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Analyses Last Updated: May 8, 2020 - 11:43:56 AM


The Malaise of the Russian Regions
By András Tóth-Czifra, Institute of Modern Russia, 04 May 2020
May 7, 2020 - 3:21:06 PM

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The COVID-19 pandemic hit Russia hard, with Moscow emerging as the epicenter and regions expected to reach peak numbers in the coming weeks. From the onset of the crisis, Vladimir Putin has delegated full responsibility for its management to regional governments in what might look like a sudden break with his centralized approach. However, regions have not been given real power, but rather left to their own devices with little guidance from the Kremlin.

Despite delegating responsibility for fighting COVID-19 to the governors, Vladimir Putin retains real political power.

Power to the regions?

From the onset of the COVID-19 crisis, the federal government has outsourced responsibility for managing the crisis to the regions. Vladimir Putin has repeatedly told governors that they should figure out how to balance the conflicting priorities of slowing the spread of the virus and keeping local economies running. He even threatened them with criminal prosecution if they failed the task. Rumors of imminent dismissals based on suboptimal performance in fighting the virus abound.

On the surface, this looks like a sudden break with the steady centralization that characterized Russia in the past two decades. But don’t be fooled: regions have not been given real power—the responsibility to set policies is only nominally theirs. For one, most of them have barely any budgetary reserves that can be spent beyond implementation of the federal programs, nor the ability to bail out local businesses and help citizens. Even before the pandemic, the National Credit Rating Agency estimated that at low oil prices 62 of the 83 regions would deplete their reserves this year. And depending on the length of the crisis, many—especially oil-producing regions—might also face up to 560 billion rubles ($7.5 billion) in lost corporate and mineral extraction tax revenues. Regions with a strong service sector (e.g. Krasnodar Krai or big cities) have suffered from the pandemic equally hard.

The 200 billion rubles ($2.7 billion) that the federal government will transfer to regional budgets as part of its financial aid package pales in comparison to the 9.6 trillion rubles ($128 billion) of the projected 2020 income of all Russian regions (excluding Moscow), or even the 2.6 trillion rubles ($34.7 billion) of transfers that regions received from the federal center in 2019. Essentially, regions are only allowed to move around existing money. This does not mean that they will go bankrupt if they need to spend more, for they are now allowed to increase expenditures and exceed deficit caps. But going down this road is not a very attractive choice as it may result in their losing fiscal autonomy to the Ministry of Finance.

What can the regions do? 

The real power remains with the president and the agencies that he controls—from the special envoys to the State Council. In Putin’s political system, even if straight orders are not spelled out, regional leaders already know they are expected to do: keep their regions calm and local interests happy, ensure people vote the right way, and deliver the right numbers. They are expected to manage, not govern. To make political decisions, governors look for cues from Moscow.

The pandemic saw this pattern repeat in recent weeks, but, as often happens during crises in regimes that lack transparency, the cues have been scarce and contradictory. The issue at the core is the absence of a federal strategy to contain the spread of the virus. When in mid-April Putin suggested that the “non-working period” originally planned to last until the end of the month might be cut short, 56 regions promptly loosened their restrictions. But then Moscow mayor Sergey Sobyanin, who fashions himself as an unofficial leader among regional governors, called for stricter measures in Moscow. Eventually, Putin also acknowledged that the country would not reopen until mid-May.


Based on official statistics, as of early May, Moscow has the highest number of confirmed cases (over 74,000), total deaths, and deaths per capita. Regions lag two or three weeks behind the capital. Ingushetia has the second highest number of deaths relative to its population. COVID-19 hotspots emerged in Murmansk, the Leningrad region, and the Komi Republic. The virus also spread quickly in the Chelyabinsk, Sverdlovsk, and Arkhangelsk regions.

The problem is further exacerbated by how little power governors can actually exert over their regions, despite being granted “responsibility.” While they can limit travel within the region, blocking interregional commuting is out of their reach. For instance, Muscovites continued to travel around over the weekends, forcing residents of the neighboring Yaroslavl region to complain about being “flooded.”. When governors asked Sobyanin to help them suspend transit links, he reportedly deferred them to the federal government—to no avail. Chechnya’s unilateral attempts to close its borders were immediately rebuked by the federal government. Still, some regions found a way around this problem. In the Irkutsk, Tomsk and Krasnoyarsk regions visitors from Moscow and St. Petersburg now have to quarantine, while Nizhny Novgorod and Tomsk have managed to limit in- and outward traffic since April 27.

Another problem that governors routinely have to deal with is the presence of various interests in their territories that are bigger than the authority of local governments. In the Leningrad region a COVID-19 hotspot developed among workers at an IKEA construction site. In the Murmansk region hundreds of cases were registered at a construction site belonging to Novatek, a gas company linked to Gennady Timchenko, one of Putin’s closest allies. Governors have limited authority to close these kinds of sites as they belong either to businesses declared essential by the federal government or to someone more powerful than them.

Not all regions are created equal

The crisis has also highlighted various differences between Russia’s 83 regions. Those with a significant degree of autonomy (e.g. Chechnya, Tatarstan) were able to take independent initiatives. Tatarstan, for example, was one of the first regions to introduce an electronic permit system for travelling around under quarantine—the idea was picked up by Moscow two weeks later, but the implementation in both regions was widely criticized. The responses of others were often sluggish as governors waited for suggestions from the federal government. Yet some, such as the Amur region, the Altai Republic, and the Republic of Tuva, were called out by the Ministry of Trade and Industry for “dangerous inertia” because, as of April 22, they had not yet acquired personal protective equipment for hospitals.

Political differences also came into play. The governor of the Vladimir region, Vladimir Sipyagin, took the bold step of publicly complaining to Putin about the poor state of the healthcare system in his region. Sipyagin is one of the few governors representing the “systemic” opposition parties, thus feeling slightly freer to voice these concerns than colleagues from the pro-Kremlin United Russia. Sergei Furgal, another “systemic” opposition governor of the Khabarovsk region, was among the first to oblige citizens to wear masks in public spaces (shortly after Tatarstan).

It is noteworthy that some regions, such as Ingushetia and North Ossetia, already riddled with low trust in the authorities—a phenomenon that preceded the pandemic—saw political tensions rise as a result of confusing decisions and bad communication by the local and federal governments. In North Ossetia’s capital, Vladikavkaz, a protest erupted against the lockdown measures. These sensitivities were likely taken into account by two regions led by Putin’s former bodyguards, Tula (Alexei Dyumin) and Yaroslavl (Dmitry Mironov), which did not implement strict lockdown measures, even though Tula is one of the high-risk regions for COVID-19 due to its large number of elderly residents. All of these regional heads are appointees sent from Moscow and command very little public legitimacy.

The most glaring difference is between Moscow and the rest of the country. The capital, even as it struggles to fight the pandemic, has a fiscal cushion that regions (perhaps save for the city of St. Petersburg) simply do not. Moscow’s budget doubled in the past decade as the government was eager to brighten the mood of unruly Muscovites with costly construction projects. This year it will spend an approximate 250,000 rubles ($3,330) per resident—more than three times than an average region and more than five times than poor regions, such as Volgograd or Saratov. Moscow can also afford to redirect spending from other areas on loans and guarantees to local companies, while most regions can merely support the unemployed and allow local businesses to defer taxes for a couple of months.

In April, the government made it possible for regions to lend to each other. Natalya Zubarevich, a leading expert on Russia’s regional development, called this “a clear attempt to tap Moscow’s budget” to plug holes in the financing of regions. But even in the best-case scenario this risks creating a different power vertical, with wealthier regions holding sway over poorer ones.

In the current system, where authority and income are highly centralized, governors, especially non-local appointees from Moscow, who lack links to local interest groups, are encouraged by the federal center to cut expenses rather than invest in public services. This is hardly going to change without fiscal devolution, for which the Kremlin evokes the 1990s nightmare of the “unruly” regions, or without a larger aid package from the National Welfare Fund, which the government seems hellbent on keeping intact.

Yet it seems increasingly unlikely that things will get “back to normal.” As citizens and businesses are asked to obey orders without getting a safety net in return, as governors are asked to solve problems on their own without getting more political and fiscal autonomy to do so, the contracts underpinning the political system will lose their meaning. It is difficult to pinpoint where and when, but people left to their own devices are bound to take their own initiatives.


Source:Ocnus.net 2020

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