Dynamics of decentralization in Poltava region | Center for Political Analysis “Observatory of Democracy”

Dynamics of decentralization in Poltava region

According to the results of an expert survey conducted by The Ilko Kucheriv Democratic Initiatives Foundation in November 2017, the respondents mentioned decentralization as an example of the successful reform most often (in the second place – the start of medical reform, in the third – the creation of anticorruption bodies). The data of mass polls of Ukrainians also testify to the support by the population of decentralization: as of the end of July 2017, 42% of respondents expressed their positive attitude to it, 27% expressed the negative opinion (the rest of the percentage was distributed between the neutral category and those who could not answer).

Are there any other ideas in modern Ukrainian politics, around which such a consolidation among power, experts and citizens could be seen? Is there a similar consensus on other reforms? Probably decentralization as a vector of public policy is one of the few, if not the only, consolidating reform, the study of which involves not only forecasting future effects, but also an analysis of already existing exact results.

However, the logic of decentralization itself suggests that these concrete results directly depend on the specifics of the regional political regime – the attitude to the reform of regional and district state administrations, the interest of local elites, the competence of managers at the local level, the activeness of citizens themselves.

Following the brief analysis of the realization of decentralization in Luhansk region, the study of the process in Sumy region, a cycle of analytical materials on advancing the reform in Kharkiv region, the Center for Political Analysis “Observatory of Democracy” is presenting a study of the state and dynamics of decentralization in Poltava region.

Decentralization, as a vector of public policy, involves changes in a wide variety of areas – in this regard, we can say about decentralization in education, medicine, and the sphere of providing administrative services. The main thing in the process of decentralization is the transfer of power, resources and responsibilities from the central to the local level, from the vertical of state administrations to the elected by the communities bodies of self-government in accordance with the principle of subsidiarity.

Furthermore, the participation of communities should not be limited to voting in elections every 5 years: the reform of decentralization aims to build in Ukraine “participatory democracy” – a model that integrates various institutions of direct implementation of the community’s constitutional right to self-government “without intermediaries” in the person of deputies. Considering the experience of European countries, such a complex decentralization extends over the decade, but the results of the first three years of regional reform can already be explored. In our analysis, the emphasis is on two, perhaps most important, aspects of community unification and financial decentralization.

Poltava region in the rating of the Ministry of Regional Development

In the ranking of regions for the formation of UTCs published by the Ministry of Regional Development, Building and Housing and Communal Services of Ukraine in November 2017, Poltava region shares 14th place with Lviv region. However, the methodology of this general ranking is quite controversial: 4 indicators have the same “weight” and among them – “the number of UTCs with a population of less than 5 thousand people”. That is, a region in which no UTC has been created at all, will rank first due to this indicator, while more active regions risk losing their positions in the overall rating due to the presence of “small UTCs”.

Actually, this is exactly the situation happened in case of Poltava region, which according to the indicator “the number of UTCs that have already passed the first elections” is one of the leaders (the 4th in Ukraine) with the result of 32. In total, referring to the Prospective plan for the formation of the communities of Poltava region 54 UTC are planned to be created (in accordance with the order of the Government of 11.10.17 amendments). The area covered by the united communities in which elections have already taken place is currently about 25%.

Source: website “Decentralization in Ukraine”

UTC Year of the first elections Type
Globinska 2015 City
Pyriatynska 2015 City
Shyshatska 2015 Settlement
Semenivska 2015 Settlement
Omelnitska 2015 Village
Nedogarkovska 2015 Village
Pryshibska 2015 Village
Pishchanska 2015 Village
Novyazmianska 2015 Village
Belotserkivska 2015 Village
Pokrovsko-Bagachanska 2015 Village
Klepachivska 2015 Village
Skorohodivska 2016 Settlement
Reshetylivska 2016 Settlement
Novoavramivska 2016 Village
Velykosorochinska 2016 Village
Sergiivska 2016 Village
Zasulska 2016 Village
Lokhvytska 2017 City
Hrebinkivska 2017 City
Velykobagachanska 2017 Settlement
Novogaleshynska 2017 Settlement
Novosanzharska 2017 Settlement
Rokytianska 2017 Village
Senchanska 2017 Village
Butenkivska 2017 Village
Nehvoroshchanska 2017 Village
Drabynivska 2017 Village
Rudenkivska 2017 Village
Malopereshchepynska 2017 Village
Lannivska 2017 Village
Mykhailivska 2017 Village

Source: site of the Poltava Regional State Administration

Another 7 UTCs expect to hold the first elections on December 24 this year, and in four communities (Stepnenska, Tereshkivska, Novoselivska, Dmitrivska), due to various reasons (in three cases because of litigation) first elections have not taken place.

Thus, the total number of UTCs already created in Poltava region is 43, and 39 from January 1, 2018, will go on direct relationship with the state budget. It should be noted that Poltava region is the leader in Ukraine for the cooperation of territorial communities – in the region 46 agreements on cooperation between communities in the areas of housing and communal services, improvement, fire safety, education and health care were set.

Electoral aspect of decentralization

Comparing the results of the 2015, 2016, and 2017 elections in Poltava region, there are several main trends that can be outlined.

Firstly, the overwhelming majority of the “newly elected” heads of communities (almost 88%) are former city, village and settlement heads of these UTCs (mostly “central”, around which there is unification). Exceptions are only:

  • in the elections 2015 – the head of Bila Tserkva village UTC Ivan Leshchenko (self-nominee, expert of the Poltava Regional Office of Reforms) and village head of Novoznamianka village UTC Iryna Kobka (self-nominee, secretary of the village council);
  • in the elections 2017 – village head of Lanivska UTC – Konstantin Udovychenko (from the BPP “Solidarity” party, a teacher of chemistry and biology).

Secondly, there is a consistent tendency in all elections for party membership of candidates, or rather for its absence, since most community leaders declare themselves to be going to the elections by themselves (although some candidates are equally supported by certain political forces, for example in elections in 2017, the head of Butenkovska UTC, self-nominated Mykola Skrylnik was supported both by the BPP “Solidarnist” and the “Batkivshchyna” parties).

But considering the “dry” figures in the 2015 elections half of the UTC’s leaders were self-nominated, 25% from the BPP “Solidarity”, and 25% from the “Agrarian Party”. In the 2016 elections, the proportion of self-nominated candidates increased to 83.33%, and only one head of the community was a representative of the BPP “Solidarity”. At the elections in 2017, the situation changed slightly: self-nomination – 50%, representatives of the “Batkivshchyna” – 21.43%, representatives of the BPP “Solidarity” – 14.29%, and one representative (7.14%) from the “Agrarian Party” and from “Radical Party of Oleg Lyashko”. Such support for self-nominated candidates can be explained by a high percentage of voter distrust of political parties and a more “personal approach” to voting at local elections.

Thirdly, according to the results of the latest elections held on October 29, 2017, a slight increase in the percentage of voters’ activity was stated, with an average of 49% to 51.56%. Although in this case it is necessary to mark the leaders of the attendance (Drabynivska UTC – 76.1%, Butenkivska OTG – 63%, Mykhailivska UTC – 61.3%), and “outsiders” (Novosanzharska UTC – 36.3%, Hrebinkivska UTC – 39.95%, Lannivska OTG – 41.4%).

Analysis of the results of the first UTC councils’ deputies elections that took place in 2015-2017 (as of December 11, 2017)

Political party 2015 2016 2017 Total
number of deputies % number of deputies % number of deputies % number of deputies %
1 Self-nominated 102 39,23 80 64,52 64 21,33 246 36,02
2 “Batkivshchyna” 10 3,85 12 9,68 115 38,33 137 20,06
3 “Agrarian Party” 57 21,92 4 3,23 17 5,67 78 11,42
4 BPP “Solidarity” 33 12,69 8 6,45 19 6,33 60 8,78
5 “Ukrop” 12 4,62 5 4,03 19 6,33 36 5,27
6 “Radical Party of Oleg Lyashko” 6 2,31 10 8,06 20 6,67 36 5,27
7 “Party of Ordinary People of S. Kaplin” 14 5,38 1 0,81 13 4,33 28 4,10
8 “Ridne misto” 9 3,46 0 0,00 6 2,00 15 2,20
9  “Svoboda” 5 1,92 2 1,61 6 2,00 13 1,90
10 “Vidrodzhennia” 3 1,15 2 1,61 7 2,33 12 1,76
11 “Nash kray” 3 1,15 0 0,00 5 1,67 8 1,17
12 “Opposition Bloc” 2 0,77 0 0,00 4 1,33 6 0,88
13 “Socialists” 4 1,54 0 0,00 0 0,00 4 0,59
14 “Spravedlyvist” 0 0 0 0 3 1,00 3 0,44
15 “Samopomich” 0 0 0 0 1 0,33 1 0,15
Total 260 100 124 100 299 100 683 100

* “Party of Ordinary People of S. Kaplin” was renamed in 2016 to the “Social-Democratic Party”

Source: data from Central Election Commission

Regarding the elections to local councils that took place in the UTCs from 2015 to 06.12.2017, at present according to the results of all elections, the largest number of deputies has the so-called block of “self-nominated” – 246 seats (or 36.02%) of the total number of local council members who have already been elected, however, in 2017 their number has significantly decreased compared with the elections in 2015 and 2016.

The second place occupies the political party “Batkivshchyna”, which has 137 seats (or 20.06%): this political force significantly increased its presence in the UTCs of the region in 2017, due to the fact that it received the majority in Drabynivska, Novosanzharska, Nehvoroshchanska, Rudenkivska and Rokytianska UTCs.

In the third place in the conditional rating is the “Agrarian Party”, which has 78 seats (or 11.42%). Although, the success this party obtained in the 2015 elections, when it received 57 seats, and in the 2016 and 2017 elections it only received 4 seats and 17 seats respectively.

It is interesting to compare these results with the results of the elections to the Poltava regional council in 2015. In general, we can say about the great degree of electoral fragmentation of the regional political regime, as evidenced by the presence of 10 fractions of political parties at once in the regional council. However, not all of these parties actively participated in numerous elections to the UTCs during 2015-2017 (a striking example is the “Opposition Bloc”, although the result of the presidential party in the UTC election is worse, than the one of the regional council elections in 2015).

Results of elections to the regional council (2015) Votes Mandates
BPP “Solidarity” 87686 15
“Batkivshchyna” 75672 13
“Radical Party of Oleg Lyashko” 47376 8
“Ukrop” 46721 8
“Party of Ordinary People of S. Kaplin” 44921 8
“Svoboda” 40467 7
“Agrarian Party” 39487 7
“Ridne misto” 38770 6
“Opposition Bloc” 34319 6
“Vidrodzhennia” 33932 6

Source: data from Central Election Commission

On December 24, 2017, the first elections will take place in 7 newly formed UTCs.

UTC number of inhabitants number of councils, which formed UTC % number of inhabitants in the center of UTC Head Run for election in 2015 the 1st appointment, year
1 Zavorsklyanska village UTC (Poltava district) 3164 2 21,02% Sologor Vyacheslav Ivanovych Self-nominated 2008
2 Kozelshchynska settlement UTC (Kozelshchyna district) 10849 9 34,33% Pishchany Dmytro Ivanovych “Ridne misto” 2010
3 Machuhivska village UTC (Poltava district) 7421 5 44,97% Bilokin Valery Vasilyevych Self-nominated 1998
4 Mashivska settlement UTC (Mashivka district) 7712 3 49,36% Kravchenko Mykola Ivanovych Self-nominated 2008
5 Obolonska village UTC (Semenivka district) 2729 2 79,99% Gambal Sergiy Oleksiyovych Self-nominated 2007
6 Petrivsko-Romenska village UTC (Gadyach district) 4826 4 56,38% Bugayova Valentyna Petrivna Self-nominated 2015
7 Shcherbanivska village UTC (Poltava district) 14379 2 12,96% Protsyk

Igor Stepanovych

Self-nominated 2015

Source: data from Central Election Commission and Portal of united communities in Ukraine

It will be interesting to observe the elections in Kozelshchynska settlement UTC, which will unite 9 village and settlement councils, almost 11 thousand inhabitants and more than 81% of the Kozelshchyna district area, as well as in Shcherbanivska village UTC, which borders with Poltava and after the unification, for the most modest estimate, will have an annual budget of about 60 million hryvnias.

In Shcherbanivska UTC, there are currently 15 candidates for the post of the head and more than 200 candidates for the deputy of the village council. The hardest fight is likely to unfold between the current head of the Shcherbanivka village council Igor Protsyk and former head Valery Petrenko. On the whole, all acting heads can be considered as the favorites of the election, and the probability of their re-election is the higher, the longer the head occupies his position.

Economic sustainability of communities and financial decentralization

Probably the greatest attention of decentralization researchers is now focused on those UTCs in which the first elections took place in 2015-2016, and from January 1, 2017, communities will have already had the direct relations with the state budget. It is their example that the communities that have not yet decided on a voluntary association will be oriented to, and that provides the “success stories” for local authorities to boast.

There are 366 such UTCs in Ukraine in total, of which 18 were formed in Poltava region. “Poltava communities” received quite a high rating position from the Ministry of Regional Development, Building and Housing and Communal Services of Ukraine – in the corresponding rating, compiled on the basis of the 9 months of 2017, at once 11 UTCs are in the first hundred, and only one – in the second half of the rating. Among the “first achievements” of communities, local authorities name capital repairs for roads, educational and medical facilities.

UTC Own incomes per inhabitant

(for 9 months)

% basic/reverse dotation Capital expenditures per inhabitant

(without subventions)

 

 

% expenditures on the maintenance of the management apparatus in their own incomes Dynamics * (place in rating as of 01.07.2017)
6 Globinska 5296 -7,4% 1563 13,9% (8) →
8 Shyshatska 4356 -3% 3840 14,9% (5) →
22 Belotserkivska 4961 -2,7% 1398 21% (17) →
24 Reshetylivska 2770 0% 11696 18,5% (28) →
27 Pryshibska 5349 5,6% 5910 18,1% (26) →
31 Pyriatynska 2565 3,8% 825 12,3% (20) ↓
41 Semenivska 2745 4,9% 1882 19,6% (64)
46 Sergiivska 4101 0% 1777 28,2% (46) →
69 Zasulska 2346 5% 2786 23,6% (97)
75 Pokrovsko-Bagachanska 2977 0,5% 952 29,2% (56) ↓
89 Skorohodivska 2665 4,4% 366 19,5% (76) ↓
110 Klepachivska 2678 0% 663 37,9% (127)
119 Nedogarkovska 1957 9,8% 1457 25,4% (87) ↓
121 Pishchanska 2524 0% 250 24,7% (108) ↓
122 Novyazmianska 1905 5% 669 25,5% (106) ↓
126 Omelnitska 2416 3,1% 518 31,5% (112) ↓
141 Velykosorochinska 2225 0,7% 179 22,9% (116) ↓
221 Novoavramivska 2048 1,9% 103 36,8% (201) ↓

Source: website “Decentralization in Ukraine”

Overall, the analysis shows that the lowest financial strength indicators are typical for most of the small population size communities. The exception is made up of some small communities, in which there are budget-setting enterprises and powerful enterprises of the real economy sector.

It also should be that three communities are subject to a reverse dotation (used for “horizontal alignment” with respect to wealthy communities with a large share of their own tax revenues in the revenue part of the budget) – Shyshatska, Globinska and Belotserkivska UTC. They are ones the most interested in keeping rates of reverse subsidies at 50% rather than raising up to 80% that the authorities have been trying to make in the 2018 budget, and are likely to strive next year.

An interesting indicator is the percentage of expenditures on the maintenance of the management (governmental) apparatus. On average, this indicator is 20.62% (from 13.9% in Globinska UTC to 37.9% in Klepachivska UTC) – that is, on average in the region more than one fifth of the income is spent on community governing (for comparison, in the neighboring Sumy region this indicator makes up 27.6%, and in Kharkiv region it is 18.75%).

One of the first formed UTC in Poltava region was Shyshatska UTC, which is largely exemplary (both in terms of economic capacity and openness of public information on the community website). After the transition to direct relations with the state budget in 2016, the community’s own revenues grew by 3.5 times, and, taking into account the subventions, the budget increased even more tangibly. However, it is probably more relevant to compare changes in the budget structure of 2016 and 2017.

Points of the general fund income January-October

2016 (ths. UAH)

January-October

2017 (ths. UAH)

% of change
Own incomes 8668,50 11895,80 37,23
Transfers from state and local budgets, including: 3761,70 3521,20 -6,39
– educational subvention from the state budget to local budgets 1452,00 1863,20 28,32
– medical subvention from the state budget to local budgets 337,70 392,20 16,14
– subventions from the state budget to local budgets to form the infrastructure of the united territorial communities 1600,10 341,00 -78,69
– other subventions 8,80 10,00 13,64
– subventions for the maintenance of objects of common use 363,10 352,90 -2,81
– an additional dotations from the state budget to local budgets for the implementation of expenditures transferred from the state budget to institutions of education and health 0,00 523,40 100,00
– subventions from the state budget for the reimbursement of the cost of drugs for the treatment of certain diseases 0,00 31,90 100,00
– subventions from the state budget to local budgets to provide state support to people with special educational needs 0,00 6,60 100,00
Total 12430,20 15417,00 24,03
Subventions 3761,70 3521,20 -6,39
% subventions in the total amount of the general fund 30,26 22,84 -24,53
% own revenues in the total amount of the general fund 69,74 77,16 10,64

Source: website of Shyshatska UTC

In general, revenues to the general fund of Shyshatska UTC during that period increased by 2986.8 thousand UAH, or by 24.03% (from 12430.20 thousand UAH in 2016 to 15417.00 thousand UAH in 2017), however, before discussing the positive effects of this community unification, it should be understood exactly at what expense this increase occurred.

Own incomes of this UTC in January-October 2016 and 2017 increased by 3227.3 thousand UAH, or by 37.23%, however, the total amount of transfers from state and local budgets in the total amount decreased by 6.39% (even though there is a small increase in “educational” and “medical” subventions).

If we compare the ratio of the amount of own revenues and transfers from budgets of different levels, then there is a positive dynamics, namely: in January-October 2016, own revenues accounted for 69.74% of the total fund, while transfers, respectively, 30, 26%. During the corresponding period of 2017, the share of own revenues increased by 7.42% and already amounts to 77.16%, while the share of transfers decreased to 22.84%.

This increase can be explained by the developed branch of agroindustrial complex in the given region and by the large number of agricultural enterprises operating on the territory of the mentioned UTC, such as agricultural enterprises “Voskobiinyk”, “Agroecology”, “Agroinitiative Plus” and the largest “Astarta” (which is a vertically integrated agrarian company that processes 250 thousand hectares of land in 8 regions of Ukraine: the “Astarta” includes a strong soybean processing plant and a biogas plant for the production of biogas in Globino, which is the center of the first financially powerful UTC in region).

But perhaps the most important and credible figure for the residents of Shyshatska UTC is the following: the average salary level in UTC is 1.5 thousand UAH more than the average salary in the region.

Considering Poltava region as a whole, comparing the data on the implementation of the budgets of the region for the 9 months of 2017 with the same period of 2015 and 2016, we have the following data:

  • for the 9 months of 2015, the budget amounted to 7.64 billion UAH. (taking into account intergovernmental transfers);
  • for 9 months of 2016 the budget amounted to 10.69 billion UAH. (including intergovernmental transfers), which is almost 40% more than in the same period of 2015;
  • for 9 months of 2017 the budget amounted to UAH 15.12 billion. (including interbudget transfers), which is almost 98% more than in the same period in 2015, and almost 41% more than in the same period in 2016).

Also, it should be emphasized that in Poltava region there is a Program of “participatory budget” for 2017-2020, though every year only 4 million hryvnias are put into implementation of citizens’ projects (for comparison, the Kharkiv city program provides UAH 50 million only for 2018 year).

Conclusions

  1. Poltava region is one of the leaders in Ukraine in the number of UTCs – 32 communities have already held the first elections (4th place in the country), 7 more will be held on December 24, in 4th UTC elections for various reasons did not happen. It is worth noting the significant intensification of the process of voluntary association of communities in 2017 – this year dated the first elections in the 21st OTG. Poltava Region also is leading in the number of cooperation agreements (46) established between territorial communities.
  2. At the same time, only 4 UTCs were formed in the region with the participation of cities, 9 – settlement communities and 30 – village communities. The lack of interest of the mayors of cities of the region significance is explained, firstly, by the unwillingness to go for re-election, and secondly, the already existing direct relations between cities and the state budget. Approved in the first reading, but sent for refinement, the bill number 6466 will allow neighboring settlements to be attached to cities of region significance without holding the first elections in the city itself, and equates cities of region significance to sustainable territorial communities – accordingly, if it is accepted statistically, the percentage of residents’ covered by this aspect of the reform will increase significantly.
  3. Decentralization in Poltava region is not characterized by a renewal of power – 88% of the existing heads of the “central” settlements of the UTC were elected as the result of the first elections of the UTC heads. The highest percentage of deputies elected to the UTC councils is presented by self-nominated candidates (36%), but in 2017, those are relatively less than the results of the 2015 and 2016 elections. Instead, the share of winning candidates from the “Batkivshchyna” increased significantly (by a total of 20%; by 2017 only 38%), and many deputies are elected from the “Agrarian Party” (11%) and the BPP “Solidarity” (9%), “Radical Party of Oleg Lyashko” and “Ucrop” (by 5% each).
  4. 18 UTCs, in which the elections took place in 2015 and 2016 and which are already in direct relation with the state budget, taking advantage of financial decentralization, occupy quite high places in the capacity rating according to the criteria of the Minregion. At once, 11 UTCs are in the first hundred (of them Globinska and Shishatska – in the first ten), and only one – in the second half of the rating. The three most successful communities are subjected to a reverse dotation. At the same time, on the example of Shishatska UTC, there is a positive trend of increasing the share of own revenues and reducing dependence on subventions in the structure of the local budget. In general, over the past two years, the regional budget has doubled (but about 25% of official inflation over this period should be taken into account).
  5. In addition to the budget and electoral dimension, the course on decentralization lies in the reform of educational and medical systems, as well as in the sphere of providing administrative services. In summary, we present the actual data (as of mid-November 2017), which the Minregion considers indicators of the success of the implementation of decentralization standards in the relevant areas.
  • In Poltava region 22 pivotal schools were created, 5 of them – on the territory of UTC (10th place among the regions of Ukraine).
  • Poltava region approved a division into 4 hospital districts (with centers in the cities of Poltava, Mirgorod, Lubny, Kremenchug).
  • In Poltava region 32 centers of administrative services were created, most of them – within district state administrations.

Recommendations

  1. According to the assessment of the Ministry of Regional Development, Construction and Housing and Communal Services, the formation of new UTCs should take into account the following criteria:
  • the size of the community should not be less than 5-7 thousand people;
  • the weight of the basic dotation is no more than 30% of the amount of own income;
  • the expenditures on the maintaining the administrative (governmental) apparatus – no more than 20% of the amount of own resources of the community.

These conditions need to be taken into account in order to create potentially economically capable UTCs that will be able to switch to “self-sufficiency” after the end of the “favorable subsidy period” (approximately after the 2019 election, although the relevant features are already noticeable in the 2018 state budget analysis).

  1. It is also important in advance, before the unification, to elaborate development strategies and plans for the socio-economic development of the future UTCs, which in currently existing united communities are only on rare occasions.
  2. Local political party organizations should more actively participate in the elections to the UTC councils, even at village and settlement levels, where a majority system is in place and self-nomination is allowed. The draft Election Code approved in the first reading envisages the transition to parliamentary elections to a proportional system with open regional lists – accordingly, parties need to lay the foundation of their support in the region precisely in similar local elections, co-opting local “opinion leaders” in their ranks. On the other hand, it will help to overcome the crisis of trust in Ukrainian society to political parties.
  3. It is necessary to depoliticize the field of education and medicine, as well as all civil service during the elections to the UTC. If in Kharkiv region “state employees” and “officials” were co-opted exclusively in the presidential party, then in Poltava region school directors, chief doctors, district state administration employees run both “BPP-Solidarity” and other parties (most often – “Batkivshchyna”), however, this does not change the essence of the problem of using the factors of administrative pressure and politicization of those areas that a priori should be outside of politics.
  4. In Poltava region there is a regional program of “participatory budget” for 2017-2020, and this is an important step towards the demonopolization of the power of deputies in the process of allocating funds. However, direct participation of the community in the budget process should be not only nominal, therefore it is expedient to consider the possibility of a substantial increase in the regional program of “participatory budget” (currently the annual fund is 4 million hryvnias – for comparison, similar funds in Kyiv and Kharkiv are 12.5 times higher).

Anton Avksentiev, Pavlo Shestopal

Center for Political Analysis “Observatory of Democracy”

Published on the website “Regional communal informational agency “News of Poltava Region”

The material was prepared within the framework of a project implemented with the financial support of the European Endowment for Democracy (EED) and the Government of Canada

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