Russia 2000 Part 3: Russia's Regions, Can the Center Hold?

11 MINS READOct 12, 1999 | 05:00 GMT

From the collapse of the Soviet empire in 1991 to the renewed war in Chechnya today, the question has been: Can Moscow hold the 89 regions that are Russia? Can the center hold or is separatism destined to split off the dozens of republics, krais, oblasts and okrugs that Russia absorbed over the past 400 years? Though none have yet followed Chechnya into secession, Russia's regional governors have threatened it for nine years. Some have usurped power: 70 percent of the regional laws and all the charters in the North Caucasus violate federal law. Others simply have taken various degrees of control over courts and banks, tax laws and the rights and freedoms of citizens. Thirty regions have lodged territorial claims - against each other. Regional leaders have not so much seized power from the center as they have filled the vacuum left by the Kremlin: the failure to provide adequate defense, social order and economic vision.

But the dynamic appears to be shifting back toward Moscow. The regions have not so much rebelled as protested. Even as they have taken powers, many regional governors have called for a stronger central government. Secessionist tendencies have stemmed generally not from ethnic or historic roots, but from Moscow's failure to meet its obligations.

At first glance, the conflicts in Chechnya and Dagestan seem to be evidence of accelerating disintegration, but Prime Minister Vladimir Putin's response - swift, sure and ruthless - marks the end of the process. The Kremlin's ability to thwart the Dagestan incursion and the ongoing invasion of Chechnya are first steps to reasserting the federal government's role in providing security in the regions.

The contenders for Russian leadership are building campaigns with promises of a strong central government, and the promises are warmly received. The disintegration in Russia is at an end.

Tax Revolt and Economic Collapse

The federal government's persistent failure to meet its financial obligations to the regions sparked a series of tax revolts and, following the economic crash of August 1998, generated wholesale economic separatism.

Tax revolt swept the regions in February 1997, when Sakhalin Oblast voted to withhold taxes in retaliation for the Kremlin's failure to meet its obligations to the region. Sakhalin revoked the decision the next month, after the federal government paid some of its debt. The government of Irkutsk Oblast stopped tax transfers to the federal government on March 1, 1997, claiming the federal government owed the region two trillion rubles; the Russian Finance Ministry and prosecutor general forced Irkutsk Gov. Yuri Nozhikov to recant several days later. The governments of Tula Oblast and Krasnodar Krai announced that they were contemplating withholding taxes from the federal government as well, though they did not carry through. Sverdlovsk Oblast Gov. Eduard Rossel led the Association of Ural Executives in blasting the federal government.

The Kremlin checked the tax mutiny of 1997, but the underlying problems simmered. When the Russian economy collapsed in August 1998, so did the relationship between the Kremlin and the regions. The federal government effectively lost control and the regions took economic policy into their own hands. The Republic of Buryatiya and Kaliningrad Oblast declared states of emergency, usurping a power reserved for the Russian president.

The regions prepared to go out on their own if they had to. More than 60 regions established austerity plans, many froze consumer prices, withheld taxes and drew up plans for local currencies and food vouchers. The Sakha Republic banned mining enterprises from selling gold to the federal government. Sakha and Kemorovo Oblast began to build gold and hard currency reserves, in violation of Russian law. Sakha defaulted on its debts, as well. By October 1998, Tatarstan considered establishing its own citizenship. Sverdlovsk examined a regional currency, nationalizing banks and industries, and issuing its own Eurobond. Khabarovsk Gov. Viktor Ishayev announced the suspension of tax payments to Moscow because the federal government owed more than 3 billion rubles ($189 million). Separatism peaked.

These protests were not aimed at a break, but at ensuring survival. Indeed, they were cries for aid. Particularly in the Far East and Far North, the regions entered the winter of 1998-1999 desperately short on heating fuel. Vladivostok declared a state of emergency in December, when half the city's buildings were without heat. By February 1999, the Far Eastern regions of Chukotka, Magadan and Kamchatka were suffering from such a lack of food and medicine that the Russian Red Cross appealed for $5 million in international emergency aid.

Besides their piece of the pie, most leaders wanted just one thing: a strong and competent central government.

Primakov's Attempt

Regional governments have been looking for a savior, and for a moment, Yevgeny Primakov was that savior. In late 1998, under Primakov, the Kremlin began disbursing relief packages to the regions. Primakov made the fight against disintegration his top priority.

"We lost the Soviet Union," said Primakov. "We will not allow Russia to be lost." He warned the regional governors against behaving like "feudal princelings," and once the crisis passed, proceeded to address the structure of relationships between the center and the regions.

In this Primakov garnered the support of several governors. Saratov Gov. Dmitry Ayatskov warned that Russia would end up a confederation if the Kremlin did not crack down on economic separatism. Sverdlovsk Gov. Eduard Rossel lobbied for a strong, top-down management system in Russia, and Novgorod Gov. Mikhail Prusak suggested that regional governors be appointed by the president, not elected by the people, as they had been prior to the December 1993 ratification of Russia's new constitution. He called it "nonsensical" for one arm of the executive branch to work against the other.

Moscow Mayor Yuri Luzhkov met with Primakov Sept. 16, 1998, and revived a plan proposed by Vladimir Zhirinovsky a few years earlier, advocating consolidation of Russia's 89 regions into 10 to12 larger regions. Kemorovo Gov. Aman Tuleyev declared his support, though he suggested that 25 to 35 regions would be more appropriate and argued that the new regions should be given the kind of economic autonomy enjoyed by Tatarstan and Sakha.

Primakov expressed general support for these and similar proposals, insisted that Russia would eventually make governors again subordinate to the president and came up with an interim plan. He suggested a final plan at the end of January of this year, which included consolidation of regions, appointed governors and strong top-down control. Primakov did not have a chance to deliver the regions from economic and political exile, however, as Yeltsin sacked him in May.

Dependence Breeds Unity

Today, Russia's regions are emerging as key to the upcoming Duma and presidential elections.

Far beyond the chaos of Moscow politics, three new major political blocs formed for the Duma elections are grounded in the support of regional governors. At a tactical level, the blocs - Unity, Fatherland-All Russia, and the Union of Right Wing Forces - lack regional political organizations, and must rely on the networks and patronage of regional leaders. But for presidential candidates behind the blocs, such as Primakov and Putin, the appeal to the governors is part of a much broader attempt to reestablish the contract between Russia's center and its regions.

The contest has been fierce throughout the summer months. The Kremlin "Family" was rumored to be seeking political support among regional governors through the Unity political party. Leaders of about half of Russia's 89 regions are backing the ticket led by Emergency Situations Minister Sergei Shoigu. It is the third major governor-backed political bloc in the upcoming Duma election. The All Russia bloc, led by Tatarstan President Mintimir Shaiymiyev, is part of the Fatherland-All Russia bloc backing Moscow Mayor Yuri Luzhkov and former Prime Minister Yevgeny Primakov. And Samara Gov. Konstantin Titov's Voice of Russia bloc has thrown its support behind former Prime Minister Sergei Kirienko's liberal reformist Union of Right Wing Forces. The two major blocs - Primakov and Luzhkov's Fatherland-All Russia and Shoigu and Putin's Unity - appeal to the governors from different angles, but to the same end.

Interestingly, they have divided governors into haves and the have-nots. Fatherland-All Russia comprises the haves; Unity groups the much larger number of have-nots. The majority of the regions depend upon federal subsidies. The North Caucasus is one of the poorest and most dependent upon Moscow. The Republic of Kalmykia gets more than 90 percent of its budget from federal subsidies. More than a third of the population lives below the poverty line in nearly all of the North Caucasus. With the exception of a few oil and gas rich regions, most of Siberia and the Russian Far East depends on federal government transfers.

Unity is courting the most dependent regions, with Putin suggesting they take a greater role in forming the budget. Putin has already made clear his willingness to sacrifice austerity measures mandated by the International Monetary Fund to provide for increased defense spending and larger subsidies to the regions. This, alongside the Chechen war and the ongoing investigation of the oligarchs, shows that Putin is well on his way to remedying the federal government's lapsed commitment to the regions.

Conversely, only 13 regions are net donors to the federal government, paying more in taxes than they receive in subsidies. These include the cities of Moscow and St. Petersburg, the republics of Tatarstan and Bashkortostan, Krasnoyarsk Krai, Lipetsk, Samara, Perm, Sverdlovsk, Moscow, and Irkutsk Oblasts, and the Khanty-Mansi and Yamal-Nenets Autonomous Okrugs. The small group of donor regions also offers the greatest contribution to the federal budget. Moscow city and Oblast together provide more than 40 percent of the budget.

Primakov has retained the support of wealthier regions, whose leaders remain unconvinced that Unity is not just another of Kremlin oligarch Boris Berezovsky's schemes for looting the regions. Primakov has vowed to strengthen central control over the regions and to crack down on the Kremlin kleptocrats, regaining control over the economy. Were it not for the commonality of purpose shared by Primakov and Putin, this would be a dangerous game, pitting Russia's regions against each other along economic lines.

However, campaign rhetoric and political fears aside, Putin and Primakov's agendas are identical: the reassertion of the center.

Closing the Book on Separatism

Many argue that Russia cannot pose a threat to the former Soviet Republics, let alone reassert control over them, because Russia is too weak to maintain its own territorial integrity. The Kremlin does not have the forces necessary to impose its will in the regions.

The argument though fundamentally misinterprets the relationship between the Russian federal and regional governments. Instead of mistrusting Moscow, regional governors are — for the most part — prepared to welcome the return of a strong central government. They just wish that one would appear.

Now, one has. When Muslim militants invaded Dagestan from Chechnya and revived the real threat of regional secession, Prime Minister Stepashin balked at sending in Russian troops. Possibly involuntarily, Yeltsin replaced him with Vladimir Putin, who resolved to close the book on separatism. Putin dispatched more troops to handle a 2,000-man insurgency than Russia had deployed to Chechnya during the first war. After the Russians routed the intruders, Putin continued the buildup, ordered the bombardment of Chechnya and sent in more troops. Putin unequivocally took a stand against the disintegration of the Russian Federation, reversing three years of neglect by the central government.

With rare exception, separatism never had a chance from an economic standpoint. The regions had attempted to scare more resources out of a neglectful federal government but saw few rewards from openness and reform. Governing elites of the ethnically diverse regions have remained unified because of their Soviet-trained bureaucrats, their use of the Russian language and their preference to work within the system.

Besides taking control of the situation in Chechnya, Putin has made clear his intent to increase military funding, critical for maintaining order and federal authority. Many of the regional governors had been forced to subsidize the troops on their territory. Putin consolidated central control over the regional branches of the intelligence community when he was director of the Federal Security Service (FSB).

In demonstrating the value of the center to regions, Putin has one more task: he must control the wanton corruption and economic crime in Moscow. The regions have little incentive to toe the line when they see a weak and corrupt center. Before Putin can challenge the regions to pay their taxes in full, he must take charge of the oligarchs who control the major factories and resources in the regions and who stash their profits tax-free out of the country. The oligarchs must fall or Russia cannot advance.

Whether Putin or Primakov wins the presidential election next year, Russia's federal government is poised to pick up the pieces of its authority in the regions. If so, Russia can quickly regain its political cohesion. This will not extend quickly to the former Soviet Republics. Russia's newly independent neighbors share longstanding economic and political ties with Russia that have not been replaced. They may not be ready to warmly welcome Russian masters, but several are already looking to Moscow to meet some old obligations.

Russia is radically reversing the process of disintegration inside the Federation. As it seeks to restore and enhance its security it will look next to its periphery.

Next: The Duma elections point to centralization in Russia's future.

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