Federalism and Local Politics in Russia

Leviathan’s return 13Khanty-Mansiskii and Yamalo-Nenetskii autonomous okrugs; the economicpotential of such a ‘super-region’ would have been too great. 57 Regionalamalgamations have proved relatively successful and have allowed the Centreto reduce the costs of economic development in the regions.Third, in 2001, under the influence of the utilitarians, there began the processof the division of what had been shared competences between the Centreand the Subjects of the Federation. This sphere, which according to Article72 of the Russian Constitutions covers 26 fields (from education to ecology),was during the 1990s the subject of serious dispute between the Centre andthe regions. Both Centre and regions were attempting to pass to each theresponsibility for taking decisions on and financing these shared competences;the Centre and the regions proved unable to agree a common policyto resolve this ‘joint decision trap’. 58 The Commission on Delimitation ofCompetences between Levels of Government, chaired by the Deputy Headof the Presidential Administration, Dmitry Kozak, proposed and passedthrough the State Duma a detailed plan delimiting the competences of theCentre, the regions and local self-government in all the areas of sharedcompetences listed in Article 72. Kozak’s plan foresaw the division of allspheres of responsibility and the assignation of financial responsibility foreach to a particular level of government. For example the Centre would beresponsible for higher education, regions for secondary education, andmunicipalities for primary and pre-school education.The reform’s trajectory was, however, to collide with other prioritieswithin the overall policy of the Centre: the institutional changes initiated bythe presidential administration contradicted the preferred approach of theMinistry of Finance, which was to concentrate financial resources at theCentre and partially restore the Soviet-era ‘fan’ model, whereby local andregional budgets are formed from above by transfers from the Centre. Theconflict between the Presidential Administration and the Ministry of Financeappeared to echo, both institutionally and substantially, the stand-offbetween the Ministry of Finance and the Ministry of the Interior over thezemstvo reform of 1864-1905. 59In the absence of clear governmental accountability, the head of state mayhave the last word in such conflicts, but only in a case where the conflicttouches on key points in the political agenda. The delimitation of competencesbetween Centre and regions, despite all its significance, was not in2002–3 such a priority for the Kremlin, and therefore the necessary amendmentsto the Tax and Budget Codes, which would have been essential tocreate the system of inter-budgetary finance in line with Kozak’s plan, wereblocked by the Ministry of Finance.In 2004 the State Duma nonetheless passed a law containing the amendmentsto sectoral legislation necessary for implementing the Kozak plan,envisaging changes in the method of financing much of the state’s socialexpenditure and, effectively, devolving responsibility for a wide range ofsocial expenditure onto regions and municipalities. It was this set of