Report on the situation of Local and Regional Democracy in Latvia - CG (5) 5 Part II

Rapporteurs: Leon KIERES (Poland) and Markku POHJOLA (Finland)

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EXPLANATORY MEMORANDUM

I. THE GENERAL CONTEXT

The Republic of Latvia covers an area of 64,000 km2. Its population in 1997 was 2,456,000, geographically very much concentrated in Riga, the capital, and the surrounding conurbation (population of some 900,000).

Latvia is a multi-ethnic society which has experienced a high level of development since the end of World War II. According to official figures, 56.7% of the population were of Latvian stock in 1997. The second ethnic group was the Russians, who made up 30.2% of the population. There were followed by the Belarussians, Ukranians, Poles and Lithuanians. It should be noted that the Russian-speaking minority is a majority in six cities in the country.

This situation is a legacy of Latvia's annexation by the Soviet Union in 1940, and following the end of World War II, Latvia became a country of immigration, to which Russian manual workers and soldiers came to settle. A few figures reflect this development: 75.5% of the population was of Latvian stock in 1935, 62% in 1959, 53.7% in 1979 and, on independence in 1990, 52%.

The Constitution of the Republic of Latvia, Satversme, was adopted in 1922 and fully restored in 1993 following the proclamation of independence. It is brief and of decisive symbolic value. It stipulates that Latvia is a democratic republic with a classic parliamentary system: the parliament (Saeima) elects the President of the Republic, and the Head of Government is responsible to it.

Since independence, domestic politics have suffered from the fragile nature of the coalitions and government instability, as a result of the fragmentation of political forces.

The setting up of independent local authorities was one of the main themes during the first years of transition. Until 1995, a Minister for State Reform was solely responsible for preparing and implementing basic decentralisation arrangements.

However, it has to be said that the reforms and the present organisation of local and regional government are based on the precedent of the laws relating to local authorities dating from 1922 to 1926, during the first period of independence. At that time Latvia was divided into 19 counties, 519 rural municipalities and 60 towns, including Riga.

Economic and cultural variety and dynamism centre on Riga, its conurbation and Ventspils. Features of the economic situation are a high unemployment rate, particularly in rural areas, no wages and a process of restructuring in both agriculture and industry. In this respect, the eastern region adjacent to Belarus, Latgale, seems to be the most disadvantaged.

II. THE LEGAL BASIS OF THE REPORT AND DRAFTING PROCEDURES

Following up Resolution 58 (1997) of the Council of Europe's Congress of Local and Regional Authorities of Europe (CLRAE), which called for a report on local and regional democracy in six of the Organisation's member states to be drawn up, a CLRAE delegation visited Latvia on two occasions, from 8 to 11 December 1997 and on 1 and 2 March 1998.

The delegation for the first visit comprised Mr Markku POHJOLA (Finland), rapporteur on local aspects, Mr Leon KIERES (Poland), rapporteur on regional aspects, Mr Michael O'BRIEN (Ireland), a member of the Bureau, Mr Michel RIVOLLIER, an expert, and Mr Riccardo PRIORE, representative of the Council of Europe Secretariat. Mr O'Brien was unable to attend the second meeting. His place was taken by Mr CONNOR-SCARTEEN (Ireland).

During the visits, the CLRAE delegation met representatives of various bodies: Mr KAKSITIS, Deputy Prime Minister, Mr KALVINS, Chair of the Parliamentary Committee on Central and Local Government, Mr BUNKSS, a member of the same committee and former Secretary of State at the Ministry for Central Government Reform, Mr ZUNDA, Minister of State responsible for Local Governments, Ms KRUMINA, adviser to the private office of the Minister for Local Affairs, representatives of the Ministry for Regional Development, the Ministry for Finance and the National Audit Office, as well as the Chair of the Latvian Association of Local Authorities and a number of elected local and regional representatives. The Latvian authorities welcomed the opportunity to discuss the preliminary draft of this report. This procedure gave them the possibility to react in a more appropriate way during the discussions with the CLRAE delegation. In particular, Mr Zunda drew up written observations to the above preliminary draft.

III. THE MAIN ITEMS DISCUSSED

1. Constitutional and legal recognition of local self-government

1.1 Article 2 of the European Charter of Local Self-Government states that “the principle of local self-government shall be recognised in domestic legislation, and where practical in the constitution". Within the context of Council of Europe activities, the problem of the recognition of local self-government in the Constitution was referred to in an expert report of February 1995. It is still an issue. At present, the constitution adopted by (independent) Latvia in 1922 and re-adopted in toto in 1993 makes only one indirect reference to the concept of “local authorities”. Article 25 refers to relations between the latter and parliamentary committees in the context of their activities. All the people with whom we spoke appear to accept the principle that the constitution and the law should make explicit reference to the concept of local self-government; nevertheless, there are a number of obstacles.

1.1.1 Positive factors

Those who support recognition of local democracy in the constitution are of the opinion that the recent constitutional amendments approved by the Latvian Parliament show that the time is now right for a provision on local authorities. There have been proposals along these lines since 1994/1995 but as yet they have not been followed up. At the moment there are three draft constitutional amendments:

- the first, from the Latvian Association of Local Authorities, comprises everything so far achieved in the field of decentralisation which it would like to see added in a specific section of the constitution;

- the other two, which are more recent, come from the Parliamentary Committee on State Administration and Local Self-Government. They propose adding a Section 8 on local self-government. The most recent version, dated February 1996, is more detailed; Article 89 of the draft refers to an elected local authority, the electoral system and legally defined powers, while Article 90 refers to an independent budget.

1.1.2 Obstacles

Political obstacles: any change to the constitution requires a qualified majority. Because of the fragmentation of Latvian political parties it is extremely difficult to achieve this kind of majority, although parliament did manage to reach a consensus on including a section on human rights and fundamental freedoms.

Furthermore, the recent adoption of constitutional amendments, regarded as minor changes by the parliamentary committee, cannot be seen as conducive to more substantive changes.

There is also reluctance for historical and philosophical reasons. The Vice-Chair of the committee considered that, bearing in mind Article 2 of the European Charter of Local Self-Government, the recognition of the principle of local self-government in the Constitution is merely an option and not an obligation. In addition, the Latvian Constitution is a concise text, and including a new section would run counter to the intent of its authors. Lastly, the current constitution dates from 1922, and was restored in its entirety in 1993. As such, it is a symbol of continuing Latvian independence.

Those to whom the delegation spoke reaffirmed that the incorporation of a human rights section into the Constitution remained the priority. The rapporteurs draw the conclusion that constitutional recognition of the principle of local self-government is impeded both by a problem of restrictive interpretation of Article 2 of the Charter by the Latvian authorities and by a political blockage connected with the lack of a strong parliamentary majority on this subject. The members of the parliamentary committee responsible for the question nevertheless said that the matter would appear on political formations' programmes for the autumn legislative elections.

While noting that the discussions could reach a favourable conclusion after the parliamentary elections, the rapporteurs feel that Article 2 of the European Charter of Local Self-Government should serve as a guide for incorporating the concept of local self-government in the Constitution.

1.2 Legal recognition

When it adopted the law of 22 February 1996, the Latvian Parliament approved the country's accession to the European Charter of Local Self-Government, although it refused to ratify Articles 6.2, 7.2, 9.4 and 9.8 (of the Charter's 30 paragraphs). It came into force on 1 April 1997. The legal framework for local self-government comprises several laws on the status and election of members of the assemblies, local budgets and financial equalisation. However, the primary text is still the law on local self-government of 19 May 1994, amended on 25 November 1997. The CLRAE delegation confirmed that the most recent version of this law did not satisfy the requirements of Article 3 of the Charter, which had been adopted and ratified in the meantime. The CLRAE members singled out the wording of the new Article 3 of the amended law, which defines local authorities as “a form of local state administration which, with the assistance of elected representatives ... ensures that the duties laid down by the law are discharged ...”. All the people with whom the delegation spoke (ministers, experts, senior officials, parliamentarians) referred to the difficulties in producing an accurate translation of the Latvian and acknowledged that the juxtaposition of the three key-words and the use of the term “state” were inappropriate. The rapporteurs emphasised that the legislation should use terms in keeping with the spirit of decentralisation and, in particular, that the word "state" be replaced "public administration".

The checking of constitutionality covers another aspect of the legal protection of local self-government, with reference to Article 11 of the European Charter. Under legislation of July 1996 a Constitutional Court was set up with responsibility for checking that domestic legislation is in conformity with the Constitution and with international agreements. However, matters may be referred to the Constitutional Court only by the Head of State, the Cabinet, the President of the Court or by 20 members of parliament. Although they have no right directly to refer to the Constitutional Court objections through laws which run counter to the principles of the Charter, local and regional authorities may object to the Constitutional Court about deliberations of the Cabinet. The rapporteurs consider that it would be premature to make a final judgment on the real existence of checks of constitutionality, but that the introduction of a constitutional court and the referral of matters, albeit indirectly, by local authorities are in keeping with the spirit of Article 11 of the European Charter of Local Self-Government on the opportunity of local authorities to "have the right of recourse to a judicial remedy in order to secure a free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation".

2. State control over local authorities

2.1 Local and regional authorities are subject to both legal and financial supervision.

2.1.1 Pursuant to Articles 45, 47 and 49 of the 1994 law, responsibility for reviewing the lawfulness of decisions falls to the relevant ministry, viz. the Administrative Unit for Local Affairs of the Ministry of Regional Development and Environment. The first step in controlling lawfulness is the compulsory transmission to the Ministry, within three days, of local authority decisions which have mandatory scope. Any decision or part of a decision which is unlawful is suspended by the minister, who issues an injunction with reasons. The chair of the local authority then has fifteen days to convene the deliberating organ and make the necessary changes to the decision. The chair may also appeal against the suspension. Failing a meeting within the specified time-limit, the decision in question is deemed annulled. In practice, the local authority is normally contacted and warned beforehand by the supervisory body, which suggests appropriate changes.

2.1.2. Financial supervision of local and regional authorities is carried out by the recently set up National Audit Office, which is directly accountable to parliament. This is post facto supervision, covering both the state budget and local and regional budgets, and, so we were informed, is based on the three principles of balance, efficiency and economy. The National Audit Office submits its reports and recommendations to the Parliamentary Audit Committee. It is also in constant contact with the Ministry of Finance.

2.2 The principle of this type of supervision is set down in Article 8 of the European Charter of Local Self-Government. The rapporteurs took note of the positive aspects of the post facto supervision and the structural independence of the Audit Office.

2.3 There remains some ambiguity as to the actual nature of the check of lawfulness and as to the real existence of slippage towards expediency control against the Latvian background of relations between local and central government which are still settling down.

2.4 Although the National Audit Office claims to have total freedom of action in relation to central government, the Latvian Association of Local Authorities has expressed some doubt about its independence vis-à-vis the Ministry of Finance. It was also confirmed to CLRAE members that audits did not cover the schedule and actual content of a project if it was funded from a local authority’s own resources. However, it seems legitimate to wonder about the actual extent to which local authorities are able to self-fund a whole project, bearing in mind the general paucity of local authorities’ own income.

3. Local finances

The financial aspects of local and regional self-government are regulated by a series of laws and government decrees, of which the most important are:

- The Tax Act of 2 February 1995, which is the basic text

- The Local and Regional Authorities’ Budget Act (March 1995)

- The Budgetary and Financial Organisation Act (1995).

In addition to this, the financial situation of local authorities depends on the annual budget (covering the state budget and the share earmarked for local authorities) and the annual financial equalisation system.

3.1 The concept of local and regional authorities’ “own resources”

There seemed to be some confusion in the minds of some of those the delegation met between:

- local authorities setting their own local taxes

- the same local authorities collecting national taxes

- state tax transfers to local and regional budgets.

3.1.1 Income tax, property tax and land tax are the prime sources of local authorities’ income. Each year these state taxes are transferred totally or partially to the local authorities:

- Property tax is transferred in toto by the Central Revenue Department.

- Land tax is paid directly into local budgets. In 1998 this tax will be replaced by the built land tax, the basic amount of which will be 1.5% of the property’s rateable value.

- 71.6% of income tax revenue is transferred by the Central Revenue Department, the remainder going to the Ministry of Health to finance public health services. The Association of Local Authorities claims that income tax represents 65% of all local revenue.

In practice, Latvia's local and regional authorities cannot decide to introduce a direct local tax and therefore do not have any "own resources" within the meaning of Article 9(1) of the European Charter of Local Self-Government.

All those to whom the CLRAE delegation spoke acknowledged that apart from very restricted exceptions, local and regional authorities cannot levy tax and merely administer and that, for want of taxes introduced by local and regional authorities, the transfer of state taxes to local and regional budgets remained the fundamental principle.

Not only do local authorities suffer from a lack of financial autonomy, they have increasingly less scope to collect taxes and are unable to change the tax rate, with the sole exception of the land tax (within a range of 0.5 and 1.5%).

3.1.2 Block grants and specific grants from the state are the second most important source of local and regional revenue. They derive primarily from the Financial Equalisation Fund. Block and specific grants cover salaries and charges for teaching staff in primary, secondary and vocational schools. The national budget is a further source of block and specific grants, particularly for local investment.

3.1.3 Duties and taxes account for the remaining part of local and regional authority income. They come under each authority’s own powers but represent only 1-2% of all income, except in certain cities such as Riga or Jurmala. There is therefore absurdly little financial room for manoeuvre.

The current tax arrangements seem only partly to correspond to Article 9.3 of the European Charter of Local Self-Government and to the concept of "adequate financial resources of their own".

3.2 Access to the national capital market. Since 1995, central government has gradually reduced access by local and regional authorities to private capital markets. They can now borrow only via the Treasury Department of the Ministry of Finance, which claims that it can offer preferential interest rates and that local authorities are not sufficiently solvent.

This makes it completely impossible for authorities to make investments of their own, in contravention of Article 9.8 of the European Charter of Local Self-Government, which, moreover, Latvia has not ratified.

3.3 Financial equalisation

Since 1995 there has been a system of financial equalisation which is both vertical (from the state to the local authorities) and horizontal (between authorities). However, it is unsatisfactory for two reasons:

- the system is unstable since it applies only to one financial year at a time

- there are very few authorities from which resources are diverted to the less well-off ones; by and large this concerns only Riga and Ventspils.

It has to be emphasised that the principle of financial equalisation tallies with the requirements of Article 9.5 of the Charter on the financial protection of local authorities through "the institution of financial equalisation procedures ...". It nevertheless remains for the current system to be made permanent, which the legislative plans to do in 1998. It would also be appropriate to lay down in law the weight of each of the equalisation criteria, taking account of the internal diversity of the country, in order to achieve a re-balancing between countryside and urban areas.

3.4 The financial situation of local and regional authorities in the state budget

The vast majority of local and regional authorities are unable to undertake any large-scale projects, since overall the proportion of their budget allocated to investment rarely exceeds 1-2% of total financial resources.

Discussion is also on the way about the weight of local and regional finances in the state budget and about changes in this since 1994. In the Association's view, the portion of national revenue allocated to local and regional authorities fell from 20% to 25% in 1992 and 1995 and the 1997 figure was 16.7%. This resulted from both the state's announced wish drastically to reduce the budget deficit and an increase in the duties devolving to the authorities. In addition to their tasks in accordance with the law, the state delegated tasks to them without the corresponding funds. The Latvian authorities take the view that this cannot be described as a budget reduction: the Ministry of Finance and the officials of the Parliamentary Committee on Local Self-Government state that the figure was 22.6% for 1998. They explained the difference compared to the figures put forward by the Association and others to whom the delegation spoke by a confirmed decrease in the package of allocations paid to local authorities, for which there was ample compensation in the form of an increase in the amount of the specific subsidies paid by the state to these authorities.

What is more, compared to 1994, a year when authorities were fully dependent in the budgetary sphere, the situation has improved.

The rapporteurs are aware of the serious difficulties experienced by local authorities in performing their duties without having at their disposal adequate financial resources. It nevertheless takes the view that central government currently faces significant problems relating to the socio-economic development of the country and is unable to meet the requests of local authorities until such time as local and regional government is reformed. With this in mind, it is suggested that Latvia's parliamentary and government authorities base local and regional government reform on the need to consolidate the political, administrative and financial independence of local and regional authorities and to apply the subsidiarity principle as set out in Article 4.3 of the European Charter of Local Self-Government.

4. Local and regional government reform

Latvia has two categories in this sphere: local authorities and regional authorities:

A. Local authorities

- municipalities (pagast), of which there are 491, with a population between 400 and 3,000. Municipalities are also known as “rural districts”;

- Cities, of which there are 70;

- Major cities or urban communities, of which there are seven (Riga, Daugavpils, Liepaja, Ventspils, Jurmala, Rezekne and Jelgava). Among these, Riga, the capital, accounts for 36% of the total population (2.5 million);

B. Regional authorities

- Regions (rajons, of which there are 26) with the exception of the seven urban communities, each includes pagasts and cities.

4.1 A paper entitled “The plan for regional development in Latvia” which was approved by the Cabinet in December 1996 and is expected to lead to an outline-law, is the basis for a reform initiated by the Ministry of Regional Development. Its main aim is to reduce the number of regions. At present there are two options: (i) five regions based on criteria set out in the above-mentioned paper and on the country’s historical provinces and (ii) eight regions centred on the major cities. Broadly stated, the reasons given for this reform are as follows:

- The present division of the regions was inherited from the first decentralisation, of 1926, a process intensified during the period of Soviet occupation.

- Larger regional entities would make dialogue with the state much easier and reduce the overlapping of functions between municipalities and regions which are currently too small.

The criteria on which the 1996 paper bases its proposals for defining the future regions are geography, former economic and trade relations, and “national interests” so as to keep the concept of border and coastal areas.

- The size of the future regions would be determined in such a way as to give an impetus to regional development policy aimed at reducing internal disparities.

The Ministry is offering financial encouragement to any proposal along these lines where the initiative comes from grass-roots level. Accordingly, five regions which at present form the eastern province of Latgale, have begun discussing the nature of the future region.

4.2 However, this reform cannot be dissociated from other projects affecting the regions and municipalities.

4.3 The regions. The holding of the regional elections scheduled for March 1997 was cancelled by parliament, at the suggestion of the previous government. An amendment to the 1994 law adopted on 25 November 1997 stipulates that the regions are to be represented by the elected representatives of the municipalities, who in turn appoint their own chair. Although this indirect suffrage fails to satisfy the requirements of Article 3 of the Charter, it may be regarded as a temporary compromise which is acceptable in the light of the situation existing hitherto.

4.4 The municipalities. Various governments have stated their wish to reduce the number of municipalities. The official reason put forward is that their small populations, meagre financial resources, and fragmentation make it impossible for them to provide satisfactory services to the population and for the State to preserve its links with each one of them. The likely future number is about 200 new municipal authorities.

4.5 Work is currently in progress at the Ministry for the Environment and Regional Development on a bill to be submitted to the Cabinet early in April 1998, prior to which it will have been the subject of consultations with the National Association of Local Authorities, which has not yet officially had the text referred to it. The general philosophy underlying the proposed reform is one of an integration of basic local authorities ("pagasts" and districts) on the basis of the criteria of sustainable development, stability of basic income, existing infrastructure, geographical and historical unity and ability to take action. It is proposed that the process take place in two stages:

- prior to 1 January 2000, the municipalities will voluntarily start to consider the shape of the new municipalities and to put forward proposals;

- between 2000 and March 2001, there will be a finalisation stage culminating in adoption of the reform by parliament. It is during this period that cases of municipalities which have refused the co-operation-integration process or failed to draw up a plan will be dealt with. A co-ordinating committee comprising representatives of the state, parliament and the National Association of Local Authorities will rule on these disputed cases, and its proposals will be included in the reform project.

4.6 Some municipalities have taken advantage of the possibilities offered by the law on local self-government and Article 10 of the Charter to set up inter-municipal co-operation machinery to carry out tasks of common interest. Through its meetings in situ with local authorities, the delegation was able to identify two distinct types of co-operation:

- Recent experiments with the creation of “novads” (“local communities”), following the example of Kanadva in south-west Latvia. This is a form of integrated co-operation (or amalgamation). Three municipalities have decided to work together around a small town to carry out tasks in the field of education and social work. This area, with a population of some 9000, is represented by a chair and a council made up of all the municipal councillors concerned. It has its own budget. The decision to implement this form of integrated co-operation was taken by two municipal councils and the project was approved in the third municipality following a yes-vote in a referendum on the issue.

- A flexible approach to co-operation-participation. The underlying concept is that inter-municipal co-operation develops over time. This is the case of eight municipalities, including the town of Cesis (20,000 inhabitants), which have launched a programme of inter-municipal action on education, road infrastructure and water supply. Each member municipality keeps its own institutions and co-funds each inter-municipal project out of its own budget.

4.7 The Ministry for the Environment and Regional Development has a clear preference for the first approach, which it puts forward as the one to follow. The National Association, however, is very wary about any project for inter-municipal groupings and would prefer a more flexible form of co-operation, preserving the municipalities as they currently exist. It seems at this stage that the start of work on local and regional government reform, the prior consultation of the National Association of Local Authorities and the consultation and proposal stage for basic authorities for which the outline law provides do comply with the requirement for consultation set out in Articles 4.6 (consultation on "all matters which concern them directly") and 5 (consultation in respect of "changes in local authority boundaries"). The rapporteurs propose that this general movement to restructure municipalities be based on the recent law on local referendums so as to comply with and establish the right of consultation of the populations concerned which Articles 5 and 4.6 of the European Charter of Local Self-Government provide.

5. Local democracy and citizenship

According to the preamble to the European Charter of Local Self-Government, "the right of citizens to participate in the conduct of public affairs is one of the democratic principles that are shared" by the members of the Council of Europe. Yet Latvia faces the problem of the democratic integration of a large portion of its population which comprises "non-citizens".

5.1 Over half a century of Soviet annexation, Latvia became a country of immigration: people of Latvian stock made up 56.75 of the total population in 1997, while the minority, mainly comprising Russians, Belarussians and Ukranians, comprised 37%. In addition, the population is divided between "citizens" and "non-citizens". In 1997, some 675,000 people in the total population of 2,500,000 were residents without citizenship, ie 27%. Sixty-six per cent of all "non-citizens" were Russians, who were the most numerous in six of the eight major cities.

The question of ethnic groups seems to coincide with that of citizenship.

Residents other than Latvians applying for naturalisation must have lived in Latvia since May 1990 for a minimum of five years and must pass an examination in Latvian language, history and institutions. These arrangements are made even stricter by an age group system: only "non-citizens" aged under 30 are at present allowed to apply for naturalisation. In practice, various studies and polls have revealed a lack of interest among young "non-citizens" in Latvian citizenship. A recent OSCE survey showed only 6% of them to have submitted an application. The reasons for this disaffection are many: there is little enthusiasm for the youth of Latvian, those who are not Latvian citizens are exempt from military service, and Russian passports enabling them to travel to Russia are issued, with a validity which is supposed to cease on 31 March 1998. In spite of these various obstacles, virtually all of them wish to remain in Latvia, where they live harmoniously with the Latvian community.

5.2 In pursuance of the law, those who held Latvian citizenship in June 1940, when the Soviet army invaded the Baltic Republic, together with their descendants are Latvian citizens. The acquisition of Latvian citizenship nevertheless remains a complex process: at the age of 16, children of mixed marriages have to opt for the ethnic group of one of the parents.

5.3 The present issue of citizenship in Latvia is not without its effects on the exercise of local democracy: what place is to be granted to these residents in the context of the future reforms of local and regional government? Some elected local representatives are endeavouring to reintegrate this category of people in the local, social and political context through consultation bodies or through the recognition of representative associations.

In certain towns, such as Daugavpils, Ventspils and Dobele, where the percentage of "non-citizens" is above 25% of the municipal population, consultative committees (Committees of Aliens) have been set up to deal with the problems peculiar to "non-citizens" residents.

Lastly, a recently adopted law on local referendums provides for "non-citizens" to participate where the submission of the issues to referendum is optional.

The delegation takes the view that these initiatives are one step forward towards greater integration of "non-citizens" in Latvian society, and its suggests that more progress be made towards the future European Convention on the Participation of Foreigners in Local Public Life".

IV. CONCLUSION

For any progress to be made in the area of local democracy in Latvia, there has to be a stable political system capable of initiating structural reforms in a post-transition phase. However, from this point of view, the current institutions are generally weak on account of:

- The lack of a stable parliamentary majority and the fragmentation of political parties. Any reform of the constitution has to be passed by a special majority which is very difficult to obtain. For example, the parliamentary committee responsible for local authorities is made up of eleven members from five different groups within the parliamentary majority, plus three members of the opposition..

- There is no strong representation of local authorities and their association in national politics, because of strict rules on the holding of more than one elected office and the limited part played by parties in local politics. The CLRAE delegation noted during its two visits that the majority of local councillors had been put forward as candidates in the local elections by informal groups of citizens. Nationally, only 16% of municipal councillors have been elected on a party ticket.

- The annual agreement for which the local government legislation of 1994 provides between the Association and the previous government did not enable stable agreements to be reached between 1995 and 1997. For the local authorities, this is the main opportunity for dialogue and the most important means of exerting pressure on central government.

- Relations have improved considerably since the appointment of a new Prime Minister and the negotiations on the annual agreement might reach a positive conclusion. However, the CLRAE delegation has the impression that for the time being any progress in local and regional democracy still depends upon the goodwill of the government in power.



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