Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

INSIDE RUSSIA: Regions Look To Hamurabi For Crisis Plan




Those who say that Russia still does not have an anti-crisis program are mistaken. There is a program, in the form of dozens of draconian resolutions implemented not by the federal government but by the regional authorities.


Measures taken so far can be split into two groups. The first comprises those that are designed to take control of financial flows. The republic of Kalmykia, for example, has announced that it will not pay taxes to the federal budget, and the republic of Sakha has created its own gold reserves. The republic of Chuvashia has started to set up its own regional clearance system; the authorities in the Samara region have decided to create a banking pool; the republic of Buryatia has stopped local branches of Moscow banks transferring payments beyond its borders.


The governors' determination in their dealings with the banks contrasts starkly with the helplessness of the federal authorities, and will probably bring about the collapse of the existing branch banking system run by the oligarchs. Filling the gap, there will be a revival of small regional banks that will channel budget funds, regional money surrogates and preferential credits destined for the construction of new homes for the governors' relatives.


The second group of laws controls the market by regulating prices, as in the Voronezh and Stavropol regions, and the republics of Sakha, Dagestan, Chuvashia and Northern Osetia, and by banning the movement of food products out of the region without the local administration's authorization, as in the Vologda, Bryansk, Kaluga, Tula, Samara and Omsk regions, and the republics of Chuvashia, Dagestan, North Ossetia and Udmurtia.


For those who remember something from their Ancient Oriental history classes, the laws of Hammurabi, the sixth Amorite ruler of Babylon, illustrate how such measures operate.


"If an axe weighs three minas, then its hiring price for one month is one silver shekel. If the axe weighs one mina then its hiring price for one month is half a silver shekel," was one law.


A society built on such economic principles has been variously characterized through the ages as "barbarity" (Aristotle), "despotism" (Montesquieu), "the Asian means of production" (Karl Marx) and "a totalitarian irrigational economy" (Karl Wittfogel). The main difference between this and the market economy is the absence of the formation of free prices, while the main difference from the socialist economy is that personal wealth and private ownership are fully acceptable within its framework, but only as an attribute of power.


While banks and free trade are the primary targets of the governors' attacks, industrial enterprises have hardly been affected. This is partly explained by the fact the governor of a region does not neccessarily call all the shots. Key decisions are often made by the main local tax-paying enterprise. As a rule it is more correct to divide Russia's regions not into "red" and "democratic" ones, but into those ruled by the governor and those ruled by the local aluminium plant, metal works or oil company.


One way or another, the major industrial enterprises are allied with the governors and have an interest in ensuring that shares belonging to the federal authorities are transferred to the regional property fund. So it is safe to say the next offensive by the governors will target federal property.


Yulia Latynina is a staff writer for Expert magazine.