Introduction

Tracey German 1-
 
 

Regionalisation of the Federal Power Structures

Dr Pavel K Baev

Senior Researcher, International Peace Research Institute,

Oslo (PRIO) Editor, Security Dialogue
 
 

A Current Assessment of Regional Separatism

Martin Nicholson

International Institute for Strategic Studies
 
 

Belarus’-Russia: Politics versus Economics?

Dr Steven Main

Conflict Studies Research Centre
 
 

Russia And The CIS: Does The CIS Exist Any More?

Dr Vladimir Batyuk

Senior Research Fellow, Institute of USA and Canada Studies

(ISKRAN), Moscow
 
 

Russia At The Threshold Of The 21^st Century? – Federal,

Confederal or Collapsed State?

Dr Graeme P Herd

Deputy Director, Scottish Centre for International

In the wake of the rapid demise of communism as a global ideology, considerable attention has been focused on the extant democratisation of the former Soviet empire. The progress of the Russian Federation’s democratisation project has not been trouble-free, a fact that is manifest in its evolving relationship with its eighty-nine constituent parts. At a recent conference in Moscow, the financier George Soros stated his opinion that the future of Russia’s fragile democracy depends on whether its regions manage to procure more power from Moscow: ‘Russia is such a big country that I think it will become democratic only through decentralisation’. This statement reflects the increasing emphasis that Western analysts are beginning to place on the role of the Federation’s regions, as Moscow’s influence over them continues to wane.

It could be argued that the current systemic crisis in Russia has arisen as a direct result of the nature of its democratisation, stemming from a failure to institutionalise the new political and economic order. In particular, Moscow has failed to define its relationship with the regions, choosing to react to events as they arise rather than take preventative measures. Many analysts stress the importance of decentralisation in the democratisation process, viewing the granting of significant autonomy to local governments as crucial to the furtherance of democratic behaviour. Jeffrey Hahn states that ‘a stable federal system can contribute to democracy where legitimate and effectively functioning regional governments can act to limit central power; its absence creates greater opportunity for the abuse of central power’. Post-communist Russia is typified by a progressive regionalisation of both federal power structures and criminal groups, primarily caused by the impotence of the centre.

During the final days of the USSR the burgeoning self-determination movement was permitted free expression across Soviet territory, recognised as a useful tool in the fight for supremacy taking place in the Kremlin. However, the participants of this power struggle crucially failed to comprehend the pitfalls inherent in the exploitation of nationalist grievances. By adopting the guise of a democratic state, both the Russian and Soviet leaderships merely hastened secessionist tendencies, as regional leaders sought to increase their own personal power by distancing themselves from central control. Yeltsin’s encouragement of a loosening of central control, during his struggle with Gorbachev for political power, precipitated serious problems for post-Soviet Russia, which have continued to trouble the Russian leadership. The lack of effective federal institutions associated with the process of democratic transition facilitated separatist tendencies throughout the Federation. The system of state government was very weak following the collapse of the Soviet regime, heralding a period characterised by economic chaos and political frailty, which encouraged regional leaders to seize as much power and autonomy from central control as possible.

In a speech to the Russian parliament in October 1991, Yeltsin proclaimed his determination to protect Russia’s territorial integrity: ‘We cannot and will not under any circumstances allow the break-up of Russia, its disintegration into dozens of separate fiefdoms, all fighting amongst themselves’. The threat of disintegration has remained a persistent concern of the Russian leadership since the dismantling of the Soviet Union as the same dynamics that resulted in the break-up of the Soviet empire also threaten the integrity of the Russian Federation. There are many variants of separatism, including issues of taxation, trade, politics, the military and even crime. However, the leadership failed to institutionalise a legal framework for federal relations, thereby hindering the future development of a democratic state system.

The Federal Treaty of 1992, a determined effort to delineate centre-periphery relations in the post-Soviet era, went some way to alleviating the tension between Moscow and the regions. This agreement was signed by the majority of Russia’s constituent parts, although several republics emphatically refused, notably Tatarstan and Chechnya, forcing Moscow to consider concessions. However, the confrontation between the Russian executive and legislature exacerbated volatile centre-periphery tensions. The Russian president’s dismissal of the rebellious parliament and subsequent adoption of a new Constitution that granted him wide-reaching powers ushered in a change in federal relations. Article Four of this Constitution provided a legal basis for the preservation of Russia’s territorial integrity and Yeltsin’s determination to safeguard this was exhibited by the eventual conclusion of a Federal Treaty with Tatarstan.

Relations with the regions have always been manipulated by the Russian leadership in its domestic quarrels, and financial concessions are often utilised as political bargaining tools. The regions have remained very reliant upon the centre for financial assistance, receiving large handouts from the federal budget whilst simultaneously manifesting a blatant disregard for Russian tax legislation. The creation of the Federation Council could be perceived as a vain attempt to win regional support for the new constitutional order. Regional leaders have a clear understanding of their role in Moscow’s power games, and it has been suggested that separatist discourse is used by the elites merely to increase or maintain specific levels of subsidies. It is questionable whether any of the regions could realistically expect to survive outside of the Federation’s economic sphere. This dependency was exacerbated by the financial crisis of August 1998, causing many regions to take extraordinary steps to protect themselves.

There does not appear to be any single factor that can be attributed to the erosion of central control, rather a series of complex issues, varying from region to region. This ambiguous situation could have been partially prevented by the institutionalisation of relations from the very inception of the Federation. A strict framework to operate within may have prevented the manipulation of relations and exploitation of resources. Despite this weakness on the part of Moscow, the regions have proved slow to unite into effective regional blocs, a reticence perhaps due to the rivalry between regions for resources.

Moscow’s relations with its peripheral regions provide a clear litmus test of the health of democracy across the Federation. Increasingly, regional trends and relationships have become the crucial factor in any assessment of political stability in Russia, as opposed to clashes within the Kremlin itself. Nikolai Petrov of the Moscow Carnegie Centre has characterised Russian centre-periphery relations as ‘pendulum swings’, in which periods of centralisation alternate with ones of decentralisation. In his opinion it is the centre, rather than the regions, that prompts such changes. In other words, the disintegration dynamic is driven not by the separatism of regional leaders, but by a lack of effective central authority.

This collection of papers was presented at a conference organised by the Scottish Centre for International Security at the University of Aberdeen. This conference, entitled ‘Moscow, the Regions and Russia’s Foreign Policy’, was the fourth in a series, commencing in May 1998, that aims to investigate systemic transformation within the Russian Federation and the impact of economic instability upon the integrity of federal structures.
 
 

Endnotes

By Dr Pavel K Baev

Introduction. The Concept of Primakov

Trying to understand what is currently going on in Russia, and why, is always an exciting research issue. However, it is not always the shortest way to understanding what is going to happen tomorrow. The trajectories of the fundamental trends are so uneven and capricious that an observer can easily mistake a zigzag for a trend-breaker or a plateau for stabilisation. We must be aware of this possible error when looking at the current post-August and pre-election period.

This period can easily be described as mezhdutsarstviye, a short transitional break between the Yeltsin era (which to all intents and purposes ended on 24 August 1998) and a new, as yet unknown reign, which is due to start after the new president and the new parliament will start functioning. Logically, even the most penetrating analysis of this ‘M-period’ could produce few clues to the character of the new era. However, there are good reasons to expect that some key features of today might continue at least into the beginning (the boldest foresight would be two years) of the new regime.

Indeed, what distinguishes the on-going in-between period from similar ones (and not only in Russia’s unpredictable history) is undeniable, if somewhat unnatural, political stabilisation. One would expect that the progressive paralysis of the presidency as the key power institution would lead to a series of clashes between disparate branches of power and competing political forces. However, what we really observe are personal vendettas (involving Berezovskiy, Skuratov, Smolenskiy) or Yeltsin’s habitual reshuffling of aides (Bordyuzha, Yumashev, Putin), which primarily provide public entertainment. Even the over-dramatised fall of Primakov’s government in mid-May has brought remarkably (some would say ‘depressingly’) little change in the political climate. Meanwhile, the major political actors, both central and regional, are eager to play in several overlapping soap operas and avoid direct clashes (hence the failure of the impeachment).

One explanation for this ‘unnatural’ behaviour might be politico-psychological: in much the same way as in October 1993, the Russian political elite looked into the abyss of state catastrophe in August 1998 – and rushed to restore the stability of key structures, including federal arrangements. This psychological ‘self-defence’ reaction in the elite generally mirrors a strong public desire for ‘normalisation’ and a slowing down of the dynamics of change, including the rejection of radical reform plans. Another explanation is the obvious need for the major political forces to regroup and consolidate their camps before heading full-speed into the election marathon. Accumulating financial resources and making alliances with business empires also requires a pause. This generally conforms with the analytical model that portrays Russia as an ‘electoral democracy’, which has failed to accomplish full transition to a democratic state.

However, the phenomenon of current ‘stabilisation’ has become so solid and widespread that these explanations do not seem sufficient. The August meltdown brought the final proof that free state resources (in the widest meaning) for distribution and consumption are exhausted. At that point, several generations of post-perestroika actors who had taken part in the ‘Bacchanalia’ of privatisation realised the urgent need to institutionalise their positions and secure their gains. The fluidity of the habitual ‘swamp’ had become uncomfortable and even dangerous, hence the search for ‘crystallisation’.

Primakov had very skilfully positioned himself in the very centre of this ‘crystallisation’, projecting the idea of stability and ‘normalcy’. Being a seasoned apparatchik, he has taken great care to support the image with ‘cadre’ policy, placing his trusted lieutenants in several key positions. However, the success of the first half-year of his prime-ministership had been secured not by bureaucratic intrigue and certainly not by a sound economic policy but essentially by riding on the right trend. In this sense ‘Primakov’ is a much wider concept than the person of Yevgeny Maksimovich, and may well be applied to the new government of Sergei Stepashin.

This Primakov-centred (but not dependent) stabilisation was often mistaken for, or just labelled as ‘Communist revanche’, while in fact it is a broader and essentially non-ideological phenomenon. It takes some forms and style from the late-Brezhnev years as these forms are the most familiar and comfortable for the elite and also the most acceptable for society. In much the same way Luzhkov’s style of rebuilding Moscow as a ‘New Russian’ capital has distinct similarities with Stalin’s grandeur. Stepashin, greeted by many liberal commentators (despite his Chechen shadow) as ‘democratic’, in fact shows much the same style of zastoy (stagnation). It seems possible to predict that any new ‘surprise’ nomination from Yeltsin will remain hostage to this engulfing ‘normalcy’ and the trend towards centrism will dominate the election period, marginalising such contenders as Zhirinovskiy, Nemtsov and even Lebed. At the moment, it is Moscow mayor Yury Luzhkov who is most successfully positioning himself to ride on this trend through the elections, but the sustainability of this stabilisation is one of the key problems for political analysis in the coming months.
 
 

The Trajectory of Regionalism

Most serious analysts (perhaps with the exception of a few anoraks still following the Kremlin intrigues) would agree that regionalism is the dominant trend in Russia’s political development in the 1990s. Its dynamics have been remarkably uneven, with one clear peak in mid-1993 (against the background of the ‘president-versus-parliament’ clash), another smaller one in early 1995 (against the background of the Chechen War), and steady growth in 1996-97. Even more remarkable have been changes in the character of the driving forces in this process. In 1992-93, we saw plenty of political tension between the centre, which relied on traditional methods of administrative control, and fledgling groupings of regional elites. In 1994-96, the centre moved towards bi-lateral compromises with key regions, formalised in treaties, with increasing use of economic incentives. Since late-1996 and until mid-1998, the centre, facing newly elected governors with much strengthened local political bases, exploited the budget as the key mechanism for holding the Federation together.

The August 1998 financial meltdown destroyed the very foundation of this budgetary federalism, so it was widely expected that regionalism would climb to a new peak and the centrifugal forces would accelerate. Not only certain over-excited Western experts, but also Prime Minister Primakov himself, in his first address to the State Duma on 11 September 1998, acknowledged that the danger of disintegration ‘is far from theoretical and far from hypothetical’. By mid-1999, there is enough evidence to conclude that the break-up did not happen – but an understanding of ‘Why?’ has yet to be found. This paper can provide a partial answer at best, but must attempt a closer examination.

For about a month after the ‘sudden death’ of the rouble regional leaders desperately tried to shelter their respective economies from the shock waves emanating from Moscow by erecting various types of barriers. Aleksandr Lebed in Krasnoyarsk set an example for several other regions by enforcing price controls; Stavropol kray took the lead in introducing a ban on the export of food outside the region; Edward Rossel in Yekaterinburg issued an anti-crisis plan aimed at helping the regional banks, and Leonid Gorbenko in Kaliningrad went as far as declaring an emergency situation. However, it was Kirsan Ilyumzhinov in Kalmykia who pushed the limits the furthest by attempting to take control over the entire banking system in his republic and refusing to pay any federal taxes. But by the time he dared to threaten secession in mid-November, the tide of separatism had already turned back.

Not that a couple of official warnings from Primakov were that impressive, it was rather that the regional barons and ‘dear leaders’ quickly realised the inefficiency of their defensive measures and calculated that a demonstration of loyalty to Moscow represented a much better chance for political survival. There were a few loud objections against the government’s draft budget for 1999, which envisaged deep cuts in regional subsidies, but compromises were found remarkably quickly and the budget was approved by the Parliament with unexpected ease.

Primakov was quick to see strength where he had not expected to find it and decided to explore the possibilities of augmenting it. Recycling an old idea about the consolidation of the ‘executive vertical’, he began to talk about laws giving the federal authorities the right to dismiss elected regional leaders, as well as constitutional amendments that reduced regional elections to a vote for two or three candidates proposed by the centre. He also stated quite explicitly that 89 subjects of the Federation ‘is too much’, indicating the possibility of the merger of several regions and a strengthening of inter-regional associations.

Certainly none of these ideas were developed into even a first draft of a federal law, but the mere mention of such shifts in the power balance by Primakov put the regional elites under much pressure. It is possible to conclude that his ‘big plan’ regarding federal/regional relations did not include any far reaching legislative initiatives or amendments of the Constitution, but was merely aimed at stabilising the ‘playground’ for the election period purely by political manoeuvring. Vadim Gustov, Deputy Prime Minister in charge of regional policies, had little experience of Moscow power games and maintained a low profile, thus his dismissal by President Yeltsin in late April was hardly a serious setback for Primakov’s strategy. So when President Yeltsin made a case to ‘defend’ the rights of the regional elites against assaults from Primakov, seeking their consent for dismissing General Prosecutor Skuratov, they showed little interest. Stabilisation has essentially been achieved, and the regional elites, instead of plotting secessions, have been eagerly establishing electoral blocs and combining them in various configurations. Consequently Primakov’s abrupt dismissal, which delivered a heavy knockdown to the State Duma, was taken rather indifferently by the regional leaders.

The major question is the sustainability of this truce between the centre and the regions, even in the short-term. Looking at this question from a political angle, it is possible to see a positive answer. Indeed, Primakov’s ‘normalisation’ (with or without him) stands a good chance of surviving the ‘double twister’ of parliamentary and presidential elections, thereby denying the Communists and other radicals, particularly Zhirinovskiy, dominance in the new State Duma and minimising the possibility of a ‘loose cannon’ candidate, such as Lebed, snatching the presidential ticket. But from an economic-political angle the answer is fairly negative. Primakov has succeeded in transforming the financial default from a fact into a process, presiding over a slow-moving economic catastrophe. Yeltsin emphasised economic inefficiency as the main reason for his dismissal of Primakov’s government, but there are few reasons to believe that Stepashin’s cabinet will perform any better.

The economic base for political stabilisation is very weak indeed, and the optimistic scenario here is that it will not collapse during the elections. Even this scenario comes to a cross-roads sometime in 2000 when a worsening financial situation will necessitate tough and painful decisions by the new leadership, which in turn would inevitably increase tensions in federal relations. A new acceleration in regionalism trends would threaten a revival of radical options (like a confederation of regional blocs) with a high risk of disintegration, outlined – perhaps prematurely – by some analysts in the wake of the August 1998 crisis.
 
 

The Trajectories of Power Structures Reforms

Following Gorbachev’s farewell the Russian ruling class, with its solid Soviet background, needed no explanations of the crucial importance of power structures in a state where democratic checks-and-balances are not even expected to work and the respect of law is low and declining. Rebuilding and reforming the instruments of power have accordingly been one of the key aims throughout both of Yeltsin’s presidencies. The results, however, are pitiful.

There are two features that appear to be the most striking from any superficial overview of the state structures, which could use ‘power’ in implementing their policies: how many and how poor. Proliferation began with the political decision to split the omnipotent KGB into seven separate agencies, which quickly developed their own bureaucratic interests and political profiles. The Ministry of Emergencies has built up its own forces, the Ministry of Justice has taken control over such increasingly important instruments as the Tax Police, the Railroad Forces were taken out of the Defence Ministry, and on top of that there has been a massive growth in private security forces, paramilitary formations, etc. The Defence Ministry regularly takes up this issue and circulates proposals regarding a streamlining of this dispersion, preferably under its control. However, it has always been clear that this ministry does not really want to take any additional responsibilities and seeks primarily to increase its share of budget resources. The struggle for diminishing resources is perhaps the major factor blocking any plans for a co-ordination of efforts and preventing any mergers.

Of all the power structures it is the Armed Forces that are the most under-financed, the most politically neglected and the least capable of performing their functions. In 1992 and 1993 the military leadership was essentially given a carte blanche to implement reforms as it saw fit; the only political order was to withdraw from Germany and the Baltic states. Defence Minister Grachev interpreted this as an opportunity not to proceed with any meaningful reforms. This lost time has proven to be irretrievable. By 1994 the flow of money had started to dry out, the political influence of the Army had declined, and by the end of that year it was pushed into the hopeless war in Chechnya. Besides the physical damage and drain on its resources, this humiliating defeat delivered such a devastating political and moral blow to the military that the full scale of disaster has yet to be accurately measured.

By mid-1997 it had become all too clear that a further postponement of meaningful reforms would not only permit further debilitation of the Army but might make the problem sharply political. President Yeltsin quickly countered this threat by approving a package of decrees that amounted to moderate numerical cuts and some long overdue restructuring. Unlike several previous false starts, the military leadership this time showed a determination to proceed with the envisaged steps and keep to deadlines set at the end of 1998. At the same time, the lack of an overall conceptual design for reform raised doubts concerning its further development. Hopes were pinned on Andrei Kokoshin, who held the position of Secretary of the Defence Council, and since March 1998 – Secretary of the Security Council. Kokoshin eagerly indulged himself in theorising on doctrinal matters, enlisting cooperation from NATO experts, but this promising exercise was cut short by the August shock.

Even before this financial catastrophe, there were strong doubts concerning the financing of the reform project. Due to constant budget squeeze, by mid-September 1998 the Armed Forces had only received about 25 billion roubles of the approved 82 billion, the rest being delivered by the end of the year, but in a much devalued currency. Military expenditure for 1999 was approved at the level of 3.1 per cent of GDP, but the only real achievement in the first half of the year was the more or less stable payment of salaries (even some arrears were covered), which left no money for real reforms.

With the departure of Kokoshin in September 1998, the Primakov government felt free to de-prioritise military reform. The only area in which Defence Minister Sergeyev has a vested interest in pushing forward with deep reorganization is the nuclear forces, where he plans to expand the Strategic Rocket Forces (RVSN) into the Unified Command of the Strategic Deterrent Forces, giving it control over the naval and air components of the nuclear ‘triad’. His plan has received a new impulse from the war in Kosovo, as the Russian leadership recognised the need to maximise the political use of nuclear instruments. However, this narrow focus on nuclear forces, perhaps justified not only from the point of view of political power-play but by risk assessments as well, leaves the bulk of the Russian Armed Forces in neglect and dislocation.

Compared with the dismal military posture, most of the other power structures appear to be in considerably better shape. Since the October 1993 crisis in Moscow the political leadership has perceived the Interior Ministry and its forces as the main guarantor of internal stability. It has received progressively expanded funding and in fact was able –in stark contrast to the Army – to benefit from the war in Chechnya, both in terms of combat experience and resource allocation. It has also enjoyed remarkably strong leadership, and it was only after the dismissal of the increasingly ambitious Interior Minister Anatoly Kulikov in March 1998 that the plan for a reduction of the Interior Troops by about 30 per cent from the current level of 330, 000 was approved. The recent promotion of Sergei Stepashin, who has long-term ties to this ministry, to the position of Prime Minister perhaps secures priority financing and merely symbolic cuts for the Interior Troops.

Remarkable achievements in reforming the Border Troops were associated with Andrey Nikolayev, Director of the Federal Frontier Service (FPS) until his resignation in December 1997. By taking on such difficult tasks as the defence of the border in Tajikistan or patrolling the maritime economic zones in the Far East, the Border Troops were able to secure a sufficient share of the draft and steady financing. While Nikolayev’s successor Bordyuzha has taken a less than successful detour into the Kremlin corridors, Nikolayev’s own high political profile and close ties to Luzhkov promise a solid political ‘cover’ for the FPS in the near future.

The Federal Security Service (FSB) is often accused of preserving the assets and traditions of the KGB and resisting ‘reforms’. Whilst the deliberately frequent change of leadership in this too powerful structure prevented any consistent reforms, one area where it has steadily increased its profile is so-called ‘economic security’, which embraces everything from Internet hacking to ‘shuttle trade’. The FSB has been particularly active in penetrating the financial-banking sphere, as well as the hard currency-generating oil and gas sector, having, for instance, a special department permanently assigned to Gazprom. The FSB is also moving fast to develop close co-operation with various private security firms, which employ plenty of former kagebeshniks (KGB cadre).

Another law-enforcement structure, whose power rests not so much on control over armed formations, as on its monopoly on interpreting the law, is the State Prosecution Service. This rigidly centralised structure with firm corporate ethics has barely been reformed not only since Brezhnev times, but perhaps since Stalin’s lieutenant Vyshinskiy. The most serious blow to its integrity was delivered recently by the high-profile political scandal involving the Chief State Prosecutor Yuri Skuratov.

Overall, the power structures have been moving along remarkably different trajectories and at quite different speeds in their reforms. Democratic control has never been seriously attempted, thus allowing every power ministry to become a bureaucratic ‘suzerainty’ nominally subordinated to the presidential ‘court’. Central coordination was notoriously absent and would be hard to enforce for any new leadership. The years of under-financing have left each bureaucracy with a burden of unresolved problems, and the ways to solve them are generally sought in non-budget and non-state funds, in economically cost-effective activities and various ‘shadow’ enterprises.
 
 

The Interplay Between the Two Trajectories

Simple juxtaposition of the accelerating regionalism trend and the descending trajectories in power structures reforms provides ground for a logical conclusion that gradual disintegration of the latter would inevitably follow the regional pattern. Several factors facilitating the break-up of the Armed Forces, the Border Troops and various law enforcement mechanisms into regional elements might be listed in support of this conclusion.

• Acute shortage of centrally distributed resources. The most apparent element of this problems is non-payment of salaries and accumulation of arrears, but there are other elements such as a lack of uniforms, poor supply of food to many remote garrisons, unpaid electricity bills, deficit of spare parts, collapse of logistics. Obviously, it is the Army with its technically complicated weapon systems and general high level of consumption of material resources, that is most affected by this factor.

• Erosion of command and control systems. Most of the communication systems, which secure the integrity of power structures, were built in 1980s or before and generally rely on the technologies of 1970s. Poor maintenance of these systems makes them increasingly unreliable, while the transport infrastructure shows increased ‘friction’ and costs in exploitation. The distances in Russia are becoming greater and communication poorer; it must also be remembered that most of the power structures have absolutely no access to computer networks.

• Indigenisation of personnel. Back in the Soviet times, all power structures employed systems of cadre rotation, which were expected to guarantee weak local loyalties and firm central control. The costs of systematic rotation have now become unaffordable, officers and bureaucrats cannot afford the costs of moving, housing remains a major problem, even the draft is increasingly conducted locally. Russian Army and Border Troops units deployed in Tajikistan, Armenia and some other states are particularly affected, turning into ‘lost legions’.

• Interests of regional leaders. By ‘privatising’ the elements of power structures located on their territories, republican presidents and regional governors can strengthen their power base and secure their domains against internal or external troubles.

It is easy to identify the advantages of taking control of certain elements of law enforcement related to: a) the personal security of the leaders; b) combating hostile groupings of organised crime; c) promoting own ‘shadow’ business; and d) the ability to influence the outcome of elections. However, these interests are quite limited, while, for instance, in the majority of regions the leaders are not confronted with any mass unrest and do not perceive it to be a potential threat to stability. By and large the governors and presidents see no need to employ power instruments against their respective parliaments (like the crisis in Moscow in September-October 1993), since the regional elections generally tend to produce quite conformist legislatures. So far the regional elites have not contemplated any use of power in their relations with Moscow (intrigue and bribery work in most cases) or vis-à-vis one another, Chechnya being the exception that confirms the rule.

While the above reasoning might seem to be slightly theoretical, the resource factor is empirical and tangible. Even with their new political self-sufficiency, regional leaders have diminishing financial and material resources under their control. While many of them have to, and some are even glad to supply (and thus ‘domesticate’) military and other ‘power’ units on their territories, they are able to calculate that the real costs of supporting regional ‘armies’ are prohibitive. This is particularly the case with technically complex military assets, such as air defence or naval systems, which require sophisticated maintenance. An extreme level of complexity and high level of risk is characteristic of nuclear weapon systems, thus regional leaders might dare to make references here only in order to attract public attention.

Overall, regional leaders have a limited interest in taking control of power structures and even more limited possibilities of assuming responsibilities for their maintenance and support. This benign picture might, however, change in the near future.
 
 

Perspectives – After ‘Normalisation’, What?

The present-day political stabilisation in Russia, relative and fragile as it is, could provide for the smooth transition of power by means of elections that are acceptable both internally and internationally. On the other hand, it signifies that two years between the end of Yeltsin’s ‘era’ in August 1998 and the election of a new leader in July 2000 will be lost to reforms. Against a background of slow-moving economic catastrophe, this lost time might turn out to be quite expensive, and the waste of public resources on two election campaigns might be unaffordable. Certainly, a much better option for the country would be to elect a president and a parliament in combined elections in late 1999, but only another sudden deterioration of Yeltsin’s health would make this option feasible.

‘Normalisation’ generally paves the way for a moderate and pragmatic candidate who may enjoy better cooperation with a less divided and non-ideological parliament. But even such middle-of-the road Primakov-style leadership would soon be confronted with the necessity of making radical decisions about economic and social reforms. These decisions will inevitably undermine political stability and radicalise the internal environment. One predictable dimension of this radicalisation is a significant growth in regional separatism. It could be facilitated on the one hand by a progressive weakening of trans-regional economic enterprises and networks (like Moscow-based banks or financial-industrial groups). On the other hand, repaired and reconstructed budgetary federalism gradually reduces central control over regional budgets and Moscow’s ability to employ redistributive instruments.

The inevitable, significant and sustained reduction of the amount and share of resources controlled by the government directly leads to major reductions in federal power structures. Logically, besides shrinking, this might seriously accelerate their regionalisation. The regional elites, besides increasing their control over various law enforcement structures, including the Internal Troops, might gradually become more involved in military matters as well.

The character of this involvement would depend upon the decisions on military reform, which would be one of the first challenges for the new leadership and could hardly be postponed any further than the end of 2000. If a radical option, generally aimed at creating combat-capable and professional Armed Forces of about 500, 000, is chosen, the Internal Troops might become the first reserve and the main mobilisation base. If a ‘muddle down’ pattern, with the aim of keeping the Armed Forces more or less in the present shape at the level of about one million, is maintained, the Army would increasingly have to share logistics, resource base and draft pools with the Internal Troops. Military and Interior districts would become increasingly integrated, perhaps even with joint Headquarters, and in this command system the military elements, as most under-financed and neglected, could become increasingly subordinated to the Interior structures.

During the course of electoral battles, a gradual merger of political, ‘power’, and military elites might develop, particularly in heavily militarised regions (Kamchatka, Murmansk, Kaliningrad). In other regions, especially those which have areas of violent conflicts in the neighbourhood, political elites may focus their efforts on asserting control over power structures and turning them into political instruments to use against troubled neighbours. For example, Stavropol kray already has its own policy towards Chechnya, aimed at erecting a fortified border, which does not always correspond with federal preferences. In the near future, Krasnodar might become more important than Moscow in decision-making regarding the conflict in Abkhazia. Overall, while it remains quite improbable that some regions might resort to utilising ‘power instruments’ against Moscow, the probability of violent conflicts between regions, including cross-border conflicts, is growing.

Among the elements of power structures that the regional elites might find most suitable for meeting their security challenges, the Special Rapid Reaction Units (SOBR) of the Ministry of Interior should perhaps be named first. These professional elite units have equipment and weapons for tactical combat operations – and have received valuable combat experience in Chechnya. Military SPETSNAZ units, airborne and marine brigades may also find themselves increasingly disconnected from Moscow and involved in regional power play. One absolutely crucial task here, and the one where international cooperation might be really helpful, is to prevent any ‘privatisation’ of nuclear forces. It remains feasible to exclude nuclear structures from the general regionalisation trend, and one important precondition here is to avoid any nuclear ‘tracks’ in the problematic process of Russian-Belorussian ‘reunification’.
 
 

Endnotes

The Story So Far

In assessing the current stage of regional separatism in Russia we should remember how it all started. The new Russian Federation was faced with fragmentation or worse from its very inception in December 1991. The nationality based ASSRs, especially Tatarstan, had made gains in their status in the Soviet Union’s last year that they did not intend to give up lightly. This aroused resentment among the territorially based regional leaders. Add to the mixture the developing struggle between President and Parliament in Moscow between 1992 and 1993, in which both sides appealed to the regions – and to the respective branches of power within them – in the hope of getting their support. It was no small feat, therefore, that two constitutional settlements - the Federation Treaties of March 1992 and the ‘Yeltsin’ Constitution of December 1993 – were agreed at all. The starting point of this assessment, then, is that there is agreement among 88 of the 89 components of the Federation (Chechnya of course being the exception) that they are and will continue to be part of the Russian Federation. None of them has any defined separatist goals.

The constitutional settlements were not, however, a blueprint for action. The years 1994-98 saw the establishment of an uneven but functioning relationship between the centre and the regions, the basis of which was Yeltsin’s ability to establish personal relations with the regional leaders. This was an approach that could go wildly wrong, as it did in Chechnya, but on the whole provided a degree of stability. It was more successful than the economic reform, which was being tackled in parallel and which owed more to a vision of how things should be than how they actually were. The question addressed in this paper is what changes were wrought by the August 1998 economic and political crisis.
 
 

The August 1998 Crisis

On 17 August 1998 the Russian government tried to avert a mounting financial crisis by devaluing the rouble and by defaulting on some foreign commercial debt and on domestic Treasury Bills (GKOs). On 23 August President Yeltsin dismissed Prime Minister Sergei Kiriyenko and his government, precipitating a political crisis. It was settled only on 11 September, when the Duma approved Yevgeniy Primakov as Prime Minister after rejecting Yeltsin’s candidate, the former Prime Minister Viktor Chernomyrdin.

The crisis had two immediate effects on centre/regions relations. First, it dealt a terminal blow to President Yeltsin’s authority. This meant the end of the era when his personal involvement (and at working level that of the President’s Administration) was the crucial element, most clearly expressed through the series of power-sharing treaties between the federal authorities and the republics and regions. No further treaties of this sort have been signed since mayor Luzhkov of Moscow signed the 46^th in the series on 16 June 1998.

Secondly, the crisis graphically demonstrated the weakness of the centre and thus in relative terms boosted the strength and authority of the regions. The reaction of regional leaders to the financial crisis was strongly protectionist and ‘go-it-alone’. Some declared a ‘state of emergency’ in their region, though they quickly retreated from the implication that this was a formal, and therefore anti-constitutional, act. Others claimed that they were halting the remittance of tax revenues to Moscow. This was not only illegal but also difficult for all but a few to implement in practice. Only the Republic of Kalmykia persisted, for which the relevant officials were sacked. A number of regions imposed price controls and banned the ‘export’ of foodstuffs from their territory. Many of these measures were sabotaged - by retailers who withheld their products from the shops until they were able to charge a realistic price, and by producers bribing police on the boundary of their region to let their goods through. Much of the initial demonstration of regional strength and independence was more declaratory than real.

At the same time the crisis prompted the regions to look for more substantial measures to secure their economic and financial self-sufficiency. Six regions created their own gold and foreign currency reserves. They were able to do this legally, availing themselves of a federal law ‘On Precious Metals and Precious Stones’, adopted in the spring of 1998. In this way they gained a degree of financial independence, though it was far from complete. The law was not totally permissive - it reserved to the federal precious metals authority Gokhran the primary right to buy gold. On 10 January 1999 Yeltsin suspended the relevant Sakha/Yakutia decree of 27 August 1998, which appeared to go against this provision.

Regionally based banks emerged relatively stronger than the regional branches of Moscow-based banks. This was because, having little cash to start off with, they had had less exposure to the boom and bust of the GKO market and had not borrowed heavily abroad. In the words of Central Bank Chairman Viktor Gerashchenko, ‘These banks are small, but stable’. Regional authorities strengthened their influence over local finances. In St Petersburg and Sverdlovsk they took control of local banks. A regional scheme involving offset payments was set up to release funds from the insolvent Moscow-based Inkombank into the hands of governors, for the latter to return them to private creditors and gain electoral credit in so doing.

Above all, the crisis brought home the reality of the interdependence of the regional and central economies. It came as a shock to the stronger regions, such as Sverdlovsk, to find that, under the conventions of the international financial world, regions cannot have a higher credit rating than that of the country as a whole. Even mayor Luzhkov failed to stop Moody’s downgrading Moscow’s rating. There was no question of the regions gaining economic independence through foreign investment at the expense of the centre.

Despite their relatively enhanced position, the regions did not directly influence the political outcome of the August crisis. On 4 September 1998 the Federation Council voted narrowly to recommend the return of Viktor Chernomyrdin as Prime Minister. Its recommendation was ignored by the Duma. The regional leaders then quickly threw their weight behind the new Prime Minister, Yevgeniy Primakov, who met their interest in stability. Primakov for his part saw a need publicly to recognise the increased authority of the regions. He did this by inviting the eight heads of the inter-regional economic associations to become members of the government’s presidium. The move was no more than a gesture. There is no evidence that the relevant governors have since played a significant role on the government presidium. It further blurred the constitutional separation of powers - the governors concerned, already members of the executive at regional level and of the legislature at federal level, now became members of the executive at federal level as well.
 
 

Primakov’s Agenda

The regions’ renewed self-assertiveness alarmed the government. On 15 January 1999 Primakov expressed fears for Russia’s territorial integrity. He said, ‘We lost the Soviet Union, we will not allow Russia to be lost’ and added that separatist tendencies ‘must be discouraged, eliminated and rooted out’. At a national conference on federal relations on 26 January Primakov set out the government’s considered response in seven regional policy goals:

1. To ensure that the term ‘federation’ was henceforth understood as a unifying and not decentralising concept;
2. To solve the dilemma of ensuring the equality of all the component parts of the Federation while creating the best conditions to safeguard the national identity of all the peoples of Russia;
3. To reconstitute the constitutionally entrenched vertical structure of executive bodies throughout the Federation;
4. To bring the system of bilateral centre/region agreements into accord with a set of common rules and regulations;
5. To focus on optimising the management of state property rather than its re-division between centre and regions;
6. To rationalise the system of financial transfers from the centre and introduce transparency into regional budgets;
7. To develop horizontal economic integration through inter-regional associations, while recognising that forthcoming elections make discussion of the consolidation of the 89 units of the Federation inexpedient for the present.

Economic

Centre/region economic relations remained the key issue after the August crisis. Primakov’s appeal to focus on optimising the management of state property rather than its redistribution between centre and regions looked likely to fall on deaf ears. Acquisition of assets by regional leaders – whether profitable or not – is still the name of the game. There are many examples. Regional leaders continue to battle with the monopoly energy provider United Energy Systems (UES), under Anatoliy Chubais, for control of regional energos and the regional energy commissions that set local tariffs – they are an important source of local manipulation. Governor Ishayev of Khabarovsk kray seems to have won a partial victory for regional control over the major, quasi-privatised defence industry conglomerate producing the Sukhoy fighter aircraft. Ishayev protested strongly against government proposals in 1997-98 to privatise the facility and to merge it with two similar ones in neighbouring regions. The solution was to create a 100% government-owned corporation with a further distribution of shares between the company and the relevant regional administrations. Whether or not this is the ‘optimal’ solution, it looks like another political carve-up.

The most intriguing contemporary illustration (see box for details) of the fight for acquisition of assets, the local constraints on regional governors, and of the continuing role of the centre is the case of General Aleksandr Lebed. Lebed won election as governor of Krasnoyarsk kray, one of Russia’s biggest and richest regions, in May 1998, under the impression that his regional governorship could quickly be turned to political advantage at the federal level. He soon found himself in trouble on several fronts, the most significant of which was a growing feud with the local ‘alternative power’ – his erstwhile supporter, a local businessman with an alleged criminal past. Lebed had to appeal first to the MVD, then to UES, and finally to Primakov himself for support. An agreement signed on 10 April 1999 between Primakov and Lebed seems to negate the new principles that Primakov had set out a few months earlier.

Lebed in Krasnoyarsk

Lebed clashed with Anatoliy Bykov, the leading businessman of the region, and chairman of the board of the second largest aluminium factory in Russia, Krasnoyarsk Aluminium (KrAZ), who had supported his bid for the governorship. Bykov appears to have assumed that in return, Lebed would support his own bid to create a large energy-metallurgical corporation, incorporating: KrAZ; the Achinsk Alumina Combine, which provides the raw material for KrAZ; the Krasnoyarsk Metal Works; the Krasnoyarsk Hydroelectric Power Plant; and the Krasnoyarsk Coal Mining Company (Krasugol), a federally owned holding company, which provides over a quarter of the coal consumed by the federal energy provider United Energy System (UES). Lebed, however, opposed the merger on the grounds that the new corporation would not be paying sufficient tax locally.

In his battle with Bykov, Lebed had to call upon:

• A task force from the Ministry of the Interior under Deputy Minister Vladimir Kolesnikov to investigate the finances of KrAZ, Krasugol and others. Its preliminary findings showed privatisation to have been carried out illegally to the detriment of government and in favour of Bykov, against whom an arrest warrant was issued;
• The Chairman of UES, Anatoliy Chubais, to find the money to repay the Roubles 72bn debt Krasugol owed to UES and thus prevent Bykov gaining control of it through bankruptcy proceedings (Chubais agreed only in exchange for UES acquiring equity in Krasugol, a condition that Lebed rejected); and
• Minister of Fuel and Power Sergei Generalov, to authorise the money from the Federal Fund for Gubernatorial Programmes.

Primakov’s other economic injunction, to rationalise the system of financial transfers from the centre to the regions, is in line with those of his predecessors and is being pursued by the same team under Deputy Finance Minister Khristenko (Deputy Prime Minister in Kiriyenko’s government). It involves:

• Pushing the responsibility for collecting taxes - and the rewards for so doing - down to regional level by instituting a new sales tax, an imputed tax (to be imposed on local traders with imperfect accounting procedures) and the levying of VAT on large corporations at the place where their main economic activity takes place, rather than where they are registered;
• Reforming the Fund for Regional Support so that the country is not artificially divided into a few ‘donors’ and many recipients and to ensure that federal transfers to the regions are spent for the purposes for which they are designed.

The drive to regulate centre/regions financial transfers across the board is hampered by the continued failure to adopt the necessary federal laws on taxation. The first part of a new Tax Code became law on 6 August 1998, just before the crisis, and entered into force on 1 January 1999. But it consists of general provisions. The Tax Code has been in draft since early 1997, and hopes that it would become the basis for the budgets of 1998 and then 1999 were dashed. With a new and cautious government in office and elections in the offing, the prospect of applied work on the overall tax framework is remote.

Political

The political prescriptions in Primakov’s 26 January speech were controversial. By calling for the restoration of top-down administration of the country he appeared to be directly challenging the principle of the popular election of governors. This principle had become part of the acquis of democratisation of the country, even though, as Primakov correctly noted, it is the ‘vertical structure of the executive’, not the elective principle, that is entrenched in the Constitution. Primakov modified his position in a later speech to the extent of calling not for the abolition of the elective principle, but for governors to be elected on a narrower base – by regional legislatures from a slate of candidates proposed by the President.

Primakov’s proposals evoked mixed reactions from the regions. A considered opinion from Governor Mikhail Prusak of Novgorod was that a deal could be done: the ‘vertical structure of power’ could be reinstated so long as regional governors were given back the right to control those below them, down to municipal level. This view reflected concern over the increasing pressure on governors from leading mayors, who in many regions had become a more or less institutionalised opposition. The prevailing view, however, is likely to be that for governors to cede the popular election principle would be to give away much of the freedom of manoeuvre they have won over the past four years. (It is not clear how Primakov proposes to deal with heads of republics, who have long been popularly, if not always fairly, elected.) This part of Primakov’s agenda looks unworkable and curiously out of tune with the prevailing mood. It is not surprising that Yeltsin, whose political instinct remains sharp, picked it up as a point of attack.

Constitutional

Primakov’s first point, that the term ‘federation’ should henceforth be understood as a unifying, not decentralising concept, was one of his most challenging. It would reverse the current trend, which is to accommodate, willingly or unwillingly, regional peculiarities. This trend is unlikely to be reversed so long as the practice of making individual deals with regions persists. The North Caucasus, where local legislation and political practice is becoming ever more idiosyncratic, is the most extreme case.

Primakov’s proposals for horizontal integration were rational. The formal establishment of Russia as a federation of 89 components owed more to political expediency than to rational planning. There was a palpable sense after the August 1998 crisis that Russia’s regions were poised to exercise more political power, but did not have the means while they remained so fragmented.

There is as yet no supra-regional breakdown into units broader than the full 89 components of the Federation, although this is generally recognised as an unwieldy number. The Soviet-era division of the Russian Federation into eleven economic regions has been retained, but operates only for the purpose of economic and statistical reporting and analysis. Ideas for redrawing the administrative boundaries of Russia that had been floated between 1990 and 1993, during the drafting of the Constitution, were revived after August 1998. Primakov championed the eight Inter-regional Economic Associations. These are flexible organisations self-generated in the lifetime of the new Russian Federation, with voluntary and sometimes overlapping membership, and therefore a better basis for future consolidation than the economic regions. But they maintain their coherence largely because their rotating chairmanships ensure that they have no political clout. Primakov’s proposal evoked a strongly negative response from the leaders of the republics, who saw any consolidation that threw them together with ‘ordinary’ regions as an infringement of their special status. This objection will ensure that the idea remains cocooned for the foreseeable future. Primakov was right, however, that constitutional reform will have to wait until a new parliament, president, government and a significant proportion of the regional leaderships are in place. All of this is due to take place between the end of 1999 and the end of 2000.
 
 

The Impact of Elections

The importance attached in the regions to the state Duma elections shows that regional separatism has not gone so far as to render federal legislation a matter of no concern. For all the regions’ strength through the Federation Council as a power of last resort, they want to get their hands on draft legislation at an early stage. How can this be done?

One of the largest parliamentary factions in the current Duma is ‘Russia’s Regions’. This is not a group representing the co-ordinated position of the regions (there is none), but a collection of deputies with no political allegiance other than to the constituency in which they were elected, sometimes referred to a little pejoratively as ‘governors’ deputies’. They have by and large voted in line with government wishes. But their election took place at the time when most of the governors (as distinct from the leaders of the republics) were not themselves elected politicians and took their cue from the centre. It is reasonable to suppose that in the next Duma there will be more deputies representing local interests. This is partly because the rule reserving half the seats in the Duma to parties on the list vote has yet to succeed in its express purpose of encouraging the development of a multi-party political system in Russia. Parties have found it difficult extend their organisation to the provinces. The CPRF is best placed, having inherited much of the Soviet Communist Party’s organisation. The LDPR and Yabloko both have regional structures, but the former is likely to fade along with its leader, while the latter has yet to develop the strength in numbers that would make it a decisive political force.

The fate of ‘Our Home is Russia’ (NDR), set up in April 1995 under Prime Minister Chernomyrdin, is the most significant factor in regional influence on the Duma. The NDR did well in the provinces initially, since it attracted the regional elites and the administrative structures they controlled. But it lost its cohesion the moment Chernomyrdin ceased to be Prime Minister, confirming that it had never graduated from being the ‘party of power’ to becoming a real political party with a viable programme of its own. There is considerable doubt whether the NDR will surmount the 5% barrier in the December 1999 Duma elections.

If the NDR was intended to project the power of the centre into the provinces, three parties that have emerged in its wake aim to inject regional power into the centre. First in the field was ‘Fatherland’, founded by Moscow’s mayor Yuriy Luzhkov in December 1998, just in time for it to be registered a year before the Duma elections and thus participate in its own right. The second is an electoral alliance, ‘Russia’s Voice’, founded by the governor of Samara, Konstantin Titov, in January 1999. The third is another broad movement, ‘All Russia’, popularly known as Shaymiyev’s (Tatarstan) party. Luzhkov’s party made less headway than had initially been expected, partly because as the boss of prosperous Moscow Luzhkov was met with suspicion in the less favoured regions, despite considerable largesse on his part, and partly because his party was undercut by Titov. In response, Luzhkov switched his approach to the municipalities, where he holds an advantage as a municipal as well as regional leader. He is also seeking to ally himself with ‘All Russia’. The regional elites have on the whole hedged their bets, many of them choosing by judicious placing of subordinates and allies to have a stake in all the emerging movements.

For all the activity involved, it is hard to see how any viable ‘party of the regions’ can emerge, given the widely differing circumstances and interests of the regions. For many of the governors it is as important to create a political base in their own region. In Sverdlovsk Governor Rossel founded ‘Transformation of the Urals’, while his rival, Yekaterinburg mayor Chernetskiy, founded ‘Our Home is our Town’. In the nationality-based republics, local ‘parties of power’, loyal to the republic’s leader, are the norm. The effect has been further to reduce the influence of the Moscow based national political parties in the regions. It follows that the regional influence in the next Duma will increase. Whether this will be done through an organised party of the regional elites, such as Titov’s movement, possibly having taken over the remnants of the NDR, or less coherently through the influence of governors on individual constituency deputies is difficult to predict at this stage.

Behind the manoeuvring over the Duma elections lies manoeuvring over presidential elections (July 2000). It is noteworthy that two of the leading candidates, Luzhkov and Lebed, are themselves regional leaders. But each is a special case, Luzhkov being to all intents and purposes a member of the central political elite, and Lebed having only recently moved to the provinces. Currently it looks unlikely that any other regional leader, with the possible exception of Yegor Stroyev, who doubles as Governor of Orel oblast and Chairman of the Federation Council, will be able to make the move straight from the provinces to the presidency. Here, the regionalisation of Russia is working against provincial governors. Lacking national parties that could, as in the United States, ‘market’ a provincial politician throughout the country, most are unknown outside their own region. Even when Boris Nemtsov was a high profile provincial governor with Yeltsin’s more or less explicit backing as a future president, his national ratings were very low.

In summary, the effect of the federal electoral process on regional separatism is hard to gauge. On the one hand, federal legislation is important, and the regions ignore the State Duma at their peril. On the other, regionalism is further stultifying the growth of national political parties and potentially weakening the concept of a single political space.
 
 

The Regions in the Foreign Policy Context

One dog that did not apparently bark in Primakov’s policy-setting speech of 26 January 1999 was the regional role in Russia’s foreign policy. It may be that this was simply because there is no fundamental problem in this area. Yeltsin himself, as a former regional leader and a man who has generally been less troubled by fears of separatism than his officials, has taken a rather permissive approach to the regions’ international activities. In January 1999 he signed the first law giving effect to the constitutional provisions for the regions’ foreign relations. It allows regions to maintain relations at levels below that of government, and even with government bodies, if this is with the consent of the Russian federal government. They are also permitted to sign agreements at this level provided these do not contradict federal legislation, impinge on other regions or purport to be international treaties. Regions may set up missions abroad and host missions of sub-national entities of foreign states, with the stipulation that they do not have the functions or status of diplomatic missions. The Foreign Ministry’s main concerns have been that regions should not undermine the foreign policy positions of the government (as, for example, some appeared to do in mid-1998 by attending an Istanbul conference that recognised the Turkish Republic of North Cyprus), or exceed their status by signing agreements at state level. In practice a blind eye has usually been turned to region-to-state agreements with the CIS countries and Mongolia. President Lukashenka of Belarus has caused some alarm in Moscow by assiduously courting the Russian regions, particularly at times when the centre has appeared to be cold shouldering him, but it is recognised that the initiative has been his, not that of the regions.

The more powerful and publicity conscious regional leaders (for example President Shaymiyev of Tatarstan and governors Ayatskov of Saratov and Rossel of Sverdlovsk) are constantly pushing at the limits of the acceptable, while Moscow mayor Luzhkov receives treatment that many a head of state would envy. But most of the regions have little experience of operating in an international environment and have a genuine need for guidance from the federal authorities.

The regional leaders’ purpose in their foreign economic activity has been straightforward – to attract investment in their region. Almost all have Internet web sites in English, a few have representatives abroad, usually a businessman who is representing his region as an extra. Their main task has been to present would-be investors with the picture of a locality that presents a tax-friendly and stable environment.

A boost to investment in resource-rich regions was heralded by long awaited amendments to a 1995 law on production sharing agreements (PSA) in January 1999. This will allow prospectors in a number of specified oil and gas fields to repatriate a share of the resources extracted through their investment and enjoy a favourable local tax regime. One condition is that participants in an approved scheme will have to buy 70% of their equipment and hire 80% of their labour in the Russian Federation, increasing the role of local administrations in the arrangements.

The history of the PSA legislation showed a tension between the commercial instincts of those regions that stood to gain and the ideological bent of the majority of the State Duma, which resisted what it saw as the leeching of Russia’s wealth by foreigners. A similar tension exists over the draft Land Code, which has been held up in the Duma by ideological objections to the free sale and purchase of agricultural land. Meanwhile, at least two regions, Samara and Tatarstan, have passed their own permissive laws (Tatarstan also allowing for foreign purchase) and others are following suit. When the Land Code is eventually adopted, it is likely to be more restrictive than the regional laws and to provoke a conflict over the primacy of federal and regional law.

If the regional leaders’ pursuit of wealth through foreign investment is largely perceived in the centre as benign, the danger of whole areas coming under the sway of foreign powers is another question altogether, and one that is too complex to be adequately dealt with in this analysis. Suffice it to say that the alienation of the North Caucasus is proceeding at a frightening pace, and that of the Russian Far East constrained only by the rather hostile cultural climate surrounding the area. A more benign influence (the EU) is making itself felt in the North West. Kaliningrad is a special case, although there will be consequences, eg for special economic zone regimes, from any new status of the exclave following the accession of its neighbours, Poland and Lithuania, to the EU.
 
 

Conclusions

It would be wrong on the basis of a current assessment to draw any far reaching conclusions. The trends identified in this analysis suggest the following:

• The era of regional separatism as a political goal is over. The August 1998 crisis brought home the interdependence of the regions and the centre. Loud declarations of independence (which have declined) are bravado or attention-seeking (eg Kalmykia).
• The trend towards decentralisation and the regionalisation of power are nonetheless continuing. In principle there is plenty of room for this process to continue without bringing the integrity of the Russian state into question, but…
• Messy, ad hoc deals between the regions and the centre are still the order of the day. The prospect of agreed rules of the game is remote.
• The regions are not seeking to make Russian foreign policy, but Russia is vulnerable to outside powers on its periphery.
• Political uncertainty in Moscow and upcoming elections preclude any serious reform to bring the Constitution more in line with the actual conduct of centre/region relations. The pax Yeltsinica is over, but there is nothing new to replace it.

Ever since Lukashenko came to power in June 1994, one of his main policies has been the formal re-unification of Belarus’ and Russia. In some respects, reunification is possibly not quite the right word here, perhaps reintegration would be better, for Lukashenko has never really appeared to be a strong believer in, or proponent of, Belarussian independence. Indeed, in 1998, he was reported to have described the break-up of the USSR back in August 1991 as a "historical mistake" and, certainly in his actions since coming to power, he has done his utmost to promote the reintegration of two of the three traditional Slavic nations of Europe, namely Belarus’ and Russia. This whole process has been thrown into sharp focus recently in the light of the war in the Balkans, following Serbia’s decision to renew its application to join the existing Union of Belarus’ and Russia. At the present time, Serbia has observer status to the Union only. However, a few months before the war broke out in the Balkans, Serbia did apply for formal membership of the Union. Both Russia and Belarus’ decided then to put the request on hold but, given the political situation inside Russia and the consequences of Russia’s continued non-diplomatic inaction over the bombing of another Slav nation by troops belonging to the former enemy camp (NATO), it is a possibility that the present political leadership, certainly in Russia, may not be able to hold off the demands much longer. For the time being, both Belarus’ and Russia are insisting that Serbia’s proposed membership of the Union will be discussed, but only after the end of the war in the Balkans, not during it. At present, neither Belarus’ nor Russia want to embroil themselves in military conflict with the Western powers. Thus, it could be argued quite convincingly that the Union is more a political device than an economic one, but that the economic side of the equation should not be overlooked; neither should the military/security context of the Union be ignored. What I hope to do is present a very brief summary of the political and economic aspects of the reintegration process between the two states and discuss very briefly the recent security agreements signed in Minsk.
 
 

Belarus’-Russia: Towards Integration (1994-1999)?

It has to be said that for many commentators, both inside and outside of Belarus’ Lukashenko’s presidential victory came as a surprise. The other contenders for the post - Kebich and Shushkevich - lost either because they were implicated in scandal (Kebich) or because their popular appeal was limited (Shushkevich really only was popular amongst the country’s intellectuals, rather than the mass of the electorate). Lukashenko ran on a very strong anti-corruption ticket and could talk to people in a language that was accessible to all. After all as a previous kolkhoz chairman and a political officer in the Interior Ministry Troops, Lukashenko had experience of dealing with people from a wide variety of social backgrounds. Ever since becoming president in June 1994, however, Lukashenko has done his best to promote the creation of a new Slavic state in Europe. He has done his best to promote what was best of the USSR, even at the expense of his own country’s independent status. Lukashenko is, in some ways, president of a country that he would rather wish did not exist!

Curiously enough despite its hankerings over its own "lost empire", if either of the two states has been dragging its feet on the reintegration of Belarus’ into Russia, it has been Russia, which occasionally does seem to get close to adopting a few of Lukashenko’s suggestions and ideas but, when it comes to the crunch, eventually and quietly backs away. This was even evidenced at the last formal meeting of Lukashenko and Yel’tsin towards the end of April 1999, when Lukashenko basically accused the Russians of dragging their feet concerning his proposals for the creation of a single parliament, a single Cabinet and (of course, Lukashenko’s real prize) a united president, with him, no doubt, filling the post after the removal of Yeltsin from power in the presidential election due to take place in June 2000. Without wishing to over-emphasise this particular line of argument, it is worth making the point that Lukashenko does seem to have his eyes now on a much larger prize than simply being president of Belarus’; there is a strong feeling that Lukashenko wants to be president of a new unified Slavic state, hence his desire to merge the two states as quickly as possible. In some respects, his own personal political ambitions coincide with the wishes of his people, as well as economic realities: for instance, according to figures released prior to the August 1998 rouble crash, Belarus’ was heavily dependent on Russia for raw materials (importing some 70% of its raw materials from Russia); energy resources (90%) and exporting 90% of its goods to Russia, on the whole. It is also true to say that many Belarussians see little to be gained in any sense for long remaining an independent state. Without detailing the history of the country, suffice it to say that Belarus’ has never enjoyed a significant period of time as an independent state; it has either been part of Poland or part of the Russian Empire for centuries. Despite the existence of a distinct Belarussian language, the overwhelming majority of Belarussians (some 80%) class Russian as their first language and, given their common ancestry, this is hardly surprising. It is probably true to say that Belarussians have more in common with Russians than, say, Russians and Ukrainians; after all, Ukraine was an independent state in Europe until the early 17th century and enjoyed a further period of independence in the 20^th century as well. Ukrainians would appear to have a much stronger sense of national identity than Belarussians.

Looking at recent events between the two countries, it is easy to chart the nature of their developing political relationship. In February 1995, both Lukashenko and Yel’tsin signed a Treaty of Friendship, Good Neighbourliness and Cooperation; on 26th May 1995, a border post was erected in the village of Rechka, signifying that there was no border dispute between the two republics (unlike the situation that exists between Russia and Latvia, or Russia and Estonia, for instance). In February 1996, in his official capacity as President of Belarus’ Lukashenko visited Yel’tsin in Moscow; a few weeks later, on 2nd April, the purpose of the earlier visit was made more apparent: on that date, both men initialled the agreement that brought into existence the Community (soobshcha) of Belarus’ and Russia. In effect, this agreement meant that both sides agreed to an integrationist policy which would result in them pooling their material and intellectual capabilities in order to strengthen their economies and improve the lot of their fellow citizens. According to contemporary figures, between 1994-1996, Belarus’ imported directly from Russia some 70% of its iron-manufactured goods requirements, more than 50% of its cement requirements, about 80% of its demand for coal, and 70% of its tractors. Thanks to the April 1996 agreement, an executive organ was created, charged with overseeing the new legislation being brought into being by the existence of the new Community: Lukashenko became Chairman of the Community’s new Supreme Council; Chernomyrdin, then Russian Prime Minister, became Chairman of the Council’s Executive Committee.

Despite noises made in the West at the time to the effect that this was the first step towards the formal re-creation of the old USSR, even a cursory examination of the Agreement shows that it fell well short of a complete merger of the two countries: for instance, there was no indication that the Agreement was going to pave the way for the establishment of a common currency between the two states. But a momentum had been created and, as long as Russia saw that it was in its interests to play Lukashenko along, it was happy enough to support Lukashenko’s broad thrust. Thus, on 26th April 1996, a further agreement was signed between the two parliamentary leaders on creating a joint parliamentary assembly for the Community. On 2nd April 1997, Yel’tsin and Lukashenko signed a Treaty on the Union of Belarus’ and Russia and, in December 1998, again both Heads of state signed a "declaration on the further unification of Russia and Belarus’". In some respects, this document could be seen as the forerunner to any potential draft union treaty being drawn up between the two states. Despite Lukashenko’s expressed public exasperation at the latest meeting held between the two men in April 1999, Russia has stated that it is presently working on a much more detailed draft union treaty, which will be ready for the beginning of June and then up for public debate after that. If all goes well, referenda could then be held in both states for formal ratification by the people on the eventual political merger of Belarus’ and Russia. Russian commentators reckon that, sticking to this timetable, referenda could be held possibly at the end of 1999 and certainly towards the beginning of 2000. This being the case, Europe could witness the birth of yet another new geopolitical entity on its map: a Russian-Belarussian Federation.

But, as revealed in April 1999, Moscow is not running as fast with this as Minsk would like. Although both Yel’tsin and Lukashenko signed a range of agreements concerning, for instance, joint weapons production (the Su-27 to be built under licence in Belarus’, future joint production of the Tor-M1 anti-aircraft defence system), better cooperation in securing their border (the Russian Border Guards Commander-in-Chief, Colonel-General Totskiy, now has operational control of the Belarussian border, as well as Russia’s border), increased co-ordination of the security strategies of the two countries (during his recent visit to Minsk at the end of April 1999, Marshal Sergeyev presided over a joint session of the collegiums of the Russian and Belarussian Ministries of Defence), Lukashenko publicly expressed his dissatisfaction that Moscow did not accept his proposals for the creation of a single presidency, cabinet or parliament.

Probably in partial response to events in the Balkans, as well as a reaction to NATO expansion eastwards, Lukashenko is keen that the issue of formal merger between the two countries is settled and settled quickly: after all, despite the November 1996 referendum which allowed him to extend his period of office by a further 2 years, unless he acts unconstitutionally, Lukashenko will have to seek formal re-election in 2001, not all that long away. If he has to stay on in Minsk, he will, but if he gets a chance to have a crack at the top job following the creation of a unified state of Belarus’ and Russia, then I am sure that he will run for the post of president of that state, hence his careful garnering of support from a number of regional governors, as well as men like Yury Luzhkov, the Mayor of Moscow. A few months back, Lukashenko described Luzhkov as "his best friend" and that regardless of what happens to Luzhkov, he would always be made welcome in Minsk. Depending on how things develop in Russia, these two men could easily end up being bitter political opponents in the race for the top job.

Both economically and politically, Belarus’ has been very active in pursuing its relationship with the 89 "subjects" of the Russian Federation: in an interview the Republic’s First Vice-Premier, Vasily Dolgolev, admitted that Belarus’ had "significantly" increased its trade with 22 regions and that it was not uncommon for between 2-3 regional delegations to visit Minsk on an almost daily basis. He also quoted an annual figure of trade turnover with Moscow alone amounting to $2.5 billion: no wonder, Luzhkov is such a good friend of Lukashenko’s! To put the latter figure in some sort of overall context: in 1996, Belarus’ effectively exported goods and services to Russia worth $6.2 billion; its equivalent figure with Germany was $800 million; with the USA, $212 million.

There are a number of important joint economic projects involving the two countries: one involving the BelAvtoMAZ combine and the Yarolsavl’ factory "Russkiy dizel’", designing and producing a new HGV for the CIS. There is also another programme called "Soyuznyy televizor" which, as the name implies, is to produce new colour TVs for the home market, with an annual production run of 1 million sets per year. A whole range of Moscow-based and Minsk-based factories are involved in that particular project. However, arguably one of the most interesting areas for joint economic production is that of defence. At the recent meeting held between Marshal Sergeyev and his Belarussian counterpart, Colonel-General A Chumakov, a number of agreements were signed in this area. However, cooperation between the two states in defence production would appear to have been going on for some time. In a report published in one of Russia’s most respected papers, the latter stated that 200 Russian defence firms had maintained "technological links" with approximately 120 Belarussian counterparts. Apparently, Belarus’ accounts for 17% of Russian defence imports, including satellite communication equipment, equipment for radar stations, radio navigational equipment, etc. In many respects, this simply maintains a position that existed long before the collapse of the USSR in 1991. The Belarussian military- industrial complex was both one of the most useful and specialised sectors of the whole Soviet military-industrial complex. It is no surprise that the Russians are keen to keep them formally involved.
 
 

Recent Military Developments (May 1999)

Space does not permit a thorough or detailed examination of the nature of the military relationship that has developed between the two states since 1991, but in light of the war in the Balkans, Lukashenko’s failed mediation attempts with President Milosevic and the recent visit by Marshal Sergeyev to Minsk, already noted, a very important aspect of the reintegration process must be emphasised. Arguably, the most successful part of this process is not economic, nor even political, but military. For instance, although NATO refused to guarantee the safety of the flight of Primakov to Belgrade on 30th March, a joint Bealrussian-Russian air defence patrol made sure that the Russian Prime Minister did arrive at his destination in one piece. This was a clear sign of the working-relationship which is part and parcel of the recent development of both militaries. Both militaries have been cooperating intensely with one another for many years now, in fact, almost since the collapse of the USSR itself. The Staff HQs of the two republics exchange operational information, for instance, on NATO’s military activities in the Balkans. Both Staffs are also actively working on the creation of a new regional security system for the area and agreements have already been signed for the joint production of certain types of weapons. They have held and will continue to hold a wide range of joint military-tactical planning exercises; to all intents and purposes, they are planning and working out their own interoperational capabilities, testing their strengths and weaknesses. Regardless of the state of the Russian Armed Forces, judging by reports appearing in the Russian military press and elsewhere, the Belarussian Armed Forces, at 80,000 strong, would appear to be well-equipped, well-trained, and be reasonably well-disciplined. Thus, if there is any sort of merger involving the militaries of both countries, Russia’s military capability, especially in this part of the world, would be enhanced, not weakened.
 
 

Conclusion

In answer to the question posed in the title, it would appear that the primary motive for the drive towards further integration between the two states is political. The economic side of the equation, however, is very important, more so since the rouble collapse of August 1998. But if Lukashenko was not in power, would the drive for reintegration be as great? I do not think so, not least because I would argue that Lukashenko is one of the few presidents who would appear to be very keen on getting rid of his country’s independence. Given his continued popularity rating, it would also appear that the majority of Belarussians are also of this opinion. However, the most successful aspects of the Union agreements to date are, in my opinion, in the area of security and defence where, for a whole host of reasons, both militaries have found it significantly easier to sign on the dotted line, than have their political counterparts. They have found it very easy to make common cause and ensure that some of the reintegration talks have ended up being more than just talk.
 
 

Endnotes

The CIS April 1999 Summit: Another Step to Disintegration

The past year has become another step towards the disintegration of the Commonwealth of Independent States (CIS), an international organisation created in December 1991 from the ashes of the USSR. From the very beginning this organisation and its purposes have been shrouded in ambiguity. The Russian left-wing opposition assumed that the CIS was merely a prelude to the restoration of the Soviet Union. For Russian liberal reformers, the ideal for CIS integration was similar to the European Union. Many leaders and citizens of former Soviet republics viewed the CIS as either an instrument for a ‘civilised divorce’ from Mother Russia, or leverage in interrelationships with the latter.

Over the past decade economic and even technological interdependence between CIS countries seemed overwhelming, and far more important than any disagreements between members of the Commonwealth. For example, Russia’s total volume of trade with other Soviet republics far exceeded its trade with other trading partners. In 1998, however, we witnessed an interesting new trend in Russia’s economic co-operation with the outside world: Germany has become Russian trade partner Number One, with the United States second, whilst Ukraine is only the third most important of Russia’s trading partners (it should be noted that the greater part of Russian-Ukrainian trade is in fact subsidised by Gazprom and RAO UES). As for other CIS countries, Russian trade with them is insignificant. Moreover, Russia can only find the financial and technological resources necessary for the restructuring of its economy in the West.

In addition, during the 1990s the former Soviet republics acquired divergent foreign and national security interests. Only Armenia and Belarus have demonstrated a willingness to increase economic and security co-operation with Russia. The Baltic states, Moldova, Ukraine, Georgia and Azerbaijan prefer NATO as principal security partner rather than Russia, while Uzbekistan views Moscow as the main political and military hindrance to Tashkent’s desire to dominate Central Asia.

Unsurprisingly, all of these economic and political tendencies in the former Soviet Union have led to a further weakening of already enfeebled CIS structures. Below are a few examples in support of this statement:

• In February 1999 Uzbekistan announced its unwillingness to renew the CIS Collective Security Treaty (curiously, this treaty was signed in Tashkent in 1992), and an unwillingness to participate in any future military alliances within the CIS.

• In February 1999 another CIS state, Georgia, terminated its participation in the CIS Collective Security Treaty, stating that the treaty ‘is not working’, and that Russia had failed to fulfil its obligations under the treaty (that is, it had refused to help Georgia to resolve the Abkhazian conflict and had not handed weaponry over to the Georgian army).

• In March 1999, just a few weeks before the CIS Summit, Turkmenia announced that it was leaving the CIS Non-Visa Travel Agreement.

• At the CIS Summit in Moscow (2^nd April 1999), decisions were taken that weakened CIS collective organs even further. These organs cannot now make any decisions of their own; furthermore, their personnel and budget were significantly reduced.

• During the Summit the heads of the CIS states failed to issue any statement concerning Kosovo because of wide differences of opinion over the NATO air strikes against Yugoslavia.

• Almost immediately after the Summit a group of CIS countries, namely Azerbaijan, Georgia and Ukraine, announced the opening of a corridor for oil transportation that circumvented Russian territory, in clear defiance of Moscow.

• CIS leaders, openly disregarding Moscow’s current anti-NATO stance, participated in NATO’s Washington Summit.

However, after the diplomatic debacle at the Kishinev CIS Summit in October 1997, Moscow has taken a more realistic approach to its relations with the CIS countries. In a report by the influential Russian Foreign and Defence Council approved at its 6^th Assembly (March 1998), the Russian ruling elite was accused of an inability to recognise the realities of the post-Soviet situation: the economic disintegration of the CIS continues, whilst the levels and directions of economic development in former Soviet republics are increasingly divergent. Members of the CIS are inclined to unite not WITH Russia, but AGAINST it. Under these junctures the Council recommended greater bilateral diplomacy in relations with the former Soviet republics.

Recent events demonstrated that the Council’s recommendations were taken seriously by the Kremlin. More emphasis has been laid upon bilateral relations with key CIS states. The Russian Ministry of Foreign Affairs (MID) now openly recognises that CIS mechanisms are not working, and consequently it is stimulating economic co-operation between Russian regions and CIS states, seeing these ties as an instrument of economic integration in the former Soviet Union (it should be noted that the majority of Russian-Kazakh trade is border trade between Russian and Kazakh regions). As Russian Foreign Minister Igor Ivanov said at the MID’s Consultative Council on the international ties of the Russian Federation’s subjects on 20^th January 1999, ‘Today, when processes of integration within the CIS are, frankly speaking, in trouble, bilateral co-operation with CIS countries is of special importance. By deepening ties with the regions, the subjects of the Federation contribute to the resolution of this task’.

Consequently, interrelationships between Russia and influential members of the CIS, such as Kazakhstan and Ukraine, have improved noticeably over the past two years.

Recognition of the inevitability of the Caspian Seabed partition between the littoral states was another sign of goodwill and a recognition of reality on the part of Moscow. This move, undertaken at the beginning of 1998, has already improved Russian relations with Kazakhstan.

Of special importance for Moscow is, of course, a breakthrough in its relations with Kiev. The ratification of the Russian-Ukrainian Friendship Treaty by the Russian Parliament was an event of international significance, far exceeding Russian-Ukrainian bilateral relations. By ratifying the treaty, the Russian Federal Assembly recognised the irreversibility of the USSR’s disintegration, and renounced plans to restore the Russian Empire in any form.

From the Russian military’s point of view, the ratification of the three Sevastopol accords by the Ukrainian parliament was of no less significance, as these three agreements legitimise the basing of the Black Sea Fleet on Ukrainian soil, and open up the way for a more constructive relationship between the Russian and Ukrainian militaries.

However, this new Russian CIS policy, whilst creating some new opportunities for Moscow in the former Soviet Union, is not without its own problems. Firstly, the closer the integration within the Customs Union, which embraces five CIS nations – Russia, Belarus, Kazakhstan, Kirghizia, and Tajikistan - the weaker the CIS is as a whole, because many CIS nations look jealously at any ‘special relations’ between Russia and other CIS countries. The same can be said of the Russian-Belarussian alliance, which has already elicited a negative response from Kazakhstan and Ukraine. Secondly, Moscow faces serious problems in its relationships with even its closest CIS allies. Kirghizia’s membership of the World Trade Organisation represented a clear defiance of the Customs Union. Moreover, after the devaluation of the rouble an influx of cheaper Russian goods created serious problems for Kazakh industry, forcing the authorities to impose limits on a number of Russian imports into Kazakhstan. However, these measures were not enough to prevent the devaluation of the tenge, the Kazakh national currency. In addition, the traditional problem of the insolvency of a number of CIS countries (such as Ukraine, Belarus and Moldova, all of which are unable to pay for Russian energy supplies) was aggravated further by the economic crisis of August 1998. On the one hand, Russia is unable to credit the CIS economies any more, being in a situation of technical default on its foreign debts. On the other hand, these countries themselves are facing serious economic problems, precluding any possibility of repaying their debts.
 
 

Russian Policy in the Former Soviet Union: Disengagement from the CIS

In my opinion, the numerous problems that Russia faces in its policy towards the former Soviet Union are derived from the fact that for the Russian elite the criterion of this policy’s success became the success of CIS integration. It should be noted however, that although the CIS is not working, its mechanisms are no less efficient than those of the British Commonwealth. The problem for both Commonwealths is that both were created on the ruins of empires, not on the basis of economic self interest, like the EU was.

The CIS bodies, mechanisms and regimes were created before the national interests of the Newly Independent States (NIS) were consolidated and comprehended by either the people or the ruling elites. The CIS was thus a product of nostalgia (both in Russia and other former Soviet republics) for the lost Soviet empire and, to a certain degree, of the dream to restore it. But all attempts to restore the Russian or Soviet empire on the basis of national interest have failed miserably in recent years, because the empires are centred around ideals, not interests. Over the past decade the Russian intelligentsia has been unable to produce any new ideas or social myths that are acceptable to both the Russian people and to the majority of the peoples of the former USSR. As a result the CIS did not evolve into a new empire.

Nostalgia for the empire still felt in Russia and ‘phantom pain’ of the disintegrated USSR still pre-determine Russian approaches to the NIS. For example, the hermetic isolation of the CIS region from the outside world (particularly the West) is still viewed as one of the principal targets of Russian policy there. In particular, the participation of Western oil companies in the development of Caspian oil and gas resources is considered by many Russian politicians and experts as an encroachment into a traditionally Russian sphere of influence in the region.

It should be noted however, that among the most successful economic projects in the former Soviet Union are those which combine the natural and technological resources of the NIS with Western finances and management. This constitutes real economic integration in the CIS, paving the way for possible political integration. Examples include:

• The exploitation of Caspian oil resources as a result of co-operation between Russian LUKoil and Western companies, such as Amoco, BP and Azeri oil companies.

• The Sea Launch project: Russian, American and Ukrainian companies are jointly building a sea-based launch pad for commercial space launches.

• Russian-Ukrainian co-operation in the development of new types of airspace technique (such as the Dnepr rocket and An-70 transport aircraft), aimed at the Western market.

• The Caspian Pipeline Consortium: Russian and Kazakh oil companies are co-operating with the American company Chevron in the construction of a pipeline from the Tengiz oilfields in Kazakhstan to Novorossiysk on the Russian Black Sea coast.

Conclusion

After six years of the existence of the CIS, the leaders of the former Soviet republics are faced with the necessity of creating new integration mechanisms. In doing this however, they will have to overcome not only the negative aspects of the Soviet experience, but also mistakes made after the collapse of the Soviet Union.

Introduction

How stable is the Russian Federal system of government, whose guiding principles, power relationships, competencies and prerogatives were outlined in the December 1993 Russian Federal Constitution? In what direction is the Russian Federal system moving; what is the trajectory of Russian Federal evolution? Is, for example, the Russian Federation consolidating and strengthening around existing principles of Federal governance? Or should we argue that August 1998 acted as a major catalyst in Russian Federal governance, adding fuel to the motor of power devolution and political decentralisation, leading to a much weaker Federal system characterised by the consequent diminution in the effectiveness of Federal power structures? Or could it be argued that key dynamics that now dominate Federal politics within Russia have the unintended potential to create an effective Russian confederal system with the strength to contain and manage failed or collapsed regions? (See Fig. 1: Possible Pathologies of Systemic Transformation).

This paper will explore the process of unstable and unpredictable transformation that defines Russia at the end of the 20th Century. It argues that ad hoc, temporary arrangements designed to counter the immediate impact of the August 1998 crisis appear to be leading to a fragmentation and a regrouping of Federal power within a far weaker and more decentralized system of confederal governance. This process is not driven by central and regional elites following some hidden blueprint for strategic renewal but rather it unfolds by default through reaction and counteraction, it is governed by ‘creeping autonomy’, contingency and uncertainty, rather than design.

The trajectory of such a drift contains the clear and already apparent potential to create a strong confederal system of governance. This paper concludes by suggesting that a strong conferederal system underpinned and legitimised by constitutional reform poses policy dilemmas for foreign states. However, the continuation of governance under the present outdated and largely ignored Federal constitution provides a self-destructive mechanism, with the potential to create a collapsed state. The tensions and running disputes and power clashes between a de facto confederal reality and a de jure Federal ideal suggest a weaker Federal system that eventually implodes under the weight of its internal contradictions.
 
 

Systemic Shock: the Impact of August upon Federal Politics

In August 1998 Russia suffered what appeared to be a major financial and economic ‘meltdown’ or dislocation. This collapse has had a wider and more profound significance that should be recognised – it is systemic in nature. Its impact upon governance within the Russian Federation, particularly Federal economic coherence and political stability has been profound. It also had a
 
 
 
 

residual or ‘spillover’ effect on the coherence and management of Russia’s foreign policy. It has transformed both the substance of the policy, further stretching the soft security agenda to cover new issues, and it has placed a far greater importance on inter-state interaction at the regional level through the use of sub-federal institutions.

Whilst some of Russia’s constituent parts had gained greater autonomy between 1996 and 1998, their ability to act independently was circumscribed by the centre – not least by the overt exercise of budgetary federalism and the unconscious linguistic, cultural and psychological commonalties that bound the federation together. Moreover, president Yeltsin had developed a vertical hierarchy of power within the federation, in which the Duma’s role was slight and through which the force of both presidential personality and the centre-periphery patronage networks he serviced provided important levers of control over the regions. But, throughout the post-August 1998 period Russia appeared mired in crisis, as pillars of federal control and power were weakened by the fusion of political and economic breakdown. The cumulative impact of the disintegration of federal pillars of support has the potential to cause at the very least the restructuring of the Russian Federation, at most its collapse. As the precarious balance of power between integratory and centrifugal forces created between 1996 – 1998 is disrupted, Russia appears to have entered a period of drift towards federal transformation.
 
 

Economic Collapse

The August events of 1998 have seriously impaired the sustainability of federal power structures, shedding light on many of the inherent structural, institutional and behavioural weaknesses of Russia’s post-Soviet state-building. On 17 August 1998 the rouble was devalued to two thirds of its value and on 21 August 1998 the Kiriyenko government fell. The banking system in particular came under immense pressure from rouble devaluation. The chances of economic stagnation and hyper-inflation increased as pressures grew for ‘controlled emissions’ of cash into the monetary system to cover the budget deficit. These events highlighted two ongoing inter-linked systemic processes. Firstly, it focussed attention on economic dislocation, the weakening of the Financial-Industrial Groups (FIGs) and their power, particularly over the banking system, and the pressures placed on the maintenance of ‘budgetary federalism’ through the general shortage of funds and non-arrival of investments. Secondly, it served as a catalyst for further regionalisation and emphasised the loss of political authority (or ‘capital’) and respect that the regions had for Moscow based Federal institutions. Primakov, as the current Russian Prime Minister, was the first to underscore the seriousness of systemic weakness. On 11 September 1998 he sombrely informed the Duma that the threat to Russia’s integrity was ‘not a theoretical or hypothetical issue’ and that ‘we are facing a very serious threat of our country being split up.’ A final implosion heralded by a slip into hyperinflation, bankruptcy and the complete collapse of the banking system was a real threat.

The economic collapse of August 1998 impacted on Russian attitudes to marketization, the stability of centre-periphery relations within the Federation and the strength of Russia’s international trade. The banking collapse and loss of personal savings undermined the faith of Russians in the legitimacy and integrity of market-democratic ideals and practice. The core of federalism is the relationship between the budgets of the regions and the centre. The fall in tax receipts impaired the ability of ‘budgetary federalism’- the distribution of subsidies between net donor and receiver regions – to act as a glue or cohesive force within the Federation and so disrupted centre-periphery relations. The First Deputy Speaker of the State Duma, Vladimir Ryzhkov, compared the impact of August 1998 in Russia to that of the ‘big bang’ within the Universe, arguing that divergent legislation, customs barriers, economic and trade warfare and an unstable ethnic policy characterised the contemporary federal system.

These internal dimensions to the economic dislocation have been matched by external trade implications. Russian international trade has also been seriously weakened. In 1998 Russian exports shrank by 16.4% and imports were down 19.1%; Russian trade, including unofficial trade shrank 17.6% in 1998. Maslyukov argued that although the economic decline had been halted six months after the August meltdown the situation remained grave, particularly in textiles and light industries, but not hopeless. Inflation slowed from 11.6% in December 1998 to 8.5% in January to 4.1% in February 1999. The new budget came into force on 1 March 1999. It supposed IMF financial support (which has yet to materialise) and was based upon a projection of 30% inflation, yet the first quarter showed a 16% rise. The budget has to resolve wage debts to regional budget employees, where arrears are at R11.6bn (Federal budget employees were paid through February 1999.) and pensions arrears. Only 6 regions have eliminated all arrears, whilst 20 regions have actually increased arrears. In 1991 450 m tonnes of oil was drilled, in 1999 that figure is projected to be 285 million tonnes. Should this continue, by 2005 it is calculated that an irreversible degradation of the energy sector’s technological and cadre potential will have been breached and Russia will have lost its ability to compete on the foreign as well as domestic markets. Russia will be importing oil, according to Maslyukov.

Despite this gloomy assessment, it should be noted that the most pessimistic of the predictions made in August 1998 have failed to materialise and judged against this stern barometer, the economy remains more stable and robust than anticipated. The weekly business magazine Ekspert published an article in May entitled ‘Unexpected Happiness’ – it argued that the Russian economy was now showing unexpected signs of growth, with the revival of domestic goods at the forefront of a resurgent industry. Barter transactions were reported to be down and the wage backlog had been cut. However, the article also warned that industry could exhaust slack capacity and be forced to hike prices to boost output, so fuelling inflation. Further rouble devaluation coupled to under-investment and changes in government policy also threatened economic stability.

The new Russian government faced a series of policy dilemmas centred upon their need to maintain the unifying and cohesive effect of budgetary federalism in a period when revenue and tax collection was halved by the combined effects of non-payment and inflation. There was, for example, a 50% fall in tax collection in September and six-fold drop in imports. As the Russian Ministry of Finance became unable to distribute federal subsidies to the eighty ‘consumer’ regions or collect from the nine ‘donor’ or ‘producer’ regions, budgetary federalism as a lever of federal cohesion was seriously damaged. Russian centre-periphery relations were then set to drift towards an ever deepening and vicious spiral of vice: as Federal subsidies dry up, tensions between opposing factions in dependent regions are exacerbated; competition for control of the limited handouts becomes more intense.

As the governor of Samara noted, this represents a danger to federal survival: ‘once united, the regional leaders are capable of turning purely economic questions into political ones, whereupon the centre will be left in splendid isolation.’ The Kalmyk President Kirsan Ilyumzhinov stated in mid-November 1998 that his republic is prepared to secede from the federation and rejoin a Russian confederation as an associate member or become a sovereign republic with a defence alliance with Russia. He threatened to remove Kalmykia from the federal budget and nationalise federal structures on Kalmyk territory. Although this provocative threat was designed to bring the republic’s budgetary problems to the attention of federal authorities, it challenged the unity and the integrity of the federal state.

By 23 September 1998 66 regions had entered ‘austerity mode’, imposing price controls on key food products. Indeed, Russia’s Minister for the Regions noted that: ‘Almost all constituent parts of the federation which have a reasonably strong food industry have adopted local laws banning the export of food and other commodities.’ Such ‘food separatism’ through the creation of customs regimes is seen as a means of protection against the crisis in lieu of federal action. It has, however, a devastating impact on federal integrity when 57% of food is imported and ‘the collapse of the banking system has put an end to settlements and payments.’ Other constituent parts were truly in dire straits. The ability of the federal government to ensure food and fuel supplies to the Russian Far North was heavily questioned. It became apparent in late September 1998 that the Northern regions had received only 63.8% of oil, 58.6% of coal and 46.7% of food, in individual regions (Koryakskiy autonomous district and Amurskiy region) the supply percentages were much lower. Primakov reported in February 1999 that the agro-industrial complex was being destabilized by bans on the flow of food across the borders from one constituent part of the Federation to another: ‘It is not just a political matter. It develops separatism. In the economic field, it totally destroys the market for agricultural produce throughout the country.’

During this period the integrity of federal military and security structures markedly deteriorated. The General Staff of the Russian Armed Forces reported the psychological stress and low morale amongst troops caused by cash starvation, regionalisation and the growing criminalisation of armed structures. The Duma Defence Committee has stated that ‘the armed forces are in the deepest imaginable crisis, which is effectively full-scale disintegration, and unable, as their experts say, to carry out strategic operations.’ This sentiment was underlined by a General Staff report that argued the Russian military was on the brink of being unable to fulfil its primary function - the defence of the Federation. Defence Minister Igor Sergeyev stated in December 1998 that 30-25% of military aircraft were in good repair, 60% of strategic missile systems deployed had been in use for twice the length of their service life and more than 70% of naval vessels were in need of repairs. In 1998 the armed forces received ‘not a single nuclear submarine, tank, combat aeroplane, helicopter or piece of artillery.’ The general malaise within the military was illustrated in Tatarstan when in January 1999 several defence plants, starved of government orders for over two years, were taken under dual management by the Republic.
 
 

Identifying the Dynamics of Federal Transformation

Russia’s federal transformation does now appear to be underway, although the ultimate destination of the transformation currently gathering pace is difficult to fathom. There are elite pressures at both the centre and the periphery that push for constitutional reform. There is also a process of drift that has placed the reality of centre-periphery and executive-legislature relations far in advance of existing legislation. The key questions that now arise focus on the direction of the transformation and the extent to which it can be more-or-less managed and controlled. Thus Russia may be in the process of systemic transformation as regional bloc formation occurs on an incremental ad hoc basis, driven by the logic of the crisis and the faltering heartbeat of constitutional reform, rather than elite policy choices or strategy.

1. The Constitutional Dynamic

In the immediate aftermath of the August Meltdown, the political elite within Moscow began to debate the utility of rationalising power relations between centre and periphery in order to simplify governance within the federation. By May 1999 all key politicians were actively engaged in debating the draft treaty on political accord. In discussing the need for constitutional change, all factions rule out all but amendments until after the State Duma December 1999 and Presidential July 2000 elections. The desperate necessity for initiating constitutional reform was best captured by the governor of Saratov, Dmitriy Ayatskov, who stated that ‘the 1993 constitution was adopted in haste and is in shreds.’ Some influential Russian commentators, such as Sergei Karaganov, the Chairman of the Council of Foreign and Defence Policy, discussed the ‘high probability’ of Russia disintegrating as a state in the near future and simply becoming a ‘shape on the map’ if political and constitutional reform is not enacted in 1999. It is possible to begin to identify the key characteristics of the fabric of governance post July 2000, or at least the parameters within which the constitution will rest.

a. ‘the idea of larger regions is worth considering’

As if to illustrate the intensifying nature of systemic collapse, Primakov admitted in September 1998: ‘the idea of larger regions is worth considering. It seems to me a sound idea, because 89 constituent parts of the federation is too many.’ In a similar vein, the Regional Policy Minister stated that regions would ‘definitely have to’ merge. By December 1998 Yeltsin gave presidential authority for Leningrad Region and St. Petersburg to hold referenda in December 1998 in order to merge, and the leading presidential candidate and mayor of Moscow, Yuri Luzhkov, promoted the idea of 12 regional economic associations.

b. ‘Inter Regional Economic Associations R’Us’

The real battle for reform will be over the nature of the relationship between the core and the periphery in a restructured Federation. Thus, the principles of devolution and subsidiarity will be present, as will talk of merging regions and re-emphasising the role of IREAs. In late September 1998 Primakov again noted that as Federal funds are insufficient, regions should consider ‘once again the possibility of co-ordination and co-operation within the framework of the eight regional associations, developing your own tax base.’

However, the ability of IREAs to co-ordinate coherent ‘regional’ policies is open to question. Governors in Northwest Russia (St. Petersburg, Republic of Karelia and Leningrad, Pskov, Novgorod and Kaliningrad oblasts) have shared these sentiments, arguing that decentralisation of federal responsibilities must be matched by the devolution of the means to fulfil the tasks assigned by the centre. As Mikhail Prusak, Governor of Novgorod, reported to Primakov in February 1998, the crisis of budgetary federalism has created a ‘vacuum of power’ within the regions in general and NW Russia in particular. The indistinct legal and constitutional position of regional associations within a transformed Federation, their voluntary status and weak legitimacy, all point to their inability to fulfil such a key function. Also open to question may be the emergence of tensions between IREAs with their recently created regional-based political associations (Fatherland, All-Russia, and Voice of Russia). These emergent parties are the political expressions of regional bloc consolidation and their strength can be gauged by the fact that they are in the process of cannibalising Federal parties (NDR, for example).

c. ‘tough vertical relations’

At the same time, Primakov called for the reestablishment of ‘tough vertical relations’ with the regions in order to maintain the integrity of the Federation. It is thus likely that Primakov’s favoured ‘vertical hierarchy of power’ will be reconstituted, with regional Dumas ‘electing’ governors from a shortlist of three candidates pre-selected by the centre. Yeltsin reinforced this message following his annual address to the Federal Assembly in an address entitled: Russia at the Threshold of the 21st Century: the situation in the country and the main directions of Russian Federal Policy. He stressed that slimmed down vertical structures of executive power and the demarcation of specific jurisdictions and powers between bodies of state power in the Russian Federation and bodies of state power in the constituent parts of the Russian Federation were needed.

d. ‘If you have been unlucky with a wife once …’

These discussions on structural changes to the federal architecture were supplemented by ideas to redistribute power between the executive and the legislature at the centre. By mid-November 1998 the constitutional court had ruled that Yeltsin would not be able to stand for a ‘second’ term in 2000. With this decision finalised, Yeltsin appears now to be ready to relinquish executive power, thus rendering any successor more liable to legislative oversight and control. In late November 1998 calls for constitutional reform had become widespread across the political spectrum. Yeltsin himself instructed the presidential administration to set up an expert council to draft proposals for constitutional reform, specifically for the creation of the post of ‘vice president’ to ensure a smooth succession of power should Yeltsin suddenly die. As Lebed argued: ‘If you have been unlucky with a wife once, that is no reason to give up the institution of marriage.’ Thus, political power is likely to be redistributed within the executive (with the appointment of a Vice President) and from the executive to the legislature in Moscow.

e. ‘Extremely tough demands regarding unnecessary expenditure’

Primakov also stated in March 1999 that ‘We have 300,000 representatives of federal bodies at present in the localities. This is a vast army. Many of these people duplicate each other … Extremely tough demands regarding unnecessary expenditure will be made of leaders at all levels this year.’ In April, this was re-emphasised when Primakov stressed that a radical cut in the number of federal officials working in the regions was needed.

6. ‘The political line in 1999 …’

‘I am insisting and will insist that you and not the Federal government have priority, that you come first. Then come ministers and all the rest. That’s how it is. So we will give you more independence than set down in the bilateral agreements we have signed. Let us gradually revise these agreements, one Region or Territory after another. You make your proposals and we [the Presidential Administration?] will look at your wishes as to how much more [independence] you want to claw back from the federal centre, and will do it.’

This suggests that Yeltsin envisages a gradual revision of bilateral treaties, allowing for the devolution of power through to constituent parts, with the centre acquiescing to periphery demands. The periphery sets the agenda, delimits the boundaries of competence and authority and the centre gives consent. Lebed summarised the new Federation as one in which: ‘Russia can be run by having the federal government retain the minimal powers, those which only Moscow can carry out, the regions must implement the rest of power.’

Transformation under these conditions raises self-imposed difficulties. There is clearly no consensus as to what is acceptable and what is off limits. As Yeltsin noted: ‘everything should begin with the regions, including proposals for foreign policy activity.’ The growing role of sub-Federal economic structures such as IREAs and regional political elites in Russian foreign policy formation is already notable. The Russian Ministry of Foreign Affairs acknowledged this reality by establishing a special unit on interregional affairs and promoted its institutional presence in regions most actively engaged in foreign trade. The ministry has also invited leaders from Northwest Russia to participate in federal trade delegations to the EU, and has supported the creation of a representative office for Russian regions in Brussels. In a hybrid-(Con)Federation the core might insist that foreign affairs, defence and security remain the competence of the President - all other powers would then be ‘devolved’ down to the regional blocs or associations. However, as the military is already largely regionalised and this process will intensify, it is likely that future conflicts will arise between centre and periphery over the issue of command and control of military assets and the fuzzy boundaries between competing conceptions of what constitutes ‘foreign affairs, defence and security’.

If we dismiss the draft constitutional accord debates of early and mid 1999 as largely declaratory and rhetorical, a cloak for Federal consolidation, then we ignore the importance and residual power of political discourse in uncertain and unstable environments. These debates do provide the context, the framework and possible template of realisable constitutional change. Moreover, if we argue that the ad hoc nature of the power relations between centre and periphery is a source of strength rather than weakness, we fail to take into account the extent to which centre-periphery disputes are emerging due to this supposed inherent ‘strength’. Constitutional violations (Federal versus constituent constitutions), arbitrary juridical interpretations (Federal versus local courts), economic disparities (tax/budgetary federalism), media, political and military regionalisation all diminish the power, authority, legitimacy and respect of Federal institutions within the regions. The limits of Federal power are reinforced by ad hoc and de facto arrangements. As the State Duma noted, Yeltsin’s proposal of 20 April 1999: ‘further weakens the already fragile foundations of Russian federalism, fails to meet Russia’s strategic national interests and is promoted solely by political considerations of the moment.’ The deputies added that as a consequence ‘the fast accelerating processes of dilution of federalism will get an additional impulse’. They argued that this will seal ‘the already dangerous asymmetry and substantial inequality in rights of Russian territories and citizens living there will ultimately pose a threat to the state’s unity as one of the fundamental principles underlying the federal state.’

It can be rather more convincingly argued at that constitutional change could lead to greater asymmetry within the Federation. The ad hoc and rather haphazard manner in which power is to be redistributed may lead to the unwitting drift into de facto confederalism. It represents an inherently unstable approach to centre-periphery relations, as it simultaneously presents regional governors with power and authority but deprives them of the means to exercise that responsibility; the flow of power to the regions is not yet to be mirrored by the requisite flow of finance.

2. The Dynamic and Challenge of Collapsed Regions?

There are at least three examples of ‘failed’, ‘collapsed’ or ‘collapsing’ regions within the Russian Federation that can be analysed – that is, three constituent parts that have declared ‘state of emergency’ status. Within each of them different dynamics are at work that are shaping the region’s relationship with the centre. They are important as their emergency status forces the pace and shapes the nature of Federal response and reaction. They create particular types of centre-periphery relationships that could prove enduring, transferable and so emblematic of post-Yeltsin politics. They highlight the Federal centre’s inability to contain or manage their crises and so explicitly undermine respect and faith in current Federal constitutional arrangements. They implicitly suggest that weaker Federalism or Confederal arrangements may prove more suitable and appropriate to the needs of centre and periphery power distribution and so stability. This analysis presupposes that collapsed regions currently act as knowing and unintended mediating agents of Federal transformation within the body politic. Their influence is not benign, restricted to their administrative borders, but malignant. They have the ability to undermine stability in contiguous regions, to reduce respect for Federal politicians, policies and institutions, and even provide destructive disintegrationist paradigms for other unrelated constituent parts. (See Fig 2: Possible Pathologies of Systemic Transformation).

a. Chechnya – ‘the logic of failed separatist stasis?’

In April 1999 Primakov reaffirmed that the North Caucasus was ‘a buttress of Russian statehood.’ It represents an important political and geo-strategic region for Russia and yet at its heart lies the most separatist, collapsed and destabilising of all Federal constituent parts. Chechnya is split internally between differing clans and war lords and represents a danger to stability throughout the ‘Russian’ North Caucasus.

Basayev, a Chechen field commander, has stated that his intended aim is to create a Confederation of the North Caucasus, from the Black to Caspian Sea. Such a Confederation would be underpinned by the imposition of Islamic rule and lead to the creation of a Russian Republic bereft of empire: ‘It is only in Russia that the cross rises above the vanquished crescent. But the crescent will never be vanquished.’ Analysts in the Russian Interior Ministry argue that such foreign policy pronouncements, including the creation of a Congress of the Peoples of Chechnya and Dagestan are utilised instrumentally to undermine President Maskhadov and represent a tactic within the clan struggle that is ongoing, rather than a realisable strategic objective. Whatever its intended intent, governance, the rule of law and legitimacy are lacking within Chechnya, creating serious security
 
 

problems for Russian regions in the North Caucasus, and policy dilemmas for the Federal centre. Karachay-Cherkessia and Dagestan – both have the potential to become a second and third ‘Chechnya’ in the North Caucasus - are of particular concern to the Russian Interior Ministry.

The role and relationship of Stavropol Territory towards Chechnya is very instructive. Kurskiy District of Stavropol Territory borders Chechnya and represents a destabilised cross-border zone. Various attempts have been instituted to close the administrative border between Stavropol Territory and Chechnya. The Governor has banned export and imports of goods from Chechnya and called ‘for the introduction of strict migration controls and strict passport procedures and the creation of other conditions to ensure the safety of the Territory’s population.’ To institute an international border would be to accept Chechen independence and the inviolability of the Federation de jure. Moscow has stated that the border has ‘special status’ as the government formally rules out state frontier status for this administrative border. Special militia regiments consisting of Cossack units supported by four helicopter gunships guard the border that is international in all but name.

Thus the centre’s relationship with its Chechen periphery illustrates the extent to which de facto arrangements can be instituted under the cloak of de jure constitutional propriety. It reveals the extent to which the Federal constitution can be implicitly discarded and indicates the need for new looser constitutional relationships between centre and periphery. The Chechen example points, in extreme relief, to the consolidation of ethnocracies within ethnic republics at the expense of Federal power structures and personnel. Moreover, such ‘brush fires’ are transferable templates of regional separatism and may lead - as the Russian analyst Andrei Shumikhin noted - to ‘the eventual destruction of Russian territorial integrity.’

b. Russian Far North – ‘a policy of merging failed regions?’

On April 18 1999 Governor Vladimir Biryukov of Kamchatka and Valentina Brovevich, Head of the Koryak Autonomous Area, agreed on the joint operation of the administrations of these constituent parts of the Russian Federation. In short, these constituent parts will merge, sharing a common legal space, cutting the number of parallel federal administrative structures by relocating those in Koryak to Petropavlovsk-Kamchatka. This will allow for budget savings to be made.

Here the dynamic for effecting change in centre-periphery relations here is clearly economic. The Russian Security Council’s interdepartmental commission on economic security, meeting in April 1999, acknowledged the crisis in Russia’s Arctic zone. The most acute problem is radioactive waste disposal for submarines and the nuclear icebreaker fleet and the related problem of environmental protection. Emergency situations regularly arise with irregular supplies of food and fuel to the Far North regions. The commission noted problems resulting from the uneven social and economic development in the region and difficult relations between local and federal budgetary and credit systems. The ‘solution’ appears to be merging peripheral regions to cut federal expenditure.

If this ‘solution’ were extended to other regions, particularly those that were poor, peripheral and had been united in the past, then a policy of consolidating ‘emergency’ regions might begin to emerge. The logic of larger units might see Krasnoyarsk merge with Khakassia (this was one region pre 1993), Sakhalin which is suffering from energy crises with the Maritime Provinces, and the elimination of Autonomous Areas as designated constituent parts of the Federation. At present this appears an ad hoc arrangement that has the support of a desperate periphery and cash starved centre – but it could prove the template for the merging of particular types of constituent parts. This process of integrating failed regions could become unstable and the issue ‘securitised’ should autonomous regions be integrated into republics. For example, would the Ust-Orda Buryat Okrug and the Aga-Buryat Okrug split from Irkutsk Oblast and Chita Oblast respectively to merge with the Buryat Republic?

c. Kaliningrad – ‘the logic of separatism by default?’

Kaliningrad, a region of critical geo-strategic and political importance, was particularly badly affected by the August 1998 meltdown. Customs and transit tariffs are two to three times higher than those in the rest of the Russian Federation. It has the highest prices in the RF and 85% of its goods and products were imported from the west and paid for in dollars. It has slipped 25 places on the inter-regional economic table and the bulk of the population had saved in dollars in SBS-Agro Bank, which subsequently collapsed. Some analysts have warned of a social explosion within the region.

Moreover, Lithuania’s accession negotiation talks with the EU and Poland’s integration into NATO have resulted in a Lithuanian refusal to replace the temporary visa free travel regime by a five year visa free travel agreement with the Russian Federation. As a consequence, Valeriy Ustyugov (speaker of the Kaliningrad Duma) has warned of the further economic isolation of Kaliningrad from participating in European-Baltic energy and transport projects. Involvement in these programmes is central to both Kaliningrad’s internal sustainability and its future ability to function as an instrument of Russian influence in the region. Effectively, Kaliningraders will need a visa to reach Russia.

One unintended consequence of the drift into a decentralised Federal system has been the perceived and real loss of control and criminalisation of some Russian regions. Kaliningrad, for example, is perceived to represent an unstable and poorly administered centre for criminal activity. In such a situation, weak governors could prove incapable of acting as competent partners for foreign states or companies. They may only be capable of acting as mediators between regional criminal groups and business empires (which could hold effective power but are fragmented through rivalry) and external actors. In this ‘collapsed’ or ‘failing state’ scenario, foreign state actors may prove to be the only neutral, legitimate arbitrators between interregional and centre–periphery disputes within the Federation.

In essence, Kaliningrad provides a clear insight into the extent of Moscow’s inability to set the actual (as opposed to rhetorical) regional policy agenda. Federal control over Kaliningrad is declining despite the wishes of Kaliningraders to integrate more fully into the Federation. As the Governor noted in his reply to charges that he was a separatist: ‘In fact separatism begins in the offices of public officials in the capital city. They have long been far removed from the country and are living in isolation.’ Thus, despite its best intentions, Kaliningrad provides a template for other more recalcitrant regions.

3. The Dynamic of Presidentialism and Contingency

The fall of the Primakov government in May 1999 was indicative of the measure to which the Federal political system reflects and reacts to more primeval power struggles between interest groups and sectoral interests within Russia. The power relationship between the unholy trinity of President and Presidential Administration (‘family administration’), government and duma charts the ebb and flow of power struggles between FIGs, political parties, the military-industrial complex, particular power ministries, the agro-lobby, regional elites and other key interest groups. The new Prime Minister, Sergey Stepashin, paradoxically illustrated this fact when in addressing the State Duma before deputies voted to confirm him in his post he stated that ‘the government is not a puppet body.’ Other analysts have argued that Stepashin will go the way of Primakov, as soon as he appears effective or at least becomes more independent of the President and slips the reins of Presidential Administrative control, he will be replaced. Stepashin is likely to be constantly competing for power within a divided administration, as Nikolay Aksenenko – ‘who is behaving as though the prime minister was not there’ - and other strong deputy ministers are promoted by the Kremlin to curtail his independence.

It is also predicted that lobby groups, particularly the ‘grey cardinals’ or oligarchs (such as Boris Berezovskiy, Vladimir Gusinskiy and Anatoly Chubais), are attempting to project their influence within the new government. FIGs, then, have emerged from their period of stagnation following the August 1998 meltdown of the banking sector. It is argued that they do not project a consolidated front but are internally divided into factions against each other. For example, Berezovskiy’s ‘party of power’ (lobby group) consisting of key protégés in the presidential administration (headed by Aleksandr Voloshin) and government (Aksenenko), is set to become a key actor on the Russian Federal political landscape. They are set to act as ‘counterweights’ to Chubais’ personnel choice for colonising key governmental posts. The political analyst Vyacheslav Nikonov has argued that the ‘party of power’ will do their utmost to strengthen their position so as to maximise their control of law enforcement agencies, financial flows and natural monopolies ahead of the next elections. This suggests that consolidation of competing factions within the oligarchy will enable them to influence the outcome of the presidential elections à la 1996 and so perpetuate their power.

In short, the atmosphere in Moscow is volatile, complicated by discussions on the nature of power distribution in the post-Yeltsin era, imminent impeachment threats and the looming Duma (December 1999) and presidential (July 2000) elections. The degree of volatility is reflected in the spectrum of speculation – the Duma elections may be postponed and combined with the presidential elections in 2000. Alternatively, Stepashin’s self-styled ‘government of professionals’ may prove an extremely weak non-political stop-gap, falling in August to allow for early elections in September or October 1999. The latter scenario suggests that the government will be unable to impose its authority on the federation, leaving the Federation Council and regional heads of administration strong political actors in the Federation. Under such circumstances, with Yeltsin by-passing the White House and playing to the Federal Assembly’s gallery, the strengthening of regions will not lead to the strengthening of the Federation, but rather to creeping autonomy and greater uncontrolled devolution.

Vaguer, more contingent and transitory factors will also prove crucial, such as the impact of, for example, the Belarus Union Treaty on Tatarstan’s constitutional aspirations. Into this category we can place the character, ability and personality of the new President in July 2000. His personal authority and powers of patronage will also shape the transformation. At present, Yeltsin and his administration appear to have consolidated their position within a weakened Federation. They removed Primakov from the political scene and marginalised his chances as a presidential contender. They survived the talk of impeachment and effectively suppressed the attempt and colonised new posts within the government. They appear ready to undermine another of the leading presidential contenders, Yuriy Luzhkov, leader of the Fatherland Movement and the municipal government of Moscow. If such analysis holds water, Yeltsin may either be grooming a successor in his own image to ensure a ‘continuity of power’ (but what in reality may amount to the guarantee of the ‘party of power’s’ interests), or is reconsidering the possibility of himself standing for a third time. If the latter option is realisable, then the political compromise will involve greater decentralisation to the regions and constitutional reform. These processes all add to the drift into de facto and perhaps, following constitutional change, de jure confederation. (These options and variants are outlined in Figures 1, 2 and 3).
 
 

Conclusions: ‘What is Russia’s Threshold?’

If the above analysis does capture the essence of transformation – if the pressures of presidentialism, failing regions and constitutional reform do prove to be catalysts for the emergence of a confederal Russia – what are the likely implications of Russian systemic transformation? How great do these pressures have to be before Russia crosses the ‘threshold’ from Federal to confederal state? How might the West respond to Russia’s systemic transformation or collapse?

• As the systemic crisis deepens the security implications and western policy options will become more apparent.

• In considering Russia’s systemic transformation, Western policy-makers have invariably been caught off balance by the direction, nature and rapidity of change within Russia over the last ten years. There appeared to be no certainties and precious few predictions that might light the way forward and allow policies to be co-ordinated and coherently applied.

• On past evidence, it is clear that any western options available will be limited, reactive in nature and largely focussed on supporting key leaders who are likely to promote their conception of what constitutes ‘stability’ and ‘security’ within the Russian Federation.

There are two clear categories of policy implications. Firstly, functional issues - how do foreign actors deal with a Russian Federation undergoing a renewed wave of systemic transformation? Secondly, can the west identify and implement policies that have the possibility of achieving realisable objectives? Does the West share a common consensus as to what constitutes desirable and realisable goals of its ‘Russia policy’? What are the policy dilemmas that need to be avoided?

These dilemmas will be particularly acute should Russian Federal systemic transformation lose coherence and result in hybrid Russian Confederal and collapsed variants. If both the Federal centre and the regions continue to weaken, then the Russian Federation and its foreign policy will lose coherence. In such a context the West may be drawn much more fully into Russian politics in order to fill the security and governance vacuum left by the effective collapse of Federal authority within the regions. Two Western policy dilemma alternatives are at once apparent should the long-term trends (economic weakness, structural/institutional ineffectiveness and demographic decline) continue and the short-term Federal characteristics (regionalism/corruption) become more pronounced. All of these dilemmas could coexist uneasily.

Western actors as arbiters in Russian centre-periphery disputes?

• Both the Federal centre and the regions may prove incapable of maintaining command and control of nuclear, chemical and biological assets. There is a danger that lack of financial payments to energy producing enterprises, nuclear as well as conventional, could result in the increase of environmental risks of spillages and pollution. As international environmental safety is at stake, foreign governments may seek to secure through ‘joint-venture finance’ the integrity of such plants.

• Such a move would effectively represent the ‘outsourcing and privatisation’ of Federal responsibility and functions to foreign states and further undermine and erode the role of Moscow within the periphery. This process has begun with, for example, UK and Norwegian financial support to improve the management of decommissioned Northern Fleet nuclear waste. Within the internal political environment such co-operation can be easily characterised as the thin edge of a western wedge. The CPRF-LDPR nightmare scenario of ‘Russia as proxy-state’, governed by the flip side of market economic reform as trans-national corporation colonisation of the Russian natural resource base (comprador capitalism), will become a reality – at least in communist-nationalist populist discourse.

• In these ‘failing state’ scenarios, foreign state actors may prove to be the only neutral legitimate arbitrators between inter-regional and centre-periphery disputes within the Federation. This in turn pre-supposes that western states can act in concert and share a similar assessment of Federal collapse and agree on joint policy goals.

• If a drift towards de facto confederalism is afoot, what are the policy dilemmas inherent within such a transformation? Undue recognition or legitimisation by western states of the ‘economic conglomerates’ may be construed by an overly sensitive core as a threat to the integrity of the federation. These regions may enjoy economic sovereignty, but would they be able to develop their own foreign economic policy? The indistinct legal and constitutional position of regional associations within a confederation would create difficult foreign policy dilemmas for foreign states. This, in turn, will be complicated if Western states fail to act in concert, share a similar assessment of federal collapse, or agree on joint policy goals.

• Alternatively, external legitimisation of particular regions that claim full sovereignty under the stress of a failed transition to a remodelled federation or confederation may actually help stabilise the internal security of particular Russian territories. But which foreign state would risk being accused of breaking up the RF?

• NATO – what of NATO’s continued strategic partnership and security relations with Russia? The Founding Act on Mutual Relations, Co-operation and Security between NATO and the Russian Federation and the Russia-NATO Permanent Joint Council help resolve tensions. But Kosovo highlights ease with which communist-nationalist factions can be promoted and democratic forces isolated. The possibility of a freeze in East-West relations would undermine attempts to stabilise the Russian economy and support systemic transformation. The squeezing out of western support will remove an important external mode of legitimisation for key Russian political actors and radically reduce the West’s ability to shape Russia’s modernisation paradigm.

Directorate General Development and Doctrine

Royal Military Academy Sandhurst

Camberley Telephone : (44) 1276 412346

Surrey Or 412375

GU15 4PQ Fax : (44) 1276 686880

England E-mail: csrc.dgd&d@gtnet.gov.uk