Tuesday, August 28, 2018

Moscow to Divide Russia into 14 Economic Macro-Regions, Creating Still More Problems

Paul Goble

            Staunton, August 27 – Early on in his presidency, Vladimir Putin divided the Russian Federation into seven federal districts in order to regain control over the regions and republics. Now, his economic development ministry has proposed dividing up the country into twice as many economic macro-regions.

            In its announcement, the ministry said that this new move would create “better conditions for cooperation among regions” and allow for the development of new centers of economic growth because each would be centered on a city that would take the lead in promoting that (vesti.ru/doc.html?id=3053430).

            More details are certain to emerge in the coming days, but five things about this proposal are already obvious. First, by creating yet another competing layer of bureaucracy in Russia, this new move will mean that the role of the state in the economy will grow rather than decline and thus make it more rather than less likely Russia will be able to escape its current crisis.

            Second, by centering each of these 14 regions on what is to be a growth center, this step is a move in the direction of dividing up the country in terms of regional agglomerations as Kudrin has proposed but because everything else remains in place, it will subvert what Kudrin hopes for rather than open the way for the achievement of his goals.

            Third, as has been the case with many of the federal districts, this new bureaucracy will give Putin yet another place to put superannuated or failed officials or to allow his friends to find new ways to extract resources from the state and economy, thus increasing rather than decreasing corruption and inefficiency.

            Fourth, by creating new and competing centers of power, this new arrangement will allow some regions and republics to play one of them off against another thus reducing rather than improving Moscow’s ability to direct the economy. Some regions already have this possibility and this problem (idelreal.org/a/bashkortostan-eto-volga-ili-ural/29451634.html).

            And fifth, because this reform is likely to prove a disaster like Khrushchev’s economic regionalism, Putin ultimately may make use of it to justify the scrapping of the existing federal system, something he has already signaled he wants to do. That the idea is coming from a ministry rather than from the Kremlin suggests this may be yet move in that direction. 

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