Kozak's New Macroregions

With one month remaining before the presidential election and the subsequent reshuffling of the government, Regional Development Minister Dmitry Kozak, who is one of the people closest to President Vladimir Putin, has announced a host of initiatives that have been called a "new concept for regional politics."

The proposals include a plan to give the regions maximum authority in areas that have a direct impact on the local investment climate. They grant the regions 300 million to 4 billion rubles from the federal investment fund and stipulate the establishment of between seven and 10 economic "macroregions." These regions would be similar to the seven current federal districts but would focus exclusively on economic issues.

Allocations from the government investment fund were promised without clearly assigning the priorities. Given that the plans are still in the development stages, it would seem that the government's premature announcement is driven largely by a political motive -- the desire to win votes. Moreover, the pledge to give an average of 1 billion rubles to every region is reminiscent of United Russia's 2007 pre-election promise to give 100 million rubles to each city with a population of over 1 million.

But what are there reasons for returning to a type of centralized economic planning similar to the way Gosplan when it tried to develop the regions during the Soviet period? For one, it would help put the regions in order: Regions typically have dozens of their own development strategies which, as a rule, lack funding and end up going absolutely nowhere. Kozak's plan is for the Regional Development Ministry to define the composition of each region and assign its economic priorities.

In addition, the network of macroregions will be capable of executing administrative tasks. While today's seven federal districts would remain under presidential authority and tied to the siloviki, the new macroregions would fall under the authority of the prime minister and be managed by the state's social and economic agencies.

This type of division of authority was discussed as far back as 2000 -- when the appointment of ministerial envoys to the regions alongside the presidential ones was proposed -- but the idea was quickly shelved. Now the expected formation of a government with two centers of authority following this election might very well revive the concept.

Kozak's recent initiatives coincide with statements from Finance Minister Alexei Kudrin, Unified Energy System CEO Anatoly Chubais and other "liberal economists" about the need to soften Russia's foreign policy stance in order to attract investors. Putin has already indicated support for Kozak's new system for the distribution of funding and the financing of investment projects. That means there is a high probability that at least some of Kozak's proposals could become a reality. The extent to which authorities are ready to implement Kozak's plans might become clear as early as Feb. 14, when a Cabinet meeting is scheduled to discuss federal priorities in the regions.

Or Kozak's initiatives could be part of a pre-election agreement between the central authorities on the one hand and the regional political and business elite on the other hand. It is worth noting that Kozak, as the point man for regional development and one of the most effective managers on Putin's team, now accompanies the president, the prime minister and the likely presidential successor, First Deputy Prime Minister Dmitry Medvedev, on their increasingly frequent visits to the regions.

Moreover, different options for the transfer of powers from the federal to the regional level -- along with the funds necessary to back them up -- are under consideration in connection with a bill designed to increase the regions' self-sufficiency.

The idea of granting more power to the regions -- including greater authority to develop independent investment policies -- is nothing new for Kozak. But as Kozak himself has noted, his proposals have not yet received final government approval. His decision to voice them now can be viewed as either a bid for the job of first deputy prime minister should Medvedev become president and Putin prime minister -- or, at the very least, a play for some kind of consolation prize if Medvedev chooses someone else for the first deputy prime minister post.

Nikolai Petrov is a scholar in residence at the Carnegie Moscow Center.