Even in Central Federal District, Gap Between Moscow and Everywhere Else is Staggering, Russians Say

Paul Goble

            Staunton, February 27 – The gap in standard of living between Moscow and the regions is so large that even the authorities can’t ignore it, but they generally talk abouut differences between the capital and regions like the North Caucasus and the Russian Far East rather than those closer to the center.

Now, the gap between Moscow and its immediate neighbors is attracting attention; and that could prompt the central government to act. Indeed, some plans are now being pushed to do just that but they may do little to change the relationship in incomes and well-being between the capital and more distant parts of the country.

Rosstat says that while the Russian economy as a whole showed improvement at the end of 2019, in of the 85 federal subjects, there were declines in some or all of the five sectors it evaluates – industry, construction, paid services, retail trade and wholesale trade (finanz.ru/novosti/aktsii/rossiyskie-regiony-vnov-okazalis-na-grani-recessii-1028940254).

In Arkhangelsk, Smolensk, Vologda and Astrakhan oblasts all five of these sectors showed declines. In 14 others, four of the five fell, up from 11 earlier in the year; and in contrast, the number of regions showing growth in four or five of the sectors fell from 21 to 15 between in a month. The situation was especially dire in construction (cf. ng.ru/economics/2020-02-26/4_7803_construction.html).

Igor Sergeyev, a journalist for the URA news agency, says that the federal authorities are now taking up these imbalances if not directly than via the competition the Presidential Administration has sponsored to identify new leaders. Because these are organized territorially, participants focus on regional problems (ura.news/articles/1036279772).

This year, participants in the Central Federal District have focused on the fact that the leadership of that district in Russia as a whole is based entirely on the city of Moscow and that other places within it are lagging behind in terms of economic performance almost as much as places like the North Caucasus and Siberia.

Thus, Moscow city’s regional product is equal to 15.7 trillion rubles (250 billion US dollars), while most of the cities in the FD have regional products which amount to less than 25 or even 10 percent of that.  Even expressed in per capita terms, they are far below the level of the capital.

According to Sergeyev, “the authorities recognize that Moscow’s superiority in this regard is creating risk for all Russia” and that it must be addressed or the situation will deteriorate further. Participants in the Leaders of Russia competition have come up with plans to equalize things, but officials outside the capital “don’t believe” these will be adopted or work.

Because of Russian tax policies which allow Moscow to collect and thus keep far more money than anywhere else, they say, the subjects are in an impossible situation and can’t hope to achieve parity with the capital, Oleg Ivanov, the first deputy governor of Tambov says.  His view is echoed by others including Sergey Lezhnev, an advisor to the Oryel Oblast governor.

The only thing the regions can hope for, Lezhnev says, is to equalize pay in some sectors such as medicine so that doctors do not flee to Moscow for higher incomes. That would help, but it will take a long time to bring even the places near the capital anywhere close to the standard of living inside the ring road.