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4 August 2015

Kremlin colonialism vs. federalism

What has to be done for the Russian Federation to become a federation?

Hardly anyone would argue that today that strong Russian regions are suffocating under Kremlin policy while the weak ones remain on a tight leash, given their handouts from the federal budget. Simply put, the Russian Federation is not a federation. However, the objective and natural multi-faceted nature of its socio-economic development has led to the fact that any attempts at administrative unification revive old colonial practices, inadequate for the complex Russian society and the contemporary world on the whole.

Correspondingly, we should understand the way that political mechanism of today’s excessive political and economic centralization works and how (and at whose hands) a desirable federal structure can be arrived at following Vladimir Putin’s departure from his post.

Breaking with the Soviet model

The basis for the current administrative-and-territorial system in Russia is the Federation Treaty concluded on March 31, 1992, between the state authorities in the regions and the Russian Federation which practically formed the basis for the corresponding chapter in the 1993 Constitution. In point of fact, we are talking about three agreements – the central government signed an agreement with sovereign republics of the Russian Federation (only Tatarstan and Chechnya refused to sign it); an agreement with the territories, regions and cities of Moscow and Saint Petersburg; an agreement with the autonomous districts and the Jewish autonomous region. A legal analysis of their provisions is not our task – we need to focus on the political aspect of the issue.

As a first step, let us look at those who signed the Treaty – these were the authorized representatives of public authorities and them only. That is, the 1992 Treaty, in fact, is a kind of a deal between the central and regional authorities of the country which, up that point, had been called the Russian Soviet Federative Socialist Republic (RSFSR).

Regional authorities (that is authorities – not citizens) retained only minimal powers within their sphere of sole responsibility and, in return, they received representation in the upper house of the Russian parliament and a share of control over state-owned assets. As a result, the Soviet status quo of power, albeit with the absence of the Communist Party of the Soviet Union (CPSU) and some elements of market economy, prevailed. It is precisely this nature of the Treaty; as a deal between central and regional authorities, which predefined both special conditions for the elites of Tatarstan, who managed to negotiate more favorable terms with the Kremlin, and the catastrophe of two Chechen wars at a time when the Kremlin was attempting to bargain with Dudayev from a position of strength.

The lack of a well-established elective principle regarding the regional authorities has become yet another important aspect of continuity with the Bolshevik system. And this is precisely what explains the phenomenon that since 1992, we have already observed four separate approaches to the formation of regional authorities of the executive branch (elections by direct vote took place only in 1995-2004) and constant amendments to the electoral process of regional legislatures. Moreover, all the key changes have been introduced on the Kremlin’s initiative.

Thesis 1: On behalf of citizens residing in each region and via representatives directly elected by them, it is indispensable to conclude the new Federation Treaty and, accordingly, to amend chapter 3 of the Constitution of the Russian Federation on the federal structure, paving the way for the establishment of regional authorities and the implementation of key principles of local government. At the same time, the central administration should delegate maximal powers to the regions, excluding the emission of the ruble, foreign policy, defense and powers in the areas where the consolidation of resources is important.

Nota Bene: Until such time that an international solution to the problem of the Russian annexation of Crimea has been implemented, residents of the peninsula should, under no circumstances, participate in this process. Otherwise the newly-established Russian federalism will be discredited.

Create political equality between the regions

Another important dimension of the 1992 Federation Treaty was the political inequality of the regions it pertained to. The sovereign status of the republics within the structure of the RF was offset through Putin’s rise to power. However, they maintained their privileged status in the country. The majority of the regions – krai and oblast - constitute the ‘middle class’ within this hierarchy. Here, the position of local elites is determined solely by the economic weight of each region individually as well as the lobbying capabilities of individual governors.

Autonomous districts identified on ethnic grounds back in the Soviet days are at the very foot of the hierarchy. Except for the Yamalo-Nenets Autonomous Okrug and Khanty-Mansi Autonomous Okrug, which are the centers of oil and gas extraction, other districts can be characterized as economically distressed areas. However, instead of creating institutional conditions for their development, the central government has chosen to promote the process of their absorption by stronger neighboring territories and regions. As a result, 6 out of 11 autonomous districts which were signatories of the Treaty have ceased to exist as subjects of the federation.

Thus, a political mechanism of subjugation of initially unequal regions to the Kremlin was forged, whereby local elites negotiated over all important matters with it separately; in isolation from each other and from the citizens.

Thesis 2: The redistribution of income of strong regions in favor of the weak ones via the federal budget should be stopped. The central government should focus on creating and maintaining universal free market institutions throughout the country. Weak regions are incentivized when it comes to the development of a real market system. Moreover, as regards mergers, the division of regions, or the formation of sustainable political-and-economic conglomerates within the federation, they should be resolved exclusively by the regions themselves. Thereby even the formation of provisional Far Eastern, Siberian or Ural republics will not constitute a tragic event. 

Nota Bene: If we look at today’s economically developed part of Russia as an archipelago of over twenty agglomerations with a population of over 1 million each - it becomes clear that any potential resistance by weak regions can be disregarded, when such an approach is applied.

The Federation Council as an institute of true unity

The Russian political regime has developed a number of additional mechanisms to maintain its power over the regions. To exercise control over the regions and weaken horizontal communication ties between their elites, federal districts headed by the president’s authorized representatives who resembled governor generals of the era of monarchy were formed in the year 2000. This system is one of the means of communication for governors of territories and regions with the president’s administration - yet another bargaining platform.

The Kremlin also exercises control over the upper house of the Russian parliament - the Federation Council (FC) - which represents the regions. Neither the Federation Treaty nor the Constitution lays down the procedure for the election of members to this house. Only once, in 1994-1995, did two directly elected representatives of each region sit in sessions. And such a situation turned out to be very uncomfortable for the Kremlin: regions could build horizontal political communication ties via the FC; with such a composition, the house itself turned out to be capable of influencing the decisions of the center. Subsequently, the procedure for the formation of the FC changed twice; direct elections were not mentioned any more, while seats in it became yet another subject for bargaining between the center and regional elites. Moreover, in 2014, the president obtained a quota to appoint 10% of the members of this house.

Thesis 3: The Federation Council should be formed by citizens in elections by direct vote. This election system should be enshrined in the Constitution. All the institutions which give the Kremlin bureaucratic control over the regions should be eliminated. This is the only way of overcoming the historical inertia of totalitarianism and creating a system of checks and balances.

Laissez Faire, Laissez Passer

In general, the central government in post-Soviet Russia is fearful of any independent communication between the regions; and raising barriers for this communication is one of the directions of its policies. Hence, all significant issues, especially in areas of long-term regional economic cooperation are solved only via the Kremlin and those close to it.

Under these conditions, state-controlled companies – ‘Gazprom’, ‘Rosneft’ and ‘Transneft’, ‘Russian railways’, ‘Rostec’ and others – play a far more significant role in maintaining economic and political ties between the regions and even neighboring municipalities in different regions. However, a political priority of state corporatism reinforces regional inequalities, weakens the regions and gives rise to the high costs of monopolism. And, hypothetically, the fragmentation of these companies will not fundamentally change anything.

The current structure provides for too few sources of economic growth in the regions, since business is largely crushed by taxes which benefit the center and regulation by different government agencies. As a result, instead of creating a federation, post-Soviet Russia has reproduced a colonial paradigm. As always, the economic interest of the ruling group is the essence of it.

Thesis 4: In order to truly overcome these phenomena, any restrictions on private and regional initiatives will be displaced through the emergence of real initiatives, and only this, coupled with the development of representative government institutions at the local, regional and federal level, will allow an escape from the authoritarian and colonial management practices which hinder the development of the country.

Is there a road map?

Today, we observe an absolute lack of a common constructive agenda in Russia. And today’s authorities are not able to offer one in any form. Instead, regional and local agendas are emerging surreptitiously. So far, they boil down to one question: ‘How is it possible to survive under conditions of growing uncertainty’? And this question is addressed separately by every region, every city, with no mechanisms in place by which to conduct a joint search for an answer. The problem with respect to the lack of federalism is aggravated by two negative manifestations which are symptomatic of the impending exacerbation of political disease – the stagnation of regional elites, and the significant decomposition of gubernatorial and mayoral carcasses.

1. It is clear that the current Russian regime is trying to save itself tooth and nail, that the historical inertia of totalitarianism is prevalent. However, regardless of the way in which Putin leaves his presidential post, the new government will have to address two tasks. Initially, it will have to legitimize itself within the country and externally, and secondly, it has to enter into a difficult dialogue with the regions. These tasks will have to be addressed regardless of whether the new government is truly democratic or not, and should it attempt to imitate democracy for the sake of self-preservation.

2. Members of the Federation Council together with the majority of current governors are not ready for such a dialogue. Under the circumstances, the simplest and most effective solution is a return to direct gubernatorial elections and to delegation of responsibility, thereby directly handing over risk to the upper house of the parliament elected by direct vote. In addition, the central government has nothing to offer the regions except for the expansion of their roles, their authority and increased share of tax revenue. And political institutions no longer in existence today will require the re-constitution of the separation of powers.

3. The abolition of the redistribution of income is difficult, first and foremost, psychologically. The multi-faceted nature of the country means that it is impossible to build a fair and rational system of redistribution: there will always be too few donors and too many beneficiaries. Therefore, an American model rather than a German one suits Russia best in terms of budgetary federalism. The only way forward is to leave taxes which cannot be abolished in place locally, and give strong regions a chance to gain a share of, and to adapt to, the global market. Only in this way can they function as catalyst for overall economic growth.

4. This extremely painful establishment of the institutions of the free market is indispensable to a viable federal structure in Russia. It is worth recalling that at least 20 million citizens, in fact, work under these conditions (the government calls it ‘shadow employment’). That is, the thesis of laissez faire, laissez passer is already being implemented by a significant portion of Russians.

The main risk. The political situation can change in most unpredictable ways, and the desire to implement rapid change as well as tactical considerations when it comes to addressing the said problem will prove more tempting than sharing responsibility with citizens and making tough decisions for any post-Putin government. In this regard, it is highly probable that we are doomed to yet another reemergence of the authoritarian model if not the degradation and disintegration of the mosaic of political space in the country.

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