Federalism and Local Politics in Russia

Leviathan’s return 17In spite of the fact that the sustained economic growth that Russia hasbeen experiencing would be seen, objectively, as favouring a major shift inthe direction of decentralization (not least in fiscal terms 69 ), in fact it is theopposite which has occurred. This is borne out by the following key examples(there are many more):• The Centre’s insistence on regulating all utility tariffs, rather thanentrusting responsibility to the regions.• Inter-regional budget equalization (the policy of negative transfers 70 ),intended to redistribute budget funds from ‘rich’ to ‘poor’ regions.• Repeated proposals from the federal centre to introduce temporaryfinancial management of highly-subsidized region. The new Law onNatural Resources, which advocates the designation of such resources asexclusively federal, and the removal from the regional authorities of anydecision-making role regarding the granting of licenses or control overthe exploitation of mineral deposits. 71To some extent these measures were determined by the Russian ‘politicalbusiness cycle’. In the run-up to the federal elections of 2007–8 the Centrehad an interest in being the main source of benefits for the regions and theirvoters, thereby assuring its desired election result, 72 whilst the governorswould no longer have any such incentive, as they no longer depended on thepreferences of voters. But, apart from such short-term effects it is worthconsidering some longer-term factors favouring recentralization in Russia.These have more to do with the increasing importance of natural resourcesin the country’s overall economic development. Insofar as the country isincreasingly dependent on energy-related exports, so the Russian elite hasbecome more interested in concentrating the rents that may be extracted,and therefore in favour of long-term centralization. This has meant thatthe recentralization drive has continued right up to the end of the 2007–8electoral cycle.What are the consequences of ‘new centralism’ in terms of politicaltransformation in Russia? One way of assessing this would be to compare thebenefits (of reduced transaction costs in regional government) with the costs(in terms of greater central control). Standardization of institutional designsignificantly narrowed the scope for diversity of regional regimes and governmentalsystems. By the mid-2000s the Russian regions have undergonebureaucratic rationalization in the Weberian sense of homogenization ofrules and procedures. However, this homogenization was not brought aboutthrough increased openness and transparency of policy and administrationin notorious regional regimes such as those of Bashkortostan or Kalmykiya,but through the imposition of new ‘rules of the game’ on all regions withoutexception, regardless of results. 73 According to the Moscow Carnegie Centre,the decline in the quality of democratic (especially electoral) processes thatoccurred in Russian regions over the period 2001–5 occurred as a result of a