Tuesday, August 17, 2010

Window on Eurasia: Some Russian Regions Limiting Food Exports to Other Russian Regions

Paul Goble

Staunton, August 17 – In what one analyst describes as “the rebirth of the supply-based regional separatism” Russia experienced in the 1990s, the leaders of some Russian regions are again limiting the dispatch of grains and other agricultural products beyond their borders in order to ensure that the residents of their regions will not suffer food shortages.
In “Novaya Versiya” today, journalist Igor Dmitriyev says that these regional leaders feel compelled to act this way because of falling production as a result of the drought and fires and because they have concluded that Moscow has no plans to provide them with sufficient funds to compensate for their losses (versia.ru/articles/2010/aug/16/zapret_na_export_produktov).
At the end of the Yeltsin period, Dmitriyev points out, “Russia experienced a similar phenomena. In 1999, for example, “limitations on the export of food products existed in almost 20 subjects of the Russian Federation, including Stavropol and Krasnodar krays, and Rostov, Voronezh, and Kursk oblasts.
At that time, Aleksandr Rutskoy, the governor of Kursk, ordered officials to consider any food being sent outside his oblast to be “contraband,” offering the militia there five percent of any confiscated at the border and transferring the remaining 95 percent to the Oblast Supply Corporation.
Moreover, Rutskoy also provided assistance to his own people in another way. He required anyone wanting to sell locally produced food to do so only through that corporation which artificially kept prices for the public at a level 50 percent lower than those in the marketplace.
Another governor in that period, Nikolay Kondratenko of Krasnodar kray, behaved in “a more clever fashion.” He introduced “a system according to which permission for the export of grain and food products based on its processing could be obtained only by those firms which did not have any debts before the kray administration.
But because almost all such firms had those debts as a result of credits extended to them during the growing cycle, Kondratenko was able to restrict exports to other Russian regions almost to zero, even as he insisted that he was acting to recover debts rather than impose a burden on Russians elsewhere.
After ten years of the current “unitary federalism” built up by Vladimir Putin, Dmitriyev suggests, “it might have seemed that such arbitrary action by the provincial powers that be would have become impossible.” But given the problems arising from the drought and the fires, that assumption has been called into question.
Omsk oblast was the first to tighten control over the shipment of agricultural products beyond the borders of the region. At a meeting of the oblast Security Council, officials decided to take that step because of what they projected would be the inevitable increase in demand for such products and sharply rising prices.
Omsk Governor Leonid Pozhelayev said that “it is necessary to put in place a mechanism which will exclude the possibility of the appearance of a deficit of food supplies” or speculation leading to a rise in prices. “We must take the most extreme measures” in order to “guarantee the food security on the territory of the region” by blocking “the uncontrolled export” of its food.
“There must be food on the tables of Omsk residents,” he declared.
Pozhelayev did not specify just how he planned to block such shipments, Dmitriyev says, but the journalist notes that “one need not doubt that Omsk and other regional powers that be, who traditionally control a large segment of the food sector, will find the necessary levels to do just that.”
The “Novaya versiya” journalist adds that there are “rumors” that Samara oblast plans to follow in Omsk’s footsteps on this. But the reason Samara Governor Vladimir Artyakov and his aides are giving is a bit different: they are suggesting that Moscow will not provide them with enough assistance to compensate for their losses from the drought and the fires.
At the moment, Moscow is offering far less than the regional heads say they need, and that is likely to continue: As Agricultural Minister Elena Skrynnik pointed out, the central authorities are skeptical about regional claims: “Not always,” she said, “do the declared data offered by the regions about their losses correspond to reality.”
Other regions are likely to follow Omsk, Dmitriyev suggests. Twenty-three of them have already been declared disaster areas, something that makes it unlikely Moscow will be able to compensate them even as much as it has promised so far. And the current Moscow offer covers only about a quarter of the estimated losses.
Moreover, whatever Moscow does, food shortages are likely to emerge at least in some locations and prices rise, something that could have political consequences for regional leaders just as it has already had for Moscow where Vladimir Putin has declared a provisional ban on grain exports.
While that has hit some grain producers and dealers hard, it has been praised by some Russians as being “the first case in the administration of the duumvirate when the demands of political self-preservation outweighed the commercial interests of affiliated business” (www.snd-su.ru/cgi-bin/rg.pl?param=div2&page=4&type=2627&what=1001).
Perhaps not surprisingly, regional leaders are now making a similar kind of calculation, the results of which are likely to exacerbate tensions between Moscow and the regions in much the same way such bans on the shipment of food across regional borders did more than a decade ago.

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