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. Last Updated: 07/27/2016

Regional Rule No Longer in Yeltsin's Hands

Last week was marked by the government's official announcement that it would make good on its debts to pensioners. And by all indications, it has kept its promise. It has also promised to take harsh measures against regions that ignore the demands of federal authorities to collect payments for the State Pension Fund.


The government recalled that the state of the pension fund depends not only on Moscow but on how local authorities collect pension dues from the enterprises on their own territories. The federal authorities also wanted to show they were ready to use all their levers of influence on governors.


What kind of levers do they have at their disposal? The most important is of course the financial flows from the federal budget to the regions. Of the 89 constituent members of the Russian Federation, only nine fully provide for their own budgetary and extra-budgetary funds. The rest more or less receive subsidies, or transfers, through various channels from Moscow. There are more than 20 such channels such as the road fund, pension fund, employment fund and others.


The threat of closing all these channels or reducing the flow of money is entirely real, and one the regional leaders cannot ignore. But President Boris Yeltsin's threat to "strictly punish" those who try to use the pension money from Moscow to solve local problems will not be all that easy to carry out.


The failure to oust the governor of the Far Eastern region of Primorsky Krai, Yevgeny Nazdratenko, showed that the Kremlin does not have enough power to replace an elected governor.


Nevertheless the governor of the Kemerovo Oblast, Mikhail Kislyuk, seems to be the next candidate for replacement. Kislyuk was named by Yeltsin and was long considered a democratic leader and supporter of the party in power. The constantly worsening economic situation of this enormous coal region and clear incompetence of the governor, however, caused him to fall out with the Kremlin. Kislyuk is now the last of the appointed governors in Russia. And this means that he is the only one whom Yeltsin can remove from his duties by decree.


The debt of industries to the budget in the oblast is around 13 trillion rubles ($225 million), of which 4 trillion rubles is owed to the Pension Fund. At the same time, the region is making enormous demands for funds from the federal budget.


The Kremlin has simply grown tired of sending money to support the miners and the coal industry. Several trillion rubles in subsidies and foreign credits have been sunk into the Kemerovo Oblast without any clear results. Social tensions in the oblast are growing, and the situation is beginning to resemble Primorye.


The Kemerovo governor is likely to be dismissed in the near future. And with him an era of governors appointed by the Russian president will be gone. Several analysts have even said Aman Tuleyev, the well-known communist and former nationalities minister, could be his replacement. At one time, he was both Yeltsin's and Kislyuk's main opponent. It is namely Tuleyev who is likely to be elected governor of Kemerovo Oblast in December. This only goes to prove that there are no permanent allies but only permanent interests.





Mikhail Berger is economics editor of Izvestia.