Oleksii Kuleba, Deputy Prime Minister for Recovery and Minister for Development of Communities and Territories: “Every financial decision will be considered with close attention. But I am fully aware of this”

After the resignation of Oleksandr Kubrakov, the key ministry during the war for the development of communities, territories and infrastructure (Ministry for Development) functioned for four months without a minister. Oleksii Kuleba, appointed to the position on September 5, was initially in the top three of Bankova Street's shortlist. However, as a result of long perturbations, the main contender, namely the former head of the Joint-Stock Company "National Joint-Stock Company "Naftogaz of Ukraine" Oleksii Chernyshov, went to unite Ukrainians in the Ministry of National Unity with still unclear powers, and Oleksii Kuleba, in the status of deputy prime minister and minister, received at his disposal the billion-dollar resources of the Ministry of Development of Communities and Territories of Ukraine.

The scope of powers of the deputy prime minister is very large in its scope (the ministry was never divided), as is the scope of challenges that he faces, including ensuring military logistics, protecting energy facilities and building global infrastructure projects that have already begun.

All the pre-election threads of the current government converge in this ministry. It is Oleksii Kuleba who will have to shape the center's policy in relation to local authorities: the tension between them against the backdrop of the budget war has reached its peak. Ahead of us lies the introduction of state supervision over local government bodies (LGBs), under which there is a layer of unresolved contradictions about the advisability of the widespread introduction of military administrations in communities. The problems of restoration are extremely urgent, under which there is still a mine of the controversial law No. 5655 on urban development reform, left by predecessors. Oleksii Kuleba will have to not only cope with the difficulties, but also publicly demonstrate the side he chose when agreeing to take this high post. Who is he in fact, a statesman making his own decisions or a voiceless political protégé of political leaders on Bankova Street? What is his personal limit of compromise in solving this dilemma? There are enough speculations about his role as the key resource hands of political leaders on Bankova Street. As well as personal responsibility for the management of so many state spheres. In the symbolic 100 days since his appointment, the Deputy Prime Minister has managed to form a team, enter the context, give a number of public signals during the formation of the budget, and also agree to this direct and long conversation.

In the first part of the interview with Deputy Prime Minister – Minister of Community, Territory and Infrastructure Development Oleksii Kuleba, we will talk about the subjectivity of the Cabinet of Ministers of Ukraine, the key challenges of the ministry. In addition, he will also talk about building communication with local authorities, budget schemes, regional policy and housing and communal services. Yes, yes, as it turns out, they still remember him! In the second part of the interview, he will recall corruption in the construction sector, favorite contractors of infrastructure projects and problems of restoration.

On the agency of the Cabinet of Ministers of Ukraine, the division of the ministry and priorities

— Oleksii Volodymyrovych, five years ago you were responsible for the improvement of Kyiv, and now you head the largest ministry in the government, through which huge sums of money will go, including for post-war restoration. How do you feel about this mind-blowing career growth?

—  I started my career as a department director of the Kyiv city improvement department in 2019. In 2020, I became the first deputy head of the Kyiv City State Administration, Vitalii Klychko. A year later, literally two weeks before the full-scale invasion, I was appointed head of the Kyiv Regional Administration. We spoke for the first time during this period.

After that, I took the position of deputy head of the Presidential Office for regional policy. And now this is a ministry that is directly related to regional policy. So, I was moving up the career ladder.

— And how do you feel, knowing that at this stage in 2025 you will have to master 90 billion (including the budget of the Agency for the Restoration of Ukraine) of state funds?

— Any personnel position where you have to make decisions related to the distribution of resources is certainly a risk. Each of your decisions will be considered with close attention, and there will always be a reaction to it, including a negative one. Already because society is in a state of war and daily losses. I am fully aware of this.

— How did you get appointed to this position?

— The first conversation took place with Prime Minister Denys Shmyhal, who proposed that I join the government. I said that this was a great responsibility for me and that I needed to talk to my immediate superiors, namely, the head of the presidential office and, of course, the president of the country.

— And what tasks did the president of the country set for you?

— The prime minister also set tasks for me.

— Prime Minister Shmyhal heads a long-standing non-subjective authority, which is led by the president of the country with the help of the head of his office.

— Inna, I understand that we observe what is happening in power from different platforms, and what one sees may not be available to another. Therefore, for the sake of balance, I will allow myself to disagree with you. No changes have been made to the Constitution of the country. We have a president, who is also the Supreme Commander-in-Chief, due to the fact that a full-scale invasion has begun and martial law has been introduced. All other authorities, based on these features, continue to bear their responsibility. And it is worth noting that the Cabinet of Ministers of Ukraine is no exception here.

— So, this is the main irony of what is happening with our system of power, because it is worth noting that the Cabinet of Ministers of Ukraine, according to the Constitution of our country, is responsible for decisions that undergo complete filtration and are not responsible for anything significant to the political leaders on Bankova Street.

— Let's not substitute concepts. Indeed, in the hands of the Supreme Commander-in-Chief of Ukraine, a warring state, there is a large concentration of power energy. Since he primarily makes decisions related to war and international activities. These are the two main vectors that exist in the office of the president of the country. I was inside this system and I am speaking about what I know. At the same time, the Office of the President of Ukraine did not become a military office, did not concentrate any additional excessive powers.

As for the Cabinet of Ministers of Ukraine. The Prime Minister has not changed for more than four years. You can have different attitudes to this, but it cannot be denied that a solid structure has been formed within the Cabinet of Ministers of Ukraine and its apparatus. The government works like clockwork and makes management decisions at least twice a week, eight times a month and 96 times a year. There are transcripts of these specific decisions that we can easily retrieve. As well as regulatory acts that the Cabinet of Ministers of Ukraine submits to the Verkhovna Rada of Ukraine. The parliament adopted about 3.8 thousand legislative acts at the suggestion of the Cabinet of Ministers of Ukraine.

— Well, here you and I can accidentally make an incorrect conclusion about the non-subjectivity of the parliament of Ukraine. Because all these statistics were accumulated against the background of the complete lack of accountability of the Cabinet of Ministers to the Verkhovna Rada. But the full accountability of Bankova Street.

— There is a war going on in our country now, and it requires quick decisions. We see how our enemies have reformatted themselves. The process of consultations between the government and the Verkhovna Rada of Ukraine has improved. Of course, there were and are imbalances, but they can be overcome. Pensions have been paid in the country for almost three years of the war. It is worth noting that we have not had a single delay in state and social payments. Moreover, this volume is increasing. It is clear that a significant part of this is the help of partners, but without our joint internal work, it would not have happened. And we cannot help but talk about this, otherwise we do not fully describe the picture that is happening in the country. In the same way, we cannot keep silent about the problems.

— The fact that the Prime Minister of Ukraine remained silent when Bankova Street sent your predecessor Oleksandr Kubrakov into retirement by the hands of people’s deputies is a problem?

— I think it is better to ask the Prime Minister of Ukraine himself about this.

— And who should I ask about the division of the ministry? After all, Oleksandr Kubrakov, whom we are not assessing his success in office now, was fired under the pretext of the need to split the Ministry for the Reintegration of Temporarily Occupied Territories.

— Indeed, initially there was an idea to split the ministry. But then everyone agreed that at this stage of the war it is quite difficult to split institutions. I am not sure that we will be able to explain to people the need to create another ministry. Note that even the Ministry of National Unity of Ukraine was created on the basis of the Ministry for the Reintegration of Temporarily Occupied Territories.

— Returning to the tasks that were set before you. Outline the key ones literally with a dotted line.

— In terms of restoration, all the projects that have been started must be completed. The main task is to optimize expenses. All costs and estimates are currently being analyzed. But it is worth noting that where housing projects are concerned, we will maintain all social standards. Construction of new housing for internally displaced persons. If we talk about infrastructure, transport and logistics, then here, in addition to traditional tasks, there is a sea corridor. It is also worth noting that the Danube region has become a matter of national security. In regional development, the main emphasis is on frontline territories. It is necessary to formulate a policy that will allow people who have been living in conditions of intense military action for more than two and a half years to make their lives easier.

The war has created very large disproportions in the development of regions and communities, and this is a very big challenge for the state. We must also learn to implement and use the best practices of regional development, from planning activities to project implementation. Another important issue is the decentralization of energy supply, this is about the strategic development of our country.

On military administrations' pressure on mayors, privatization of public utilities and introduction of supervision over local government bodies

— Are you going to adjust your policy towards local government bodies? Last week, acting mayor of Chernihiv Oleksandr Lomako announced his resignation, accusing the head of the military administration Dmytryi Bryzhynskyi of pressuring him. According to Oleksandr Lomako, there was a threat of stopping food in kindergartens, blocking the accounts of the largest hospital and stopping transport. The head of the military administrations of Ukraine simply blocked payment orders, the right to sign which the court transferred to him.

— At the time of our conversation, the local government body, namely the Chernihiv City Council, is working. In order to accept the resignation, a session must be convened. As for any other statements by Oleksandr Lomako, it is better to take comments from the head of the city's military administration. And it is also better to take them from Oleksandr Lomako himself. Our country has a long-standing political tradition: to explain the lack of success in its activities by political pressure.

However, in your opinion, what should Chernihiv spend its budget on now? On the development of public utilities or on the defense of the city? For me, the answer is obvious. This is the essence of the conflict. In my understanding, the military administration in Chernihiv should be engaged in the defense of Chernihiv 24/7. I would like Chernihiv to have more mobile groups at the expense of the community that would shoot down Iranian-made Shahed 136 missiles, more electronic warfare equipment, and so on. I can say the same about the city of Kyiv, whose mayor limits himself to presenting the next batch of DJI Mavic, which is a series of unmanned aerial vehicles, bought with the money of the capital's taxpayers.

In fact, communities have something to buy and something to spend their money on, based on the martial law. The mayor and the head of the military administration are not enemies. They just have different tasks and areas of responsibility, but their duty is to find a compromise. Believe me, the defense demand is huge. It is not worth sitting and waiting for some general to come to you and tell you what to do, neither Chernihiv, nor Sumy, nor Kharkov, nor Zaporizhia, nor Kherson.

For example, the head of the Zaporizhia Regional Military Administration Ivan Fedorov, the former mayor of occupied Melitopol, regularly gives part of his budget to the war. And he does this not in an emergency, when they started talking about the Russian military concentrating reserves near the city, but from the moment of his appointment.

— The law that would ensure the transparency of the activities of the heads of local and regional military administrations has not been adopted. And this is not only a problem for Chernihiv, it is a trend. Military administrations have been introduced in 185 communities. It is worth noting that this was often done without any criteria. Thus, 257 communities are without heads. Without a decision of the Verkhovna Rada of Ukraine, as required by Article 10 of the law on the legal regime of martial law, military administrations throughout the country take over the powers of local government bodies. Land, budget, transport, education... In the same Chernihiv, the head of the military administration, by his order, allocated land plots to a developer who heads the Servants of the People faction in the city council. Here is the document.

— I really appreciate your critical view, but let me give you just one example. There is a beautiful town called Netishyn in the Khmelnytskyi region, where a military administration has been introduced. The town is known for being located next to one of the largest critical infrastructure facilities. At a meeting of one of the Headquarters, information from the Main Directorate of Intelligence of the Ministry of Defence of Ukraine was announced and a decision was made to immediately establish a military administration there. It is also worth noting that this position was personally lobbied by the Commander-in-Chief at that time, Valerii Zaluzhnyi. The mayor was promptly informed about the situation, we talked with him for a long time. So what? He still walks around and talks about the seizure of power, the redistribution of land, etc. Including at international forums.

As for other military administrations, there are criteria and principles by which they are introduced. I would very much like for us to have a common balanced state position when speaking on this topic. I would like it to be so because these theses are also discussed with our international partners.

—  And still clarify your opinion about the review of the powers of local government bodies by the heads of military administrations.

—  There is a law on martial law, which clearly and unambiguously regulates this issue.

—  Returning to the communal enterprises of the communities. Bill No. 6013, which is lobbied by Speaker Ruslan Stefanchuk, provides for their complete privatization. However, the heating crisis in Kryvyi Rih arose due to the fact that the city lost control over the supplier of thermal energy. Has anyone calculated the possible risks for communities from transferring public utilities to private owners? In addition, did you participate in the discussion of the bill?

—  In this case, we must speak exclusively in the language of numbers. And here I will have very difficult questions for any mayor. And how much money did you spend on modernizing these public utilities? How many kilometers of pipes did you specifically replace? In addition, it is worth noting that the modernization was not carried out. It was not carried out either in the Municipal Enterprises of Water Supply and Sewerage, or in the Municipal Enterprise Kyivteploenergo, which is one of the largest producers of heat and electric energy in Europe, or in the Joint-Stock Company "National Joint-Stock Company Naftogaz of Ukraine", or anywhere at all. And I am not afraid to use the expressions I want when we held the last meeting. But this money was included in the tariffs.

— But we do not forget about the 45 billion unpaid by the state of the difference in tariffs of local government bodies? After the conclusion of the memorandum, local authorities have been holding back tariff growth for several years, and the government does not compensate for the difference.

In addition, 12 billion have been allocated for the first time next year.

—  This is a separate side of the problem and I do not deny it. But I insist that this is a two-way street. Local government bodies, regional councils must be responsible for public utilities. The war has shown what constant theft and abuse lead to.

At the same time, we need to clearly understand what we are replacing them with. If the bet is that a foreign investor will come, invest money in them and modernize the networks, the answer is obvious. If we are going for dubious local private initiatives, probably not. We have already passed through private water utilities and the like many times. The result is zero.

—  So, you don't support the bill in this form? Especially since some see this as a possible lever of political pressure from the authorities on local government bodies. A frequent person who is easy to control has turned off the heat and the mayor has no rating.

— We had quite a lengthy discussion on this matter, and representatives of the Ministry for Reintegration of the Temporarily Occupied Territories gave their comments on this matter. On the one hand, if we reason from the position of the mayor, who is responsible for the heating season, I probably would not be delighted with such an initiative. Because we need to clearly understand what local government is responsible for, and what someone else is responsible for. On the other hand, this is a question of the responsibility of mayors. But the key thing is that there will be a five-year delay before the implementation of this initiative. This means that everyone has time.

(Here it is worth clarifying that the five-year delay is only for existing communal enterprises, which can be transferred to the status of an Open Joint-Stock Company during this time. But not for new ones. From the moment this law comes into force, new enterprises will not be allowed to be created, and this primarily concerns water utilities, heat and power companies and hospitals. During a war, this is a necessary tool for a prompt response to the situation. They blocked accounts, bombed the enterprise and quickly created a new one. – I.V.)

— In order for the system of checks and balances to work in the public administration system, the entire law enforcement system must function, and not just the National Anti-Corruption Bureau of Ukraine and the Specialized Anti-Corruption Prosecutor's Office. In addition, it is necessary to introduce state supervision over the activities of local government bodies. However, it can already be predicted that the new version of bill No. 4298 will not pass through parliament without difficulties. Local authorities, in particular the Association of Ukrainian Cities (AUC), categorically insist that it is necessary to clearly divide powers between central and local authorities. What is your position?

— I hold quite a lot of consultations with heads of communities, district and regional administrations. Unfortunately, local authorities very often simplify this model, perceiving the introduction of the supervision institute as another law enforcement agency. However, we are talking about a complete change in the architecture of government. At the same time, of course, before introducing supervision by the state, it is necessary to clearly delineate powers between the central and local authorities so that everyone understands who is responsible for what. Moreover, in the Ukraine Facility Plan, this is our direct obligation. There are many other important issues in this topic, concerning, for example, the timing of the return of local self-government in the de-occupied territories.

That is, we are talking about a large systemic work that should include several bills that will ensure this new architecture of government.

— I can explain why mayors perceive prefectures as another supervisory body. Local government bodies insist that the authors of the bill return to its original version and remove the provision on the possibility of duplicating control functions between the head of the regional state administration/prefect and territorial executive bodies. And there are 26 of them! If the quality of food in schools is controlled by the State Service for Consumer Protection, then why should the prefect, who coordinates the activities of this service itself, control it? In addition, prefects are given the authority to interfere in the personnel and economic policies of communities.

—  We are having a very high-quality discussion. But we still understand its controversial nature.

—  Why is that?

—  Because you are a liberal and a democrat at heart.

—  And you are an authoritarian?

—  No, I am simply speaking in the context of the war. Do you understand the difference? Therefore, no matter how much we want to make decisions emotionally and fairly, we must always remember that there is a war. And therefore, we need to either spread it all out over time with certain delays, or make decisions, understanding that during a war it simply will not work. Or, what's worse, it won't work for our country.

— Are you talking about the regulatory authorities or in general?

— I'm talking about the philosophy of this bill in general. That is, when the mayor says that this is a new regulatory authority for him, it means that he hasn't read this bill and simply doesn't understand the depth of the changes he is proposing. It's worth noting that Bill No. 4298 doesn't have a single position that would limit the powers of local authorities. On the contrary, the prefect will have much more risks, because he can only act through the court.

In addition, we must understand that we cannot blindly rely on the practices of our European partners. We have our own peculiarities that must be taken into account. Because it is not the Italians or the French who will live here. We will then have to find a common language among ourselves, the court, and so on.

— I still don't understand what we are doing. Are we making the processes of separating powers and establishing state supervision parallel or separating them in time? Are we removing 26 regulatory authorities or leaving them? Do we give prefects the right to interfere in the economic activities of communities or not? It is worth noting that the People love specifics.

—  You are asking the wrong question. The Ministry of Development of Communities and Territories of Ukraine does not adopt laws, but prepares proposals that are then submitted to the Cabinet of Ministers of Ukraine. Supervision and the division of powers have different deadlines: if we must establish supervision in the first quarter of 2025, then we need to distribute powers in the first quarter of 2026. Of course, this movement will be coordinated among themselves, as far as possible and will be useful for the state and local government bodies.

About the budget war with local government bodies, the new equalization system and the social economy of the Cabinet of Ministers of Ukraine

—  On the eve of the vote on the 2025 state budget, 68 people's deputies approached you with a call to refuse the withdrawal of community funds for the state budget. That is, the so-called reverse subsidy. At the same time, you had an off-the-record meeting, i.e. one in which there is an agreement between a journalist and a person to whom the media turns for information that what is said in the future will not be published with reference to this hero or newsmaker with the heads of associations of local government bodies, at which the Association of Ukrainian Cities (AUC) also spoke out against the withdrawal of reverse. You did not support this position. Why is this so?

—  Of 1,470 communities, 200 are occupied. Over the year, the growth of community incomes across the country has grown by 15% on average. But this does not mean that there is growth in every community. There has been a terrible disproportion. Why is this so? Because economic activity is determined by several factors, the key one of which is the relocation of enterprises. It is clear that now businesses are leaving the frontline territories, which are suffering the most. Including these territories, they also suffer economically. This is the general picture across the country.

What was voted in the budget? Firstly, the communities were left with 64% of the Personal Income Tax, including the target 4%, which was also fought for. They were left to the communities to get through the heating season. In monetary terms, this is no less than 13 billion hryvnia. It is worth recalling that this story is more than two years old and not all communities always use this money to get through the heating season. Secondly, the reverse in 2025 will not affect only frontline communities. It is worth clarifying here. The system of equalizing the financial capabilities of local budgets, in effect since 2014, is based on the tax capacity index (TCI). This index reflects how much the revenues from the personal income tax in the community per capita differ from the national average. If the tax capacity index is below 0.9, the community receives a subsidy covering 80% of the deficit. With a taxability index from 0.9 to 1.1, no subsidy is provided. If the taxability index is higher than 1.1, the community must transfer 50% of the excess to the state budget. It is worth noting that this is a reverse subsidy.

But I am convinced that the reverse subsidy system has outlived its usefulness. It is not about justice. The mayor of any city always understands that he has excess reverse. When I was the head of the regional state administration, I learned this lesson very well. And it was taught to me by one of the very famous mayors of a frontline community. He came to me and said: “I need to help the neighboring community and I want to transfer 80 million UAH to such and such a specific project.”

In the end, we agreed on everything, and then I find out from my financiers that he simply had excess reverse. And so that it is not confiscated, the mayor urgently needs to redirect the money somewhere. All large cities have a similar story. Why is this so? Because all the nearby businesses are registered there. They are the ones who start paying taxes and making the city richer. This is good, on the one hand. But on the other hand, what have the cities themselves done for this? Have they created any added value? Or any additional conditions? I am definitely not against such communities and their growth. But I am convinced that we need to completely change the equalization system. And this is my first challenge in 2025.

— And the second?

— Creating community solvency coefficients. We must methodologically explain what a wealthy community is, what we need to strive for in order to become a wealthy community. At the same time, it is important to clearly outline the incentives. Because now, unfortunately, the system looks like an unfair redistribution of something to who knows where.

— The trick is that, according to the law, communities could only spend 12 billion in reverse on social programs, that is, assistance to internally displaced persons and other things. That is, on people, and not on capital investments. And now this money will remain with you, and it can be spent on bridges, roads, etc., that is, on construction, where billions are usually buried uncontrollably. Moreover, COVID killed the "social economy" in parliament, but it remained in the government! Additional subsidies, investment projects for communities, subventions from the Ministry of Education and Science of Ukraine, the Ministry of Health of Ukraine and the Ministry for Development... All this will be manually distributed to communities by ministers, including you. By what criteria?

—  An interesting thesis, but unfortunately, it does not work.

—  Why is this so?

—  Because we are completely different branches of government. The Verkhovna Rada of Ukraine, distributing issues of social economy, was certainly involved in politics. A majoritarian people’s deputy comes, takes money for his district, for a school, for a hospital and brings it to this district. But neither Marchenko, nor Lisovyi, nor I, nor even Fedorov have a district! We are the highest executive body of power. What are our criteria for resource allocation? There are several main factors. The first, of course, is the appeal of communities and people's deputies. It is worth noting here that without the initiative of the community, we cannot make any decisions in principle.

—  So, the mayors are talking about the return of representatives of the interests and views of Mykola Azarov, when they were proactively knocking on the doors of ministries for weeks. About the 30% form of negotiated bribery? And about your contractor for the allocated money for the construction of the facility? These are all old working schemes. Moreover, this budget is called an election budget, where, allegedly, thanks to the "handbrake", Oleksii Kuleba will earn money for the elections of the ruling party or any of its new configurations. You can comment.

—  As for your statement that Oleksii Kuleba has become the main one, he will manage these schemes and will distribute some flows. What are we even talking about? In the register for the state program of assistance for owners of damaged and destroyed housing "eRecovery" there is a clear electronic queue, you can't get in there, you are automatically loaded and just as automatically thrown out when you go in for money. All the investment projects that we need to complete have undergone procedures, there is a huge debt load everywhere and we need to think about where to get additional funding for this. Of course, there are different people, there are scammers.

—  Well, at least this article for a billion hryvnia: a subvention from the state budget to local budgets for the implementation of projects within the framework of the Ukraine Recovery Program III. To whom and according to what criteria will the money go? I counted at least six similar articles. And also, the State Regional Development Fund, all of whose projects were approved back in 2020, and 32 billion were to be allocated for 2025. But the war changed everything. Will there be a new competition for the allocated billion, who will decide by what criteria these funds will be distributed and for what objects? The main signatories are you and the head of the relevant committee.

—  We can only talk in this format about the State Regional Development Fund. There will be a new government resolution regarding this Fund, as well as new transparent criteria. Regarding the subvention you mentioned, there is a clear understanding that all projects that are implemented in communities must first and foremost work within the framework of the strategy of this community. That is, projects are the implementation of the strategy. That's the way it should be.

This is the main and only approach that will be applied starting next year.

There is no money, no investment funds, all the money goes to the war and to priority development. The budget is protected for 2025 and partially for 2026, this is very good news. But we must find everything else within ourselves, optimize, redistribute, and so on. The main criterion for "manual control" is the needs of the frontline regions.

In the Odessa and Nikolaev regions, 30% of the harvest burned due to drought. It is urgently necessary to implement a melioration system, and this is the task of the state. This is a priority that I understand. The Ministry of Agrarian Policy and Food of Ukraine supports me, but I need to convince other colleagues in the government. The water supply in Mykolaiv is important, but the land reclamation in these areas is critical. If we don’t do it now, farmers won’t be able to sow next year, people will leave, and we will face depopulation.

The Russians and their allies are forming a geopolitical arc that includes Iran, Korea, Saudi Arabia. We are behind this arc. Inside the Russian Federation, they are creating buffer zones, such as Georgia, Ossetia, Transnistria, Chechnia. A buffer is a territory without energy, economic activity, democracy, passionaries, and creativity. Crime and violence reign there. In contrast, the arc is energy, economics, the military-industrial complex, big money. Our task is to preserve as many active territories as possible so as not to turn into a buffer zone. We cannot afford zones with low taxes and economic passivity, otherwise the whole country will face risks and lose investments and the opportunity to recover.

— In order not to become a buffer, we need growth poles. In addition, speaking about the system of equalization of community incomes, it is important to note that in European countries the state does not take away surplus funds from strong communities. The equalization system kills the motivation for development. In the process of equalization, money goes to weak communities according to the formula from the Ministry of Finance of Ukraine, and not from ministries, which excludes manual control and significantly reduces corruption and the size of the state apparatus.

—  It is difficult to compare our and European systems: they have a completely different historical experience and path of development of local self-government. Unlike Europe, we had a Soviet system that had nothing in common with modern local self-government as a separate branch of government. Decentralization, the transfer of tax powers to communities is already a big step forward, contributing to economic growth at the local level. However, the equalization system, as I have already said, requires optimization, especially in war conditions, when the gap between communities has increased. What kind of system will it be in the end? We don't know yet, we'll see how events develop.

The European Union sets before us many tasks and restrictions, which we must work with in the integration process. Unfortunately, not all global instruments can be used in our reality, which requires discussions with the European Union.

The war has radically changed our entire regional policy. Especially in frontline communities. We must focus on these territories. Now we are working with the Ministry of Economy of Ukraine so that loans and grants are allocated depending on the level of economic activity in different regions. It is worth noting that it is important that loans are given not only on an industry basis, but also taking into account the specifics of the regions. Where the economy is actively functioning, loans can be effective. In regions such as the Kherson region or Zaporizhia, providing loans is difficult, and here a transition to a grant basis is required.

The Ministry is already starting to give more grants, but for now they are distributed on an industry basis. It is important for me that when distributing funds, we take into account regional characteristics. It is necessary that support programs intersect according to the matrix principle: loans for those who can repay them, grants for those who find themselves in difficult circumstances

Note from the editor: Read the second part of the interview with Oleksii Kuleba, Deputy Prime Minister for Recovery and Minister for Development of Communities and Territories, tomorrow.

 

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