Shadow Budget Key Feature of Putin’s Regime and Why He Won’t Reform, Travin Says

Paul Goble

            Staunton, September 20 – The ability of the regime to draw on funds not in the budget to finance its operations is a necessary feature of an authoritarian regime like Vladimir Putin’s, Dmitry Travin says, and a major reason why he is not in a position to reform the country even if he wanted to.

            The St. Petersburg European University professor says that “a surfeit of extra-budgetary funds in the absence of money in the budget is a characteristic sign of [Russia’s] current political economic system and more than that the most important reason why Putin will not seriously reform the country” (rosbalt.ru/blogs/2017/09/19/1647159.html).

                Travin argues that “an authoritarian regime is set up in a much more complicated way than a dictatorship.” The latter relies on “jails, camps and shootings.” But the former is based on “electoral authoritarianism,” one in which elections take place but “power remains the same.” And that requires “a much more complicated approach to administration than in dictatorships.”

            The way the system works is this: the nominally private sector is so dependent on the powers that be for survival and profits that it is willing to finance the various kinds of political activities the Kremlin needs to ensure that it remains in power. And if small amounts of money won’t do the job, then this sector will provide BIG MONEY.”

            It is money and not “personal convictions, ideological attachments [or] simple human good behavior” which determines who is advanced and whether they win, Travin says, because candidates now are sold in approximately the same way Coca-Cola is marketed.  The state provides some of the funding for this but far from all.

            And “therefore,” he continues, “in systems of electoral authoritarianism [like Russia’s] a shadow budget inevitably exists,” something that arises not simply because of theft by particular individuals but rather as “a condition of the existence of the regime.”  Given restrictions on journalism, not everything about this is known; but enough is to draw conclusions.

             This shadow budget is not all in one place, controlled by a single institution or individual, and is dispersed on condition of success. Those who get money from it do so initially because they are close to the Kremlin. If they succeed, they will get more money; if they fail, they will be cast further away from the charmed circle and no longer get such funds.

            “When you understand the principle behind such a mechanism and the tasks it fulfills, it become obvious why corruption [in Russia] spreads, despite the appearance of an active struggle against it,” Travin says.  This struggle, of course, is part of the system and is used to redistribute the flows in this shadow world and to remind everyone of why they must participate.

            The St. Petersburg scholar draws three conclusions about what the role of these shadow funds have for the nature of the Russian political system:

·         First, “corruption in the Putin system always existed because it is a by-product of the work of the mechanism which guarantees the existence of electoral authoritarianism.”

·         Second, “the ‘shifting’ shadowy millions will pass from weak groups to strong because money is divided not by understandings but by lawlessness.”

·         And third, this struggle will spark conspiracy theories because it will involve not physical attacks but rather the use of “investigators, prosecutors, and judges.”