Moscow isn’t Subsidizing Most Federal Subjects but Only Giving Back Part of What It Takes from Them, Fomin Says

Paul Goble

            Staunton, Mar 30 – Russian officials routinely insist that Moscow is subsidizing three-quarters of the country’s federal subjects – e.g., top-rf.ru/places/564-dotatsionnye-regiony.html – a claim that many both in Russia and abroad believe and one that leads many in both places to argue that most regions can’t afford to cut their ties with the Russian capital.

            The problem is that this claim is a myth, Karelian economist Vasily Fomin says, one that reflects Kremlin policies which do not allow the regions and republics to keep much of the profits or tax revenues enterprises on their territories take produce but rather takes an overwhelming share of them and then returns a small fraction (region.expert/myth/).

            Moscow does this in two ways. On the one hand, it takes a disproportionate share of all tax revenues collected in the regions and gives back only a much smaller share even to the “subsidized.” And on the other, the center requires corporations to pay taxes where their central offices are, typically in Moscow, rather than where their production occurs, typically elsewhere.

            That means, Fomin continues, that “real de-colonization must begin with economics” and begin in a double sense: Russians and Westerners must stop accepting Moscow’s lies about subsidies and see the regions and republics for the exploited colonies they in fact have once again become under Vladimir Putin.

            And the regions and republics themselves must stop accepting the idea that the money Moscow gives them belongs to the center rather than to themselves and see that what is going on in the Russian economy is a giant shell game to benefit a small group of people at the center on  the exploitation of almost everyone else beyond the ring road.