative and democratic society. There is certainly a necessity to increase citizen and civil society organisation, access and involvement in local government, to improve the legal and financial sustainability of local government and to search for ways for increasing local government influence at national level. There is also a need to provide more training to local authorities to administer their duties professionally, efficiently and to the benefit of their municipalities.

Particular mention should be made concerning the region of Sandjak with the capital city Novi Pazar. Even compared to standards of Serbia and Montenegro, the region is particularly underdeveloped and has a high level of unemployment. The region is multiethnic and located on the borders of Kosovo situated partly in Serbia and partly in Montenegro. Its political representatives complain about a lack of support, both from Serbia and Montenegro and from the international community. The people live on the edge of poverty, which has a very bad impact on the development of the local economy. The region would also hope to benefit from the implantation of a Local Democracy Agency. The location on difficult borders and a lack of decentralisation lead to a situation where the people in the region feel that there is no hope for a good future for them.

Contrary to other countries of the region, no real decentralisation has occurred in Kosovo so far, in spite of the fact that the current structure results in a number of deficiencies. Most of the municipalities are too large and the quality of administrative services provided by them is poor. The gains in economies of scale are far outweighed by the democratic deficit caused by inappropriate territorial representation within municipal assemblies, their distance from a large part of the population and the lack of public control and participation. The quality of administrative services in those units is generally poor. They have to cater for too many people and a large part of their population is distant from the municipal centre. This relatively centralised structure has been reinforced by the local electoral system, which is based on closed party lists and which completely lacks the constituency principle. Thus, local communities have been effectively marginalised in the decision-making process.

Although UNMIK Regulation No. 2000/45 on Self-Government of Municipalities in Kosovo was largely prepared in line with the European Charter of Local Self-Government, due to some insufficiently clearly specified competences and a lack of appropriate implementation mechanisms, its provisions have been put into effect in a very uneven fashion.

Municipalities have problems in defining municipal property and have been unable to establish a system for the proper identification and protection of municipal assets. Contradictory regulations in the public services area and infrastructure created total confusion as regards the relationship between municipalities and public enterprises. Municipalities have also failed to put an end to illegal construction.

At the request of UNMIK, the Council of Europe has recently developed a reform proposal, aiming to bring decision-making and management closer to the people, gradually improve the quality of local administration and the trust of the citizens in their representatives and public officials and increase the stability of Kosovo's democratic institutions, not least in respect of inter-ethnic relations. It is uncertain, however, if these proposals would be implemented, since the political climate in Kosovo continues to negatively affect endeavours to rationalise the discussions on reforming local self-government.

The Council of Europe Decentralisation Mission in Kosovo highlighted in its report that, based primarily on the principle of subsidiarity and on the criteria of the Council of Europe’s Charter of Local Self-Government, the proposed reform’s main aim is to transfer decision-making processes closer to citizens and to provide better public services and more efficient public administration to the population. For this purpose, it is proposed to create a sub-municipal level as a new tier of local self-government: whilst maintaining the existing municipalities as the main element of local self-government, some 180 new sub-municipal units, with properly elected councils and leaders, should be created. It was highlighted that Kosovo needs efficient local government that is responsive to the needs of people, services should be brought closer to the public in order to enable the public to influence and shape the design of those services. The guiding principle behind local government reform should be to ensure more effective and responsible local management and improve the delivery of public services to everyone and local politicians should be enabled to move forward in carrying out their responsibilities. Unfortunately, the report prepared by the Council of Europe in November has not yet made any progress. It has been opposed by the Association of Kosovo Municipalities, as well as members of the Kosovo Assembly. Indeed, there is a real need to examine the current situation, and to move forward.

CONCLUSIONS

Local democracies in South East Europe are developing very fast. However, they have to face numerous obstacles of political, economic and practical natures. Many issues await more sustainable solutions.

There is a strong need to reinforce various components of local self-government. In many respects the municipalities remain weak and the necessity for the transfer of additional powers and relevant resources to the local level seems to be obvious.

The international community - the Stability Pact, the European Union, the Council of Europe - should confirm its support for the reform processes engaged in most countries with a view to achieving a strong and balanced decentralisation both at the institutional and fiscal levels. The Ministers of local self-government of the countries of the region should be encouraged to reaffirm, through a political declaration, their commitment to carrying the reform process through to its successful implementation.

The legislation should clarify powers and responsibilities of different levels of authorities and the legislation should clearly regulate the nature and extent of the supervision, which the higher levels exercise over local authorities and the relations between various levels of government.

In some countries the legislation should be revised to correspond to the provisions of the European Charter of Local Self-Government and necessary measures should be taken to guarantee implementation of this legislation in matters of local and regional democracy.

Transfer of responsibility from central to local level should be genuine and supported by necessary means, financial and logistical. The ways in which both central and local authorities act should be made more transparent.

It is important to foster closer links and co-operation between municipalities and transfrontier co-operation. In this regard the initiatives taken by municipalities in different countries of South East Europe are to be commended and encouraged.

Euroregions should be encouraged, provided that the legal framework for their establishment and functioning is adequately established. The initial steps taken in order to provide a follow-up to the Chisinau Political Declaration (from the ratification of the Madrid Outline Convention and Protocols to the possible conclusion of new interstate agreements) are to be welcomed and should be continued.

Also the role of media is not to be underestimated as concerns issues of transparency and accountability as well as establishment of new contacts between different municipalities. The media seem to be the best placed to promote these matters.

Finally, it is clear that given current financial difficulties facing the municipalities it could be too early to over emphasise the need to improve the service supply to the citizens, but nevertheless this should remain an objective of primary importance.

1 For further information, see document CG (10) 8, Information report on the 10th Anniversary of the LDA Programme submitted by Yavuz Mildon to the Plenary session of the Congress in 2003 and the LDA Association website: www.ldaaonline.org