Wednesday, July 7, 2010

Window on Eurasia: Moscow Plans to Solve Problems of North Caucasus by Economic Growth Alone

Paul Goble

Staunton, July 7 – Moscow’s new plan for the North Caucasus, one developed by Presidential Plenipotentiary Aleksandr Khloponin and now backed by Prime Minister Vladimir Putin, focuses almost exclusively on promoting economic development rather than on directly combating problems there like corruption, violence, and an increasingly separate way of life.
On January 23rd, “Russky Newsweek” reports today, Putin directed Khloponin and the regional development ministry to develop a new Caucasus strategy, and their experts produced a draft by the middle of May. A copy of the final version of the text became available to the Russian magazine this week (
Consideration of the nearly 200-page document, the journal says, was “rushed” because Putin had given the government until July 1 to come up with the draft and because the Russian prime minister was scheduled to give a presentation on the region at a conference of his United Russia Party in Nalchik this week.
In his remarks – see -- Putin, while discussing many aspects of the region, clearly signaled that he backs central idea of the new plan for North Caucasus, something that suggests that the various ministries now considering it – regional affairs, culture, sports and finance – will, in the words of “Russky Newsweek,” now approve it.
Konstantin Gaaze, a journalist at the weekly, noted that in November 2009, President Dmitry Medvedev declared that the North Caucasus is ‘the most serious domestic political problem.’ He clearly has in mind, the corruption, force, clan structures, and autonomous way of life which infect [the region].”
But the new strategy that Khloponin has come up with and that Putin has signaled his approval of “does not have any proposals concerning the resolution of these problems,” Gaaze notes. Instead, “it prefer[s] to concentrate on purely economic undertakings,” an approach that appears likely to fail.
The strategy paper, Gaaze continues, “is an economic document: in it, there is neither a plan for the struggle with corruption nor an analysis of the political situation in the district, nor an assessment of the existing models of political culture and political diversity of the North Caucasus republics.”
Instead, the paper calls for “a struggle with the shadow economy, special conditions of development, stormy economic growth and new work places. And the result [it promises] will be a flourishing region,” one where the current problems apparently will solve themselves without being addressed directly.
The policy paper, the “Russky Newsweek” journalist reports, lays out “three scenarios for the development of the district through 2025. Under the first – “the inertial scenario” – “social stratification will increase, the business climate will not improve and terrorism and interethnic conflicts will all be as before.”
The second – or “base” scenario – is “more optimistic. It “anticipates a growth in state investments in the economy of the district. But small and mid-sized business [there] all the same will remain outside of this flourishing, and that means the situation in the labor market will not change.”
The third scenario, the paper says, is “the only hope of the Caucasus for rapid and convincing growth.” It calls for massive investments so that the economy of the North Caucasus will grow “more than ten percent a year” for much of this period, “small and mid-sized business will flourish, and the Caucasus “will be integrated into the Russian and world markets.’”
The paper itself does not offer totals for the amount of budgetary funds that would be necessary, but Gaaze suggests that the sums are potentially enormous – perhaps as much as 130 billion rubles (4 billion US dollars) for three years, money that Moscow would likely find it quite difficult to extract from other accounts.
But that may not be the biggest difficulty with the introduction of the new plan. Aleksandr Konev, a political scientist, points out that “solving only the economic problems in the Caucasus solves nothing.” New political institutions are needed, and the rapid urbanization the plan calls for “will only create more problems,” given “the complex ethnic picture” there.
And the plan itself contains a potentially even more explosive aspect. According to Gaaze, Khloponin wants to get around the current corrupt governments there by “creating in the Caucasus a parallel system of administration,” something current elites would certainly fight and that thus might do little besides making the region even more ungovernable.

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