Moscow’s Subsidies to Regions Increasing Dependence of Latter of the Center, Accounting Chamber Finds

Paul Goble

            Staunton, June 12 – Subsidies from the federal government to regional ones are neither effectively reducing income differences among the regions nor creating conditions in which the latter will be able to rely on their own resources, the Accounting Chamber says. Instead, they are increasing the dependency of the regions on the center.

            There are various ways that these subsidies could be handled that would have a different impact, experts say; and that leads to the conclusion that the center is not really committed to equalizing life in the various regions or to creating a situation in which the regions will be able to rely on their own resources (profile.ru/economy/effekt-kolei-pochemu-rastet-zavisimost-regionov-rossii-ot-federalnogo-bjudzheta-1112573/).

            Those conclusions arise from the Accounting Chamber’s study of the impact of subsidies on the middle range of regions, those who do not receive subsidies, the so-called “donor” regions, and those, mostly in the North Caucasus, who are so dependent on subsidies that they would collapse entirely without them.

            The fact that so few regions have left this group over the last decade, the Accounting Chamber says, shows that the current system of subsidies is not helping the regions to become more self-standing and the fact that poverty is spreading at the regional level shows that the subsidies are doing no more than maintaining the existing situation rather than changing it.

            According to the Accounting Chamber, there is a danger that under increasing sanctions pressure, this system will collapse and regions that have mostly been able to pay their own way will not be able to do so, forcing Moscow either to increase subsidies dramatically to them or see them fall into the high-subsidy category or suffer without additional outside funds.