Friday, January 30, 2015

Putin Calls on Russian Regions to ‘Independently’ Struggle with Crisis

Paul Goble


            Staunton, January 30 – In a move that recalls Mikhail Gorbachev’s times and that the current Kremlin leader may come to regret, Vladimir Putin has called on Russia’s regions to “formulate their own anti-crisis plans and independently search for sources of financing for new infrastructure projects” (


            Those words which recall Gorbachev’s outline of his thinking in December 1984 before he came to power and which signaled the end of massive Soviet interregional transfers of resources played a major role in triggering not just new thinking about economics but also about the future political relationship between Moscow and the now-independent union republics.


            Yesterday, Putin called on the leaders of Russia’s federal subjects to come up with their own “action plans” to cope with the crisis in the way that they did in 2008-2009. “Now, it is necessary to do the same thing.” He added that Moscow will support those it can but that the regions will also have to look for their own funding as well.


            Two Russian experts with whom the BBC’s Russian Service spoke were quite dismissive of Putin’s suggestion, seeing it as a reflection of his being out of touch with the situation in the country and at best too little too late.


            Natalya Zubarevich, director of regional programs at Moscow’s Independent Institute for Social Policy, said that Putin’s remarks show that he “poorly understands what is taking place in the regions,” a reflection of a breakdown in communications between the Kremlin and regional leaders.


            Were the Kremlin leader aware of the actual situation, one in which the regions can do little because they are facing rising debt, falling tax revenues, and cuts in federal subsidies, he would know, Zubarevich continued, that there was no possibility for the regions to take the kind of steps he called for.


            And Karen Vartapetov, deputy director of Standard&Poors for Russia, agreed, noting that the regions face the challenge of extinguishing far more debt in the coming year than they have the capacity to do on their own and that Moscow is doing far too little to help them whatever the Kremlin suggests.


            This situation has arisen, the ratings analyst said, because of Putin’s directives in May 2012 which, in the face of slowing economic growth, “imposed on the regions greater obligations” for social spending. That in turn has led to a structural imbalance in regional budgets equal to 1.5 to 2.0 percent of the country’s GDP as a whole.


            Neither addressed the political consequences of these economic problems, but they are obvious: if Moscow is cutting the regions lose to face their own problems as far as the economy is concerned, at least some people in some of the regions of the country may begin to think seriously about cutting themselves off politically from a capital so obviously out of touch.



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