Toward a Transparent, Inclusive, and Accountable Recovery in Ukraine

Local democracy is the foundation of societal resilience in Ukraine, building on multi-stakeholder engagement and a very strong community-centered approach. This local engagement in the planning and implementation of the recovery process ensures the sustainability of all efforts. Civic actors and independent media play a key role in upholding transparency, accountability, and the rule of law in any society.

Ukraine is largely engaged in a top-down recovery process at the moment, with often insufficient engagement of local actors and vertical communication mechanisms. Structured dialogue processes are not always in place, and civic actors or private-sector representatives are mostly informed but not engaged in a meaningful way in the strategic planning process.

The EU holds two key levers for promoting local participation in the recovery of Ukraine: its conditionality tied to decentralization and the fact that its accession criteria demand local implementation of reforms. The empowerment of local actors comes from participation in the multi-level governance and decision-making process as well as from direct access to funding. The EU can thus continue to empower local actors through targeted technical assistance, simplified access to funding and the strategic planning process, and a transparent monitoring framework with local impact indicators. Through the financial support mechanisms put forward by the EU, local actors—the public sector, businesses, and civic actors—have the opportunity to continue to play an important role in their communities, ensuring a quick recovery and an enduring reconstruction process.

Ukrainian civil society is very mature and diverse, including nongovernmental organizations, independent media, youth, the diaspora, and informal networks. However, in order for it to be better represented in the recovery decision-making process, a more coordinated approach should be developed, building toward a collective civil society voice reaching decision-makers at the national and international levels. Common interests for the entire spectrum of civic actors in Ukraine include an emphasis on local ownership; upholding accountability mechanisms and democratic practice; and more flexible, agile, and simplified funding structures.

Building on their experience during the war, Ukraine’s civic actors have become more engaged in partnerships with local governments and even the private sector. These trilateral partnerships are key not just to having a larger positive impact in communities, but also to insure the sustainability of civic actors in a context in which funding is much scarcer. Complex situations require complex solutions in terms of governance and funding.

The balance of power between the different layers of Ukraine’s public administration should continue and decentralization should deepen, avoiding a rollback in the context of war and martial law. Local capacity varies, with many small communities struggling to participate in the strategic planning process. However, as a whole, and especially through local governments’ associations, the prioritization of investments and the reform alignment process should include a strong representation of local governments. There are legislative and structural gaps that impede local representation: for example, new laws on agglomeration and inter-municipal cooperation came into force in June, but they lack accompanying financial and institutional mechanisms.

Ukraine thus needs a stable, transparent mechanism able to connect local needs to national and EU funding flows in a dynamic manner that reflects current needs and capabilities.

The design of the Public Investment Management (PIM) system is critical in this regard, as it will not only ensure the mechanism for representing local needs and priorities, but also distribute the majority of financial resources involved in the recovery and reconstruction process to all local beneficiaries: the public sector, the private sector, and civil society. Local actors remain marginalized in shaping financial instruments like the PIM system and the EU’s Ukraine Facility. Decision-making power is centralized while local authorities lack a structured dialogue process to develop and submit initiatives or to shape project pipelines. According to some local estimates, as much as 70% of current investment funding covers mature pre-war projects, creating barriers for new, local initiatives. Ukraine thus needs a stable, transparent mechanism able to connect local needs to national and EU funding flows in a dynamic manner that reflects current needs and capabilities. This is a way to involve the variety of local actors, beyond public authorities, given the prevalence of new funding models (for example, crowdfunding or private partnerships) and cost-sharing strategies.

The following recommendations will advance the contribution of civic actors and local actors more broadly in ensuring a transparent, inclusive, and accountable recovery process for Ukraine.

• Create a national platform for stakeholder consultation across all levels on reconstruction and investment. Establish permanent advisory mechanisms between the central and local levels for PIM and Ukraine Facility coordination.
• Develop feedback-loop mechanisms to evaluate and adjust project planning and delivery. Develop a real-time feedback mechanism for evaluating the impact of centrally approved projects and their alignment with local needs.
• Support capacity-building projects for youth, civic actors, and local authorities. Boost technical assistance (for example, under the U-LEAD project and the technical assistance available under Pillar 3 of the Ukraine Facility) to help municipalities access funding from the EU and the international financial institutions.
• Encourage diversified funding models for civil society initiatives, including partnerships between civil society organizations and local regional authorities and decentralized Ukraine-EU partnerships (for example, following the local democracy agencies model).
• Strengthen sub-regional platforms (at the level of district/oblast councils) for the collection of ideas, technical guidance, and advocacy.
• Promote direct EU support to municipalities through micro-grants, technical assistance hubs, and simplified small grants.

Further support civil society and independent media, including at the local level, to facilitate cooperation with local authorities for developing and strengthening the capacities for local recovery, ensuring the transparent and accountable monitoring of reconstruction.

Iryna Khomiak is program officer, Ukraine: Relief, Resilience, Recovery at the German Marshall Fund of the United States.

Khrystyna Kvartsiana is country coordinator for Ukraine at ALDA—European Association for Local Democracy and a ReThink.CEE Fellow 2022 of the German Marshall Fund of the United States.

Clara Volintiru is regional director, Black Sea at the German Marshall Fund of the United States.