Moscow’s Subsidies to North Caucasus to Keep It Quiet Blocking Any Possibility of Economic Growth, Zubarevich Says

Paul Goble

            Staunton, June 6 – Moscow and the North Caucasus find themselves in a vicious circle: the center heavily subsidizes the North Caucasus in order to keep the peace there, but as long as it does, the regions and republics have little incentive or even possibility to grow their economies, Natalya Zubarevich says.

            The Moscow State University regional economist says that Moscow fears if it ever cuts back, it will be confronted by ethnic explosions; but as long as it keeps the subsidies flowing, regional elites and what economic players there are there as well as potential investors aren’t going to do anything (kavkazr.com/a/31288362.html).

            Six of the North Caucasus republics rank in the top ten in terms of federal subsidies, with Ingushetia having 87 percent of its budget provided by transfer payments from Moscow, Chechnya 88 percent, and Dagehstan a whopping 90 percent, Zubarevich says. But that is far from the only problem of this region.

            Among the others are the fact that in many places there is nothing to develop, that much of the economy is in the shadow sector so no one really knows what the true economic situation is, and that there are powerful elites who like the current situation just fine, especially as the leaders of some of the poorest republics are the richest of all regional leaders.

            As long as the current political and economic situation in the country as a whole continues in its current course, Zubarevich concludes, there is little chance that there will be any improvement.

            Another expert on the region, Anton Chablin of the Aktsentsy Analytic Center, says that one explanation about the problems of the North Caucasus that many invoke that isn’t true. They aren’t as corrupt as many other federal subjects and in contrast to their leading position on most economic measures, they aren’t leaders there.

            In presenting their conclusions, Lyubov Merenkova of the Kavkaz.Realii portal appends a list of the horrifically low positions the North Caucasus republics occupy on measures like socio-economic development, unemployment, pay, access to mortgages, attractiveness for investors, quality of schooling, number of poor pensioners, and per capita accounts in local banks.