Sub-National Governance in Small States: The Case of Iceland [1st ed.] 9783030515515, 9783030515522

Table of contents :
Front Matter ....Pages i-ix
Introduction (Eva Marín Hlynsdóttir)....Pages 1-7
Conceptualising Key Concepts (Eva Marín Hlynsdóttir)....Pages 9-28
Decentralisation to Subnational Governments in Small States (Eva Marín Hlynsdóttir)....Pages 29-56
The Nordic Local Government Model: The Icelandic Way (Eva Marín Hlynsdóttir)....Pages 57-73
Urbanisation in a Small State: The Case of Iceland (Eva Marín Hlynsdóttir)....Pages 75-91
The Choice Between Efficiency and Tradition (Eva Marín Hlynsdóttir)....Pages 93-112
The Future of Subnational Government in Small States (Eva Marín Hlynsdóttir)....Pages 113-118
Back Matter ....Pages 119-122

Citation preview

PALGRAVE STUDIES IN SUB-NATIONAL GOVERNANCE

Sub-National Governance in Small States The Case of Iceland

Eva Marín Hlynsdóttir

Palgrave Studies in Sub-National Governance

Series Editors Linze Schaap Tilburg University Tilburg, The Netherlands Jochen Franzke University of Potsdam Potsdam, Germany Hanna Vakkala University of Lapland Rovaniemi, Finland Filipe Teles University of Aveiro Aveiro, Portugal

This series explores the formal organisation of sub-national government and democracy on the one hand, and the necessities and practices of regions and cities on the other hand. In monographs, edited volumes and Palgrave Pivots, the series will consider the future of territorial governance and of territory-based democracy; the impact of hybrid forms of territorial government and functional governance on the traditional institutions of government and representative democracy and on public values; what improvements are possible and effective in local and regional democracy; and, what framework conditions can be developed to encourage minority groups to participate in urban decision-making. Books in the series will also examine ways of governance, from ‘network governance’ to ‘triple helix governance’, from ‘quadruple’ governance to the potential of ‘multiple helix’ governance. The series will also focus on societal issues, for instance global warming and sustainability, energy transition, economic growth, labour market, urban and regional development, immigration and integration, and transport, as well as on adaptation and learning in sub-national government. The series favours comparative studies, and especially volumes that compare international trends, themes, and developments, preferably with an interdisciplinary angle. Country-by-country comparisons may also be included in this series, provided that they contain solid comparative analyses.

More information about this series at http://www.palgrave.com/gp/series/15960

Eva Marín Hlynsdóttir

Sub-National Governance in Small States The Case of Iceland

Eva Marín Hlynsdóttir Department of Political Science University of Iceland Reykjavík, Iceland

ISSN 2523-8248 ISSN 2523-8256 (electronic) Palgrave Studies in Sub-National Governance ISBN 978-3-030-51551-5 ISBN 978-3-030-51552-2 (eBook) https://doi.org/10.1007/978-3-030-51552-2 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Dmitry Merkushin/Alamy Stock Vector This Palgrave Pivot imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

This book is about subnational government and state size or, perhaps more precisely, ‘smallness’ and how being small in population affects the internal arrangements of sovereign states. In an increasingly complex and global world, local and place identity has gained importance, and small states have not escaped the increased pressure worldwide for decentralisation and bringing government and governance to the people. The main objective of this book is to put together a readable and comprehensive text on subnational government and governance from the perspective of the small-state literature. It discusses and introduces subnational governance and government in Iceland, using the case of Iceland as a model to which other cases are compared. The book’s originality and strength lie in the interdisciplinary and broad approach it takes on small states and subnational governance, moving beyond the traditional regional approach. The discussion draws from information on the arrangement of subnational governments in small states, highlighting the effect of population size on subnational governments’ structures around the globe. This endeavour is the first attempt to put ‘smallness’ and subnational governance in a global context and comprehensively compare subnational governments’ arrangements in small states. Inevitably, this fact makes this book open in the sense that it provides a framework for future studies on this subject by stressing the advantages and disadvantages of such research. The case of Iceland is especially useful to illustrate, simultaneously, the positive and negative v

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sides of organising subnational government in a small state. Moreover, in these times of uncertainty, when the world has experienced unprecedented events such as the closing of states borders due to the spread of Covid-19, the importance of small states’ public administrative capacity will be of great significance in addressing the situation. The current situation is likely to highlight both the strengths and weaknesses in the internal governance of small states. My goal was to write a thought-provoking and interesting book aimed at the academic community as well as practitioners and politicians in small states throughout the world. More specifically, the content of the book may be of use to students on both the undergraduate and graduate levels in public administration, urban and regional studies, political science and international relations. The content of this book has been developed over some time, and individual chapters and sections of the book owe large and small debts to many colleagues and friends, with whom I’ve shared conferences and informal discussions on various topics in this book. Among my colleagues at the Faculty of Political Science at the University of Iceland, I would especially like to thank Baldur Thorhallsson for his useful comments on the draft version of this book. Special thanks go to my colleagues in the Nordic community for local government scholars, who provided me with interesting and helpful angles and suggestions on how to internationally compare subnational governments in small states at the 2019 NORKOM conference in Turku, Finland. I am also very grateful to Külli Sarapuu at the Ragnar Nurkse Department of Innovation and Governance at Tallinn University for providing me with vital information on new research on public administration in small states. Finally, I would like to give special thanks to the editorial team at Palgrave Macmillan. Last but not least, my gratitude goes to my family, without whose support nothing would be accomplished. Reykjavík, Iceland

Eva Marín Hlynsdóttir

Contents

1

Introduction The Concept of Size in Subnational Government Research The Research Design of the Book Organisation of the Book References

2

Conceptualising Key Concepts The Elusive Concept of Size The Interaction Between State Capacity and Decentralisation The Four Paradoxes of Governance in Small States Theories of Subnational Government and Governance The European Charter of Local Self-Government and the Aberdeen Agenda References

3

Decentralisation to Subnational Governments in Small States Exploring the Quality of Subnational Government in Small States Worldwide Subnational Government in Small States in Africa Subnational Government in Small States in Asia Subnational Government in Small States in the Caribbean

1 2 3 5 6 9 10 11 13 16 20 22

29 31 32 35 39 vii

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Subnational Government in Small States in the Pacific Subnational Government in Small States in Europe Decentralisation of Responsibilities to Subnational Government in Small States References 4

The Nordic Local Government Model: The Icelandic Way The Origin of the Icelandic Local Government System The Institutional Framework of Icelandic Local Governments Horizontal Power Relations at the Icelandic Local Government Level Sources of Revenue for Icelandic Local Governments Reforms at the Icelandic Local Government Level References

43 47 49 52

57 58 61 64 66 67 70

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Urbanisation in a Small State: The Case of Iceland The Foundation of Metropolitan Areas and City-Regions Urbanisation Patterns in Iceland The Capital City of Reykjavík and Its Suburbs Reykjavík’s City-Region as a Functional Area A Big Fish in a Small Pond References

75 77 79 83 84 87 88

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The Choice Between Efficiency and Tradition Political Decentralisation in Iceland: Amateur or Professional Politics Fiscal Decentralisation Local Government Administrative Capacity The Paradoxes of Public Administration in Small States References

93 96 99 100 104 108

The Future of Subnational Government in Small States References

113 117

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Index

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List of Tables

Table Table Table Table Table Table

3.1 3.2 3.3 3.4 3.5 6.1

Small states in Africa Small states in Asia Small states in the Caribbean Small states in the Pacific Small states in Europe Iceland compared to larger small states in Europe

33 36 40 44 48 106

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CHAPTER 1

Introduction

Abstract This chapter introduces the main theme of the book on Subnational governance in small states: the case of Iceland. It provides a short overview of the state of the art and discusses some of the key concepts of the book such as population size and subnational governance and government. It introduces the research design of the book and discusses the nuances and problems in relation to studies on subnational government in small states. The chapter concludes with an organisational overview of the books. Keywords Small states · Subnational government · Small states studies · Local government studies

‘I’m on an island and I’ve got nowhere to run’ is the main chorus line of a song made popular by the Kinks. The atmosphere of isolation evoked by these lyrics is in many ways representative of the situation of the Icelandic subnational governments, both subjectively and objectively. The Republic of Iceland is a small island state situated in the North Atlantic just below the Arctic Circle and is by far the smallest of the Nordic states, with a population of 364,000 (Statistics Iceland 2020), covering an area of 103,000 km2 , with settlements concentrated on the coastline around the country and the middle of the country uninhabited. © The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_1

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The Icelandic subnational system is usually assumed to be based on the Nordic model of local governance (Lidström 2003). The model is based on the decentralisation of responsibilities onto the subnational level and epitomised by strong local government both functionally and politically, as well as a large number of relatively small municipalities in comparison with other European states (Baldersheim et al. 2017; Kuhlmann and Wollmann 2014). The story of the Nordic model is portrayed as a story of success in almost every aspect of government reform, including economy, welfare, security and democracy (Lægreid 2018). The Icelandic subnational system shares many of the traits of the Nordic local government system, such as many small municipalities and an emphasis on the functional role of local government. Nevertheless, it has developed somewhat differently than its Nordic counterparts. Thus, the overall administrative capacity of the Icelandic sub-national government has been estimated as very low (Hlynsdóttir 2016, 2019). Moreover, the Icelandic political system has traditionally been seen as infested with clientelism and nepotism, and many believe this is still the case for the local level (Kristinsson 2015). The high level of favouritism has been attributed by Kristinsson (2001) to the fact that the political party system was established before the administrative system, mainly because Iceland was a part of Denmark and there was very limited local administration situated in Iceland until the early twentieth century. Kristinsson bases his conclusion on the work of Shefter (1977), who again based his work on the situations in Germany, Italy and the United Kingdom. This situation is, in many ways, representative of the tendency to generalise findings from large settings onto smaller settings and not vice versa.

The Concept of Size in Subnational Government Research There is an agreement within the local governance research community that contexts such as culture, institutional design and demography are important factors when studying subnational governance (Loughlin et al. 2011). However, it is customary to exclude smaller municipalities from research designs in local government studies, usually based on the assumption that they are not comparable with larger units (Bäck et al. 2006). Hence, findings from research designs based on large municipalities are seen as generalisable onto smaller settings, while findings from small municipalities are not seen as relevant for larger settings. There are,

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of course, many cases of ‘smallness’ being an important variable in the mainstream local government literature (Kuhlmann and Bouckaert 2016; Loughlin et al. 2011). However, apart from a few notable exceptions such as the recent edition of The Routledge Handbook of International Local Government (Kerley et al. 2019), there is specifically a lack of crosscase analysis of subnational government and governance in small states. Moreover, there is a lack of consistency in the global data on subnational government (McMann 2018), and data on small states with less than one million in population are especially lacking (Corbett and Veenendaal 2018; OECD/UCLG 2019).

The Research Design of the Book The aim of this book is to address the lack of information, in the scholarly literature, on subnational government and governance in small states through exploring the case of subnational government in Iceland. As pointed out above, Iceland deviates in many important ways from the Nordic model of local government, making the case of Iceland especially intriguing. It is a prosperous modern Nordic state with a high level of urbanisation, praised for its gender equality and technological advances. However, at the same time, welfare services were until recently much more centralised in Iceland than in the other Nordic countries, with subnational government playing a limited role in the overall development of the welfare system compared to the other Nordic states (Baldersheim et al. 2017; Hlynsdóttir 2018). Furthermore, and somewhat unusually for a Nordic state, clientelism has played a much larger role in the development of Icelandic politics, and accusations of nepotism are still common at both levels of government. Finally, an extreme level of fragmentation at the local level has given rise to problems in relation to service provision and professional capacity at the local level, and it has raised awareness of the overall efficiency and effectiveness of the Icelandic subnational government (Kristinsson 2015; Hlynsdóttir 2019). Although situated in the context of small-states theory, the focus of this book is on the subnational government in small states. The term ‘subnational’ refers to levels of government below the central government; in a unitary country such as Iceland, this refers to local or regional government. Following the example of international institutions such as the OECD and the World Bank, the conceptualisation of subnational government concentrates on decentralised governments, thus excluding

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entities such as sub-municipal localities, special areas or special purpose districts. The main reason for this is the lack of coherent data on these entities in most of the states discussed in this book. Moreover, lack of data on financial situations, for example, is still a pervasive problem in relation to many small states (OECD/UCLG 2019). As of 2020 there are 46 sovereign states with fewer than 1.5 million citizens in the world; of these, 37 have fewer than one million citizens, and 13 have fewer than 100,000 citizens.1 The main analytical focus of the book is on the level of decentralisation of central government responsibilities onto the subnational level in small states, using a thick description of the Icelandic case as a starting point. In addition to the Icelandic case, information on the level of decentralisation in other small states is compiled and presented through a comparative approach. As subnational government in Iceland is the focus of this book, it was considered appropriate to create an overview of sovereign states in a similar size category. The book therefore concentrates on small states with between 100,000 and one million citizens. This is further supported by evidence suggested by studies that, with dwindling population size, the basic structure of a state starts to deviate in important aspects from larger states—hence the term ‘microstate’. However, where this threshold lies exactly is not entirely clear, but the World Bank uses the 200,000-citizen mark as a threshold for the term microstate (The World Bank 2019). In 2020 there were 25 states worldwide with a population of 100,000 to one million, ranging from Tonga with a population of 105,000 to Fiji with 896,000. Of these, 10 states are less populated than Iceland and 14 are larger in population size. Given that the population of Iceland is only around 364,000, it was deemed important to compare the Icelandic situation with less populated countries as well as more populated ones. Thus, the Icelandic situation will also be compared to the situation in larger small states, such as the other Nordic states. This book is exploratory in its approach. The aim is to explore the case of Iceland and compare it with other small states, looking for patterns of

1 For the sake of consistency, this definition of sovereign states uses the same approach as Corbett and Veenendaal (2018); thus territorial dependencies are not included in the number of small states, for example the Faroe Islands, Gibraltar, Cook Island, etc.

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similarities and differences that may be attributed to its small-state condition. Toshkov (2016) argues that this type of research design is useful in situations where there is a fundamental lack of theories. The main criticism of single-case studies is related to the lack of generalisability, an issue many social science scholars believe is a fundamental flaw in single-case study designs (King et al. 1994). However, the aim of this book is not to generalise to all other small states in the world based on the Icelandic case, I believe that is neither possible nor needed. The aim is to identify patterns of similarities and differences in the organisation of subnational government in small states throughout the world and to use the case of Iceland to explore how different angles of ‘smallness’ affect these patterns of subnational government structure.

Organisation of the Book Chapter 2 discusses problems identified in academic discussion related to the conceptualisation of size and smallness as well as local government and governance. It explores concepts such as ‘state capacity’ and ‘decentralisation’ and discusses problems related to the detection of similarities and differences of local government and governance in small states. Finally, it introduces two important contributors to the increased emphasis on local self-government and good governance: the European Charter of Local Self-Government and the Aberdeen Agenda. Chapter 3 compares the organisation of subnational government in all states with populations between 100,000 and one million and discusses the situation in light of the scholarly literature on decentralisation. Chapter 4 provides a thick description of the Icelandic arrangement of subnational government, with a short historical overview and compilation of the current situation of the system. Chapter 5 concentrates on the traditions of urbanisation in Iceland and how urban–rural cleavages continue to affect the arrangement of its subnational government. Chapter 6 draws from the information introduced in the previous chapters and discusses the transition from tradition to modernity in Icelandic subnational structure in relation to the Nordic model of local government and governance. The latter half of the chapter compares the Icelandic situation with the situation in larger European small states, such as the other Nordic states, Estonia, Latvia and Slovenia, and discusses it from the perspective of the paradoxes of small-state governance. The concluding chapter discusses the findings of

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the book, and if and how the conclusions of the book may affect future research on small states and subnational government.

References Bäck, H., Heinelt, H., & Magnier, A. (2006). The European Mayor: Political Leaders in the Changing Context of Local Democracy. Wiesbaden: VS Verlag für Sozialwissenschaften. Baldersheim, H., Rose, L. E., & Sandberg, S. (2017). Local and Regional Government in the Nordic Countries: Co-operative Decentralization. In O. Knutsen (Ed.), The Nordic Models in Political Science: Challenged but Still Viable? (pp. 193–218). Oslo: Fagbokforlaget. Corbett, J., & Veenendaal, W. (2018). Democracy in Small States: Persisting Against All Odds. Oxford: Oxford University Press. Hlynsdóttir, E. M. (2016). Administrative Capacity and Long-Term Policy Making at the Icelandic Local Level. Icelandic Review of Politics and Administration, 12(2), 237. https://doi.org/10.13177/irpa.a.2016.12.2.3. Hlynsdóttir, E. M. (2018). Autonomy or Integration: Historical Analysis of the Debate on the Purpose of Icelandic Local Self-Government. Icelandic Review of Politics and Administration, 14(1), 81–100. https://doi.org/10.13177/ irpa.a.2018.14.1.4. Hlynsdóttir, E. M. (2019). Local Administrative Capacity Based on the Presence of Expert Staff in Municipal City Halls and Inter-Municipal Cooperation Entities. Icelandic Review of Politics and Administration, 15(1), 1–20. https://doi.org/10.13177/irpa.a.2019.15.1.1. Kerley, R., Liddle, J., & Dunning, P. T. (2019). The Routledge Handbook of International Local Government. Abingdon: Routledge. King, G., Keohane, R. O., & Verba, S. (1994). Designing Social Inquiry: Scientific Inference in Qualitative Research. Princeton, NJ: Princeton University Press. Kristinsson, G. H. (2001). Staðbundin stjórnmál: Markmið og árangur sveitarfélaga. Reykjavík: Háskólaútgáfan. Kristinsson, G. H. (2015). Political Control and Perceptions of Corruption in Icelandic Local Government. Icelandic Review of Politics & Administration, 11(1), 1–18. https://doi.org/10.13177/irpa.a.2015.11.1.1. Kuhlmann, S., & Bouckaert, G. (2016). Local Public Sector Reforms in Times of Crisis: National Trajectories and International Comparisons. London: Palgrave Macmillan. Kuhlmann, S., & Wollmann, H. (2014). Introduction to Comparative Public Administration: Administrative Systems and Reforms in Europe. Cheltenham: Edward Elgar Publishing.

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Lægreid, P. (2018). Nordic Administrative Traditions. In P. Nedergaard & A. Wivel (Eds.), The Routledge Handbook of Scandinavian Politics (pp. 80–91). Abingdon: Routledge. Lidström, A. (2003). Kommunsystem i Europa. Malmö: Liber. Loughlin, J., Hendriks, F., & Lidström, A. (2011). The Oxford Handbook of Local and Regional Democracy in Europe. Oxford: Oxford University Press. McMann, K. M. (2018). Measuring Subnational Democracy: Toward Improved Regime Typologies and Theories of Regime Change. Democratization, 25(1), 19–37. https://doi.org/10.1080/13510347.2017.1307822. OECD/UCLG. (2019). Report of the World Observatory on Subnational Government Finance and Investment—Country Profiles. Available at: http://www. oecd.org/cfe/regional-policy/Observatory-on-Subnational-Government-Fin ance-and-Investment.htm. Shefter, M. (1977). Party and Patronage: Germany, Italy and England. Politics and Society, 7, 403–451. Statistics Iceland. (2020). Population by Municipality, Sex, Citizenship and Quarters 2010–2019. Available at: https://px.hagstofa.is/pxen/pxweb/en/ Ibuar/Ibuar__mannfjoldi__1_yfirlit__arsfjordungstolur/MAN10001.px/? rxid=3ef9dbf4-c470-4175-afd0-44aabe47744e. Accessed 6 March 2020. The World Bank. (2019). The World Bank in Small States: Overview. Last updated October 10, 2019. Available at: https://www.worldbank.org/en/ country/smallstates/overview. Accessed 23 February 2020. Toshkov, D. (2016). Research Design in Political Science. Basingstoke: Palgrave Macmillan.

CHAPTER 2

Conceptualising Key Concepts

Abstract This chapter offers a summary of key concepts applied in the book. It draws attention to concepts such as population size, state capacity and decentralisation. It points out the key aspects of subnational government and governance theory as well as some of the key drives in the institutionalisation of good governance and local self-government at the local level. The chapter draws attention to the ambiguity and subjectivity of many of the key concepts used to describe and measure subnational governance in small states. The first is ‘smallness’ which is highly relative and context dependent concept. The second is state capacity defined as the ability of individual states to get things done. Scholars and practitioners have not come to a mutual conclusion on where the exact threshold between small and large lies nor on what is the optimal state size needed for states to be able to get things done. This is further complicated by the fact that scholars disagree on if state capacity should be measured on the input or the output side. The chapter puts these discussions into context with scholarly literature on subnational governance and government creating a framework for the examination of subnational government in small states. Keywords State capacity · Decentralisation · Public administration · Small states · Local government · Local governance

© The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_2

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There are several key concepts that need to be defined before embarking on an exploration of subnational government and governance in small states. The first term to be defined is ‘size’, this elusive concept has proved difficult to define in a tangible and objective way (Thorhallsson 2006). However, in order for a meaningful comparison a decision must be made on the level of ‘smallness’ used in the comparison. In relation to subnational governance, the concepts of decentralisation and state capacity are of vital importance as they provide the foundation for comparison between different countries and systems (Sellers and Lidström 2007; Fukuyama 2013). Findings have shown that ‘smallness’ brings specific problems for states in relation to public governance, so-called paradoxes of governance (Randma-Liiv and Sarapuu 2019), these problems are especially interesting in relation to local governance and government as state size has seldom been put into context with the subnational government level. The final point is the importance of international treaties and declarations in relation to the institutionalisation process of good governance and local self-government.

The Elusive Concept of Size Although the number and scope of publications on various issues of small states has grown exponentially, there is no mutual understanding of what constitutes ‘small’ in relation to ‘state’ (Maass 2009). Thus, definitions of ‘small’ and ‘large’ tend to be relative and highly context-dependent. The Netherlands is, for example, often defined as a small state within the European framework; however, in comparison to the population of Iceland, it is colossal. In his seminal work, Thorhallsson (2000) studied ‘small’ countries within the EU, including for example the Netherlands, with of around 15 million at the upper population limit and Luxembourg with a population of around 600,000 at the lower end. This approach of using a broad population definition for state size is typical for the scientific field of international relations, where the focus is on power relations (Thorhallsson 2019). Contrastingly, in the public administration literature, a population of less than two million is often classified as small (Randma-Liiv 2002), although there are exceptions to that rule in both directions (Baker 1992; Connaughton 2010). International organisations such as the World Bank and the Commonwealth of Nations have their cut-off point at 1.5 million (Everest-Phillips and Henry 2018). Additionally, the term ‘microstates’ is sometimes used in various ways to denote

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small states with up to one million in population (Thorhallsson 2006) or for populations below 300,000 (Murray 1981), while in more recent cases the population threshold has been set at 100,000 (Randma-Liiv and Sarapuu 2019). Traditional variables used to define state size are, for example, population size, size of territory, military capacity and gross domestic product (GDP). In relation to that, Thorhallsson (2006, p. 8) created a conceptual framework with six dimensions to measure and explain state actions in relation to size. The first dimension is fixed size, as in population and territory; the second is sovereignty size, concerning the state’s capacity to effectively maintain an internal structure as well as presence at the international level. The third is political size, which measures military and administrative capacity, domestic cohesion and the degree to which the state is able to keep up a united front externally. The fourth is economic size, which is GDP and market size. Fifth is perceptual size, or the perception of both internal and external actors of the state. The sixth and final dimension is preference size, which measures the prioritisation of the ruling elite and its ideas about the state’s place in the international system. The framework does reveal some of the empirical challenges of the measurement of ‘size’. Although objective factors such as population, territory and GDP may be directly measured, other factors are latent variables that cannot be directly observed. Examples of this are variables such as administrative capacity and the perception of actors, as these are factors that are notoriously hard to define and measure (Hanson and Sigman 2013). Moreover, the concept of ‘state capacity’, as in individual states’ ability to make something happen on purpose, is a highly contested concept on which there is no less controversy than on the concept of size (Hendrix 2010). Consequently, Thorhallsson et al. (2019) argue that the definition of size in international relations is likely to remain a highly ‘imprecise and subjective endeavour’ (p. 15); this is particularly likely to be the case in studies conducted in different time periods or using different types of political units.

The Interaction Between State Capacity and Decentralisation The concept of state capacity in relation to public administration is, like ‘size’, a contested concept with little scholarly consensus over how to define or measure it (Bowman and Kearney 1988; Hanson and Sigman

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2013). Broadly speaking, there are two mainstream arguments on the conceptualisation of capacity. The first group of scholars argues that state capacity should be measured based on outputs and outcomes. Hence, we should concentrate on measuring the quality and quantity of states’ output, for example health or education (Boardman 2014; Rotberg 2014). On the contrary, the second group of scholars claims that looking into the functions of government is a better method in measuring state capacity. This approach focuses on two main issues namely the state’s ability to get things done and its ability to ensure bureaucratic autonomy from political micromanagement (Fukuyama 2013). In short, the first approach focuses on the output and the latter on the input, with both sides arguing that their approach is essential to good governance (Wu et al. 2015). This discussion is closely related to another important concept, which is decentralisation. In the past decades there has been a strong impetus for decentralisation around the world based on the fundamental argument that this brings government closer to the people (Ivanyna and Shah 2012; Ryan and Woods 2016). Decentralisation entails transferring authorities, resources and responsibilities to the lower levels of government. Ryan and Woods (2016) use a threefold categorisation to explain the process of decentralisation. The first is political decentralisation, where political authority and decision-making are transferred to subnational government. The level of discretionary powers entailed in this process may vary greatly from one state to another. Administrative decentralisation includes managerial discretion as the degree of autonomy in, for example, the planning and implementation of public service and administration. Finally, there is fiscal decentralisation involving the autonomy of the subnational unit in relation to the collecting and spending of fiscal resources. Thus, in relation to decentralisation, state capacity may be evaluated from two angles: the overall capacity of the central government to define, implement and evaluate policy-making at the state level and, secondly, the overall capacity of the lower levels of government to define, implement and evaluate policy-making (Polidano 2000; Farazmand 2009). There are those that argue that the smaller a state gets in terms of population size, the greater its challenges in following the international mantra of decentralisation in a meaningful way (Oppong 2016). Moreover, it has been argued that the approach taken by many consulting firms and larger states when advising small as well as developing states regarding public

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administration reforms is fundamentally flawed (Boone 2003; Huber and McCarty 2004). This is mainly due to the special situation of many of these states in terms of their various cultural aspects as well as the quantity and quality of available staffing resources within the state, making a direct implementation of Western ideas difficult (Baker 1992; Manning 2001). Consequently, scholars have suggested that using a continuum of size would be a useful approach for the conceptualisation of size (see discussion in Maass 2009; Randma-Liiv and Sarapuu 2019). These scholars argue that differences in scale in relation to population size affect the characteristics and organisational patterns of individual states. Thus, ‘the smaller the population gets, the more likely are the states to present common institutional “small state characteristics” in public governance, regardless of their other traits’ (Sarapuu and Randma-Liiv 2020). This is again related to the issue of the ‘optimal’ size of states’ administrative capacity and the fundamental question of ‘at what threshold in size can countries function effectively?’ (Everest-Phillips and Henry 2018, p. 41). Another interesting concept in relation to state capacity is ‘islandness’ and studies using the geographical situation of islands have gained in prestige more recently (Baldacchino 2004, 2012; Hassall 2015). However, this last concept will not be addressed any further in this book.

The Four Paradoxes of Governance in Small States The most widely used absolute criterion for ‘smallness’ is population size in relation to scale (Baker 1992; Randma-Liiv 2002). Sarapuu and Randma-Liiv (2020) argue that an absolute approach to the definition of smallness is more relevant for research in public administration than in political science and international relations, as limited staffing resources correlates with many problems of public administration in small states. Hence, using population size as the starting point in research on public administration is therefore only logical. In relation to this, Benedict (1966) distinguishes between the size of the state (as defined by area and population) and the size of society (as defined by the number and quality of role relationships). Benedict points out that previous studies on small states and small societies have identified several mutual characteristics of such societies. The social context is often very small, and it often matters more who a man or a woman is than what they do. These findings have to some extent been verified in studies on democracy in small states (Corbett and Veenendaal 2018). Consequently, personal relationships are crucial in these settings, as interaction within the administration is often

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based on informal relationships and structures (Randma-Liiv 2002). The number of possible roles is also limited (Benedict 1966; Sarapuu 2010), which leads to less specialisation on the one hand and increased multifunctionality on the other. As pointed out by Randma-Liiv (2002), there is a tendency in less populated societies to fit the structure and the job to the people rather than to expect the individual to meet the formal role of his/her position. Based on these controversies, Randma-Liiv and Sarapuu (2019) have identified four paradoxes of governance in small states, government size, specialisation, formalisation and centralisation. The first paradox is government size. Randma-Liiv and Sarapuu point out that it is sometimes assumed that small population leads to small government, as certain government activities are eliminated and others are scaled down. However, this approach overlooks that all national systems require the same basic functions regardless of size, although the number of units and individuals working within each unit will be much smaller than in larger states (Farrugia 1993). One indicator of the problem of start-up costs in small states is higher proportion of civil servants of the overall number of employees, as the civil service is an important provider of employment in small states, and government is often the biggest employer (Brown 2010; Everest-Phillips and Henry 2018). The main problem of civil services in small states is that a minimum level of service must be provided, which may lead to severe problems in relation to cost efficiency, as expensive services need to be provided for few people. Although it has been pointed out that delegating certain public services to other countries is an option, such options are limited and have often proved to be more costly in the long run, manifesting in, for example, brain drain (Crossley et al. 2011). Consequently, Randma-Liiv and Sarapuu (2019) argue that the alleged thinness of small-state government depends more on contextual factors, such as the type of welfare system, than on the population size itself. The second paradox identified by Randma-Liiv and Sarapuu (2019) is the level of specialisation. Simply put, there is less room for specialisation in small-scale societies (Murray 1981), and the limitations in staffing resources make it difficult to provide, for example, specialist education (Crossley et al. 2011), which again points to a limited division of labour and in-service training opportunities. Sarapuu and Randma-Liiv (2020) specifically point to issues such as the problems of lone wolves, lack of professional interchange and stimulation and overall professional loneliness. This can also lead to the development of a monopoly on expertise

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(Chittoo 2011). As pointed out above, civil services in small states still need most of the basic types of experts, simply in much smaller numbers. Moreover, as it is not always possible to hire a full-time professional, there is a strong pressure towards multifunctional roles (Everest-Phillips and Henry 2018). This may weaken the level of expertise, creating a generalist culture within public administration (Farrugia 1993). The third paradox is the level of formalisation. It has often been argued that small states’ administration is more flexible and informal (Raadschelders 1992). The argument is that in small states the system adapts the structure to people and not the people to the structure. This may lead to problems related to applying hierarchical and strictly routine-based organisational practices in the Weberian manner of ideal bureaucracy (Baker 1992; Sutton 2008). There is also a persistent myth about the easy governing in small states, as they have fewer hierarchical levels of government, less distance between executives and lower levels of organisations, leading to the prevalence of romantic ideas about consensus in small societies (Corbett and Veenendaal 2017, 2018). Contrastingly, Brown (2010) argues that although these arguments are appealing, they are highly misleading, as where differences exist, ‘they tend to be more personal, more intense and more emotionally charged, often leading to deep divisions and cleavages that undermine any suggestion of social cohesion’ (p. 47). The fourth and final paradox is the level of centralised governing. Overall, findings show that centralisation correlates with smallness; hence, the smaller a state gets, the more likely it is to be more centralised (Baldacchino 2012). As pointed out earlier in this chapter, decentralisation has been both practiced and extensively promoted internationally. In relation to size, de Vries (2000) points out that one of the main arguments against decentralisation is the alleged lack of capacity in small communities to deal effectively with the decentralisation of public service. Personalism in small societies may also enhance problems related to decentralisation in small states (Corbett and Veenendaal 2018), such as patron-client relationships, corruption and despotism (Veenendaal 2019). Other issues include overhead costs (Premdas and Steeves 1992), and the limitation of introducing marketing mechanisms in, for example, service provision, as the number of possible partners is low and roles are overlapping. This highlights some of the issues concerning the situation of subnational government and governance in small states.

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Theories of Subnational Government and Governance The idea of ‘localness’ in the sense that decision-making on local issues should be as close to the citizens as possible is, in itself, not a modern invention. As an example, India enjoys one of the oldest traditions of local self-governance, tracing its origin back to the pre-Moghul period (Shah and Shah 2006). In the Nordic setting, local decision-making was already an important part of the government structure in the Middle Ages (Kristinsson 2001), and similar claims have been made for the Pacific islands (Hassall and Tipu 2008). In the European case, modern local government is essentially an invention of the nineteenth century, when most of the current local government systems were established following the political turbulence of the eighteenth and nineteenth centuries (Hulst and Van Montfort 2007). One of the founding fathers of modern local government was J. S. Mill, who claimed that local self-government played an essential role in providing citizens with participatory opportunities in local decision-making. He emphasised the educational role of local government in relation to the democratic practice of politics and government, and he believed that giving the local citizens a voice in decision-making at the local level made it more likely that the government would achieve its goals both efficiently and effectively (Mill 1865). Consequently, and with the rise of the welfare state in the aftermath of the Second World War, scholars such as Sharpe (1970) argued that the main justification for modern local government lay within its role to deliver services effectively and efficiently—an argument often phrased as the ‘efficiency value of local authorities’ (Stoker 1996, p. 8). As a result of this, there is a debate among scholars and in the wider society if it is the main role of local government to be the functional extension of the central government, with large and functionally strong municipalities delivering services efficiently, as in the case of Denmark (Mouritzen 2010), or if its role is to preserve the democratic values of local communities through functionally weak but democratically strong local self-government in relation to, for example, participatory mechanisms. This is an argument that is prevalent in the case of the role of local government in Switzerland and, to some extent, the United States (Denters et al. 2014; Warner 2015). In addition to the functional and territorial profile, there is also variation in the political profile between different models of local government (Kuhlmann and Wollmann 2014).

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Consequently, it is possible to conclude from the scholarly literature that having an institutionalised local government is important, and this is emphasised in international organisations (Hankla and Downs 2010) such as the European Charter of Local Self-Government. However, as has been pointed out before, there are important differences between the approaches of individual states in the functional, territorial and political profiles of local government that have mainly been attributed to different institutional traditions (Kuhlmann and Wollmann 2014). One of the main aims of modern local government reform has been to increase efficiency and the overall capability at the local government level. In most cases the method to achieve this has been to decentralise tasks from the central government onto the local level. However, scholars have pointed out that there are pros and cons to the decentralisation of tasks (Kuhlmann and Wollmann 2014). It is true that decentralisation increases the proximity of service delivery to citizens; however, it may also decrease specialisation and even increase political inference in the policy implementation at the local level. Therefore, scholars such as de Vries (2000) have argued that decentralisation is a relative concept and closely linked to the disputed issue of ‘optimal’ size of local government. In relation to that and ever since the publication of Dahl and Tufte’s book Size and Democracy, there has been a wealth of literature concerning local government size. Nonetheless, local government scholars have not come to any clear conclusion on the optimal size of local authorities (Baldersheim and Rose 2010; Dahl and Tufte 1973; Denters et al. 2014; Kjær and Mouritzen 2003; Newton 1982). Others have argued that ultimately there is no optimal size of local government and, more importantly, different sizes fit different tasks (Feiock 2007). Dahl and Tufte (1973) argue that size is a two-dimensional concept, balancing citizen effectiveness with system capacity. Citizen effectiveness covers the extent to which the citizens can control the polities’ decision-making, while system capacity is the capability of the polity to respond adequately to citizens’ demands. Interestingly, both dimensions have been used as arguments for and against large-scale municipal mergers (Baldersheim and Rose 2010). As an example, arguments have been put forward that claim that authorities in smaller municipalities are more responsive to citizens’ demands than authorities in larger municipalities (Denters et al. 2014). Likewise, it is often argued that larger municipalities have larger and more capable administration and are consequently able to provide services more effectively and efficiently

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(Kristinsson 2014). When it comes to the theoretical foundation for the different sides of the argument, those favouring fragmented political systems have turned towards public choice theory (Keating 1995; Feiock 2007; Warner 2015), thus supporting the idea that smallness does not in itself prevent municipalities from being able to provide adequate living standards similar to their larger counterparts. This has been one of the main justifications for municipal collaboration or shared services at the local level (Warner 2015; Teles 2016). These different types of solutions to capacity problems at the local level have been systematically asserted in the ‘scale’ classification put forward by Baldersheim and Rose (2010, p. 18), who suggest using the terms ‘up-scaling’, ‘down-scaling’ and ‘trans-scaling’ for different types of solutions. Thus, up-scaling refers to solutions that suggest the consolidation of municipalities or the transfer of functions from the local level to the regional or county level. A down-scaling approach, on the other hand, is in favour of fragmentation and the transfer of tasks to lower levels of government. Trans-scaling suggests using collaboration at the local level as the path of reforms—for example, by enabling and encouraging municipalities to set up shared services. Comparatively, the Nordic countries are more inclined to use methods of up-scaling while countries in the southern parts of Europe are more trans-scaling-oriented (Kuhlmann and Wollmann 2014). Traditionally, the research using size as an important factor has concentrated on large municipalities. This is, for example, the case for many U.S. studies on local government (Svara 1990, 2009) as well as European local leadership studies (Bäck et al. 2006; Heinelt et al. 2018). Although there are studies that admit that small municipalities are qualitatively different from larger municipalities (Denters et al. 2014; Folz and French 2005), small municipalities are normally not seen as important in the larger context of individual countries, as only a small minority of citizens reside in these municipalities. Moreover, this ignores the possibility of the local authorities in these municipalities being able to exercise any influence on sub-national politics and policies (Kristinsson 2001). As pointed out above, municipal size is closely related to the debate on the solution of modern governance efficiency problems, to which consolidation is normally seen as the ultimate solution (Baldersheim and Rose 2010). Consequently, the solution to municipal capacity problems is to amalgamate or use inter-municipal cooperation on a large scale (Teles 2016; Eythórsson et al. 2018). The consolidation approach has been

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extensively argued for in the Nordic context in relation to the expansion of the welfare system (Baldersheim et al. 2017). However, and as pointed out earlier, the effect of scale has received little attention, as most studies assume that reforming local government institutions in small and large states will produce the same outcome. Moreover, it is important to separate local government from local governance. While the former refers to local government as a formal institution subordinated to the central government, the latter encompasses the actions of a variety of societal actors at the local level in addition to local authorities such as formal and informal institutions and community and interest organisations. Anne Mette Kjær (2004) has argued that the concept of governance does not mean governing without government but rather with more than just government. In sum, local governance represents the ‘interaction of public and private actors in policy making, and the definition of commonly agreed problems and objectives’ (Haus and Heinelt 2004, p. 19). Thus, good governance is achieved when governing bodies focus on offering citizens the public goods and services they need and desire (Hankla and Downs 2010). Another important issue in relation to local government and governance in the international setting is the relevance of local government as an objective variable. First, we must ask ourselves if all states have local government. It must be emphasised that the ideas on the role of local government introduced above are essentially based on Western values and traditions. This raises the question of the transferability of institutions, such as the modern idea of local government, onto other cultural settings. As an example, Hassall and Tipu (2008) claim that local government in the Western sense is alien to the cultural world of people living in, for example, the South Pacific, further adding that ‘local government in the South Pacific is a complex blend of modern democratic principles and government systems with traditional institutions and practices, and often extremely small-scale’ (p. 26). Moreover, the usefulness of the direct application of Western values and traditions through consultation with developing countries in relation to public administration more generally has been questioned (Manning 2001). More specifically, the direct application of traditions developed in larger settings onto small societies has also been criticised (Oppong 2016). In relation to the topic of this book, it may be argued that there are two major factors that have contributed to the development of subnational governance in small states. The first

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is the European Charter of Local Self-Government and the second is the membership of individual states in the Commonwealth of the Nations.

The European Charter of Local Self-Government and the Aberdeen Agenda In October 2020, the European Charter of Local Self-Government will celebrate its thirtieth birthday (Council of Europe 2013). One of the main purposes of the Council of Europe has been to promote democracy amongst its members, of which, as argued by Himsworth (2011), the Charter has been one of the Council’s most successful and highestprofile productions. By 2020, 47 member states of the Council of Europe have signed and ratified the Charter; moreover, it is a binding international treaty, giving it significant weight in the institutionalisation process of strong local autonomy at the European local level. Individual states could make some reservations regarding some of the articles; they were, however, obliged to adhere to at ‘least 20 paragraphs of Part 1 of the Charter, including at least 10 from a more restrictive and demanding selection of 14 articles/paragraphs’ (Ladner et al. 2019). The enforcement of the Charter is followed up by monitoring visits led by independent experts to each state, on average every five years. In the Charter preamble there are several indicators of the Charter’s importance—for example, as a tool for the Council of Europe to achieve ‘greater unity’ by implementing and upholding traditional and common ideals by its members. The Charters importance is also supported by the argument that as local governments are a ‘main foundation’ of democratic governments, and therefore citizens’ right to ‘participate in the conduct of public affairs’ is best advanced at the local level. Moreover, it states that if local government are given actual tasks, they can ‘provide administration that is both effective and close to the citizens’. Finally, it asserts that, by safeguarding the local autonomy of local self-government, it contributes to the overall aim of creating a European community based on the ‘principles of democracy and decentralization of power’, and that this is best achieved through democratic and locally elected ‘decision-making’ bodies (Council of Europe 2013, pp. 11–12). These aims are then echoed throughout the articles themselves. Thus, the Charter contributes to the overall framework of local government by setting standards of, for example, legal foundations and the protection of local self-government, the suitable administrative structure, fiscal resources and the supervision

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of the local level by the central government, to name but a few (Ladner et al. 2019). As is evident from this discussion, there is a clear resonance in the Charter that the best way to create strong local self-government is to decentralise. However, the fundamental principle in the Charter is local autonomy, and it must be kept in mind that it is possible to decentralise tasks to lower levels of government without strengthening local autonomy (Sellers and Lidström 2007). Another important and influential shaper of local government in the international setting is the Commonwealth of Nations, which is a voluntary association consisting of 54 member states, most of which (not all) are previous members of the British Empire. Out of these, the Commonwealth identifies 32 as small states with 1.5 million citizens or fewer (The Commonwealth, n.d.). Out of these, 22 have fewer than one million citizens. One of the many subdivisions of the Commonwealth of Nations is the Commonwealth Local Government Forum, the main aim of which is to ‘promote and strengthen democratic local government across the Commonwealth’ (Commonwealth Local Government Forum, n.d.-a). Through the forum, the member states formally approved a set of standards to promote ‘healthy local democracy and good governance’ (Commonwealth Local Government Forum, n.d.-b), the so-called Aberdeen Agenda based on 12 principles, in 2005. The Agenda was incorporated into the Commonwealth Charter in 2013 (Commonwealth Local Government Forum, n.d.-b). The European Charter of Local Self-Government and the Aberdeen Agenda have common denominators, such as stipulating that local government should have legal protection through either common law or the constitution, the core democratic citizens’ right to elect members of the local council, and that local government should have powers in relation to the principle of subsidiary based on the perception that public responsibilities should, in general, be provided by the authority closest to the citizens. However, as is evident from the 12 principles of the Aberdeen Agenda, there are important differences. Himsworth (2011) argues that the Charter is, in its essence, a bill of rights; however, it is one aimed at local authorities and not for individual citizens. Yet more recent additions to the Charter, such as the Protocol to the European Charter of Local Self-Government from 2009, address the right of citizens to participate in the affairs of a local authority. Contrastingly, the Aberdeen Agenda has a stronger focus on the citizens’ right to participate in local governance. Where the Charter concentrates on preserving the autonomy

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of local government vis-à-vis central government, the Aberdeen Agenda is aimed more at introducing overall good governance and healthy local democracy, as stated on the forum’s website (Commonwealth Local Government Forum, n.d.-a). Hence, in the Aberdeen Agenda there is a focus on concepts such as governance, capacity, decision-making, accountably and transparency in addition to local democracy (Commonwealth Local Government Forum 2008). In relation to the Charter, these concepts are, however, of no or minimum relevance. This, of course, demonstrates the core differences in the origin and the purpose of the Charter and the Aberdeen Agenda. Fundamentally, both are aimed at enhancing local democracy, but how that goal is supposed to be achieved is very different between these two settings. These differences are of great importance when it comes to evaluating local government and governance in the following chapters of this book, both in relation to Iceland as a special case and in the more general international comparison of the subnational structure in small states.

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Kjær, A. M. (2004). Governance. Cambridge, UK: Polity Press. Kjær, U., & Mouritzen, P. E. (2003). Kommunstørrelse og lokalt demokrati. Odense: Syddansk Universitetsforlag. Kristinsson, G. H. (2001). Staðbundin stjórnmál: Markmið og árangur sveitarfélaga. Reykjavík: Háskólaútgáfan. Kristinsson, G. H. (2014). Hin mörgu andlit lýðræðis: Þátttaka og vald á sveitarstjórnarstiginu. Reykjavík: Háskólaútgáfan. Kuhlmann, S., & Wollmann, H. (2014). Introduction to Comparative Public Administration: Administrative Systems and Reforms in Europe. Cheltenham: Edward Elgar Publishing. Ladner, A., Keuffer, N., Baldersheim, H., Hlepas, N., Swianiewicz, P., Steyvers, K., & Navarror, C. (2019). Patterns of Local Autonomy in Europe. Cham: Palgrave Macmillan. Maass, M. (2009). The Elusive Definition of the Small State. International Politics, 46(1), 65–83. https://doi.org/10.1057/ip.2008.37. Manning, N. (2001). The Legacy of the New Public Management in Developing Countries. International Review of Administrative Sciences, 67 (2), 297–312. https://doi.org/10.1177/0020852301672009. Mill, J. S. (1865). On Representative Government. London: Longmans, Green and Co. Mouritzen, P. E. (2010). The Danish Revolution in Local Government. In H. Baldersheim & L. E. Rose (Eds.), Territorial Choice: The Politics of Boundaries and Borders (pp. 21–41). Basingstoke: Palgrave Macmillan. Murray, D. J. (1981). Microstates: Public Administration for the Small and Beautiful. Public Administration and Development, 1(3), 245–256. https://doi. org/10.1002/pad.4230010306. Newton, K. (1982). Is Small Really so Beautiful? Is Big Really so Ugly? Size, Effectiveness, and Democracy in Local Government, Political Studies, 30(2), 190–206. https://doi.org/10.1111/j.1467-9248.1982.tb00532.x. Oppong, N. (2016). The Twists and Turns of Institutional Innovation in Small Island Developing States: The Case of Tuvalu. Commonwealth and Comparative Politics, 54(1), 23–45. https://doi.org/10.1080/14662043.2015.112 4498. Polidano, C. (2000). Measuring Public Sector Capacity. World Development, 28(5), 805–822. https://doi.org/10.1016/S0305-750X(99)00158-8. Premdas, R. R., & Steeves, J. S. (1992). Decentralization in a Ministate: The Case of the Republic of Vanuatu. In R. Baker (Ed.), Public Administration in Small States and Island States (pp. 84–98). West Hartford, CT: Kumarian Press. Raadschelders, J. B. (1992). Definitions of Smallness: A Comparative Study. In R. Baker (Ed.), Public Administration in Small States and Island States (pp. 26– 33). West Hartford, CT: Kumarian Press.

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Randma-Liiv, T. (2002). Small States and Bureaucracy: Challenges for Public Administration. Trames, 6(4), 374–389. Randma-Liiv, T., & Sarapuu, K. (2019). Public Governance in Small States: From Paradoxes to Research Agenda. In A. Massey (Ed.), A Research Agenda for Public Administration (pp. 162–179). Cheltenham: Edward Elgar Publishing. Rotberg, R. I. (2014). Good Governance Means Performance and Results. Governance, 27 (3), 511–518. https://doi.org/10.1111/gove.12084. Ryan, R., & Woods, R. (2016). Decentralization and Subnational Governance: Theory and Praxis. In E. Schoburgh & R. Ryan (Eds.), Handbook of Research on Sub-National Governance and Development (pp. 1–33). Hershey: Information Science Reference. https://doi.org/10.4018/978-1-5225-1645-3. ch001. Sarapuu, K. (2010). Comparative Analysis of State Administrations: The Size of State as an Independent Variable. Halduskultuur-Administrative Culture, 11(1), 30–43. Available at: http://halduskultuur.eu/journal/index. php/HKAC/article/view/12. Sarapuu, K., & Randma-Liiv, T. (2020). Public Management and Policy-Making in Small States. In G. Baldacchino & A. Wivel (Eds.), Research Handbook on the Politics of Small States. Cheltenham: Edward Elgar Publishing. Sellers, J. M., & Lidström, A. (2007). Decentralization, Local Government, and the Welfare State. Governance, 20(4), 609–632. https://doi.org/10.1111/j. 1468-0491.2007.00374.x. Shah, A., & Shah, S. (2006). The New Vision of Local Governance and the Evolving Role of Local Governments. In A. Shah (Ed.), Local Governance in Developing Countries (pp. 1–46). Washington, DC: World Bank. Sharpe, L. J. (1970). Theories and Values of Local Government. Political Studies, 18(2), 153–174. Stoker, G. (1996). Introduction: Normative Theories of Local Government and Democracy. In D. King & G. Stoker (Eds.), Rethinking Local Democracy (pp. 1–27). Basingstoke: Macmillan. Sutton, P. (2008). Public Sector Reform in the Commonwealth Caribbean: A Review of Recent Experiences (The Caribbean Papers No. 6). Toronto, ON. Available at: www.cigionline.org. Svara, J. H. (1990). Official Leadership in the City: Patterns of Conflict and Cooperation. Oxford: Oxford University Press. Svara, J. H. (2009). The Facilitative Leader in City Hall: Reexamining the Scope and Contributions. New York: CRC Press. Teles, F. (2016). Local Governance and Inter-Municipal Cooperation. Basingstoke: Palgrave Macmillan. The Commonwealth. (n.d.). About Us, the Commonwealth. Available at: https:// thecommonwealth.org/about-us. Accessed 19 February 2020.

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Thorhallsson, B. (2000). The Role of Small States in the European Union. Aldershot: Ashgate. Thorhallsson, B. (2006). The Size of States in the European Union: Theoretical and Conceptual Perspectives. Journal of European Integration, 28(1), 7–31. https://doi.org/10.1080/07036330500480490. Thorhallsson, B. (2019). Small States and Shelter Theory: Iceland’s External Affairs. London: Routledge. Thorhallsson, B., Steinsson, S., & Kristinsson, Þ. (2019). The Small State in International Relations. In B. Thorhallsson (Ed.), Small States and Shelter Theory: Iceland’s External Affairs (pp. 13–23). London: Routledge. Veenendaal, W. (2019). How Smallness Fosters Clientelism: A Case Study of Malta. Political Studies, 67 (4), 1034–1052. https://doi.org/10.1177/003 2321719828275. Warner, M. E. (2015). Municipal Size, Resources, and Efficiency: Theoretical Bases for Shared Services and Consolidation. In A. C. Henderson (Ed.), Municipal Shared Services and Consolidation: A Public Solutions Handbook (pp. 3–16). New York: Routledge. Wu, X., Ramesh, M., & Howlett, M. (2015). Policy Capacity: A Conceptual Framework for Understanding Policy Competences and Capabilities. Policy and Society, 34(3–4), 165–171. https://doi.org/10.1016/j.polsoc. 2015.09.001.

CHAPTER 3

Decentralisation to Subnational Governments in Small States

Abstract Decentralisation has been something of a buzzword in the past decades with international agencies actively lobbying its virtue throughout the world. This chapter explores different levels of decentralisation through the presence and functions of subnational government in small states with a population range between 100,000 to one million. It presents some key information on the situation of small states between different regions, highlighting both regional nuances as well as worldwide similarities. The discussion highlights some of the problems of a worldwide comparison of subnational government in small states of which the most important is scarcity and unreliability of comparable data. It also draws attention to the effect of smallness on the arrangements of subnational government worldwide and how size affects the states capacity in relation to political, administrative and fiscal decentralisation. Furthermore, it discusses the concept of local self-government in relation to decentralisation of responsibilities and authority from the central government to subnational governments. Keywords Local government · Small states · Self-government · Political decentralisation · Administrative decentralisation · Fiscal decentralisation

© The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_3

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The presence of formal subnational government in small states is ultimately about the level of decentralisation of government. Conyers (1983) pointed out in the early 1980s that the concept of decentralisation had become something of a buzzword, especially in relation to developing countries that were actively striving for government reforms based on decentralisation. Moreover, international organisations were actively promoting decentralisation, a situation again verified by Kaiser (2006), showing that international organisations such as the World Bank were actively promoting decentralisation as a solution to the many problems of developing countries. Conyers (1983) also points out that early trends of decentralisation in the 1950s and 1960s were aimed at establishing local government as an active part of the government structure in many newly established states, thus proving to their citizens that they were more ‘locally’ oriented than the previous colonial overlords. In addition, international treaties such as the European Charter of Local Self-Government and the Aberdeen Agenda actively promote decentralisation as an aim in itself. As pointed out in Chapter 2, decentralisation in relation to subnational government has three categories: political, administrative and fiscal (Ryan and Woods 2016). Political decentralisation usually involves establishing a political system where political actors are able to make meaningful decisions independently from the central government. One of the main methods to achieve that is through local democratic elections (Hankla and Downs 2010); this example will be followed in the analytical discussion in the following sections. Fiscal decentralisation is often measured through, for example, the expenditures of subnational governments as a percentage of the overall governmental expenditure or through the evaluation of tax revenues (Ladner et al. 2019; Pina-Sánchez 2014; Ryan and Woods 2016). Administrative decentralisation is often measured in three stages: deconcentrating, delegation and devolution. The deconcentrating stage mostly involves moving tasks from the central government to lower levels of government, mainly by a shift in the workload; hence, the authority over the task remains within the realm of the central government. The second stage is delegation, when certain managerial responsibilities are transferred onto the subnational level, while tasks are implemented on behalf of the central government. The stage of devolution is usually seen as the highest level of administrative decentralisation, where a subnational government is able to execute functions without direct interference by the central government (Rodríguez-Pose and Gill 2003; Ryan and Woods

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2016). Thus, the focus of administrative decentralisation is on the degree of responsibilities that are decentralised from the central government to subnational governments. Overall, the promoters of decentralisation have expected such reforms to bring improvements in local initiative and responsiveness, make local administration more innovative and creative, improve service delivery and improve the overall efficiency and effectiveness of government (Chattopadhyay 2013; Hankla and Downs 2010; Wunsch 2013). Ultimately, decentralisation should bring the government closer to the people (Goel and Saunoris 2016). However, empirical findings on the virtue of decentralisation, especially in developing countries, have shown mixed results (Boone 2003; Chattopadhyay 2013; Oppong 2016; Premdas and Steeves 1992; Ryan and Woods 2016; Wunsch 2013).

Exploring the Quality of Subnational Government in Small States Worldwide The following sections of this chapter introduce the situation of subnational governments in the relevant small states based on different regions of the world.1 Recently there have been some interesting publications addressing subnational government in an international context. Factors that are likely to influence the general functions of public administration and subnational government in small states are, for example, geographical location, wealth, historical background, culture and institutional fidelity. However, as has been pointed out in the introduction to this book, information on small states is scarce. One of the key issues in all comparisons is finding relevant and reliable data, a problem that is especially important in a field that lacks previous cross-case analysis. Out of the 25 states identified with between 100,000 and one million citizens, more than half, or 15 states,2 are members of the Commonwealth of Nations. Moreover, the Commonwealth in comparison to other sources provides fairly robust information on the situation of subnational government through its Commonwealth Local Government Forum (Commonwealth Local Government Forum 2018). Additionally four more states were covered by the World Observatory country profile report on Subnational

1 For the sake of comparison, this book uses the same regional categorisation as Corbett and Veenendaal (2018). 2 The Maldives left the Commonwealth in 2016, but re-joined in February 2020, and is therefore included in this number (India Today 2020).

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E. M. HLYNSDÓTTIR

Government Finance and Investment (OECD/UCLG 2019b).3 Information on the remaining seven states needed to be retrieved through other channels, which in some cases proved to be a daunting task. As information on countries not covered by the OECD/UCLG country profile reports or the Commonwealth Local Government Forum is, in general, scarce, it was deemed important to introduce these states in more detail in the text than the remaining states, where coherent information is already available through the above-mentioned channels. Therefore, the following information was collected as thoroughly as possible on each of the 25 sovereign states: history of colonisation and year of independence, geographical situation and geographical size; population size, population density and proportion of urban population; classification of income group according to the World Bank4 list of countries; and subnational governments’ share of total government expenditure (SNG) and number of elected local government entities. Based on this information, this analysis will draw conclusions on the levels of political, administrative and fiscal decentralisation. The main aim is to identify similarities and differences in the organisation and development of subnational governments in small states in general.

Subnational Government in Small States in Africa As seen in Table 3.1, there are three sovereign states in Africa that meet the definition of a small state. All these states are multi-island states or archipelagos and belong to the World Bank lower-middle-income group. The largest is Comoros, with a population5 of around 870,000 and previously a French colony, while Cabo Verde (pop. 555,000) and São Tomé

3 UCLG is an acronym for United Cities and Local Government. 4 The World Bank uses the following criteria for its categorisation: ‘For the current

2020 fiscal year, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1025 or less in 2018; lower middleincome economies are those with a GNI per capita between $1026 and $3995; upper middle-income economies are those with a GNI per capita between $3996 and $12,375; high-income economies are those with a GNI per capita of $12,376 or more’ (World Bank 2020). In the compilation for this book there are no countries belonging to the group of low-income economies as defined by the World Bank. 5 For consistency in the population data, this publication uses Worldometer (www.Wor ldometers.info) as a source for individual states population. Worldometer bases its calcuations on elaboration of data by United Nations, Department of Economic and Social Affairs, Population Division.

France (1975) Portugal (1975) Portugal (1975)

Comoros

Archipelago 1001

Archipelago 4033

Archipelago 1660

219,000

555,000

869,000

218

138

523

73

66

29

Lower-middleincome Lower-middleincome Lower-middleincome

31,286

7f N/A

25,227

22e

N/A

N/A 9.8e

Number Average of elected municipal local population government

N/A

SNG share of total government expenditure (%)

Sources Corbett and Veenendaal (2018)a , Worldometer (2020)b , United Nations: Department of Economic and Social Affairs Population Division (2019)c , The World Bank (2020)d , OECD/UCLG (2019b)e , Freitas (2014)f

São Tomé and Príncipe

Cabo Verde

Colonisation/independencea

State

Geographical Geographical Populationb Population Proportion Income group in situationa size km2(a) density/km2 of urban 2020d population in 2018c (%)

Small states in Africa

Table 3.1

3 DECENTRALISATION TO SUBNATIONAL …

33

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E. M. HLYNSDÓTTIR

and Príncipe (pop. 219,000) were Portuguese colonies. All three states will celebrate their 45th year of independence in 2020. Of the three states, the most robust information on the situation of the subnational level is available for Cabo Verde. It is a unitary state with a single tier of local government organised into 22 municipalities with an average municipal population size of around 25,000. Municipalities are legal entities with administrative as well as patrimonial autonomy. Local authorities have a wide range of responsibilities, such as administrative services for marriages and births, municipal police and urban signage, public parks, urban roads and transport, waste management, drinking water supply, urban planning, primary health care, libraries, local museums, and pre-school and primary education, to name but a few (OECD/UCLG 2019b). In the OECD/UCLG (2019b) country profile, it is pointed out that although tasks have been decentralised, funding has not accompanied tasks, and local authorities are struggling to make ends meet. According to the country profile, subnational government expenditure is 9.8 per cent; however, municipalities have very limited possibilities for self-finance and are highly dependent on government transfers. Cabo Verde is often considered an exemplary African state. The least populated state in this group is São Tomé and Príncipe (pop. 219,000), located in the Gulf of Guinea, 350 km off the west coast of Africa. The law practiced in the country is a combination of Portuguese civil law and common law. As is the case for many other African states, it has struggled to uphold a democratic government, holding its first free elections in 1991 (Central Intelligence Agency-The World Factbook 2020a). It is a two-island state, with the island of Príncipe as an autonomous region. On the subnational level, there are six administrative regions on São Tomé, known as municipal districts, in addition to the autonomous region of Príncipe functioning as a separate municipal district. Individual municipal districts are governed by elected councils and an executive body, which are elected every three years (Freitas 2014). In an overview of the subnational system in São Tomé and Príncipe, Freitas (2014) argues that the structure of the council and executive body has a resemblance to the Danish and Swedish systems. He further points out that in the constitution and the local government law derived from it, there is a strong emphasis on local autonomy and the ‘principle of decentralization’ (p. 166). Freitas also points out that the subnational government in São Tomé and Príncipe allegedly has responsibilities in

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35

areas such as local infrastructure, local urban planning and regulatory matters such as public water provision. The largest state in the group of small states in Africa is the Federal Republic of Comoros, located in the Indian Ocean, northeast of Madagascar and north of the Mozambique Channel. Since gaining independence, Comoros has been plagued by political instability and pervasive antagonism between the islands comprising the state. Although densely populated, its level of urbanisation is only 29 per cent. This is, however, in line with the general trend in Africa being the least urbanised world region, where only 43 per cent of the population lives in urban areas (United Nations: Department of Economic and Social Affairs Population Division 2019). Despite an extensive search, it was not possible to find any information on the structure or the general situation of subnational governance in Comoros. The summary of the OECD/UCLG (2019a) key findings report showed that, on average, African municipalities are quite large in population, with an average size of 130,000. The municipal structure of the two small states identified in this region suggests a similar trend, with municipalities being relatively large population-wise. Moreover, the findings suggest a relatively low level of administrative decentralisation, although Cabo Verde has a high level of subnational government share of the total government expenditure compared to other states introduced in this chapter.

Subnational Government in Small States in Asia As shown in Table 3.2, there are only three sovereign small states in Asia. The small, landlocked (between India and China), lower-middle-income Kingdom of Bhutan is the largest state population-wise, with 771,000 citizens. This is followed by one of the most densely populated, yet at the same time geographically dispersed, countries in the world: the uppermiddle-income Maldives, with 540,000 citizens, located southwest of India in the Indian Ocean. Finally, there is the high-income constitutional monarchy of Brunei Darussalam, with a population of 437,000. There is no elected local government in Brunei, although there are four districts in addition to three municipal boards that are responsible for urban areas. However, at the local level, citizens are able to ‘elect’ traditional leaders responsible for the welfare and well-being of citizens in their respective areas, although this is not elected government in the traditional sense.

540,000

1812

40

78

Upper-middleincome

5.2f

N/A

N/A

SNG share of total government expenditure (%)

38,550 N/A No elected local governmentg 201h 2687

20e

Number of Average municipal elected population local government

Sources Corbett and Veenendaal (2018)a , Worldometer (2020)b , United Nations: Department of Economic and Social Affairs Population Division (2019)c , The World Bank (2020)d , The Constitution of the Kingdom of Bhutan (2008)e , Commonwealth Local Government Forum (2016)f , (2018)g , Aiham (2020)h

Archipelago 298

76

Lower-middleincome High-income

British protectorate (1965)

437,000

40

Maldives

5765

20

British protectorate (1984)

771,000

Brunei Darussalam

38,394

Never colonised

Bhutan

Land locked Coastal

Colonisation/independencea Geographical Geographical Populationb Population Proportion Income group in situationa size km2(a) density/km2 of urban 2020d population in 2018c (%)

Small states in Asia

State

Table 3.2

36 E. M. HLYNSDÓTTIR

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Brunei Darussalam is the second-largest state introduced in this chapter without elected local government (Commonwealth Local Government Forum 2018). Therefore, the following discussion will concentrate on the situation in Bhutan and the Maldives. The Kingdom of Bhutan is a constitutional monarchy and the only small state mentioned in this chapter that has never been formally colonised, although it formalised a treaty with Britain in the middle of the nineteenth century. It belongs to the group of lower-middle-income countries. In 2008 Bhutan ratified its first constitution, with the head of state as the monarch. The government of Bhutan is actively pursuing the implementation of ‘good governance’ within the borders of Bhutan as one of the four main pillars of the development philosophy of Gross National Happiness, an index used to measure the collective happiness and well-being of the population (Ministry of Home and Cultural Affairs, Kingdom of Bhutan Tashichhodzong, n.d.-a, n.d.-b). Moreover, the first paragraph of the twenty-second article of the Constitution of Bhutan states: ‘Power and authority shall be decentralized and devolved to elected local governments to facilitate the direct participation of the people in the development and management of their own social, economic and environmental well-being’ (The Constitution of the Kingdom of Bhutan 2008). The Constitution stipulates that there shall be 20 local governments, one in each of the so-called dzongkhags, with council members who are elected every five years. The Local Government Act of Bhutan (2009) stipulates more precisely who is eligible to be a member of local government—for example he or she must be a citizen of Bhutan, functionally literate and between 25 and 65 of age. The Act also stipulates issues of possible disqualifications, such as a criminal record, bringing ‘disrepute to Local Government by personal conduct’ or absence from local government meetings for two consecutive sessions. Then there are other issues for which a seat in the local government will be forfeited, such as membership in party politics or participating in political activities, becoming a civil servant, profiting from government companies or corporations or marrying a citizen of another country. Based on the Local Government Act of Bhutan, the main functions of local government are in the area of regulating and monitoring as well as enforcing public health and the general improvement of the local community. Examples are approving land use and development plans, regulating and allocating safe and clean drinking water, or regulating the creation of recreational areas or the monitoring operations of mines and

38

E. M. HLYNSDÓTTIR

quarries. Other types of monitoring include preventing illegal construction and preventing squatters. Other articles are more general in their approach, such as article 48, paragraph b, that local government should ‘provide democratic and accountable government for local communities’, and paragraph c, ‘coordinate maintenance of peace, harmony and security in their jurisdictions’ (Local Government Act of Bhutan 2009). Local government is permitted to levy taxes in designated areas at rates decided by the parliament. This includes taxes such as land and building taxes, cattle and grazing taxes and entertainment and advertisement taxes (see article 57 of the Local Government Act of Bhutan). The decentralisation of local government in Bhutan is still a relatively young endeavour, and in an assessment study on local governance in Bhutan from 2016 (Helvetas Swiss Intercooperation 2016), the findings showed that a principle of uniformity of local government was to some extent identified as a hindrance to the development of good governance. Moreover, there was a lack of consistency in the implementation and interpretation of legal frameworks and guidelines. It was also suggested that more decisive work was needed in the area of citizen participation and mechanisms for citizens to access information and platforms for complaints, as well as giving women and youth a direct voice in local governance. Some problems in relation to the quality of public services were identified: for example, the lack of coordination between central and local governments, a lack of horizontal coordination, slow and difficult decision-making procedures, weak social accountability and a limited possibility for local authorities to create their own revenues. Nonetheless, the report points out that local government in Bhutan has made remarkable progress in a short time—something that is to be valued. The Maldives are a democratic republic in the Indian Ocean. Like the Kingdom of Bhutan, the history of decentralised government in the Maldives is a relatively short one, although the traditions of local decisionmaking are much older. In a Review of the Decentralization Framework in the Maldives (Transparency Maldives 2019), the main developments are pointed out. In the 2008 constitution work, decisions were made regarding the issue of administrative decentralisation, which were then further developed in the Decentralization Act 7/2010 (with subsequent amendments). The 2010 Decentralization Act set up a system of elected councils that were supposed to provide services in the respective areas for, for example, road maintenance, preschool and vocational education, social services, water, land erosion and pest control (Commonwealth Local

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Government Forum 2016). Furthermore, 188 island councils were set up on every inhabited island, with 19 atoll councils overseeing and coordinating the work of the island councils, in addition to two city councils (with a minimum of 25,000 citizens) (Commonwealth Local Government Forum 2016). In the first local election in 2011, more than 1000 council members were elected. Due to political turmoil during the decade since the first local election took place, there was a considerable move towards more centralisation, with arbitrary decision-making on the central government’s behalf. In the 2017 election (postponed three times), the number of council seats was reduced to 664 (Transparency Maldives 2019). As seen in Table 3.2, there are 201 elected councils in the Maldives as of 2020. Local elections take place triennially, with the first taking place in 2011 and the fourth scheduled for April 2020, when roughly 900 members of 179 island councils, 18 atoll councils and four city councils will be elected to council seats (Xinhuanews 2019; Aiham 2020). Changes have also been made to the Decentralization Act introducing a minimum number of council seats for women (Zalif 2019). This is in line with some of the promises made by the new Maldivian president elected in the fall of 2018, who has, for example, promised to continue with the original plan of decentralisation by earmarking 5 per cent of the government income for the local councils (Xinhuanews 2019). Some of the main problems identified for the Maldivian local government have been the lack of willingness on behalf of the central government to include local councils in decision-making and a lack of fiscal decentralisation, which have severely limited the capacity of local councils to fulfil their responsibilities (Transparency Maldives 2019). In general, municipalities in Asia are large in population (OECD/UCLG 2019a), a rule to which Bhutan seems to stick. However, the situation of the Maldives is somewhat different, as the number of local authorities represents the complex situation of archipelagic states. Although both states have elected local governments, administrative decentralisation is weak, and is probably more in the form of deconcentration than devolution in the case of Bhutan or hindered by a lack of independent fiscal resources, as in the case of the Maldives.

Subnational Government in Small States in the Caribbean As shown in Table 3.3, there are eight small states in the Caribbean,

Archipelago

British (1979)

Saint Vincent and the Grenadines

389

344

606

430

10,010

22,806

156,000

110,000

112,000

183,000

287,000

393,000

397,000

586,000

283

326

302

667

39

17

3.7

4

52

36

19

31

83

46

66

27

Upper-middleincome

Upper-middleincome

Upper-middleincome

High-income

Upper-middleincome Upper-middleincome Upper-middleincome High-income

N/A

N/A

2

0.07

0.92

6.8

N/A

2

SNG share of total government expendituresd (%)

No elected local government No elected local government No elected local government No elected local government

56

N/A

N/A

N/A

N/A

7018

1965

8138

72f 202

5383

146

Average Number of municipal elected population local governmente

Sources Corbett and Veenendaal (2018)a , Worldometer (2020)b , United Nations: Department of Economic and Social Affairs Population Division (2019)c , The World Bank (2020)d , Commonwealth Local Government Forum (2018)e , Martin (2001)f

Island state

British (1974)

Grenada

Island state

British (1979)

Island state

Archipelago

Coastal

Coastal

Saint Lucia

The Bahamas Barbados

Belize

Suriname

786,000

British (1966) Dutch (1975) British (1981) British (1973) British (1966)

Guyana

196,849

Colonisation/independencea Geographical Geographical Populationb Population Proportion Income group in situationa density/km2 of urban 2020d size km2(a) population in 2018c (%)

State

Coastal

Small states in the Caribbean

Table 3.3

40 E. M. HLYNSDÓTTIR

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ranging in population from the two smallest, St. Vincent and the Grenadines and Grenada, with 110,000 and 112,000 citizens respectively, to Guyana with 786,000 citizens. All the states in this group are previous British colonies, except for Suriname, which was under the Dutch regime until 1975. The remaining states gained independence in the period from 1966 (Barbados and Guyana) to 1981 (Belize). The Bahamas and St. Vincent and the Grenadines are multi-island states, while Barbados, Grenada and Saint Lucia are single-island states. The situation of the three remaining states is somewhat different, as they are coastal states—a geographical situation they share only with Brunei Darussalam in this overview of small states. The co-operative republic of Guyana is the largest state by both geography and population; it is also by far the largest geographically of all the states introduced in this chapter, at 196,849 km2 . Furthermore, it is the only country with English as the official language in South America and it shares border with Venezuela, Brazil and Suriname. The Republic of Suriname is the smallest country by population in South America, although it is geographically the second-largest state introduced in this chapter, at 156,000 km2 ; it borders Guyana, Brazil and French Guiana. Both Suriname and Guyana are recognised as a part of the Caribbean in a cultural sense. Belize is considerably smaller, with a population of 390,000 in an area of 22,806 km2 . On the coast of the Caribbean Sea, it borders Mexico and Guatemala, with which it has had an ongoing border dispute (Commonwealth Local Government Forum 2018). The information on the situation in the Republic of Suriname is the least coherent of all the states introduced in Table 3.3. The political history of Suriname since gaining its independence in 1975 is marked by political disturbance, where the country was run by a military regime for an extended period of time (Central Intelligence Agency-The World Factbook 2020b). Local government was first established in Suriname in 1987. The constitution set out two levels of subnational government, district and sub-district (The Constitution of the Republic of Suriname (Bulletin of Acts and Decrees 1987 No. 166) 1987). The district councils are further divided into a representative arm and an executive arm. The sub-districts only have a representative role. In 2001 there were 10 district councils and 62 sub-district councils. Local elections take place every five years, and members of both district and sub-district councils are directly elected (Martin 2001). The president, however, appoints 19 district commissioners, a minimum of one for each district. In three

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cases there are two district commissioners, and in one case there are seven in its (Republiek Suriname: Ministerie van Regionale Ontwikkeling, n.d.) sub-districts and two for the capital city (Martin 2001). The setup of the local government in Suriname has clear traces of its Dutch heritage in the dualistic approach of separating between the representative and executive branches as well as the central appointment of the district commissioner (Daemen 2012). The subnational level has very limited responsibilities, mostly in the area of ‘small-scale infrastructure, maintenance of the local environment, and local administration’ (Martin, 2001, p. 151); consequently, the subnational level has very limited access to financial resources.6 Suriname is also often labelled as the least developed country in the Caribbean (GlobalSecurity.org, n.d.). The available information on local government from the Commonwealth Local Government Forum (2018) for the remaining states displayed in Table 3.3 shows that, except for Belize, subnational governments’ share of total government expenditure is very low, or less than 5 per cent. Only the Bahamas and Barbados fall into the category of highincome countries, while the remaining six countries in the Caribbean are upper-middle-income countries. The table also shows that urbanisation is rather low and, apart from the Bahamas (83 per cent) and Suriname (66 per cent), all these states are below 50 per cent in the overall proportion of urbanisation, which is low in comparison to the average urbanisation in the Caribbean (81 per cent) (United Nations: Department of Economic and Social Affairs Population Division 2019). There are some interesting variations in relation to the structure and organisation of subnational governments in this area. In Barbados, Grenada, Saint Lucia and St. Vincent and the Grenadines, there is no elected local government, and in the case of Guyana, the local government election only took place in 2016 after a break of 20 years. Thus, it may be argued that in the four cases without elected local government, political decentralisation has not taken place at all. The overall complexity of the local systems with elected local governments is high, with most states having several different types of local communities or authorities, some elected and some not, in addition to various types of centrally appointed civil servants. There is no common rule to electoral systems between states, and although a first-past-the-post system is used 6 The desk-based study this comparison is based on did not find any indications for major reforms to the local level in Suriname from the 2001 report from D. Martin.

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in many of the commonwealth countries, this is usually combined with a locally invented system and/or the proportional system. The states without elected local government do, however, have organised government on the local level, as in the case of Barbados, where local governance is administered through appointed councillors. Barbados is divided into 11 parishes in addition to the special entity of the capital city of Bridgetown. These are further divided into 30 districts. In the case of Grenada, all services are centrally provided, and there is no subnational structure in place at all. In St. Vincent and the Grenadines, there is a subnational structure based on six parishes as administrative units for the national government, but the local government level was dissolved as early as 1973 and was not re-established when the state gained independence. In St. Lucia, there are ten so-called administrative quarters governed through 15 constituency councils. There are two types of councils, village and city councils, and all members are appointed. Even in cases with an established elected local government, there is considerable asymmetry in place—for example, in the Bahamas, the capital city of Nassau and the island where it is situated do not have an independent municipal status, being directly administered by the central government (Commonwealth Local Government Forum 2018). In international comparison, the subnational governments’ share in total government expenditures is extremely low (OECD/UCLG 2019b), which suggests an emphasis on centralisation in the provision of services. Local authorities rarely have sole responsibility for services, often providing services in collaboration with the central government. Typical types of tasks are, for example, planning, water, sanitation and waste disposal and infrastructure such as roads. In fewer cases, the subnational level is responsible for pre-school, such as in the Bahamas, St. Lucia and St. Vincent and the Grenadines, and primary health care, as in the Bahamas and St. Lucia (Commonwealth Local Government Forum 2018). In sum, the findings suggest that local authorities have a marginal role in relation to service provision in these states.

Subnational Government in Small States in the Pacific There are seven small states in the Pacific, introduced in Table 3.4, ranging in population size from Tonga, with 105,000 citizens, to Fiji, with 896,000 citizens. Fiji and Tonga are also the largest and smallest

British (1978) British and France (1980) New Zealand (1962)

British (1979) US (1986) British protectorate (1970)

Solomon Islands Vanuatu

Kiribati 115,000 105,000

Archipelago 717

119,000

Archipelago 702

Archipelago 811

198,000

307,000

Archipelago 2821

686,000

Archipelago 12,189

896,000

Archipelago 27,986

Archipelago 18,274

146

163

145

70

25

25

49

23

23

54

18

25

24

56

(%)

Lower-middleincome Lower-middleincome Upper-middleincome

Lower-middleincome Lower-middleincome Upper-middleincome

Upper-middleincome

N/A

N/A

1

N/A

3.3

2.4

1.5

(%)

SNG share of total government expenditured

34,111

N/A 179 N/A (individuals)

N/A

No elected N/A local government 26 4577

9

No local N/A elected government 1 N/A

Number of Average elected local municipal governmente population

Sources Corbett and Veenendaal (2018)a , Worldometer (2020)b , United Nations: Department of Economic and Social Affairs Population Division (2019)c , The World Bank (2020)d , Commonwealth Local Government Forum (2018)e

FDR Micronesia Tonga

Samoa

British (1970)

Fiji

Colonization/independencea

State

Geographical Geographical Populationb Population Proportion Income group in situationa size density/km2 of urban 2020d population km2(a) in 2018c

Small states in the Pacific

Table 3.4

44 E. M. HLYNSDÓTTIR

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states, population-wise, that are discussed in this chapter. All seven states fall under the geographical categorisation of an archipelago. Fiji and Kiribati have a level of urbanisation of roughly 50 per cent, while the remaining states still have a very dispersed population, mostly representing the geographical situation of many small islands dispersed over a large area of sea, such as, for example, Solomon Islands (Commonwealth Local Government Forum 2018). Fiji, Samoa and Tonga are categorised as upper-middle-income countries by the World Bank, while the remaining four countries fall into the category of lower-middleincome countries. Similar to the small states in the Caribbean, the share of subnational government in total government expenditures in the Pacific is very low, and there is no information available for Tonga, Samoa and FDR Micronesia on this issue. Moreover, there is no elected government in Fiji and Samoa, and information was inconclusive on the situation of elected local government in FDR Micronesia. Fiji is by far the largest state introduced in this chapter that does not have established local elected government. The last local elections in Fiji took place in 2005, but local authorities were abolished in 2009 under military rule, when elected councillors were substituted with appointed councillors. The system is unitary, and all local governments have the same responsibilities. There are 13 municipal councils, divided into two city councils and 11 town councils, and 17 rural local authorities. In addition, there are 14 provincial councils based on traditional leadership. To add to the already complex situation, these different types of councils are overseen by three different agencies of ministries (Commonwealth Local Government Forum 2018). Plans to re-establish elected local government in Fiji were revoked by the parliament in 2019, mainly based on the assumption that the local government system was rife with corruption and needed a major overhaul before being re-established (Round 2019). Although the number of local government units in the individual states in the Pacific is relatively low, there are usually many non-elected local units based on traditional power structures in addition to the formal government structures. Hence, there are often two systems in place at the local level: one with a formal, modern state structure, and another traditional village structure. The traditional village structures represent systems that have little relevance to a modern democratic structure. An example of this is the situation found in Samoa, where there is a system of traditional villages and non-traditional villages; the former is in place in urban villages and the latter in rural areas. Based on the information presented by the

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Commonwealth Local Government Forum (2018), plans are underway to incorporate the traditional village system into the modern local government system. In other cases, there is a dual structure on the local level where local government is formally established for some units while traditional tribal organisations exist for others. An example is the case of Solomon Islands, where there is only one established local government in the capital city of Honiara, and the remaining parts of the islands are organised through provincial government based on traditional leadership. Another example is Tonga, which has around 170 villages in addition to the formal system of 179 elected district officers and town officers. In this case it is important to note that there are no elected councils in Tonga, as these are individuals who are elected to the position of district officers. In contrast is the state of Vanuatu, which has a relatively robust formal system where the elected local government is responsible for a wide range of services such as pre-school, primary education, healthcare, infrastructure such as roads, regional planning, and parks and environmental issues such as waste collection and disposal (Commonwealth Local Government Forum 2018). Overall, the administrative decentralisation of tasks to local authorities in Vanuatu seems to be more developed than in other states in this group, although subnational government expenditure is still extremely low in international comparison. The majority of states in the Pacific have a history of British colonisation, while FDR Micronesia was under U.S. influence, and Samoa was colonised by New Zealand. Vanuatu was under a dual French/British regime, which left a lasting mark on its the internal development (Premdas and Steeves 1992). With the exceptions of Samoa (1962) and FDR Micronesia (1986), all the states gained independence in the 1970s. This diversity has been extensively studied in numerous publications on the situation of small states in the Pacific, and it is safe to say that, compared to other groups of small states, this region is one of the moststudied one. The Federated States of Micronesia have a special status in this group as the only federated states. The Federated States of Micronesia comprises four states, each with its own constitution, and the central government is therefore relatively weak (Foster and Hezel 2020). Information on the situation of subnational government is relatively scarce; however, municipalities are usually composed of several small communities and are considered an important level of government. Local tribal leaders are highly respected, even more so than many elected national leaders (Nations Encyclopedia, n.d.). There are considerable differences in

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the organisation of local government between the states, but most municipalities are extremely small in population, based on information from the government website of the Federated States of Micronesia (National Government of the Federated States of Micronesia, n.d.). Chuuk state (pop. 53,000) has around 30 municipalities, Pohnpei state (pop. 36,196) at least six municipalities, Yap state (pop. 11,377) has 23, and the smallest state, Kosrae (pop. 6616), has four municipalities. It is, however, not clear if local government is elected in Micronesia or if there are any differences between the individual states. Overall, the organisation of local affairs in small states in the Pacific seems to be highly centralised. Moreover, similar to countries in the Caribbean, the responsibilities assigned to local authorities in the Pacific are mostly in the areas of infrastructure, environment and utilities such as roads, waste management or water supply. The exception to this is Vanuatu, as the information in the Commonwealth Handbook of Local Government (Commonwealth Local Government Forum 2018) shows that the local government in Vanuatu is responsible for a much wider range of tasks than in the other states in the group of Pacific states (2018). The information does not, however, reveal the quality or the depth of the service provision in Vanuatu.

Subnational Government in Small States in Europe The last group of countries introduced in this chapter comprises small states in Europe, of which there are only four countries in the size group between 100,000 to one million citizens. As seen in Table 3.5, Iceland, Luxembourg and Malta all belong to the World Bank’s category of highincome countries, and they are also the most urbanised states introduced in this chapter, with more than 90 per cent of the population living in urban settlements. This is a considerably higher proportion than the European average of 74 per cent. However, Montenegro sets itself apart from the other states, as it belongs to the group of upper-middle-income countries as well as being less urbanised. Moreover, Luxembourg and to some extent Iceland are ‘old’ states compared to other states introduced in this chapter, with long traditions of formal democratic local government (a notable exception is the Kingdom of Bhutan, never having been colonialised). Iceland and Malta are both island states, while Luxembourg and Montenegro are landlocked and situated in the heart of Europe.

Island state

103,000

1392 3.4

441,000 364,000c

242

67

94

98

91

High-income

High-income

Upper-middleincome High-income

27.6

1

11.7

10.3

SNG share of total government expendituref (%)

72

68

102

23

5055

6485

6127

27,304

Number of Average elected local municipal governmentd population

Sources Corbett and Veenendaal (2018)a , Worldometer (2020)b , Statistics Iceland (2020)c , The United Nations: Department of Economic and Social Affairs Population Division (2019)d , World Bank (2020)e , OECD/UCLG (2019b)f

Iceland

Malta

625,000

47

Land 13,452 locked Land 2586 locked Archipelago 316

Serbia (2006) Dutch (1867) British (1964) Denmark (1944)

Luxembourg

628,000

Geographical Geographical Populationb Population Proportion Income group in e situationa size density/km2 of urban 2020 population km2(a) in 2018d (%)

Colonisation/independencea

State

Montenegro

Small states in Europe

Table 3.5

48 E. M. HLYNSDÓTTIR

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Montenegro is the youngest sovereign state discussed in the chapter, only gaining independence in 2006. In relation to subnational governments’ share of total government expenditures, Table 3.5 shows that Iceland, with 27.6 per cent, is the clear winner; Luxembourg has 11.7 per cent and Montenegro 10.3 per cent, while Malta is an outlier in the group with a meagre 1 per cent share. The first three cases show the highest numbers for subnational governments’ share of total government expenditures for all the states introduced in this chapter. The OECD/UCLG (2019b) country profile report also shows that Iceland has the most extensive decentralisation, as the elected local governments are responsible for a wide range of services and have the fiscal autonomy to match it. Malta, on the other hand, only established elected local government in 1993, and although included in the constitution, the role and responsibilities at the local level are limited. Local government in Montenegro is protected by the constitution, and the average size of local government is high by international comparison, with 27,000 citizens on average. However, Montenegro has also established an interesting sub-municipal structure, as municipalities are further divided into around 1300 urban localities and rural communities, of which the rural communities are much more numerous. Luxembourg, by contrast, has an established local government system, but in line with its Napoleonic roots, local government has very limited responsibilities. The scores of individual states on the Local Autonomy Index7 created by Ladner et al. (2019) verify at least to some extent the importance of local self-government in individual countries. The index showed that Iceland is in the top ten with a score of 78.5, Luxembourg in the middle with 55.9 and Malta at the bottom with a score of 39.2 (pp. 240–241). Thus, it may be argued that Iceland and Malta are two extreme cases when it comes to exploring the role and organisation of subnational government in small states.

Decentralisation of Responsibilities to Subnational Government in Small States When comparing the level of decentralisation in the small states introduced in this chapter, several issues come to light. The first is in relation to

7 The state of Montenegro was not included in the Ladner et al. (2019) study.

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the state of political decentralisation. The comparison shows that there is no elected local government at all in seven cases: Fiji, Brunei Darussalam, Barbados, Samoa, St. Lucia, Grenada and St. Vincent and the Grenadines. Moreover, in Comoros, FDR Micronesia and to a lesser extent Suriname, the available information on the presence of local elections was not conclusive. According to Hankla and Downs (2010), local elected government is a fundamental variable to ensure accountability towards the people, and hence a precondition for the highest level of administrative decentralisation, which is devolution. Thus, from that point of view, these states do not have local self-government. Another indicator of the stage of decentralisation is the level of fiscal decentralisation as measured by the subnational share of total government expenditures. It has been argued that without fiscal decentralisation there can be no local self-government (Baldacchino 2012). Others have pointed out the interrelationship between political, administrative and fiscal decentralisation (OECD 2019). In the OECD/UCLG recent report on the finances of subnational government throughout the world, it was estimated that the average subnational government spending was around 24 per cent of overall public spending, with the subnational government in federal states on average accounting for 46.9 per cent of public spending vs. 19.4 per cent in unitary states (2019a). However, it is important to point out that of the 25 small states introduced in this chapter, only Cabo Verde, Iceland, Malta, Luxembourg and Montenegro were included in that overview. Nonetheless, the report provides an interesting framework for a discussion of the fiscal decentralisation of small states. Data on the proportion of subnational shares in the government spending were not available for 10 of the small states included in this chapter. Moreover, only Iceland has subnational expenditures higher than the OECD/UCLG report’s average of 19.4 per cent. The report defines local authorities with less than 20 per cent of the total public expenditure as having limited spending responsibilities (OECD/UCLG 2019a). Thus, the local authorities introduced in this chapter, with the exception of Iceland, have severely limited spending responsibilities. In studies and reports on the situation at the local level in these states, the lack of revenue authority on behalf of the subnational level is frequently criticised. This is viewed as a major factor in preventing meaningful decentralisation, both administrative and political, often preventing the local level from providing the services they are, by law, expected to deliver (Helvetas Swiss Intercooperation 2016; Moya 2016; Transparency Maldives 2019).

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In relation to administrative decentralisation, the level of subnational governments’ share of total government spending, as well as general information on the types of tasks allocated to the subnational level, suggests that in most states the administrative decentralisation is stuck on the deconcentrating stage, with central governments retaining the authority over decision-making and implementation (Ryan and Woods 2016). In other cases, the situation suggests delegation to the local level on behalf of the central governments, while the decentralised stage of devolution is most likely rare, as the fiscal revenues needed to reach this level are usually not available. Moreover, the comparison reveals that in the majority of states, the subnational system is very complex, with asymmetrical systems being common and different rules applying to different types of entities on the same tier of government. It is common for informal traditional systems (as in the case of Samoa) to function alongside formal local government units. In some cases, there is a complex mixture of traditional and formal systems in place. Thus, in general, it may be argued that decentralisation in these states is often more about decentralising the national government and less about establishing real democracy and tangible autonomy on the lower levels of government, as argued by Conyers (1983). One of the main arguments of the small-states literature in relation to problems inherent in smallstate public administration is the alleged lack of manpower and technical expertise (Baker 1992; Randma-Liiv and Sarapuu 2019). Thus, for decentralisation to be successful, a certain level of state capacity is needed, such as a certain level of quality and quantity of professional expertise at the central level. Consequently, Chattopadhyay (2013) has pointed out that in cases where individual states were successful in decentralising responsibilities onto the lower levels of government, their central government administration had the capacity to work on different levels of the implementation process. The argument of state capacity is further supported by Prud’homme (1995), who argues that the concept of critical mass is a key concept, both in relation to the lower levels of government and to the central government itself. Hence, he reasons that for decentralisation to be successful, local units need to be large enough in activities, population and income. Prud’homme further claims that it is not wise to transfer tasks from the central government to the subnational level to the extent that it makes the central government administration inefficient. Simply put, the central government must be large enough to be able to

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decentralise in a meaningful way. In relation to the states discussed in this chapter, this is perhaps the most important issue, as many of these states are in a fragile condition. However, there are also several cases of highincome states introduced in this chapter that have only a limited level of subnational government, for example Malta, Barbados and the Bahamas. Furthermore, as is evident from the comparison of small states in this chapter, Iceland is an outlier compared to other states in the same size category, with a much higher percentage of its total government expenditure being spent by local government than in any of the other states introduced. In a working paper by Ivanyna and Shah (2012) they made an attempt to create a worldwide indicator on localisation and decentralisation. In their country ranking for decentralisation they assign Iceland to eleventh place out of 182 countries included in the index, only to be followed by Luxembourg in 42nd place. Furthermore, most of the countries included in this chapter’s overview are situated at the bottom of their decentralisation ranking. The institutional traditions of Iceland as a Nordic state may contribute to the success of the Icelandic case; however, this raises the question of whether population size is irrelevant for the development of subnational government. The remaining chapters of this book will explore this question through the case of Iceland.

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India Today. (2020). Maldives Rejoins Commonwealth as UK Leaves EU . London. Available at: https://www.indiatoday.in/world/story/maldivesrejoins-commonwealth-as-uk-leaves-eu-1642432-2020-02-01. Accessed 15 March 2020. Ivanyna, M., & Shah, A. (2012). How Close Is Your Government to Its People? Worldwide Indicators on Localization and Decentralization. WPS6138. Washington, DC. Available at: http://documents.worldbank.org/curated/ en/534401468340175192/How-close-is-your-government-to-its-peopleworldwide-indicators-on-localization-and-decentralization. Kaiser, K. (2006). Decentralization Reforms. In A. Coudouel & S. Paternostros (Eds.), Analyzing the Distributional Impact of Reforms (pp. 313–354). Washington DC: World Bank. Ladner, A., Keuffer, N., Baldersheim, H., Hlepas, N., Swianiewicz, P., Steyvers, K., & Navarror, C. (2019). Patterns of Local Autonomy in Europe. Cham: Palgrave Macmillan. Local Government Act of Bhutan. (2009). Bhutan. Available at: http://www. localgovernment.bt/home/pageMenu/7. Accessed 20 March 2020. Martin, D. (2001). Governance in Suriname. Available at: https://publications. iadb.org/en/publication/governance-suriname. Ministry of Home & Cultural Affairs Kingdom of Bhutan Tashichhodzong. (n.d.-a). About Us: Vision and Mission. Available at: http://www.mohca.gov. bt/?page_id=156. Accessed 23 February 2020. Ministry of Home & Cultural Affairs Kingdom of Bhutan Tashichhodzong. (n.d.-b). Department of Local Governance: About Department. Available at: http://www.mohca.gov.bt/?page_id=167. Accessed 23 February 2020. Moya, Z. (2016). The Making of Developmental Local Government in Belize. In E. D. Schoburgh, J. Martin, & S. Gatchair (Eds.), Developmental Local Governance: A Critical Discourse in ‘Alternative Development’ (pp. 178–200). Basingstoke: Palgrave Macmillan. Nations Encyclopedia. (n.d.). Micronesia, Federated States of—Local Government. Available at: https://www.nationsencyclopedia.com/Asia-and-Oceania/Mic ronesia-Federated-States-of-LOCAL-GOVERNMENT.html. Accessed 29 February 2020. OECD. (2019). Making Decentralisation Work: A Handbook for PolicyMakers. Available at: http://www.oecd.org/cfe/Policyhighlights_decentrali sation-Final.pdf. OECD/UCLG. (2019a). 2019 Report World Observatory on Subnational Government Finance and Investment: Key Findings. Available at: http://www.oecd.org/cfe/regional-policy/Observatory-on-SubnationalGovernment-Finance-and-Investment.htm. OECD/UCLG. (2019b). Report of the World Observatory on Subnational Government Finance and Investment—Country Profiles. Available

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at: http://www.oecd.org/cfe/regional-policy/Observatory-on-SubnationalGovernment-Finance-and-Investment.htm. Oppong, N. (2016). The Twists and Turns of Institutional Innovation in Small Island Developing States: The Case of Tuvalu. Commonwealth and Comparative Politics, 54(1), 23–45. https://doi.org/10.1080/14662043.2015.112 4498. Pina-Sánchez, J. (2014). Decentralization as a Multifaceted Concept: A More Encompassing Index Using Bayesian Statistics. Revista Espanola de Ciencia Politica, 1(34), 9–34. https://doi.org/10.1234/recp.n34.2014.pp9-34. Premdas, R. R., & Steeves, J. S. (1992). Decentralization in a Ministate: The Case of the Republic of Vanuatu. In R. Baker (Ed.), Public Administration in Small States and Island States (pp. 84–98). West Hartford, CT: Kumarian Press. Prud’homme, R. (1995). The Dangers of Decentralization. The World Bank Research Observer, 10(2), 201–220. https://doi.org/10.1093/wbro/10. 2.201. Randma-Liiv, T., & Sarapuu, K. (2019). Public Governance in Small States: From Paradoxes to Research Agenda. In A. Massey (Ed.), A Research Agenda for Public Administration (pp. 162–179). Cheltenham: Edward Elgar Publishing. Republiek Suriname: Ministerie van Regionale Ontwikkeling. (n.d.). Districten. Available at: http://regionaldevelopment.gov.sr/contact/districten/. Accessed 20 March 2020. Rodríguez-Pose, A., & Gill, N. (2003). The Global Trend Towards Devolution and Its Implications. Environment and Planning C: Government and Policy, 21(3), 333–351. https://doi.org/10.1068/c0235. Round, S. (2019). Motion for Local Elections Defeated in Fiji Parliament. Radio New Zealand. Available at: https://www.rnz.co.nz/international/ pacific-news/386256/motion-for-local-elections-defeated-in-fiji-parliament. Accessed 15 March 2020. Ryan, R., & Woods, R. (2016). Decentralization and Subnational Governance: Theory and Praxis. In E. Schoburgh & R. Ryan (Eds.), Handbook of Research on Sub-National Governance and Development (pp. 1–33). Hershey: Information Science Reference. https://doi.org/10.4018/978-1-5225-1645-3. ch001. Statistics Iceland. (2020). Population by Municipality, Sex, Citizenship and Quarters 2010–2019. Available at: https://px.hagstofa.is/pxen/pxweb/en/ Ibuar/Ibuar__mannfjoldi__1_yfirlit__arsfjordungstolur/MAN10001.px/? rxid=3ef9dbf4-c470-4175-afd0-44aabe47744e. Accessed 6 March 2020. The Constitution of the Kingdom of Bhutan. (2008). Available at: http://www. localgovernment.bt/home/pageMenu/7. Accessed 19 March 2020.

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The Constitution of the Republic of Suriname (Bulletin of Acts and Decrees 1987 No. 166). (1987). Available at: http://www.oas.org/juridico/PDFs/ mesicic4_sur_const.pdf. Accessed 20 March 2020. The National Government of the Federated States of Micronesia. (n.d.). States Leadership, The National Government of the Federal States of Micronesia. Available at: https://gov.fm/index.php/state-government. Accessed 29 February 2020. The World Bank. (2020). Data: World Bank Country and Lending Group— Country Classification. Available at: https://datahelpdesk.worldbank.org/ knowledgebase/articles/906519-world-bank-country-and-lending-groups. Accessed 24 February 2020. Transparency Maldives. (2019). Review of the Decentralization Framework in the Maldives. Male. Available at: http://transparency.mv/v16/wp-content/ uploads/2019/08/RDFM_ENG_FINAL-for-Website.pdf. United Nations: Department of Economic and Social Affairs Population Division. (2019). World Urbanization Prospects 2018: Highlights (ST/ESA/SER.A/421). Available at: https://population.un.org/wup/Pub lications/. Worldometer. (2020). Countries in the World by Population. Available at: https://www.worldometers.info/world-population/population-bycountry/. Accessed 25 March 2020. Wunsch, J. S. (2013). Analyzing Self-Organized Local Governance Initiatives: Are There Insights for Decentralization Reforms? Public Administration and Development, 33(3), 221–235. https://doi.org/10.1002/pad.1652. Xinhuanews. (2019). Asia & Pacific: Maldives to Hold Fourth Local Council Elections on April 4, 2020. Available at: http://www.xinhuanet.com/eng lish/2019-11/20/c_138570160.htm. Accessed 19 March 2020. Zalif, Z. (2019). Local Council Elections 2020: Over 900 Councilors to Be Elected. rajje.mv. Available at: https://raajje.mv/67605. Accessed 19 March 2020.

CHAPTER 4

The Nordic Local Government Model: The Icelandic Way

Abstract When referring the Icelandic subnational government, Iceland is usually marked as a member of the Nordic model of local government. As is demonstrated in this chapter this is somewhat problematic as there are important nuances to the Icelandic local government system which set it apart from the other Nordic states. It is a latecomer in relation to decentralisation and Icelandic local authorities have less responsibilities than the other Nordic states. Nevertheless, local authorities are highly autonomous and have high political and fiscal discretion over their responsibilities. It may be argued that the Icelandic local government level has been in a continuous phase of reform since the early 1990s, where the main aim of the central government has been to make local authorities more functionally robust. Although, Iceland shares cultural and institutional traditions with the other Nordic states it has created a system that deviates in important aspects from the Nordic model of local government. Keywords Nordic local government · Iceland · Autonomy · Decentralisation · Local government reforms · Small states

The Nordic states are welfare states, in the sense that their systems are generally characterised by the principle of universal social rights and the value of equality (Sellers and Lidström 2007). Moreover, they have © The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_4

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all integrated subnational government in the implementation process of services at the community level. This also means that local and regional governments are responsible for a large part of the public sector’s financial and human resources (Lægreid 2018). The Nordic model of local government overlaps significantly with Continental European federal countries, as they share the same roots in Roman legal tradition. However, the career systems in the Nordic countries are more open to recruitment, and the system on the whole is more open and transparent to citizens than in the Continental systems (Kuhlmann and Wollmann 2014). Moreover, the Nordic system is characterised by strong local self-government and large professional administrations (Baldersheim et al. 2017). Iceland is a unitary state with subnational government organised on one tier. In the Nordic context, Iceland is by far the smallest state, with only around 364,000 citizens; none of the other four Nordic states have fewer than five million citizens. When it comes to decentralisation, Iceland was much slower to embark on reforms based on the decentralisation of welfare tasks onto the local level. As of September 2020, there were 69 municipalities in Iceland, with populations ranging from around 40 to around 130,000, with a median size of around 850. Previous studies of the Icelandic local government system have shown that the system deviates in important ways from the Nordic model (Hlynsdóttir 2018, 2019). As subnational government is not subdivided in any way, the terms ‘local government’ and ‘subnational government’ will be used interchangeably in relation to the Icelandic case.

The Origin of the Icelandic Local Government System There is a strong tradition of local decision-making in Iceland. The existence of Icelandic municipalities has been protected by the 78th article of the Icelandic constitution since 1874. Municipalities are first mentioned in Icelandic annals in the thirteenth century, and the territorial structure of many municipalities has not changed since then. Thus, traditionally speaking, Icelandic municipalities are still based on the fundamental traits of their origin as communities. This is characterised by a situation in which the citizens’ identification with a community coincides with their identification with the territorial borders of a municipality or the locality (Lowndes 1995). The current local government structure was implemented in 1872 with the introduction of a Local Government

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Act (Tilskipun um sveitarstjórn á Íslandi 1872). Although this act was essentially Danish in origin, the Icelandic parliament was able to adjust its implementation of the Local Government Act to the special circumstances of Iceland. In the beginning, the were two acts: one for the town of Reykjavík and one collective act for all the remaining municipalities. As more towns gained township rights, special acts were created for each town. There were never many, however, with only 13 municipalities having township rights in 1950. Although individual town acts shared considerable similarities, they were in no way identical, and there were important nuances between individual acts. This situation of special acts for urban and rural settlements was similar to the Danish situation at that time, where towns and rural areas had different responsibilities (Blom-Hansen 2012). The acts for towns and other municipalities were finally integrated into one act in 1961, while the last remaining differences between towns and other types of municipalities were only abolished in 1986. The management of the municipalities also developed differently between towns and rural municipalities. In the bulk of the municipalities, the council leader (or mayor) was simultaneously the political leader and the municipal manager. In contrast, and similar to the Danish market town system (Blom-Hansen 2012), an office of either the executive mayor or council manager was developed in the towns, and in some cases, the council managers in the towns were appointed by the central government, having magistrate responsibilities in addition to their council manager role. This practice was soon abolished in the larger cities, yet it was practised well into the twentieth century in many of the smaller towns in Iceland, with the last town to have a centrally appointed manager eliminating the system in 1938. The capital city of Reykjavík introduced a system of executive mayors early in the twentieth century, and since then, with few exceptions, has stuck to that government structure. The tradition for the rural areas was somewhat different from the urban areas, as the new system introduced in 1872 had councils usually consisting of three to five members, and the voting system was personal or direct. The individual with the highest number of votes in a local election usually became the leader of the council. This individual then led council meetings and handled the day-to-day management of the municipality. In the early 1990s, many Icelandic local councils still used a variation of this original voting system to elect the local council. In the local election in 1990, this type of election took place in 126 (62 per cent) out of 204 local councils. Moreover, during the 2018 local election, this type of

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voting was still being used in 16 (22 per cent) municipalities in Iceland (Statistics Iceland 2019b). As pointed out before, the local government structure introduced in the nineteenth century was originally similar to the situation in Denmark, with towns, rural municipalities and counties on one tier, regions on the second tier and the central government on top. However, in 1872 the population of Iceland was only around 70,000 individuals (Statistics Iceland 2019a), and as urbanisation was in its infancy, most people lived scattered around the country in rural municipalities or small villages along the coastline, the largest town being Reykjavík. Thus, it was soon deemed impractical to keep the second tier of local government, and the regions were abolished in 1904. However, counties were still in place, and in the rural areas one of their several roles was financial oversight coordination for municipalities; moreover, and unlike the towns, the municipalities were not entirely independent. Rural and village municipalities were subjected to the oversight of an inter-municipal county committee. The county committee was a quasi-regional entity responsible for various shared services, such as rural road infrastructure and organised sheep herding. More importantly, the district committee was also responsible for the municipal finances, which meant that the municipalities were financially interdependent. This interdependence has been identified as one of the major reasons why the number of municipalities in Iceland multiplied in the early twentieth century (Björnsson 1972). As the fishing villages began to expand, they wanted money to invest in their infrastructure, but to obtain bank loans, their neighbouring rural municipalities within the county committee needed to approve their financial schemes. Many of the more rural and conservative areas found it difficult to accept such risky financial plans. This led to the tradition of a clear separation between urban and rural settlements in Iceland as villages split from the rural communities and founded a separate municipality. Hence, it is relatively rare to find municipalities without a previous history of amalgamation with both villages and rural communities within their borders. This led to the widespread belief that rural and village communities could not coexist within the same municipality, thus fuelling the development of urban–rural cleavages. This has had a long-lasting effect, with urban–rural cleavages affecting the modern debate on, for example, municipal mergers and the discourse between the Reykjavík city-region and the remaining parts of the country (Hlynsdóttir 2018).

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The Institutional Framework of Icelandic Local Governments The Icelandic local government system is a monistic (Wollmann 2004) council-committee system (Mouritzen and Svara 2002) in which the local council is formally the main source of power. The existence of local government is protected by the constitution, with further regulations set by the Local Government Act (no. 138/2011). Local governments are responsible for a variety of legally assigned tasks in addition to voluntary tasks. The rule of thumb is that Icelandic local authorities may take up any task they deem necessary as long as it is not assigned to another body or prohibited by law (Valsson 2014). Similar procedures are found in the other Nordic countries, such as Norway (Baldersheim et al. 2017). Overall, the institutional framework has been remarkably stable since the introduction of the current system 150 years ago. Local elections take place, without exception, at the end of May every four years. It is possible to use two types of electoral systems. The first type, already mentioned in the previous section, is personal and direct, and comes into action as a default if no lists come forward. Hence, in such cases, every eligible citizen in the municipalities automatically becomes a runner for a council seat. On the election day, the voters write the name of their preferred candidate on the ballot sheet. The five people with the highest scores automatically become members of the council, and the person with the highest score usually becomes the council leader and mayor. As pointed out before, this type of voting is a remnant of the old electoral system installed in the rural municipalities in the nineteenth century, and usually only very small municipalities use this type of electoral system. Nevertheless, 22 per cent of all Icelandic municipalities used this type of voting in the local elections in 2018 (Statistics Iceland 2019b). The second and most frequent type of voting is proportional (D’Hondt method), but without a threshold. In 2018, 56 municipalities (with 99 per cent of the population) used the proportional system of voting (Statistics Iceland 2019b). How strong the presence of national political parties is on the local level varies greatly between municipalities, and local politics tend to concentrate heavily on local issues. Nevertheless, there is a positive correlation between population size and the emergence of political parties, which may not come as a

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surprise, as smaller communities often find it hard to organise political work (Kristinsson 2010). On the other hand, urbanisation seems to play a part in this development, as throughout the twentieth century, voting records show that smaller villages and towns were much more likely to organise political work based on national parties than their counterparts in even much larger rural communities. The tendency to organise local lists for local elections therefore has a long tradition. In the 2018 local government elections, only around half of the 502 representatives elected in proportional elections were from lists affiliated with national parties. The other half came from local lists (Statistics Iceland 2019b). Moreover, even though the political parties dominate the council politics in larger municipalities, there are notable exceptions to that rule. The most famous example is the case of the landslide victory of the local list The Best Party in the city of Reykjavík in 2010, as the comic Jón Gnarr became the executive mayor of Reykjavík. The 2010 election was an exception to a rule, as the leading national political parties were heavily punished in these elections due to troubles related to the ongoing financial crisis (Hlynsdóttir 2016b). Findings have shown that, in general, local and national politics are not heavily interlinked, and although there is a tendency for voters to punish government parties for their mishaps at the national level in local elections, it is not a strong one (Kristinsson 2001). Turnout at local elections has traditionally been very high in the Icelandic setting; however, in the past few elections, this trend has been disrupted. The turnout fell below 80 per cent for the first time in 2006, and it continued to decline in 2010 (73.4 per cent) and again in 2014 (66.4 per cent). The turnout then increased in 2018, up to 67.6 per cent. Nevertheless, the overall trend is one of decline, especially in the larger municipalities, while in the small municipal setting (below 1000 citizens), the turnout is still above 80 per cent on average. Younger people as well as citizens with foreign backgrounds are much less likely to turn up at the polling stations than older people and Icelandic citizens (Statistics Iceland 2010, 2015, 2019b). The political division within the council is based on the majoritarian rule, and councils are divided into the majority and minority parties. Coalitions are common in the larger municipalities, while in the smaller municipalities, one list majority is the norm. This effectively means that the majority parties are generally always on the winning side in every dispute, as they hold the majority in the council (Hlynsdóttir 2017). Article 11 of Local Government Act no. 138/2011 provides a framework

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for the number of councillors based on municipal population size. The number of council members needs to be unequal. In reality, more than two-thirds of all councils consist of between five and seven members, or 30 and 26 respectively, with only 10 councils using nine-member councils and five using 11-member councils. The city of Reykjavík is the only council with 23 members. Each council decides on the number of its council members within the range given by the law. However, there is a tendency for councils to use the lower limit, and Kristinsson (2014) has argued that the ruling parties in the council like to keep the council size small, as this makes it more difficult for new parties to enter the council, thus functioning as an informal threshold. Increasing the number of council members is highly controversial; the most recent example is the case of the city council of Reykjavík, where the number of council members was increased from 15 to 23 beginning in 2018. This has led to a debate on the increase in the cost of running the council, as all the Reykjavík city council members are full-time employees; moreover, it has shed light on problems relating to the internal work of the council (Fréttablaðið 2019). Compared to other Nordic local government councils, the Icelandic local councils are considerably smaller. As an example, councils in small, rural municipalities in Norway consist of 15–20 members (Bjørnå 2012), compared to five in Iceland. Studies also suggest that while the Nordic councils usually function as assemblies, the Icelandic local council is a management council, where council members are often directly responsible for various tasks and issues (Hlynsdóttir 2017). A survey conducted in 2017 among all council members in Iceland showed that over 70 per cent of the respondents had led committee work relating to their council work. The same study also showed that Icelandic local council members in general have a high workload, which includes backbenchers who seem to be able to put their mark on the council work by taking leadership roles for various tasks and issues. This is especially interesting, as the Icelandic system is essentially a traditional layman system, and adding the workload of local council tasks to their daily schedule puts considerable constraints on individual council members. This is demonstrated in a very high turnover, as on average 60 per cent of all council members are new recruits following each local election (Hlynsdóttir 2017). Thus, in more recent times, there has been a strong rhetoric for increasing remuneration

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for local council members or even making council work a full-time occupation. This debate will be further explained and discussed in Chapter 6 of this book.

Horizontal Power Relations at the Icelandic Local Government Level As previously described, the local council is the first source of power in the Icelandic local government power structure. In addition to the council, there are various committees at the local level, of which the executive board is the most important. The executive board is proportionally elected based on the majority and minority in the council; hence, for a three-member board, two members are chosen by the majority in the council, while the parties in the minority position must collectively decide on one person. The executive board is responsible for the daily management and fiscal administration of the municipality. Councils are not obliged to set up an executive board, and not all of them do; moreover, municipalities with five-member councils are not permitted to establish an executive board (Local Government Act no. 138/2011). The positions of the leader of the council and the leader of the executive board are usually assigned to the leading politicians on the council. The same person is not normally chosen for these positions. These leadership positions do not have independent powers, and although voting takes place within the council on who should be assigned to the positions, these are normally only formalities, as the majority on the council can effectively decide without consulting the minority. Usually, the council leader is the individual who in most other settings would be referred to as the mayor. However, there are cases where the leader of the executive board is obviously the leading politician of the municipality (Hlynsdóttir 2016a). In addition to the council and the executive board, the most important figure in the day-to-day management of the council is the local government’s chief executive. Since the introduction of Local Government Act no. 138/2011, all municipalities must have a chief executive; however, this person may be hired based on either professional merits or political basis. In cases where the chief executive is hired based on professional merits, s/he is a council manager working closely with the council led by the council leader (mayor) and the executive board led by the leader of the executive board. Essentially, there are three different types of local government chief executives. The first is a chief executive hired by the

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council from within the council itself; this generally means that the chief executive is the leading politician of the winning party in the local election. This individual then becomes an executive mayor, a role which is, in many ways, similar to the Danish type of mayor. Unlike a Danish mayor, however, the Icelandic executive mayor does not share his or her executive responsibilities with anyone, and s/he is the manager of the local administration in every aspect (Hlynsdóttir 2015). The council manager type of chief executive, on the other hand, has more in common with the Norwegian or Finnish type of chief executive. However, the Local Government Act does not distinguish between the political and the administrative arms of local government, as in the Norwegian case, and the council managers are generally less powerful than, for example, their Finnish counterparts (Hlynsdóttir 2020). Moreover, in municipalities not using the proportional voting system, the person receiving the highest number of votes in the local election usually automatically becomes the manager of the municipality. These individuals are, however, fundamentally different from the executive mayors, as they usually have a very limited number of staff and only work part-time (Hlynsdóttir 2016c). This complexity in the administrative leadership system is a source of some confusion. There is no semantic separation in the Icelandic language between the different types of chief executives, and the existing differentiation in their titles is based on the old separation between urban and rural types of managers. However, there are no qualitative differences in the work responsibilities for the individual types of chief executives. Historically speaking, local councillors and local leaders were mostly men, yet there are notable and important exceptions to that rule. One example is from 1908, when a group of four women ran with an all-female list, and all four entered the city council of Reykjavík (Styrkársdóttir 2006). Yet this was exceptional, and the presence of women at the local level did not begin to increase until the 1970s. Women were more often found in councils in urban settlements, while largely absent in smaller or more rural municipalities. In 1980, the proportion of female council members was 12 per cent, with their number rising in every local election, to 28 per cent in 1998 and 47 per cent in 2018 (Hlynsdóttir 2020). At the same time, the number of female mayors also increased, although not as dramatically, reaching 34 per cent following the 2018 local elections.1 1 Data on the number of female mayors in Iceland were collected for the Icelandic country chapter in the forthcoming edition of the Routledge Handbook of Local Elections and Voting, edited by Ulrik Kjær, Adam Gendzwill and Kristof Steyvers.

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This increase has been especially obvious in the past two or three elections, with the number of female mayors and chief executives substantially increasing.

Sources of Revenue for Icelandic Local Governments Overall, a detailed fiscal analysis is lacking on the Icelandic local level. Nevertheless, the Icelandic Association of Local Authorities provides detailed information on key issues concerning the Icelandic local governments’ financial situation through its annual publication of a yearbook (Samband íslenskra sveitarfélaga 2019). The most important source of income for Icelandic municipalities is the personal income tax, on which councils may set the yearly rate between 12.44 and 14.52 per cent (Act on local government funding, no. 4/1995). In 2018, the income tax accounted for 68.8 per cent of municipalities’ revenues. Almost all local councils have set the rate in the top percentage, with only 18 municipalities not using the highest percentage in 2018. The second-most important tax is the property tax, accounting in 2018 for around 14.6 per cent of municipal revenues, and over which councils have some discretion, although the upper limit of the tax is decided by law and councils may not abstain from levying the property tax. The third funding method is through the municipal equalisation fund, which accounted for 14.8 per cent in 2018 (Samband íslenskra sveitarfélaga 2019). Local councils are also able to charge fees for specific services and rental services. However, if councils want to receive funding from the equalisation fund, they must use up all possible tax funding opportunities first; hence, they must set the tax rate as high as possible. Smaller municipalities with a weaker tax base more often need transfers from the equality fund, and in some cases, this is a large proportion of the municipalities’ revenues. Normally, however, municipalities are fully funded by local sources of revenue. Since taking over the disability service, there has been an increase in direct transfers from the central government to the local level. Nevertheless, 80 per cent of all transfers are unconditional, and earmarked transfers are very rare (Baldersheim et al. 2019). On average, more than half, or 54 per cent, of local government revenues (introduced above) are spent on education, followed by social services (disability services included) taking up 20 per cent of revenues (Samband íslenskra sveitarfélaga 2019). However, the yearbook also

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shows that there are examples of local authorities spending between 60 and 80 per cent of their revenues on education, leaving very little for other tasks, community development or property maintenance. Many municipalities were in serious financial trouble following the financial crisis in 2008, and in one case, this led directly to an amalgamation of the municipality in question. This resulted in a major overhaul of the financial framework for Icelandic local government, led by the central government and implemented through Local Government Act no. 138/2011. The section on financial framework is now much more detailed, and financial planning and budgeting are more restrained than before. Although borrowing does not require approbation by the state municipalities, debts may only be 150 per cent of their regular income level (Valsson 2014). Before this act came into force, municipalities were left to decide freely on the extensiveness of their borrowing, a custom that is believed to have led many local communities to the brink of bankruptcy following the financial crisis in 2008.

Reforms at the Icelandic Local Government Level The Icelandic local government system is symmetrical in its structure, with all local government assigned the same tasks by law. Unlike the other Nordic countries, where the decentralisation of tasks onto the local level began as early as the 1960s (Baldersheim and Rose 2010), the Icelandic system was still heavily centralised in the early 1990s (Hlynsdóttir 2018). Individual municipalities had been able to develop in very different ways, and as they were not responsible for any of the large welfare tasks, such as primary education, many had turned to entrepreneurial behaviour, investing heavily in local enterprises or taking a lead in the development of voluntary projects such as recreational facilities and kindergarten services. However, this also meant that the difference in the service level between rural and urban municipalities was huge. In an average rural municipality in the early 1990s, there was no waste management, pre-school service, or sport facilities; there were no or only limited services for the elderly, and water supply (hot or cold) was not organised centrally.2 Principally, each farm was self-sufficient, and the local mayor was responsible for the 2 Hot groundwater is, with the exception of a few areas that lack access to it, used for general house heating in Iceland and was normally provided by local government.

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accounting and limited day-to-day management of the municipality. In the larger urban settlements, there were municipal offices with organised opening times and professional management, recreational facilities, organised water supply and waste management, to name but a few of the available services. Thus, urban settlements had already introduced basic administrative structures with offices and general operating hours, while rural communities rarely had. This was the situation in the early 1990s when the central government, led by the then-minister of local government, began the process of decentralising welfare tasks, beginning with social services such as economic assistance in 1991 and followed by primary education in 1996 (Hlynsdóttir 2016a). Around the same time, municipal planning and local planning were made mandatory for all rural and urban land, the highest authority for planning was decentralised onto the local level and local authorities were obliged to initiate municipal plans. Before that, farmland and uninhabited land in the highlands had been exempted from planning and building regulations (Jóhannsdóttir 2017). The final major transfer took place in 2011, when the responsibility for disability services was transferred onto the local level. Unlike in the other Nordic countries, Icelandic local governments are not responsible for primary health care (Baldersheim et al. 2019). They are, however, involved in various tasks without being legally obliged to, such as setting up recreational facilities. The past 30 years have therefore seen unprecedented changes in the responsibilities of Icelandic local government. These governments have become major players in the provision of welfare services and the general well-being of the citizens, are responsible for around 12.6 per cent of the gross domestic product (GDP) and employ around 12 per cent of the Icelandic workforce (Björnsson 2014; OECD/UCLG 2019). However, at the same time, the general structure of the system has largely remained the same, with a large proportion of municipalities being extremely small, in addition to a handful of larger municipalities or cities. However, changing patterns of citizen migration have led to a trend where the large municipalities grow larger and the smaller become smaller; hence, the difference in capacity in relation to the self-organisation of services has grown exponentially. Nevertheless, Icelandic local authorities enjoy a high level of autonomy, scoring high on almost every index measuring it (Baldersheim et al. 2019; Ladner et al. 2019).

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It may be argued that this high level of local autonomy is the reason why the central government has not, until now, been able to make large-scale territorial restructuring changes at the local level. As pointed out by Kuhlmann and Wollmann (2014), territorial restructuring usually precedes functional changes. However, this was exactly the opposite in the Icelandic case. According to the Icelandic Local Government Act (no. 138/2011), citizens of individual municipalities must be allowed to vote on the issue of pending amalgamation, and the results of the referendum are final. The minister of local government initiated a large-scale local referendum on the issue of amalgamation in 1993, with the aim of reducing the number of municipalities at the time from around 200 to 44. The results were meagre, with only one amalgamation occurring as a direct consequence of the referendum. Another attempt in 2005 met with similar results (Eythórsson 2014). Nevertheless, the number of municipalities has dropped dramatically since 1990. It may be argued, though, that this reduction in the number of municipalities has first and foremost been a side effect of the central government’s decision to decentralise welfare services onto the local level (Hlynsdóttir 2018). The situation in early 2020 still shows a high proportion of small local governments and that the previous amalgamations have not led to a dramatic rise in the number of large municipalities. Rather, there has been a decrease in the number of extremely small municipalities (with fewer than 500 residents) alongside an increase in the number of slightly larger municipalities (500–1000 residents). But change is lurking on the horizon, and in January 2020, the Icelandic parliament agreed on a parliamentary resolution stating that by 2022, the minimum population of municipalities must be no less than 250, and by 2026 it must be no less than 1000. The plan is to use a mixed approach and give municipalities time to choose their merging partners within the given timeframe. However, if the municipalities are not amalgamated by their own free will before 2026, the central government will initiate an obligatory amalgamation. Although smaller municipalities objected, the Icelandic Association of Local Authorities agreed to the resolution (viljinn.is 2020). In early 2020, the resolution has yet to become law, but many local authorities have already begun negotiations with their neighbours on merging procedures. If this project continues to unfold as planned, this will represent a major restructuring of the Icelandic local government system, as in 2020, 37 (54 per cent) out of 69 municipalities have fewer than 1000 residents (Statistics Iceland 2019c).

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As the discussion in this chapter demonstrates, the Icelandic case diverts from the Nordic model on a few important points. The major difference is the fact that tasks were decentralised to the local level much later in Iceland than in the other Nordic states. As will be discussed in Chapter 6, this has contributed to the increased complexity of various aspects of the Icelandic local government level. However, before discussing the different aspects of decentralisation in the Icelandic system, will discuss the main source of political cleavages at the local level in Iceland, the urban–rural divide and the centre–periphery divide.

References Act on Local Government Funding Pub. L. No. 4/1995. Baldersheim, H., Houlberg, K., Lidström, A., Hlynsdóttir, E. M., & Kettunen, P. (2019). Local Autonomy in the Nordic Countries. Kristiansand: Universitetet i Agder: Norwegian Association of Local and Regional Authorities. Baldersheim, H., & Rose, L. E. (2010). Territorial Choice: Rescaling Governance in European States. In H. Baldersheim & L. E. Rose (Eds.), Territorial Choice: The Politics of Boundaries and Borders (pp. 1–20). Basingstoke: Palgrave Macmillan. Baldersheim, H., Rose, L. E., & Sandberg, S. (2017). Local and Regional Government in the Nordic Countries: Co-Operative Decentralization. In O. Knutsen (Ed.), The Nordic Models in Political Science: Challenged but Still Viable? (pp. 193–218). Oslo: Fagbokforlaget. Bjørnå, H. (2012). Gender Balance and Institutions in Local Government— Examples from Rural Norway. Lex Localis—Journal of Local Self-Government, 10(2), 129–152. https://doi.org/10.4335/10.2.129-152(2012)ISSN. Björnsson, K. (2014). Hlutur sveitarfélaga í umfangi hins opinbera, Samband íslenskra sveitarfélaga. Available at: http://www.samband.is/um-okkur/sjo narmid/nr/1977. Accessed 11 March 2020. Björnsson, L. (1972). Saga sveitarstjórnar á Íslandi síðara bindi. Reykjavík: Samband íslenskra sveitarfélaga. Blom-Hansen, J. (2012). Local Government in Denmark and the 2007 Municipal Reform. In A. Moisio (Ed.), Rethinking Local Government: Essays on Municipal Reform (pp. 43–82). Helsinki: Government Institute for Economic Research, Vatt Publications, 61. Eythórsson, G. T. (2014). Sameining sveitarfélaga á Íslandi í 70 ár. Röksemdir sameiningarsinna og andstæðinga. Icelandic Review of Politics & Administration, 10(1), 143–168. Available at: http://www.irpa.is/article/view/1326. Accessed 19 November 2014.

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Fréttablaðið. (2019, December 17). Vilja fækkun borgarfulltrúa. Fréttablaðið, p. 6. Available at: https://www.pressreader.com/iceland/frettabladid/201 91217/281578062555906. Hlynsdóttir, E. M. (2015). Ordførermakt eller rådmannsmakt: Lokalpolitisk lederskap på Island. In N. Aarsæther & K. H. Mikalsen (Eds.), Lokalpolitisk lederskap i Norden (pp. 69–87). Oslo: Gyldendal Akademisk. Hlynsdóttir, E. M. (2016a). Administrative Capacity and Long-Term Policy Making at the Icelandic Local Level. Icelandic Review of Politics & Administration, 12(2), 237–258. https://doi.org/10.13177/irpa.a.2016.12.2.3. Hlynsdóttir, E. M. (2016b). Leading the Locality: Icelandic Local Government Leadership Dilemma. Lex Localis, 14(4), 807–826. https://doi.org/ 10.4335/14.4.807-826(2016). Hlynsdóttir, E. M. (2016c). Professionalism Among Icelandic Mayors: Job Postings, Experience and Education as Determinants of Professionalism at the Icelandic Local Level. Icelandic Review of Politics & Administration, 12(1), 1–22. https://doi.org/10.13177/irpa.a.2016.12.1.1. Hlynsdóttir, E. M. (2017). Dutiful Citizen or a Pragmatic Professional? Voluntary Retirement of Icelandic Local Councillors. Icelandic Review of Politics & Administration, 13(2), 169–188. https://doi.org/10.13177/irpa.a.2017. 13.2.1. Hlynsdóttir, E. M. (2018). Autonomy or Integration: Historical Analysis of the Debate on the Purpose of Icelandic Local Self-Government. Icelandic Review of Politics and Administration, 14(1), 81–100. https://doi.org/10.13177/ irpa.a.2018.14.1.4. Hlynsdóttir, E. M. (2019). Local Administrative Capacity Based on the Presence of Expert Staff in Municipal City Halls and Inter-Municipal Cooperation Entities. Icelandic Review of Politics and Administration, 15(1), 1–20. https:// doi.org/10.13177/irpa.a.2019.15.1.1. Hlynsdóttir, E. M. (2020). Gender in Organizations. New York: Peter Lang US. https://doi.org/10.3726/b16534. Jóhannsdóttir, A. (2017). Inngangur að skipulagsrétti: Lagarammi og réttarframkvæmd. Reykjavík: Háskólaútgáfan. Kristinsson, G. H. (2001). Staðbundin stjórnmál: Markmið og árangur sveitarfélaga. Reykjavík: Háskólaútgáfan. Kristinsson, G. H. (2010). The Greatest Number of Party Members? Membership Structures in Icelandic Political Parties. Icelandic Review of Politics & Administration, 6(2), 123–150. https://doi.org/10.13177/irpa.a.2010. 6.2.1. Kristinsson, G. H. (2014). Hin mörgu andlit lýðræðis: Þátttaka og vald á sveitarstjórnarstiginu. Reykjavík: Háskólaútgáfan.

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Kuhlmann, S., & Wollmann, H. (2014). Introduction to Comparative Public Administration: Administrative Systems and Reforms in Europe. Cheltenham: Edward Elgar. Ladner, A., et al. (2019). Patterns of Local Autonomy in Europe. Cham: Palgrave Macmillan. Lægreid, P. (2018). Nordic Administrative Traditions. In P. Nedergaard & A. Wivel (Eds.), The Routledge Handbook of Scandinavian Politics (pp. 80–91). Abingdon: Routledge. Local Government Act, Pub. L. No. 138/2011. Lowndes, V. (1995). Citzenship and Urban Politics. In D. Judge, G. Stoker, & H. Wolman (Eds.), Theories of Urban Politics (pp. 160–180). London: Sage. Mouritzen, P. E., & Svara, J. H. (2002). Leadership at the Apex: Politicians and Administrators in Western Local Governments. Pittsburgh: Pittsburgh University Press. OECD/UCLG. (2019). Report of the World Observatory on Subnational Government Finance and Investment—Country Profiles. Available at: http://www.oecd.org/cfe/regional-policy/Observatory-on-SubnationalGovernment-Finance-and-Investment.htm. Samband íslenskra sveitarfélaga. (2019). Árbók sveitarfélaganna 2019. Reykjavík: Samband íslenskra sveitarfélaga. Available at: https://www.samband.is/ media/arbok-sveitarfelaga-2019/ArbokinAnKapu.pdf. Sellers, J. M., & Lidström, A. (2007). Decentralization, Local Government, and the Welfare State. Governance, 20(4), 609–632. https://doi.org/10.1111/j. 1468-0491.2007.00374.x. Statistics Iceland. (2010). Local Government Elections 29 May 2010. Statistical Series, 95(63), 1–45. Statistics Iceland. (2015). Local Government Elections 31 May 2014. Statistical Series, 100(45), 1–48. Statistics Iceland. (2019a). Average Population by Sex and Age 1841–2018. Available at: https://px.hagstofa.is/pxen/pxweb/en/Ibuar/Ibuar__man nfjoldi__1_yfirlit__yfirlit_mannfjolda/MAN08000.px/?rxid=3ef9dbf4-c4704175-afd0-44aabe47744e. Accessed 6 March 2020. Statistics Iceland. (2019b). Local Government Elections 26 May 2018. Statistical Series, 104(9), 1–46. Statistics Iceland. (2019c). Population by Municipalities, Sex and Age 1 January 1998–2019—Current Municipalities. Styrkársdóttir, A. (2006). Women’s Suffrage in Iceland, Women’s History Archives. Available at: https://kvennasogusafn.is/index.php?page=womenssuffrage. Accessed 11 March 2020.

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Tilskipun um sveitarstjórn á Íslandi. (1872). Iceland: Tíðindi frá Alþingi Íslendinga. Fjórtánda þing. 1873 síðari partur. Valsson, T. F. (2014). Sveitarstjórnarréttur. Reykjavík: Codex. viljinn.is. (2020, February 12). Sigurður Ingi ætlar að keyra fram sameiningar sveitarfélaga. Available at: https://viljinn.is/frettaveita/sigurdur-ingi-aetlarad-keyra-fram-sameiningar-sveitarfelaga/. Wollmann, H. (2004, March). Urban Leadership in German Local Politics: The Rise, Role and Performance of the Directly Elected (Chief Executive) Mayor. International Journal of Urban and Regional Research, 28, 150–165.

CHAPTER 5

Urbanisation in a Small State: The Case of Iceland

Abstract Iceland is one of the most urbanised states in Europe, at the same time population density is very low. These contrasts highlight the profound difficulties of a small nation living in a very large country. The chapter draws attention to urbanisation in Iceland which is defined by extreme monocentric patterns with little less than two-thirds of the population living in the city-region of Reykjavík. Furthermore, the overarching population size of the city of Reykjavík compared to other municipalities in Iceland as well as the state itself creates a discrepancy in the administrative and political capacity in the system. Moreover, urban governance is not very well developed with limited tradition of cooperation and collaboration in the Reykjavík city-region. As the number of citizens living in the city-region as well as commuting from outside into it has exploded in the past few years the political fragmentation has created governance problems. Keywords Urbanisation · Monocentric · Population density · City-region · Small states · Urban–rural cleavage

Cities and urbanisation have received very little attention within the Icelandic local government literature. Thus, in general, very little is known about the trends and developments of political institutions and © The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_5

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local citizenship in the capital city of Reykjavík or its surrounding cities. For simplification, the term ‘city-region’ will be used as a synonym for Reykjavík and its surrounding cities in the following discussion. Compared to other Nordic states, urbanisation was slow to develop in Iceland, and in the beginning of the twentieth century there were a handful of towns consisting of only a few hundred or a few thousand citizens. As an example, Reykjavík city had a population of only 6000 residents in the early twentieth century. The conservative farming population was also sceptical of urbanisation, viewing their rural traditions as incompatible with it. Consequently, it is possible to argue that there are two important cleavages in Iceland: the centre–periphery cleavage and the urban–rural divide. Although closely linked, they are not fully aligned. Overall, the centre– periphery cleavage is a major source of political conflict in the Nordic context (Valen et al. 2000; Baldersheim and Rose 2010a). In the Icelandic context, this is epitomised in the ideological and political divide between the city-region of Reykjavík and the rest of the country (ice. Landsbyggðir), usually referred to as the periphery. Another important source of possible conflict is the urban–rural divide (Baldersheim and Rose 2010b; Sandberg 2010). Although less explored in the Icelandic context, with increased urbanisation, this cleavage has been gaining in importance in the political context (Hlynsdóttir 2018). Nevertheless, both cleavages have proven to be highly relevant in the Icelandic context, explaining the presence of severe political conflict (Hlynsdóttir and Önnudóttir 2018). This conflict has been further sustained and fuelled by the fact that the electoral system is still skewed in favour of the periphery, which means that peripheral constituencies have proportionally more parliamentarians than constituencies in the city-region of Reykjavík—a situation similar to the Norwegian periphery (Baldersheim and Rose 2011; Guðmundsson and Eythórsson 2013). Moreover, this has historically given parties with an electoral base in the periphery more prestige and power than parties with their electoral base in the city-region of Reykjavík. Traditionally, this system was steeped in favouritism, and parliamentarians from the periphery in particular are still often accused of being exceptionally capable in bringing favours and goods to their own constituencies (Kristinsson 1994, 2015). In relation to this, recent findings have shown that parliamentarians from the periphery enjoy a much closer relationship with their constituencies than their counterparts in the city-region of

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Reykjavík (Hlynsdóttir and Önnudóttir 2018). These issues are of special importance when it comes to evaluating the position of the city-region in the Icelandic context, as well as urbanisation more specifically.

The Foundation of Metropolitan Areas and City-Regions Cities have traditionally been viewed as territorially integrated, socioeconomic entities where people live, work and interact with other citizens. Such entities have self-government, which gives them a politico-legal status within their formal boundaries. As such, cities are no different from other types of local government, such as municipalities. However, more recently, cities have frequently become synonymous with a metropolitan area or a city-region. Governmental fragmentation (Kübler and Heinelt 2005) has thus become a real problem, as the functional urban territory clashes with the institutional structure of local government. Miller and Cox III (2014) argue that a metropolitan or city-region is the new conceptual unit in which citizens live and work. They also claim that ‘government’ is no longer the defining actor in decision-making within metropolitan regions, as the lines have blurred between governments on different levels and public and private stakeholders. Some have even gone so far as to speak of the ‘era of the “city-region”’ (Warner 2015, p. 6). Overall, there is no general agreement on the definition of what constitutes a city-region. The limits of city-regions are often defined through commuting as, although most people still tend to daily actions such as work and leisure close to their residences, the time the average citizen spends commuting for work has risen (Karlsson and Olsson 2006; Jónsson 2014). Thus, daily commuting is an important factor in defining the limits of city-regions. Lidström (2010) argues that an alternative way is to define the area around the core city in which local authorities cooperate on a regular basis as a city-region. This method is like the first one in many ways, but it has proven to be more stable over longer periods. It is also possible to view a city-region as a functional entity defined by intra-regional interaction in economics, goods and services or household shopping (Karlsson and Olsson 2006). Thus, city-regions contain one or several cities, with a hinterland that is dominated by interactions with the core city (Lidström 2012). Capello and Camagni (2000) argue that when it comes to cities, the comparative aspect is in many ways limited, as cities are not all the same. As such, they may have very different functions and

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specialise in various ways. As an example, cities in isolated areas need to be more self-sufficient, often making them very different from cities of the same size in less remote areas. Overall, different definitions are used to denote different types of urban areas. ‘Polycentric’ refers to a situation where urbanisation has been built up by several or many relatively large cities, which are dispersed around the country. Overall, various iterations of this are found in Western European countries (Puga 1996). On the other hand, monocentric patterns are usually based on only one very large city or city-region, with the rest of the country relatively sterile (ESPON Monitoring Committee 2007). This is the case in many countries in the developing world (Puga 1996). Kübler and Heinelt (2005) point to three approaches of debate on metropolitan governance: the metropolitan reform tradition, the public choice perspective and new regionalism. The first perspective equals the consolidation perspective, where the focus is on the consolidation of political institutions to reach more technical efficiency and managerial capacity (Lidström 2012). This is in line with a strong rhetoric of the positive effect of amalgamation, although it is debatable how successful such actions have been (Baldersheim and Rose 2010a). The public choice perspective, sometimes also called the fragmented model, was mainly popularised through the work of Tiebut (1956), Bish and Ostrom (1973) and Elinor Ostrom (1990). This approach suggests that each local authority sets the level of taxes and services it provides, and that citizens choose their residency based on that information (Lidström 2012). Advocates of this approach claim that a local government system, which is both fragmented and polycentric, needs no improvement. Instead, both market efficiency and voluntary coordination will eliminate any problems that may arise (Keating 1995; Warner 2015). The last approach, new regionalism, also sometimes called the governance model, looks at cooperative networks as a solution to metropolitan problems. The focus is on functional interest intermediation, as opposed to territorial interest intermediation (Kübler and Heinelt 2005). The main problem with this approach is that it has no democratic accountability mechanism (Lidström 2012). Tomàs (2015) has drawn together arguments on approaches and issues regarding metropolitan reforms. She claims that most studies as well as policies ignore the role of politics and, more precisely, the institutional variables that are responsible for shaping urban policies. Thus, like local government, regions are judged by their functional capacity to

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plan, provide and execute services for their citizens. The focus is more on their competitiveness and less on their political importance. In relation to this, Purcell (2007) argues in favour of more attention to the question of democracy in urban settings. Lidström (2010) takes a similar approach in his papers on citizens’ intermunicipal orientation. This stands in contrast to Kübler and Heinelts (2005), who focus on the institutionalisation of metropolitan governance as a source of democratic legitimacy. Tomàs (2015) points out that there is no pure metropolitan government in Europe, and in cases where attempts have been made to create political entities based on metropolitan areas, this has resulted in clashes with the long-standing political institutions of local government. Overall, there are indicators of citizens being interested in what is going on in their city-region (Lidström 2012; Kübler 2016). In rare cases, citizens may even be more attached to their city-region than their municipality (Swianiewicz and Lackowska 2008). Initiating research on the situation of urban development in metropolitan areas is therefore not only important for the functional development of the region but also for the democratic development and welfare of the citizens.

Urbanisation Patterns in Iceland A recent report on the global urban population identifies Iceland as one of the most urbanised states in Europe, with 94 per cent of the population living in urban settlements (United Nations: Department of Economic and Social Affairs Population Division 2019). This fact may come as a surprise to many Icelanders, especially because, with a population of only 364,000 in early 2020, Iceland’s citizens are unequally dispersed over a landmass of 103,000 km2 . Thus, population density is extremely low by European comparison, with an average of 3.5 citizens per square kilometre. Figure 5.1 shows the territorial structure of Icelandic local government in 2019, with the names and administrative numbers of each municipality. Most of the population is concentrated on the coastal area, with only a small number of people living above 200 metres above sea level, leaving the middle of the country uninhabited. The main reason for the high proportion of urbanisation is that around 64 per cent of the population lives in the city-region of Reykjavík (1062 km2 ), or Reykjavíkurborg which is its formal name, seen in the lower left corner of Fig. 5.1. If this is extended up to a 70 km radius, then 79 per cent of the population lives within approximately an hour’s drive from Reykjavík’s city centre (Statistics Iceland 2020). Beyond the 100 km radius of

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Fig. 5.1 Territorial division of Icelandic municipalities with names and administrative numbers in March 2020 (Source National Land Survey of Iceland [2020])

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Reykjavík, there is only one major town, Akureyrarbær, (usually referred to as Akureyri) in North Iceland, counting roughly 19,000 residents. The rest of the country is divided unequally between rural farmland and tiny hamlets and villages (Hlynsdóttir 2018). Figure 5.1 also demonstrates the territorial situation of individual municipalities, as the number of municipalities has dropped from 202 in 1990 to 72 in 2019. This explains the large territorial size of many municipalities outside the Reykjavík city-region, as these municipalities have usually gone through an extensive amalgamation. This also means that there are extreme differences in population density between regions. On 1 January 2019, the population density in the Reykjavík city-region was 218 persons per km2 (pop. 228,000), followed by the Reykjanes peninsula with 33 persons per km2 (pop. 27,000), West Iceland with 1.7 persons per km2 (pop. 16,500), the Northeast with 1.3 persons per km2 (pop. 30,000), the South with 0.9 persons per km2 (pop. 30,000), Westfjords with 0.8 persons per km2 (pop. 7000), Eastfjords with 0.7 persons per km2 (pop. 10,700) and the Northwest with 0.6 persons per km2 (pop. 7200) (Icelandic Regional Development Institute 2020). The Reykjavík city-region and the Reykjanes peninsula do not have large uninhabited areas, unlike the other regions. The history of urbanisation in Iceland is, in many ways, a story of extremes, and Icelandic urbanisation has many distinct features. The first issue is that urbanisation was much slower to take off in Iceland than in the other Nordic countries. In their important work on Icelandic regional development, Hall et al. (2002) concluded that in the late nineteenth century, 77 per cent of the population lived in the rural farmland. Following the World War I, urbanisation was swift and decisive, and in 1930, only 33 per cent lived in the rural farmland, a number which fell to a meagre 7 per cent by 1980. At the same time, the number of people living in urban settlements (areas with more than 200 residents) rose from 40 per cent in 1920 to 75 per cent by 1950. They argue that this rapidness of urbanisation may be comparable only to the urbanisation of South Korea, as the urban evolution took 20 years in Korea and 30 years in Iceland. As a comparison, the same development took 90 years in the United States. Another distinct feature of Icelandic urban development is its extremely monocentric pattern. As pointed out earlier, around 64 per cent of the population lives in the city-region of Reykjavík. It has been pointed

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out that the urbanisation of Iceland is in many ways more similar to the evolution of cities in the developing world than to the traditional situation found in the Western world (Hall et al. 2002). Hall et al. argue that there are two main reasons for this. The first is that the overall population of the country is probably too small to sustain two city-regions. The second point is that, at the beginning of the twentieth century, the Icelandic situation corresponded in many ways to what many developing countries are dealing with today (Puga 1996), such as extremely rapid population growth, a low production level of the rural farmland and a primitive level of transportation (Hall et al. 2002). Puga (1996) has suggested that an important factor contributing to monocentric urbanisation is a situation where connections to other countries are easier than within the country itself. This was very much the case for Iceland for the bulk of the twentieth century, when land transportation was especially primitive and underdeveloped. A third issue in relation to Icelandic urbanisation patterns is that of land use or land waste, better known as urban sprawl. Jónsson (2013) points out that in 1930, the city of Reykjavík covered an area with a radius of two kilometres. At that time, the city had around 28,000 residents, and as people were crammed together in a tight space, Jónsson also hypothesised that Reykjavík was at that point in time likely the most densely populated city in the Nordic countries. However, a year later, bus connections with the surrounding area were established, and the city of Reykjavík took its first steps into a new development era of American-style urban sprawl. An overgrown city, in physical terms, is generally viewed rather negatively. Urban sprawl has been known to increase environmental costs through the use of private cars, increased social segregation, and limit citizen interaction (Camagni et al. 2013). In the Icelandic context, it has been pointed out that urban land use in the city-region of Reykjavík has been extremely wasteful (Jónsson 2014); this has meant great public costs in terms of infrastructure, services and collective environmental costs due to the increased mobility of private cars. Moreover, this has also meant increased territorial–jurisdictional mismatch in the cityregion, as the borders between municipal entities are increasingly blurred in terms of functions while remaining politically static.

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The Capital City of Reykjavík and Its Suburbs As of September 2020, there are 69 municipalities in Iceland. As pointed out before, the Local Government Act (no. 138/2011) centres around the idea that all local governments are assigned the same tasks. In the eyes of the law, there is no difference between the city of Reykjavík, with its 131,220 residents, and the smallest municipalities with around 40 residents. The average number of residents is 5279, but if Reykjavík is excluded, the average drops to 3427 (Statistics Iceland 2020). The median is around 850 residents. Thus, 46 out of 69 municipalities (67 per cent) have fewer than 2000 citizens, and 37 (54 per cent) have fewer than 1000 citizens (Statistics Iceland 2019). There are seven cities or municipalities that constitute the city-region of Reykjavík. Of the three largest cities, Reykjavík is by far the largest, with 131,220 residents, followed by Kópavogsbær (pop. 37,970) and Hafnarfjarðarkaupstaður (pop. 30,000). Garðabær and Mosfellsbær are substantially smaller, with 15,700 and 12,070 residents, respectively. Although substantially large in the Icelandic context, Seltjarnarneskaupstaður, with a population of 4720, is small compared to the other cities in the cityregion. Its population growth is also much slower than that of the other cities. The main reason for this is a lack of land, as the municipality only covers 2.3 km2 and is by far the most densely populated municipality in Iceland. The last municipality and the physically largest is Kjósarhreppur, with only 250 residents; this rural and mountainous municipality is situated on the outskirts of the city-region. Its situation is like many other rural municipalities in Iceland, with an ageing farming community and a limited prospect for substantial population increase. Around 36 per cent of the Icelandic population lives in the city of Reykjavík and 28 per cent in the neighbouring cities. The percentage of the Icelandic population living in Reykjavík has remained more or less the same since 1940, when it was 31 per cent (Statistics Iceland 2008). In recent years, the suburbs cities of Reykjavík have grown much more and faster than the city itself. As an example, the population of Reykjavík grew 5 per cent from 2013 to 2018, while that of Mosfellsbær grew 15 per cent, and Kópavogsbær and Garðabær around 12 per cent (Statistics Iceland 2020). In recent years, there have been increased referrals to an area called the greater city-region of Reykjavík, which includes cities and areas up to a 50–70 km radius from the city centre. However, definitions vary on how far this area should go. There are three major urban areas within a

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50 km radius from the Reykjavík city centre: Reykjanesbær (pop. 19,430), Sveitarfélagið Árborg (pop. 10,060) and Akraneskaupstaður (pop. 7540). These cities, in addition to their own suburbs, have become a major source of commuting to and from the Reykjavík city-region. However, unlike the cities in the city-region itself, these cities are clearly separated from the capital city area, with a vast uninhabited area separating them. As pointed out earlier, around 79 per cent of Iceland’s population resides within a 70 km radius from the Reykjavík city centre. Hall, Jónsson and Agnarsson (2002) predicted as early as 2002 that these towns in the greater city-region would be the next place of growth. These three cities grew quickly in the years before the financial crisis in 2008; their growth stalled in the years following the crisis, only to start again a few years later with an unprecedented speed. As an example, the population of Reykjanesbær grew 20 per cent between 2013 and 2018, while in the same period, the city of Sveitarfélagið Árborg grew by 12.9 per cent, celebrated its nine thousandth citizen in early 2018 and its ten thousandth citizen in late 2019. Akraneskaupstaður has not expanded at the same rate, although a growth of 8.7 per cent in its population counts as a substantial increase (Statistics Iceland 2019). Thus, out of the ten most populated cities in Iceland, nine are within this greater city-region of Reykjavík. There are no major cities outside the Reykjavík city-region except Akureyri, in the north of Iceland, with a population of 19,030. Other urban settlements outside the greater cityregion have fewer than 5000 residents. However, unlike the twentiethcentury migrational patterns, the population increase in the city-region and its hinterlands is mostly driven by a natural population increase and the immigration of foreign-born citizens (Bjarnason and Þórðardóttir 2018).

Reykjavík’s City-Region as a Functional Area In the years before the financial crisis in 2008, a building boom occurred in the city-region of Reykjavík. Reykjavík and the cities surrounding it were planning and establishing new residency areas at an unprecedented speed and scale. In the aftermath of the crisis, it became clear that in many cases planning authorities had not worked together, and the outcome was, in some cases, nothing short of ridiculous, leaving aligning residence areas without any method of traveling between them except on foot. A report on planning from 2012 states that before 2008, there was a culture of

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‘thou shalt not meddle with thy neighbour’, and thus what was happening in the neighbouring city was their business and nobody else’s (Þórðarson et al. 2013). This is very different from the regions situated in other parts of the country (the periphery), where there is a long tradition of inter-municipal cooperation on various scales and for various purposes. In the city-region of Reykjavík, collaboration and cooperation were traditionally not very high on the agenda. Individual cities were more often in competition for people and business. Jónsson (2014) points out that the increased pressure of population growth was answered in an uncoordinated way, in many cases led by some ‘big city’ dreams of individual councils. However, the crisis highlighted the weaknesses of the political fragmentation of the increasingly metropolitan area of the Reykjavík cityregion. Many municipalities were left with the financial burden of large, uninhabited residences following the crisis, as the real estate market came close to a freezing point. Thus, the individualistic behaviour of councils before the crisis was criticised heavily, and there was a public outcry to prevent this situation happening again. Scholars also emphasised the importance of coordinating planning within the city-region of Reykjavík as a whole to prevent a future planning disaster (Jónsson 2014). Overall, the cities in the city-region of Reykjavík have been rather slow to address problems at the regional level. As an example, until 2001, public transport was provided by two different companies with limited coordination, often making it difficult to move from the area of one bus company to the other. The most notable large-scale collaboration schemes have been around waste management, public transport and fire departments. Though research has shown that spatial coordination is usually one of the first issues on which cities in a metropolitan region collaborate (Tavares and Feiock 2014), municipalities within the city-region of Reykjavík were rather slow to take up regular collaboration in that area. Overall, planning and land-use decision-making are the tasks of Icelandic local government. There are several stages in the planning phase, from detailed planning within the municipality, to regional planning, to the planning of the country. Regional planning has, in many cases, suffered from being uncoordinated and less rigid than the planning approaches at the local level. The latest regional plan for the city-region was created in 2015. The previous regional plan was created in 2002, but at that time, regional planning was optional. In line with criticism on planning in the city-region, regional planning in the city-region became

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mandatory by law, with a new planning act in 2011. On the other hand, regional planning in the rest of the country is still optional. The purpose of a regional plan is to put forward a mutual policy on urban development and land use. The regional plan must span at least 12 years, and all municipalities must sign it. When it comes to the internal planning of individual municipalities, they must consider the regional plan and, in some cases, the regional planning may override the local planning. The act is, however, relatively vague on the type of land use or urban development that must be taken into consideration in the regional planning (Planning Act, no. 123/2010). The regional plan from 2001 to 2024 was the very first such plan to be created for the city-region (or any region in Iceland, for that matter). On the basis of the regional plan, a committee was established consisting of two members from each municipality. It was not expected to meet on a regular basis, but only during the main work of creating or changing the regional plan. After regional planning became mandatory in 2011, the board was expected to meet more frequently, and it became mandatory to attend the meetings of the board. Before that time, the regional planning committee did not meet regularly, and there is no registered information on the work of the committee before 2007, when the committee started to meet on a regular basis. Its meetings were short, however, and in many cases, the committee members representing the capital city of Reykjavík were not present (Þórðarson et al. 2013). This shows that the political elite of the city of Reykjavík did not take regional planning very seriously, either in the years before the crisis or immediately after the crisis. The approach of the committee did not seem to change until after the new Planning Act came into force in 2012, when meetings became more frequent, longer and the mandatory attendance of all members was established. In many ways, this may not come as a surprise, as overall there has been a limited focus on behalf of the central government regarding the development of the city-region itself. The focus has been on other parts of the country or on areas suffering from a loss of people or businesses. As an example, the central government has, for decades, been putting together focus plans for all regions except the city-region. In the case of the city-region, the first focus plan was created in 2013. In addition, acts on regional development have been silent on the situation of the city of Reykjavík. This finally changed in 2018, with changes being made to the Act on Regional Planning and Initiatives (no. 69/2015) stressing the situation of Reykjavík city and especially the city-region itself, and for the

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first time drawing attention to the developmental challenges the capital city and the city-region are facing. Overall, any clear territorial differences between individual cities in the city-region have been disappearing, making it increasingly difficult for both residents and visitors to recognise individual municipal borders. Moreover, large businesses and public institutions are largely concentrated in only a few areas and mostly in the downtown area of Reykjavík. This means that a vast majority of people commute daily from the city, its suburbs and even its hinterlands into the centre area of Reykjavík, adding to the congestion of traffic every day within the city itself. Increased commuting, both within the city-region and from the greater city-region, has put increased pressure on local government in the city-region to collaborate in areas such as public transport and planning. Based on estimates the city population will increase by 70,000 by 2040, which will also increase these problems. The cities in the city-region have responded to these challenges by initiating a project on public transport, the ‘City Line Project’ for rapid transit by bus. The purpose of the project is to create a fast-lane public highway connecting all six cities in the cityregion. This is a long-term project, however, and also means that all the cities have committed to changing their urban planning in such a way as to enhance the project (Borgarlínan Project Office, n.d.).

A Big Fish in a Small Pond The city of Reykjavík has had a problematic relationship with the rest of the country for a long time—one that might be described as a one of love-hate relationship. The government and members of parliament, more generally, have often been accused of being more interested in the periphery than the city-region. This has been displayed through the fact that the central government has, until recently, paid very little attention to the city of Reykjavík, the development of the city-region and the problems of urban development in general. Furthermore, collaboration between the cities in the city-region has often been strained and has only very recently been organised thoroughly. This is further complicated by the fact that the population of the city-region accounts for almost two-thirds of the overall population of the country, and the city-region, with a special focus on the capital city of Reykjavík, is the main centre of business, education and politics. Moreover, findings from studies such as that of Hlynsdóttir and Önnudóttir (2018) show that there is less interaction between members

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of parliament from the city-region constituencies and members of the city council of Reykjavík than parliamentarians from other constituencies and the local municipal councils. This suggests that the members of parliament from the city-region are reluctant to add to a political dispute between the city and the remaining parts of the country, hence concentrating on serving the entire country and not just their city-region constituency. The fiscal and administrative capacity of the city of Reykjavík is unmatched on the Icelandic local level, and in some cases it may be argued that the cities’ capacity in policymaking matches the central government’s or even exceeds it. This also makes research on the Icelandic local governments at the local level somewhat problematic, as differences in the local governments’ administrative and fiscal capacities are enormous. Hence, studies tend to either concentrate on the larger municipalities (Kristinsson 2001) or those below 10,000 citizens (Hlynsdóttir 2019), as comparing the city of Reykjavík with smaller municipalities rarely makes sense. This also brings attention to the importance of the proportional scale of municipalities in relation to the state’s population size and how this affects the organisation of subnational governments in small states. The urban– rural cleavage, as well as the city-region–periphery cleavage, has had a real effect on the development of the Icelandic subnational level. This is especially obvious in relation to the tension between tradition and efficiency at the local level, discussed in Chapter 6.

References Act on Regional Planning and Initiatives, Pub. L. No. 69/2015. Baldersheim, H., & Rose, L. E. (2010a). Territorial Choice: Rescaling Governance in European States. In H. Baldersheim & L. E. Rose (Eds.), Territorial Choice: The Politics of Boundaries and Borders (pp. 1–20). Basingstoke: Palgrave Macmillan. Baldersheim, H., & Rose, L. E. (2010b). The Staying Power of the Norwegian Periphery. In H. Baldersheim & L. E. Rose (Eds.), Territorial Choice: The Politics of Boundaries and Borders (pp. 80–100). Basingstoke: Palgrave Macmillan. Baldersheim, H., & Rose, L. E. (2011). Norway: The Decline of Subnational Democracy? In J. Loughlin, F. Hendriks, & A. Lidström (Eds.), The Oxford Handbook of Local and Regional Democracy in Europe (pp. 282–306). Oxford: Oxford University Press.

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Bish, R. L., & Ostrom, V. (1973). Understanding Urban Government: Metropolitan Reform Reconsidered. Washington, DC: American Enterprise Institute. Bjarnason, Þ., & Þórðardóttir, S. E. (2018). Vinnusókn til höfuðborgarsvæðisins frá öðrum byggðarlögum á Suðvesturlandi. Tímarit um viðskipti og efnahagsmál, 15(2), 97–114. https://doi.org/10.24122/tve.a.2018.15.2.6. Borgarlínan Project Office. (n.d.). Borgarlínan: The Future of Public Transport, Borgarlínan Project Office. Available at: https://www.borgarlinan.is/. Accessed 11 March 2020. Camagni, R., Capello, R., & Caragliu, A. (2013). One or Infinite Optimal City Sizes? In Search of an Equilibrium Size for Cities. Annals of Regional Science, 51, 309–341. https://doi.org/10.1007/s00168-012-0548-7. Capello, R., & Camagni, R. (2000). Beyond Optimal City Size: An Evaluation of Alternative Urban Growth Patterns. Urban Studies, 37 (9), 1479–1496. https://doi.org/10.1080/00420980020080221. ESPON Monitoring Committee. (2007). ESPON Project 1.4.3. Study on Urban Functions: Final Report. Guðmundsson, B., & Eythórsson, G. T. (2013). Vægi atkvæða og pólitískt jafnrétti. Íslenska þjóðfélagið, 4, 39–63. Hall, A., Jónsson, Á., & Agnarsson, S. (2002). Byggðir og búseta: Þéttbýlismyndun á Íslandi. Reykjavík: Hagfræðistofnun Háskóla Íslands. Hlynsdóttir, E. M. (2018). Autonomy or Integration: Historical Analysis of the Debate on the Purpose of Icelandic Local Self-Government. Icelandic Review of Politics and Administration, 14(1), 81–100. https://doi.org/10.13177/ irpa.a.2018.14.1.4. Hlynsdóttir, E. M. (2019). Local Administrative Capacity Based on the Presence of Expert Staff in Municipal City Halls and Inter-Municipal Cooperation Entities. Icelandic Review of Politics & Administration, 15(1), 1–20. https://doi. org/10.13177/irpa.a.2019.15.1.1. Hlynsdóttir, E. M., & Önnudóttir, E. H. (2018). Constituency Service in Iceland and the Importance of the Centre-Periphery Divide. Representation, 54(1), 55–68. https://doi.org/10.1080/00344893.2018.1467338. Icelandic Regional Development Institute. (2020). Publications: Stöðugreiningar landshluta 2019 (Byggðastofnun mars, 2020). Available at: https://www.byg gdastofnun.is/is/utgefid-efni. Accessed 26 March 2020. Jónsson, Á. (2013). Þegar Reykjavík var þéttbýlasta borg Norðurlanda. Vísbending, pp. 22–25. Jónsson, Á. (2014). Kúvending í skipulagsmálum: Nýtt aðalskipulag í Reykjavík; forsendur, áhrif og gagnrýni. Upp í vindinn: blað umhverfis og byggingarverkfræðinema, pp. 42–45.

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Karlsson, C., & Olsson, M. (2006). The Identification of Functional Regions: Theory, Methods, and Applications. Annals of Regional Science, 40, 1–18. https://doi.org/10.1007/s00168-005-0019-5. Keating, M. (1995). Size, Efficiency and Democracy: Consolidation, Fragmentation and Public Choice. In D. Judge, G. Stoker, & H. Wolman (Eds.), Theories of Urban Politics (pp. 117–134). London: Sage. Kristinsson, G. H. (1994). Embættismenn og stjórnmálamenn: Skipulag og vinnubrögð í íslenskri stjórnsýslu. Reykjavík: Heimskringla. Kristinsson, G. H. (2001). Staðbundin stjórnmál: Markmið og árangur sveitarfélaga. Reykjavík: Háskólaútgáfan. Kristinsson, G. H. (2015). Political Control and Perceptions of Corruption in Icelandic Local Government. Icelandic Review of Politics and Administration, 11(1), 1–18. https://doi.org/10.13177/irpa.a.2015.11.1.1. Kübler, D. (2016). Citizenship in the Fragmented Metropolis: An IndividualLevel Analysis from Switzerland. Journal of Urban Affairs, 40(1), 63–81. https://doi.org/10.1111/juaf.12276. Kübler, D., & Heinelt, H. (2005). Metropolitan Governance, Democracy and the Dynamics of Place. In H. Heinelt & D. Kübler (Eds.), Metropolitan Governance: Capacity, Democracy and the Dynamics of Place (pp. 8–28). London: Routledge. Lidström, A. (2010, September). Citizens’ Intermunicipal Political Orientations: Evidence from Swedish. Urban Studies, 47, 2093–2109. https://doi.org/10. 1177/0042098009357960. Lidström, A. (2012). Citizens in the City-Regions: Political Orientations Across Municipal Borders. Urban Affairs Review, 49(2), 282–306. https://doi.org/ 10.1177/1078087412457549. Local Government Act, Pub. L. No. 138/2011. Miller, D. Y., & Cox, R. W., III. (2014). Governing the Metropolitan Region: America’s New Frontier. New York: M.E. Sharpe. National Land Survey of Iceland. (2020). Einföld kort: Sveitarfélög á Íslandi. Available at: https://www.lmi.is/en/. Ostrom, E. (1990). Governing the Commons. Cambridge, UK: Cambridge University Press. Planning Act Pub. L. No. 123/2010. Puga, D. (1996). Urbanisation Patterns: European vs. Less Developed Countries, Centre for Economic Performance. No. 305. Available at: http://dpuga.eco nomics.utoronto.ca/papers/dp0305.pdf. Purcell, M. (2007). City-Regions, Neoliberal Globalization and Democracy: A Research Agenda. International Journal of Urban and Regional Research, 31(1), 197–206. https://doi.org/10.1111/j.1468-2427.2007.00714.x.

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Sandberg, S. (2010). Finnish Power-Shift: The Defeat of the Periphery? In H. Baldersheim & L. E. Rose (Eds.), Territorial Choice: The Politics of Boundaries and Borders (pp. 42–60). Basingstoke: Palgrave Macmillan. Statistics Iceland. (2008). Population by Municipalities 1901–1990. Available at: https://px.hagstofa.is/pxen/pxweb/en/Ibuar/Ibuar__mannfjoldi__2_bygg dir__sveitarfelogeldra/MAN02120.px/?rxid=95e2c2b5-7807-4fe1-afaa-a15 9faf2610d. Accessed 11 March 2020. Statistics Iceland. (2019). Population by Municipalities, Sex and Age 1 January 1998–2019—Current Municipalities. Statistics Iceland. (2020). Population by Municipality, Sex, Citizenship and Quarters 2010–2019. Available at: https://px.hagstofa.is/pxen/pxweb/en/ Ibuar/Ibuar__mannfjoldi__1_yfirlit__arsfjordungstolur/MAN10001.px/? rxid=3ef9dbf4-c470-4175-afd0-44aabe47744e. Accessed 6 March 2020. Swianiewicz, P., & Lackowska, M. (2008). Cosmopolitans of Small Fatherlands. Miscelanea Geografica, 13, 197–208. Tavares, A. F., & Feiock, R. C. (2014). Intermunicipal Cooperation and Regional Governance in Europe: An Institutional Collective Action Framework. Glasgow. Tiebut, C. (1956). A Pure Theory of Local Expenditures. Journal of Political Economy, 21, 29–52. Tomàs, M. (2015). If Urban Regions Are the Answer, What Is the Question? Thoughts on the European Experience, International Journal of Urban and Regional Research, 39(2), 382–389. https://doi.org/10.1111/1468-2427. 12177. United Nations: Department of Economic and Social Affairs Population Division. (2019). World Urbanization Prospects 2018: Highlights (ST/ESA/SER.A/421). Available at: https://population.un.org/wup/Pub lications/. Valen, H., Narud, H. M., & Harðarson, Ó. T. (2000). Geography and Political Representation. In P. Esaiasson & K. Heidar (Eds.), Westminster and Congress: The Nordic Experience (pp. 107–131). Columbus: Ohio State University Press. Warner, M. E. (2015). Municipal Size, Resources, and Efficiency: Theoretical Bases for Shared Services and Consolidation. In A. C. Henderson (Ed.), Municipal Shared Services and Consolidation: A Public Solutions Handbook (pp. 3–16). New York: Routledge. Þórðarson, S., et al. (2013). Skýrsla úttektarnefndar borgarstjórnar á stjórnkerfi og stjórnsýslu Reykjavíkurborgar. Reykjavík: Reykjavíkurborg.

CHAPTER 6

The Choice Between Efficiency and Tradition

Abstract The transition from traditional local government to more modern structures and approaches in a small state is the main focus of this chapter. The discussion points out that, Icelandic local authorities are one of the most autonomous local authorities in Europe with a high level of political and fiscal decentralisation. However, in relation to administrative decentralisation the Icelandic situation draws attention to some of the paradoxes of smallness as both individual local authorities as well as the local government system as a whole struggle to keep up with expectations in relation to administrative capacity. The chapter also highlights some of the weaknesses of weak subnational capacity in a small state with low administrative capacity on the state level. Finally, the chapter points out the special situation of Iceland as an extreme case in relation to the success of subnational governance. The discussion shows that in relation to the size of local government measured in the level of decentralisation Icelandic local authorities have much in common with the Baltic states and Central European states. However, in relation to levels of autonomy, Iceland is clearly Nordic showing similar patterns of local autonomy traditions as the other Nordic states. Keywords Small states · Political decentralisation · Administrative decentralisation · Fiscal decentralisation · Paradoxes of governance · Local Autonomy Index

© The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_6

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Based on the comparison of subnational governments in small states demonstrated in Chapter 3, it is obvious that the role of traditional leaders and leadership functioning separately from the formal governmental decision-making mechanisms is an important feature of local decision-making in many small states, for example in small states in the Pacific—a situation normally seen as alien to the European context. However, one should think twice before dismissing the role of local tradition and culture as outdated or a thing of the past in the European context. Places and regions judged as ‘unimportant’ are increasingly using the ballot box to take back control over their fate, a phenomenon sometimes referred to as ‘the revenge of the places that don’t matter’ (Rodríguez-Pose 2018). In many cases, this has revealed a high level of territorial inequality and cleavages between more and less prosperous and affluent areas. It may also be argued that, fundamentally, this debate is about change and doing things differently than before, hence moving away from tradition to a ‘modern’ way of doing things—a trend that, in the Nordic setting, has usually been synonymous with large-scale political, administrative and fiscal decentralisation to subnational governments (Baldersheim et al. 2017; Kuhlmann and Wollmann 2014). Thus, the Nordic model of subnational government is exemplified by relatively small municipalities by international comparison, with recent reforms in Denmark being an exception (Mouritzen 2010). They are also functionally and politically strong, with a high concentration of local government control over service provision (Baldersheim et al. 2017). Moreover, political leadership is normally based on consensus, usually without strong territorial roles for political leaders, a situation more often found in many Southern European systems such as France (Goldsmith and Larsen 2004). Finally, the model assumes a high level of professional capacity in the subnational bureaucracy (Kuhlmann and Wollmann 2014). The case description in Chapter 4 shows that Iceland is a latecomer in terms of decentralisation. Thus, the timeframe for an examination of the decentralisation process in Iceland is more compatible with states in Eastern and Central Europe than the Nordic states. The backstory of the decentralisation process has never been thoroughly investigated in the Icelandic context. During the first decades following the Second World War, the four larger Nordic states were busy decentralising their welfare services onto the local level (Baldersheim and Rose 2010b; Mouritzen 2010; Sandberg 2010). This was entirely different from the situation in Iceland, as universal welfare services were, at the time,

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being created almost from scratch. The newly independent state needed to invest in infrastructure, roads, electricity, communication and basic welfare services. Unlike the other Nordic countries, local authorities were not active participants in this development; instead, they concentrated on issues not addressed by the state, such as local development, often investing in local enterprises. Later, local authorities developed kindergarten services that were first and foremost established and developed by individual local authorities, with state regulation being introduced much later (Hlynsdóttir 2018). It is also questionable how capable the Icelandic central administration really was at that time, as it was extremely small (Kristinsson 1994). Education has traditionally played a much smaller role in career advancement in Iceland than in the neighbouring countries, with a much higher proportion of the Icelandic population without upper secondary education than in the other Nordic countries (OECD 2019). This is epitomised by the position of the local government chief executive, a position for which individuals were frequently hired based on merits other than education (Kristinsson 2001; Hlynsdóttir 2020). Thus, it may be argued that Icelandic local authorities were left on their own for a very long time, as the level of regulation on behalf of the central government seems to have been very low. There were two major events that changed this in the 1990s, the first being the Act on Public Administration (no. 37/1993) coming into force in 1994, and second, the Information Act (no. 50/1996). These acts had a significant and long-lasting effect on local administration, as they required a level of administrative professionalism that went beyond what most local authorities were able to provide in the 1990s. The Norwegian scholar Francesco Kjellberg (1985, 1995) reasons that the choice of a decentralisation model has much to do with ideological traditions. He argues that there were essentially two distinct ideological traditions influencing decentralisation. The first is the autonomous model, essentially based on the traditional view of the central–local relationship. Under this model, central and local governments belong to separate domains of government, and hence, the central government monitors the local authorities but does not intrude into their sphere of influence. The role of local government is to preserve the core values of liberty, democratic participation and efficiency, and it functions more or less independently from the central government. Kjellberg identifies this ideology as a remnant of the nineteenth-century laissez-faire values (1985, p. 222). The other model is the integrational model, which views the core task of

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local authorities to be the implementation of national policies on behalf of the central government. Local government, in this model, is assigned more tasks and responsibilities but at the same time is subjected to more regulation and oversight on behalf of the central government. Kjellberg has argued that the rise of the integrational model is strongly connected to increased participation on behalf of local government in the provision of welfare services (1985). In the Icelandic setting, findings have shown that the conflict between these two contrasting ideological traditions has affected how the central government has addressed the role of local government in the provision of welfare services (Hlynsdóttir 2018). As pointed out before, the Icelandic local authorities became active partners in the provision of welfare services at a much later stage than in the other Nordic countries. There are, however, considerable differences between different types of decentralisation, including political, administrative and fiscal.

Political Decentralisation in Iceland: Amateur or Professional Politics Local councils in Iceland have been directly elected since the implementation of the current local government system in 1872; therefore, local council members have enjoyed considerable political authority throughout this time. In relation to Page and Goldsmith’s (1987) threedimensional typology of local–central government relations—functions, discretion and access—the Icelandic case reveals interesting tendencies. Traditionally, Icelandic local governments have enjoyed a high level of discretion and access, while their level of legally assigned functions has been low. The most interesting part is the relatively high level of direct access Icelandic local politicians have traditionally had vis à vis the central government and central bureaucracy (Hlynsdóttir 2016). Page and Goldsmith (1987) originally associated differences in territorial leadership between Southern and Northern Europe with differences between agrarian and industrial culture, as the south was agrarian for a longer period. Icelandic society was largely agrarian for a much longer period than the other Nordic states, and agrarian culture and traditions are still strong and influential in local and national politics. This situation, Page and Goldsmith argue, is sometimes associated with favouritism and clientelism in political culture because of its individual form of direct contact.

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As pointed out before in this book, clientelism and favouritism were wellknown features of Icelandic politics for the bulk of the twentieth century (Kristinsson 1994), and some like to argue that this is still a problem, especially at the local level (Kristinsson 2015). A study on Icelandic political leadership revealed that Icelandic local government leaders (political and administrative) were more successful in their work if they had direct and unhindered access to the central bureaucracy. Less influential local government leaders—for example, those not members of the political party having a majority in the national government, or less influential administrative leaders without political connections—often felt ignored and overlooked by the central government body (Hlynsdóttir 2016). Political experience at the local level has often opened gateways into national politics, and in 2016, it was estimated that around 40 per cent of parliamentarians had previously been elected members of local councils (Hlynsdóttir and Önnudóttir 2018). One of the main arguments for Icelandic local government reforms has been that it is necessary to turn from away from traditional or old ways of doing things to a more modern and professional approach (Hlynsdóttir 2018). In their seminal work Leadership at the Apex, Mouritzen and Svara (2002) argue that all local government is based on three principles: professionalism, political leadership and the layman’s rule. Fundamentally, the Icelandic local government system is based on the layman principle (with the exception of the city council in Reykjavík, where all council members work full-time). Essentially, there are two ideal types of local politicians, each entailing a different type of recruitment and career development. The recruitment process for an amateur politician is open, and it is relatively easy to move in and out of the political sphere. All citizens meeting the official requirement criteria, such as age or citizenship, are eligible to run for political office (Beetham 1996). Followers of this model suggest that councils elected in this manner are more likely to proportionally reflect society, hence adhering to the ideal of descriptive representation and emphasising the councillor’s representative role (Beetham 1996). The amateur type of local councillor is therefore believed to represent political equality (Steyvers and Verhelst 2012). The other ideal type of local politician is related to the notion of politics as a profession, where the chances for recruitment and career development are no longer equally distributed (Borraz and John 2004; Guérin and Kerrouche 2008). In this system, expertise is more important than mirroring society, with the importance of a councillor’s

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responsiveness exceeding the importance of descriptive representativeness (Beetham 1996). As amateur politicians view participation in council work as a leisure-time activity, they do not see re-election as a goal in and of itself (Steyvers and Verhelst 2012). This stands in strong contrast to professional politicians, who are normally seen as ambitious individuals constantly searching for ways to strengthen their political careers (MacKenzie and Kousser 2014) while at the same time establishing continuity in their careers (Aars and Offerdal 1998). There is a mutual agreement among scholars of local government and governance research that the complexity of decision-making at the local government level has increased over the past three decades. Functional decentralisation has also strengthened local councils, making them more autonomous (Kuhlmann and Wollmann 2014). At the same time, the decision-making processes have become more complex, demanding a higher level of expertise from local councillors (Guérin and Kerrouche 2008), which again has put increased restraints on the classical ideal of the amateur politician (Larsen 2005). This trend has also increased the gap between regular councillors, sometimes referred to as backbenchers, and those assigned to leadership positions (Guérin and Kerrouche 2008), in addition to putting a question mark behind the overall role of local council members in the public domain (Lepine and Sullivan 2010). The above debate is closely linked to the emergence of the New Public Management paradigm in the 1970s and 1980s, as well as the more recent phenomenon of governance. A recent study on the voluntary retirement of Icelandic councillors showed that the turnover on local councils is very high. Following the local elections in 1990, an average of four out of 10 elected councillors on local councils were new recruits, compared to six out of 10 following the 2018 local election. In addition, women leave more rapidly than men, and turnover also increases the smaller the municipality gets (Hlynsdóttir 2018; Statistics Iceland 2019).1 As pointed out in Chapter 4, Icelandic local councils are relatively small by Nordic comparison, with a majority of councils having five or seven elected members. Findings have also shown that local council members work long hours and, on average, 70 per cent of all councillors have accepted leadership on political committees at the 1 This is with the exception of the tiny municipalities (with less than 200 residents) using a personal voting system, where people tend to stay on councils for a very long time.

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local level, irrespective of whether they are in the minority or majority position on the council (Hlynsdóttir 2018). This suggests that Icelandic local-council work is highly managerial and time-consuming, which is not at all in line with the layman principle, which presumes that this is a leisure-time activity in which all citizens should be able to participate. This has lately led to an increase in the number of people arguing that being a local councillor is a full-time activity and should be compensated accordingly. This has been argued on behalf of council members, as well as the Icelandic Local Government Association. Thus, as the responsibilities of Icelandic local government have multiplied and become more complicated, the pressure for a so-called ‘professionalisation’ of local politics has increased: namely, that being a council member should be a fulltime occupation, leaving behind the old view of council work as a type of community service. Interestingly, a similar debate has not taken place regarding the capacity of the local government administration or how to divide tasks between the political realm and administration in relation to the increased role of local government in the provision of welfare services.

Fiscal Decentralisation Before discussing the administrative capacity of local government, it is important to discuss the level of fiscal decentralisation. Halásková and Halásková (2014) argue that for decentralisation to be effective, a fiscal decentralisation must first take place. They claim there are several ways to measure the levels of fiscal decentralisation, such as the expenditures of subnational government as a percentage of total expenditures or of total public expenditures, the revenues of subnational government as a percentage of total revenues, and the expenditures and revenues of subnational government as a percentage of the GDP, in addition to various other indicators such as the level of tax authority and the division of tax revenue between the subnational and central governments. Consequently, for fiscal decentralisation to take place, local authorities must have both the power to raise revenue and discretion for the allocation of financial resources (Chattopadhyay 2013). In sum, they must have access to an independent source of finances as well as the ability to decide how, when and where to spend their resources. Overall, the area of finance is seriously understudied in Icelandic local government studies. There are, however, a few indicators that point to a generally strong level of fiscal decentralisation in the Icelandic setting. As

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pointed out before, Icelandic local authorities have independent sources of revenue mainly through the income tax, which accounts, on average, for around 68 per cent of their revenues. Moreover, earmarked grants are practically non-existent, and the discretion of Icelandic local authorities over their financial resources is very high. Thus, although Icelandic local authorities do not have the power to levy taxes, the fact that financial resources and transfers are unconditional contributes to the high level of fiscal autonomy enjoyed by local authorities. Baldersheim et al. (2019) argue that Iceland has both high political discretion and high fiscal discretion. Thus, Icelandic councillors have authority over service provision and how these services are financed, which, as they argue, contributes to a balance of accountability, as it is possible to hold council members accountable for their decision-making—thus avoiding the game of blaming and shaming that takes place in cases where task division between local and central authorities is less clear. However, local authorities and individual council members have repeatedly argued that the central government is eager to devolute tasks onto the local level, but less willing to accompany these tasks with suitable resources and funding. This complaint was often voiced in relation to the transfer of primary education in 1996 and again in relation to disability services in 2012 (Freysteinsdóttir and Jónsson 2016). To address these concerns, an article was added to the Local Government Act (no. 138/2011), stating that the central government ‘must’ consult the local level on issues concerning them. Spokespersons for the local government level have argued that this article and the committee established to enhance this procedure have contributed greatly to the improved quality of collaboration between the Icelandic central and local levels (Björnsson 2019).

Local Government Administrative Capacity One of the main arguments related to the modernisation of Icelandic local government has been in relation to strengthening the capacity of the local government level in Iceland, which has been on the central government agenda almost continuously since the early 1990s. This has been exemplified in the phrase ‘enhance local governments’ capacity’ (Eythórsson 2012). Although the central government has never explicitly explained what is meant by the enhancement of local government capacity, it may be concluded that this has mostly been targeted at increasing individual local authorities’ ability to provide services to the public in an efficient

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and effective way (Hlynsdóttir 2019). Before the 1990s, decentralisation at the Icelandic local level was mostly based on deconcentrating and delegation (Rodríguez-Pose and Gill 2003; Ryan and Woods 2016). Tasks assigned to the local government were closely monitored by the central government, and it was always clear that tasks were being implemented on behalf of the central government.2 This changed in the 1990s, as the central government embarked on a journey of delegating clear administrative authority to local authorities in, for example, primary education and planning, a stage Ryan and Woods (2016) refer to as the stage of devolution. As pointed out before, this stage of decentralisation is normally viewed as the highest level of administrative decentralisation, as a subnational government is able to execute functions without the direct interference of the central government. Decentralisation is normally seen as a good thing, bringing, for example, the possibility of tailor-made policies (de Vries 2000), improvement in services (Wunsch 2013) and increased citizen participation (Chattopadhyay 2013). This highlights issues related to ‘capacity’, or the capability of government to do what they promised they would. Although Icelandic local authorities seem to be both politically and fiscally strong, the increased decentralisation of responsibilities onto the local level has increased the pressure on the local administration and brought forth questions related to bureaucratic capability and professionalism. When it comes to evaluating the qualification of public servants as well as the capability of the system, the functional responsibilities of the subnational level are of great importance. Consequently, different systems require different levels in, for example, the number of staff or the degree of expertise (Kuhlmann et al. 2015). This underscores the pointe that the Nordic model presumes a high level of local government capacity, as in staffing resources and expertise (Baldersheim et al. 2017). Fundamentally, administrative capacity is about resource management. If elected members and other decision-makers are to be able to make intelligent choices in their policy-making, the local administration must have the capability to support such decision-making (Painter and Pierre 2005). Thus, the following definition argues that public-sector capacity 2 As pointed out in Chapter 4, Icelandic local governments were traditionally highly autonomous in the sense that they were able to take on tasks not assigned to other government bodies and to organise them freely. However, this was not a part of an organised decentralisation on behalf of the central government.

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is essentially ‘the ability of the permanent machinery of government to implement policies, deliver services and provide policy advice to decisionmakers’ (Polidano 2000, p. 805). Based on this definition, it is possible to determine four focus points. The first is the ‘ability of the permanent machinery’, which refers to the technical competence of the administration—for example, staffing resources (as in the number of administrative staff), their level of education, and whether recruitment uses a merit-based system, including the possibility of career advancement. The second focus point is the administrative capacity in the ‘implementation of policies’; this concerns the expertise of the local administrative staff and the general competence of the local administration to make objective decisions and organise tasks based on knowledge and expertise. The third focus point is the local administration’s capacity in the area of ‘service provision’. This issue related to topics such as whether the qualification and staffing resources of the local administration enable them to provide high-quality service. Thus, the quality and quantity of so-called street level bureaucrats is important in this area. The fourth and final point is the administrative capacity in the provision of policy advice to decision-makers. This concerns the capacity of the local government administration to provide quality advice to the members of the local councils. This point is of particular importance, as it has been argued that the local administration must be able to handle specialised tasks in a professional way and support the local leadership’s decision-making (Lundtorp 2000, p. 6). Farazmand (2004) argues that capacity in relation to local matters is strongly related to building both national and local capabilities in the area of conceiving, developing and promoting policies. More precisely, capacity ‘refers to building and enhancing a cadre of highly qualified, highly able, and highly motivated human resources at all levels of government’ (p. 6). Huber and McCarty (2004) reason that if bureaucratic capacity is low, the incentives on behalf of politicians to politicise the bureaucracy increase, while the motivation to reform bureaucracy goes down. Moreover, Polidano (2000) maintains that the level of administrative capacity influences, among other things, the production method chosen for local services. For example, there are important differences in the local administrative needs for expertise and professional staffing resources, depending on whether services are provided in-house or outsourced.

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In the Icelandic setting, a recent study was conducted on local governments’ administrative capacity based on the available expertise in municipal city halls (Hlynsdóttir 2019). The study looked into the situation in the three most important areas of responsibility: education, social services and planning. The findings showed that overall, the number of experts in the city hall in municipalities with fewer than 1000 residents is very low and sometimes non-existent. Usually, local authorities begin by employing experts in building permits and planning, followed by experts in social services. Experts in education were only found in municipalities with more than 1000 citizens. Municipalities with fewer than 3000 residents were heavily involved in inter-municipal cooperation, mainly through standing organisations or co-owned agencies. More populated municipalities were, on the other hand, able to be self-sufficient in the organisation of their services. The very small municipalities usually received all the services their citizens needed in a neighbouring municipality via inter-municipal contracts. Hence, they are engaged in the transfer of functions, as they have permanently moved the responsibility for their service provision and production to another municipality (Morse and Abernathy 2015). Overall, Icelandic local authorities like to keep their services in-house or provide them through a co-owned standing organisation with other local governments. This is essentially local government as opposed to local governance, as the number of partners in the services’ provision and production is very limited, and local government and elected local council members are very much at the centre in this system. The key external actor in relation to local government capacity is the Icelandic Local Government Association. The Association has an extensive network of experts on local government issues and provides expert advice to local authorities free of charge. Findings from the above-mentioned study showed that smaller municipalities of up to 1000 citizens, or even more, often needed detailed, hands-on guidance in their daily work. Municipalities with fewer than 3000 citizens were also deemed more likely by the Association’s staff to have problems in dealing with their administrative tasks in an efficient and effective way than larger municipalities (Hlynsdóttir 2019). Thus, although Icelandic local governments are able to deal with their tasks in a relatively autonomous way, the local administrations are struggling to cope with the expectations. As an overwhelming number of Icelandic municipalities are very small, the findings suggest a low in-house administrative capacity with a high

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dependence on external expertise, mainly via the expert machinery of the Icelandic Local Government Association. This leads to a high level of political involvement in the local bureaucracy, as elected council members are frequently involved in the daily management of the municipality.

The Paradoxes of Public Administration in Small States Based on the comparison in Chapter 3, it is safe to draw the conclusion that Iceland is considerably different from other small states of similar population size when it comes to the organisation of subnational government. Icelandic local governments have more autonomy, spend more money, have more tasks and more political discretion over their organisation than local authorities in any of the other small states with populations of 100,000 to one million citizens. In the Nordic context, Iceland is by far the smallest, with only around 364,000 citizens. Over the years, Icelandic local and central authorities have looked to the neighbouring countries for guidance for the reorganisation of the subnational level. These include the other Nordic states, the Baltic states and other ‘small’ states in Europe, such as Slovenia. The Nordic states are a point of interest due to shared cultural and historical traditions; they are, however, much bigger than Iceland population-wise, as Finland, Norway and Denmark all have more than five million citizens and Sweden has more than 10 million. In addition, the subnational level in these states has been, unlike in the Icelandic case, an active participant in the production and provision of welfare services since the early 1960s and 1970s (Baldersheim and Rose 2010b; Mouritzen 2010; Sandberg 2010). The Baltic states, on the other hand, are much closer to Iceland population-wise, with Estonia and Latvia each having between one and two million citizens. However, the common denominator between Iceland and the Baltic states, as well as other small central European states such as Slovenia, is the fact that these states have all been in the process of rebuilding their subnational government levels since gaining independence beginning in the 1990s. Hence, their timeframe for decentralisation and related reforms at the subnational level is the same as for Iceland. Additionally, these states all fall into the World Bank category of high-income states (The World Bank 2020). Scholars specialising in small-state studies have identified four paradoxes of public administration and governance in small states: small vs. large government, generalist vs. specialist administration, formal vs.

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informal governance and centralised vs. decentralised governing (Randma-Liiv and Sarapuu 2019). Table 6.1 attempts to draw conclusions about the comparability of the above-mentioned European small states based on these paradoxes. In relation to the paradoxes identified by Randma-Liiv and Sarapuu (2019), the analysis concentrates on the questions of small vs. large government and centralised vs. decentralised governing, or the common assumption that being a small state leads to small government, and secondly, that smaller states are less decentralised than larger states. In relation to these paradoxes and as previous discussion in this book has revealed, Iceland is an outlier in terms of the local governments’ share of the total government expenditure compared to other states with populations between 100,000 and one million. Thus, it is of some interest to compare the Icelandic situation with larger small states such as the Nordic or the Baltic states as seen in Table 6.1. In relation to the subnational governments’ share of the total government expenditure, it is obvious that Iceland (at 27.6 per cent) scores much lower than the other Nordic countries on that indicator. The situation of the Icelandic local authorities in relation to this indicator is much closer to the other states introduced in the table, such as Latvia (25.6 per cent) and Croatia (24.7 per cent). The indicator of subnational governments’ average share of total expenditure shows a similar trend, and again Iceland is closer to the Baltic and Central European states than the Nordic states. The same trend is visible in relation to the indicator of staff expenditure as a percentage of the total government expenditure, where Iceland lies far below the other Nordic states. Based on this data, one could be tempted to draw the conclusion that the situation and level of decentralisation in Iceland is closer to the situation in the Baltic states and Central Europe than in the other Nordic states. However, the local autonomy index (LAI) shows a more nuanced picture, as there the Nordic states, including Iceland, are among the most autonomous states in Europe, while local authorities in both the Baltic and Central European states are less autonomous, with Slovenian local authorities being some of the least autonomous in Europe (Ladner et al. 2019). Moreover, the OECD average for unitary states for the level of local expenditure of GDP is 9.2 per cent and 28.7 per cent

42,924

338,150

385,207

56,594

Denmark

Finland

Norway

Croatia

2,066,000 2,848,000 1,941,000 1,316,000 364,000c

103 44 30 30 3.4

4,154,000 73

5,277,000 17

5,508,000 16

5,767,000 134

10,058 22

54 66 67 69 94

57

82

84

88

87

290 and 21 regions 98 and 5 regions 311 and 1 autonomous county 356 and 11 regions 556 and 21 regions 212 60 119 79 72 9745 47,467 16,311 16,658 5055

7471

14,823

17,710

58,846

34,682

8.2 7.8 9.5 9.4 12.5

11.7

16.9

22.6

34.8

24.5

Number of Average SNG share of total municipal expenditure (GDP)a elected (%) population local governmenta

18.1 22.9 25.6 23.1 27.6

24.7

33.2

40.4

65.0

50.6

SNG share of total government expenditurea (%)

34.4 43.9 45.5 39.3 43.0

46.8

56.3

75.1

72.7

76.8

SNG share of staff expenditurea (%)

49.4 64.0 51.8 63.8 78.5

56.3

73.9

79.4

74.7

75.1

LAI Indexe

Source a OECD/UCLG (2019b), b Worldometer (2020), c Statistics Iceland (2020), d United Nations: Department of Economic and Social Affairs Population Division (2019), e Ladner et al. (2019)

Slovenia 20,145 Lithuania 65,286 Latvia 64,490 Estonia 43,432 Iceland 103,000

447,420

Geographical Populationb Population Proportion size density/ of urban km2 (a) km2 pop. in 2018d (%)

Iceland compared to larger small states in Europe

Sweden

State

Table 6.1

106 E. M. HLYNSDÓTTIR

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for SNGs’ share of total public spending, while the same average for the OECD/UCLG 2019 report was 8.6 per cent of GDP and 24.1 per cent of total public spending (OECD/UCLG 2019a, b). Thus, the findings show that the quality of decentralisation in Iceland is very high, as local authorities have a high level of political and fiscal discretion over their responsibilities. However, the much lower indicators for Icelandic subnational governments’ share of public expenditures than in the other Nordic states also show that Icelandic local authorities have fewer responsibilities than in their Nordic sister states. In sum, Icelandic local authorities have fewer responsibilities but greater control over their tasks. On the other hand, the findings for the Baltic and Central European states show that although decentralisation has taken place, their low scores in the LAI index suggests that the level of decentralisation has not fully reached the stage of devolution (Rodríguez-Pose and Gill 2003; Ryan and Woods 2016). Local authorities in these states generally have limited authority over how they perform their tasks (OECD/UCLG 2019b). In the decentralisation index created by Ivanyna and Shah (2012), the Nordic states are all in the top 10, except for Iceland in 11th place, only to be followed by Latvia in place 24 and Croatia in place 62, by far the lowest score of the countries introduced in Table 6.1. The findings show that, in general, all the small states included in Table 6.1 have decentralised tasks onto the local level; however, the level of decentralisation varies greatly. In general, the Nordic states, specifically Sweden, Denmark, Finland and Norway, are viewed as some of the most decentralised states in the world (Sellers and Lidström 2007); thus, any comparison including the Nordic states might seem somewhat unfair. However, it is possible to conclude that Iceland and the Baltic states have looked to these states as role models and are actively pursuing the same method in organising their local levels, with a heavy emphasis on upscaling and decentralising more tasks onto the local level (Baldersheim and Rose 2010a). Nevertheless, the Icelandic central government, in contrast to the Baltic states, has been more willing to provide local authorities with real discretion in political, fiscal and administrative affairs, making the Icelandic case a notable exception in this group of small states.

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Statistics Iceland. (2020). Population by Municipality, Sex, Citizenship and Quarters 2010–2019. Available at: https://px.hagstofa.is/pxen/pxweb/en/ Ibuar/Ibuar__mannfjoldi__1_yfirlit__arsfjordungstolur/MAN10001.px/? rxid=3ef9dbf4-c470-4175-afd0-44aabe47744e. Accessed 6 March 2020. Steyvers, K., & Verhelst, T. (2012). Between Layman and Professional? Political Recruitment and Career Development of Local Councillors in a Comparative Perspective. Lex Localis—Journal of Local Self-Government, 10(1), 1–17. https://doi.org/10.4335/10.1.1-17(2012). The Act on Public Administration, Pub. L. No. 37/1993. The Information Act, Pub. L. No. 50/1996. The World Bank. (2020). Data: World Bank Country and Lending GroupsCountry Classification. Available at: https://datahelpdesk.worldbank.org/ knowledgebase/articles/906519-world-bank-country-and-lending-groups. Accessed 24 February 2020. United Nations: Department of Economic and Social Affairs Population Division. (2019). World Urbanization Prospects 2018: Highlights. (ST/ESA/SER.A/421). Available at: https://population.un.org/wup/Pub lications/. Worldometer. (2020). Countries in the World by Population. Available at: https://www.worldometers.info/world-population/population-by-country/. Accessed 25 March 2020. Wunsch, J. S. (2013). Analyzing Self-Organized Local Governance Initiatives: Are there Insights for Decentralization Reforms? Public Administration and Development, 33(3), 221–235. https://doi.org/10.1002/pad.1652.

CHAPTER 7

The Future of Subnational Government in Small States

Abstract This chapters draws together some of the key findings of the book. It points out that population size is relevant when it comes to evaluating the success of decentralisation of responsibilities onto the subnational government level. Overall, states with small population are more centralised than larger states. However, this trend is not linear which suggests that a combination of factors rather than individual factors is likely contributing to the success of decentralisation reforms. As an example, although wealth is a positive contributor to increased level of decentralisation it is not a sufficient condition on its own. Moreover, the case of Iceland is an extreme case having decentralised tasks onto the local government level more successfully than many larger and more populated states. However, it may be argued that Iceland is successful not because of its small size but in-spite of it. Keywords Small states · Iceland · Political decentralisation · Fiscal decentralisation · Administrative decentralisation · Local self-government

The comparative analysis of this book shows that not all small states have local government. Equally, the analysis shows that all small states have some form of local governance, in the sense that decision-making related to citizens’ needs takes place in the locality or at the community level. © The Author(s) 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2_7

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Local government based on modern democratic principles and directly elected members of a decision-making body, however, is not always in place. Though there seems to be a correlation between small size and the absence of elected local authorities, many larger small states do not have elected local government, as in the case of Fiji. In some cases, the reason for the absence of elected local government is political upheaval, as in the Maldives (Transparency Maldives 2019), autocratic regime as in Brunei Darussalam (Commonwealth Local Government Forum2018) or a general distrust in the elected members of local authorities, as in Fiji (Round 2019). In some cases, this situation may be a part of an institutional tradition where distrust in the capabilities of elected members of local authorities is a well-known phenomenon (Dollery et al. 2012). Nevertheless, the international mantra is that decentralisation is good and should be encouraged (Kaiser 2006). A variation on this is openly enforced through international treaties and declarations, such as the European Charter of Local Self-Government and the Aberdeen Agenda. However, there is a fundamental difference between the Agenda and the Charter. The former is aimed at setting up functionally strong local governance, while the latter is fundamentally about establishing local selfgovernment, with or without functionally strong local authorities. Thus, while the Aberdeen Agenda encourages good governance and the capacity for decision-making at the local level, it does not view local authorities as entities independent from the central government to the same extent as the Charter (Commonwealth Local Government Forum 2008; Ladner et al. 2019). These fundamentally different ideals have consequences when it comes to evaluating decentralisation in small states, as the question arises of whether the purpose of decentralisation is to transfer responsibilities to an independent local self-government body or to simply move central government services closer to the local citizenry. The analysis shows an overall low level of decentralisation for small states with populations between 100,000 and one million, with administrative decentralisation seldom reaching the level of devolution. Moreover, fiscal decentralisation seems to be largely absent in these states, as tasks are often allocated to local authorities without the necessary sources of funding. Although the analysis for small states with more than one million citizens was less comprehensive, it revealed similar tendencies (although less pervasive) for strong centralised control over local authorities. The main exception to that rule is the Nordic states, which

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generally seem to enjoy high political, administrative and fiscal decentralisation. Iceland, with its population of 364,000, stands out in this group, scoring high on all indicators measuring the levels of decentralisation and local government capacity. Consequently, one could be tempted to argue that Iceland lies at the threshold at which countries are able to function effectively (Everest-Phillips and Henry 2018). However, this could prove to be a problematic approach, as the analysis shows that Iceland is an island both literally and figuratively: the differences in the local government capacity between Iceland and other states with a population between 100,000 and one million are enormous. Nevertheless, the analysis of the Icelandic case revealed many of the problems often assigned to small states’ public administration (Randma-Liiv and Sarapuu 2019), such as low expertise, lack of staff, lack of formalisation and an overall low system capacity of the local government administration, combined with a high level of political influence over the municipal bureaucracy and pervasive rumours of clientelism. The analysis of the Icelandic case also indicates that the ‘critical mass’ argument put forth by Prud’homme (1995), for example, does have some bearing on the Icelandic case, as the capacity of the central government to provide expert advice and assistance to local authorities is low. Likewise, the disproportionally large size of the capital city of Reykjavík further complicates matters, as the administrative capacity of the capital city may in some cases exceed that of the central administration. Based on this, it may be argued that the Icelandic case is an example of a small state that has (at least to some extent) successfully decentralised tasks onto the local level ‘in spite of, and not because of their small size’ (Brigugilio 2018 p. 85), in the sense that this position is perhaps not as easily sustained as one might be inclined to believe. Thus, with increased decentralisation, the pressure on Icelandic local authorities to up-scale through amalgamation has also increased. In fact, it may be argued that this is a certain level of recentralisation from below, as local authorities should become larger in population to provide more coherent and systematic organisation at the local level. Consequently, disputes between those adhering to the traditional way of doing things and those aiming at more ‘modern’ approaches are common, often in the guise of a debate based on the urban–rural or capital city–periphery cleavages. The fact that Iceland is a Nordic state is most definitely a major contributor to the success of the Icelandic decentralisation process. However, Iceland deviates in important aspects from the Nordic model, such as in the extensiveness

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of its decentralisation and the organisation of the local government level. These differences are, in all likelihood, mostly due to differences in size, as the ‘smallness’ of the Icelandic system prevents it from reaching the same level of decentralisation as the other Nordic states. Conclusively, subnational governments in small states have similar challenges to Iceland, Vanuatu or the Kingdom of Bhutan, as they clash with the central government over resources and funding and fight to provide quality services with limited staff and expertise available. There are, however, combinations of factors that may contribute to successful subnational government in small states; although wealth is important, being rich is not enough for successful subnational government, as the case of Malta proves. It is more likely that a combination of several factors is of importance, such as a system with a positive culture towards local self-government, as is the case in the Nordic model, combined with other factors. The exact outcomes for these combinations are not possible to conclude at this moment. The analysis in this book has mostly concentrated on capacity on the input level based on the individual states’ capacity to get things done (Fukuyama 2013); the question of the quality of subnational governments’ services or the level of output has not been addressed. The main reason for this approach has been this author’s firm belief that in order to successfully evaluate the output side, one must first understand the input side. Thus, a thorough understanding of small states’ capacity in relation to subnational government and governance is of vital importance in order to evaluate the success in local democracy and service delivery. As the decentralisation of responsibilities onto the local level is an international phenomenon and seems only to be increasing, the importance of understanding the challenges small states are facing in relation to decentralisation will only continue to grow. Using successful cases such as Iceland as examples to thoroughly understand the advantages and disadvantages of the decentralisation process in small states is particularly useful for institutional learning. It is common for the situation of small states to be compared with larger states, without taking into account the special situation and the effect of ‘smallness’ on the public administration, which may lead to a scenario of the small state being in a constant state of deficiency. In the opening lines of this book, I refer to the popular assumption that being on an island must be constraining; however, to conclude, I would like to argue that it can also imply resilience, flexibility and a solutions-oriented mind-set.

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In sum, being small is not necessarily worse than being large; it is only different.

References Brigugilio, L. (2018). The Vulnerability of Small States. Small States Economic Review and Basic Statistics, 20, 85–92. Commonwealth Local Government Forum. (2008). The Aberdeen Agenda: Commonwealth Principles on Good Practice for Local Democracy and Good Governance. London: Commonwealth Local Government Forum. Available at: https://www.clgf.org.uk/what-we-do/aberdeen-agenda/. Accessed 18 February 2020. Commonwealth Local Government Forum. (2018). Commonwealth Local Government Handbook 2017/2018. Available at: https://www.clgf.org.uk/ resource-centre/clgf-publications/country-profiles/. Accessed 23 February 2020. Dollery, B., Wallis, J., & Akimov, A. (2012). One Size Does Not Fit All: The Special Case of Remote Small Local Councils in Outback Queensland. Local Government Studies, 36(1), 37–41. Everest-Phillips, M., & Henry, S. (2018). Public Administration in Small and Very Small States: How Does Smallness Affect Governance. International Journal of Civil Service Reform and Practice, 3(2), 27–59. Available at: https://www.astanahubjournal.org/index.php/ijcsrp/article/view/110. Fukuyama, F. (2013). What Is Governance? Governance, 26(3), 347–368. https://doi.org/10.1111/gove.12035. Kaiser, K. (2006). Decentralization Reforms. In A. Coudouel & S. Paternostros (Eds.), Analyzing the Distributional Impact of Reforms (pp. 313–354). Washington, DC: World Bank. Ladner, A., Keuffer, N., Baldersheim, H., Hlepas, N., Swianiewicz, P., Steyvers, K., & Navarror, C. (2019). Patterns of Local Autonomy in Europe. Cham: Palgrave Macmillan. Prud’homme, R. (1995). The Dangers of Decentralization. The World Bank Research Observer, 10(2), 201–220. https://doi.org/10.1093/wbro/10. 2.201. Randma-Liiv, T., & Sarapuu, K. (2019). Public Governance in Small States: From Paradoxes to Research Agenda. In A. Massey (Ed.), A Research Agenda for Public Administration (pp. 162–179). Cheltenham: Edward Elgar Publishing. Round, S. (2019). Motion for Local Elections Defeated in Fiji Parliament. Radio New Zealand. Available at: https://www.rnz.co.nz/international/ pacific-news/386256/motion-for-local-elections-defeated-in-fiji-parliament. Accessed 15 March 2020.

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Transparency Maldives. (2019). Review of the Decentralization Framework in the Maldives. Male. Available at: http://transparency.mv/v16/wp-content/ uploads/2019/08/RDFM_ENG_FINAL-for-Website.pdf.

Index

A Aberdeen Agenda, 5, 20–22, 30, 114 Africa, 32–35 Amalgamation, 60, 67, 69, 78, 81, 115 . See also Merger, Up-scaling Amateur, 96–98 Asia, 35, 39 Autonomous, 34, 95, 98, 101, 103, 105 B Bahamas, 40–43, 52 Baltic, 104, 105, 107 Barbados, 40–43, 50, 52 Bhutan, 35–39, 47, 116 Brunei, 35–37, 41, 50, 114 C Cabo Verde, 32–35, 50 Capacity administrative, 2, 11, 13, 88, 99–103, 115

local government, 2, 5, 22, 39, 68, 78, 79, 88, 94, 99–103, 115 state, 5, 10–13, 51, 116 subnational government, 1, 3, 31, 35, 39, 47, 49 Caribbean, 39–42, 45, 47 Centralised, 3, 15, 47, 67, 105, 114 Central–local relationship, 95 Cleavage, 15, 94 capital city-periphery, 115 urban-rural, 5, 60, 76, 88, 115 Commonwealth of Nations, 10, 21, 31 Comoros, 32, 33, 35, 50 Croatia, 105–107

D Decentralisation administrative decentralization, 12, 30–32, 35, 38, 39, 46, 50, 51, 94, 96, 99, 101 deconcentrating, 30, 51, 101

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 E. M. Hlynsdóttir, Sub-National Governance in Small States, Palgrave Studies in Sub-National Governance, https://doi.org/10.1007/978-3-030-51552-2

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delegation, 30, 51, 101 devolution, 30, 39, 50, 51, 101, 107, 114 fiscal decentralisation, 12, 30, 32, 39, 50, 94, 96, 99, 101, 114, 115 political decentralisation, 2, 12, 30, 32, 42, 50, 70, 94, 96, 101, 107, 115 Denmark, 2, 16, 48, 60, 94, 104, 106, 107

lower-middle-income, 32, 35, 37, 45 upper-middle-income, 35, 36, 42, 45, 47, 48 Inter-municipal cooperation, 18, 85, 103. See also Trans-scaling

E Efficiency, 3, 14, 16–18, 31, 78, 88, 95 Elected members, 97, 98, 101, 114 Estonia, 5, 104, 106 European Charter of Local SelfGovernment, 5, 17, 20, 21, 30, 114

L LAI index, 106, 107. See also Local Autonomy Index (LAI) Latvia, 5, 104–107 Layman system, 63. See also Amateur Lithuania, 106 Local authorities, 16–19, 21, 34, 38, 39, 42, 43, 45–47, 50, 61, 66–69, 77, 78, 95, 96, 99–101, 103–105, 107, 114, 115 autonomy, 20, 21, 34, 68, 69 council, 21, 39, 59, 61, 63, 64, 66, 96–99, 102, 103 councillors, 43, 65, 97–99. See also Elected members governance, 2, 5, 10, 19, 21, 22, 38, 43, 98, 103, 113, 114 government, 2, 3, 5, 10, 16–22, 30, 32, 34–39, 41–43, 45–47, 49–52, 57, 58, 60–70, 75, 77–79, 83, 85, 87, 88, 94–105, 113–116 self-government, 5, 10, 16, 20, 21, 49, 50, 58, 114, 116. See also Autonomous Local Autonomy Index (LAI), 49, 105 Luxembourg, 10, 47–50, 52

F Fiji, 4, 43–45, 50, 114 Finland, 104, 106, 107

G Grenada, 40–43, 50 Gross domestic product (GDP), 11, 68, 99, 105, 107 Guyana, 40–42

I Iceland (Icelandic), 10, 22, 47–50, 52, 58–70, 75–77, 79, 81–86, 88, 94–101, 103–107, 115, 116 Income group, 32 high-income, 32, 35, 40, 42, 47, 52, 104

K Kiribati, 44, 45

INDEX

M Maldives, 31, 35–39, 114 Malta, 47–50, 52, 116 Merger, 17, 60 Micronesia, Federate States, 44–47, 50 Montenegro, 47–50 Municipalities, 2, 16–18, 34, 35, 39, 46, 47, 49, 58–69, 77, 79–81, 83, 85, 86, 88, 94, 98, 103, 104

N Nordic states, 1, 3–5, 57, 58, 70, 76, 94, 96, 104, 105, 107, 114, 116 Norway, 61, 63, 104, 106, 107

P Pacific, 16, 19, 43, 45–47, 94 Paradoxes (paradoxes of public administration in small states), 5, 10, 13–15, 104, 105 Population, 1, 3–5, 10, 11, 13, 14, 32, 35, 37, 39, 41, 45, 47, 51, 58, 60, 61, 69, 76, 79, 81–85, 87, 95, 104, 105, 114, 115 Professional, 3, 14, 15, 51, 58, 64, 68, 94, 96–98, 102 Public administration, 10, 11, 13, 15, 19, 31, 51, 104, 115, 116

R Responsibilities, 2, 4, 12, 21, 30, 31, 34, 39, 42, 43, 45, 47, 49–51, 59, 65, 68, 96, 99, 101, 103, 107, 114, 116. See also Tasks

S Samoa, 44–46, 50, 51 São Tomé and Príncipe, 33, 34

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Share in total public spending, 107 Share of total expenditure, 105, 106. See also Share in total public spending Share of total government expenditure (SNG), 32, 42, 49, 107 Size, 5, 10, 11, 14, 15, 18, 49, 58, 78, 81, 114, 115 geographical size, 32 optimal size, 13, 17 population size, 4, 11–14, 32, 34, 43, 52, 61, 63, 88, 104 Slovenia, 5, 104–106 Smallness, 3, 5, 10, 13, 15, 18, 116 Solomon Islands, 44–46 Staff, 65, 101, 103, 115, 116 administrative staff, 102 expenditure, 105 staffing resources, 13, 14, 101, 102 State, 4, 10–13, 16, 17, 19–21, 30–32, 34, 35, 37, 39, 41–43, 45–47, 49–52, 67, 79, 88, 94, 95, 104 capacity, 5, 10–13, 51, 116 small, 1, 3–6, 10–15, 19, 21, 22, 30–33, 35–37, 39–41, 43–52, 58, 88, 94, 104–107, 113–116 unitary, 34, 50, 58, 105 St. Lucia, 43, 50 St. Vincent and the Grenadines, 41–43, 50 Subnational, 2, 4, 5, 12, 19, 22, 30, 34, 35, 42, 43, 50, 51, 88, 94, 99, 101, 104 governance, 2, 3, 5, 10, 15, 16, 35, 116 government, 1–6, 10, 12, 15, 16, 22, 30–32, 34, 35, 39, 41–43, 45–47, 49–52, 58, 88, 94, 99, 101, 104, 105, 107, 116. See also Share of total government expenditure (SNG)

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Suriname, 40–42, 50 Sweden, 104, 106, 107

traditional leaders, 35, 45, 46, 94 Trans-scaling, 18

T Tasks, 17, 18, 20, 21, 30, 32, 34, 43, 46, 47, 51, 58, 61, 63, 67, 68, 70, 83, 85, 95, 96, 99–104, 107, 114, 115 Tonga, 4, 43–46 Total public spending, 107 Tradition, 2, 5, 11, 16, 18–20, 38, 45–47, 51, 58–60, 62, 63, 76–78, 82, 85, 88, 94–97, 101, 104, 115 institutional traditions, 17, 52, 114

U Up-scaling, 18 Urban, 5, 32, 34, 35, 45, 47, 49, 59, 60, 65, 67, 68, 70, 76–79, 81–84, 86–88, 115. See also Urbanisation Urbanisation, 3, 5, 35, 42, 45, 60, 62, 75–79, 81, 82 V Vanuatu, 44, 46, 47, 116