Thursday, March 20, 2014

Window on Eurasia: Moscow Using Russian Regions to Fund Unrecognized States

Paul Goble

            Staunton, March 20 – When Ramzan Kadyrov promised that Chechnya would help rebuild the economy of Crimea after its absorption into the Russian Federation this week, most observers concluded that he was just being his usual flamboyant self. But the truth is more complicated and potentially more disturbing

            As journalist Andrey Pertsev points out on yesterday, Russian regions have been actively involved in funding the unrecognized states, an arrangement that allows Moscow to do more without attracting as much attention and even gives it when necessary a certain deniability (

            But of course it may have another consequence as well: such regional spending or promises of spending are much harder for anyone to keep track of and thus allow for the possibility of massive corruption among both the donors and the recipients as well as in Moscow itself.

            This arrangement began in August 2008 when Moscow faced the task of rebuilding much of South Osetia after the war with Georgia. But the Crimean case is different and more complicated.  On the one hand, so far at least there is less destruction. And on the other, Russian “modernization projects” of the kind likely to be launched there are notoriously corrupt.

            In addition to the billions of rubles the central Russian government has promised to send to Crimea, the city of Moscow has offered “almost a billion rubles” (28 million US dollars), Moscow oblast 100 million rubles (3.8 million US dollars), and other federal subjects proportionately less. Nizhny Novgorod, for example, says it will send 10 million rubles (380,000 US dollars).

            Most of this is budgetary funds, but the regional administrations are also involved in collecting contributions from their most important businesses.

            In the case of South Osetia, such regional contributions have already involved massive corruption and led to numerous court cases, and the same is likely to be true in Crimea or elsewhere, given “suspicious local officials” and the involvement of supervising officials from Moscow.

            Crimea may be especially fertile soil for the growth of corruption, Pertsev suggests, because much of the work will involve repairs and refurbishing rather than new construction, the former being even a richer source of corruption much of the time than the latter. Moreover, purchases of medical equipment for the peninsula open up new possibilities in that regard.

            But as interesting and symptomatic of the Putin regime as this kind of corruption is, Moscow’s use of the regions has at least three consequences, two of which work to the Kremlin’s advantage but one of which may have an impact exactly the reverse of what Moscow would like.

            First, and perhaps most important, funding the unrecognized states in this way allows the Kremlin to hide from its own people and from outsiders exactly what it is doing until its presence is so well established that little or nothing can be done about it, yet another way in which the Putin regime skirts the law.

            Second, it gives Moscow a tool that those who oppose the expansion of its influence will find more difficult to oppose. A big Moscow investment is something those involved and those against whom it is directed is visible and can serve as a mobilizing tool. An equally large Russian investment consisting of numerous smaller program is less easily a target for complaints.

            But third, this program may work  against Moscow in two ways. On the one hand, it is another example of the kind of unfunded mandates Russian regions are already having to cope with and do not like.  And on the other, it brings such regions into contact with those who have decided that staying within a particular state was not in their interests.

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