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. Last Updated: 07/27/2016

A New Breed Of Governors Brings Hope

Last Friday, two important figures -- the head of the Russian president's administration, Nikolai Yegorov, and the head of the British chocolate company Cadbury -- visited the small regional center Novgorod, which lies between Moscow and St. Petersburg.


The Novgorod governor, Mikhail Prusak, 36, was with Yegorov during most of his visit. At a certain moment during the meetings, however, Prusak quietly got up from the table of the presidium and disappeared for a meeting with the head of the chocolate company.


I am convinced that not many Russian governors today would leave their Kremlin guests for the sake of meeting with a Western company. The visit of such a high-ranking guest would normally require the constant presence of the local authorities.


The purpose of Yegorov's visit is not hard to figure out. Not long ago, he himself was governor of the Krasnodarsk region, one of the largest territories in Russia. Yegorov is actively visiting the regions in order to sound out the electorate's mood and work with the governors before the elections.


The visit of Cadbury to Novgorod was not linked with political events. This September it will open a large chocolate factory in which it has invested $135 million for construction.


The Novgorod governor thus demonstrated last Friday his ability to skillfully balance political obligations with economics.


In the past few years, a new generation of politicians like Nizhny Novgorod Governor Boris Nemtsov and Prusak has arisen in Russia. These politicians are independent enough to lead their own policies. Furthermore, both were appointed by Yeltsin in 1991 and re-elected at the end of last year.


What most differentiates the two governors is their degree of fame. The Novgorod governor, however, is not experiencing any inferiority complexes on that account. "Nizhny Novgorod is known the world over for its reforms, but it is little known to the wide public that in Novgorod, we have money for investment," Prusak told me recently. He added, "Fame is also capital, but I personally like active money, which is invested in the region."


Most surprisingly, this small region with a population of 800,000 received $470 million in foreign investment last year. This is a quarter of all foreign investment in the Russian Federation for 1995. Aside from Cadbury, Stimorol is building a factory in Novgorod at a cost of $50 million.


Prusak has something to be proud of. He is drawing investment away from such large centers of attraction for foreign capital as Moscow, St. Petersburg and Nizhny Novgorod. How? Quite simply, the regional legislators have adopted laws that free investors from local taxes until their investment projects are repaid but not for a longer period than can be technically and economically justified. Moreover, this privilege is extended to Russian investors.


Furthermore, Prusak is talking with more significant Russian industries from different regions, including Moscow, and promises to provide investors with personal guarantees. Such policies also bring money into the region.


Prusak is a clear example of a new generation of regional leaders who know not only how to fight for power but for the influx of capital. And this inspires hope.





Mikhail Berger is economics editor for Izvestia.