Window on Eurasia: Economic Crisis Puts Moscow, Russian Regions on Collision Course

Paul Goble

Vienna, October 30 – Moscow and Russia’s regions are now on a collision course, one in which the regions, in many cases devastated by the economic crisis, need more resources and authority to cope, are confronted by a central government which is further tightening control over revenues even as it holds regional leaders responsible for solving problems in their areas.
Most commentators on the situation in Russia have focused either on the problems of individual company towns – the so-called Pikalevo problem – or on the economic situation in the country as a whole. But statistics published by Russian state statistics administration yesterday highlight just how differently the economic crisis has hit different regions.
For the country as a whole, industrial production has fallen ten percent and per capita incomes four to five percent over the last year, but these figures conceal as much as they reveal, an article in “Nezavisimaya gazeta” points out, regarding “the serious consequences of the crisis in Russia’s regions” (www.ng.ru/economics/2009-10-30/1_crisis.html).
In many oblasts, the statistics administration said, the monetary incomes of people have declined “more than 20 percent, retail trade has fallen “15 percent or more, industrial production has fallen 25 percent, and “electricity use – the most reliable indicator of economic activity has fallen in a number of industrial oblasts 30 percent or more.”
Among the federal subjects which have suffered the most from the economic crisis, “Nezavisimaya” reports on the basis of the Rosstat figures, are Ivanovo, Vologda, Kemerovo, Kostroma, Yaroslavl, Vladimir and Tomsk oblasts, and the Yamalo-Nenets and Khanty-Mansiisk autonomous districts.
Such variations, experts tell the Moscow paper, “require a broadening of the authority and resources of local governments, but the federal powers that be are tightening financial centralization, in this way depriving the regions of the stimuli needed for the realization of individual anti-crisis programs.”
Indeed, these experts say that they “do not believe that a single set of anti-crisis measures, dictated from the federal Center will give the desired results. One reason for that is that regional leaders, given Moscow’s financial policies, have little incentive to increase production beyond what is necessary to keep things quiet.
According to Sergey Valentey, the head of the Center of the Economics of Federal Relations of the Moscow Institute of Economics, the central government’s approach sends a clear message to regional leaders, “the more you earn, the more [the powers that be in Moscow] will take away,” leaving the regional leaders and the regional populations in much the same place.
The specialists “Nezavisimaya” spoke with in preparing this article say that they do not expect either mass out-migration from the hardest hit regions, although Summy Telekom director Oleg Leonov said that “the arrival of the more dynamic and professional cadres in Moscow will likely continue,” another flow that will leave the regions still worse off.
Despite all this, the paper says, Russian sociologists “still do not expect mass organized protests.” Lyudmila Presnyakova of the Public Opinion Foundation said that most Russians are simply cutting back their expenditures rather than thinking about moving or taking part in protests to improve their situation.
But if the situation deteriorates or if protests in the company towns forces Moscow to send money and not just troops, such calculations could change, prompting regional elites to combine to demand an end to unfunded liabilities or regional populations to demonstrate against what “Nezavisimaya gazeta” describes as “a knockout blow” to those outside of the Russian capital.