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. Last Updated: 07/27/2016

INSIDE RUSSIA: Fighting Bureaucracy With Bureaucracy




Not a week had passed since the inauguration of President Vladimir Putin when the shot of a presidential decree was aimed at the governors. In a flash, the authoritarian regional leaders were told they could be recalled - and that they would have some kind of governors-general looming over them.


In order to understand how effective this new method for treating the governors' arbitrary rule will be, we should first look at the reasons for that arbitrary rule.


There is a powerful economic basis for the governors' actions: the system of payments. Every entrepreneur must pay taxes. In regional budgets, taxes as a rule are paid through barter. And prices set for goods used in barter can be inflated.


This creates an opportunity for abuse of the system. An enterprise whose director is friendly with the governor can lower its taxes to a laughably low percentage, by paying them with hard goods valued at an inflated price. An enterprise that is on the outs with the governor will be forced to pay its taxes with real money.


The system is so cleverly constructed that arbitrary rule does not entail stifling a business; it entails allowing a business to survive. It's clear that on this level there is no outcry - no one protests loudly when his taxes are lowered. But when a business is stifled - what can it complain of? That it is forced to pay its taxes? Any governor so accused will throw up his hands and say, "The slanderers want to get rid of me because I'm complying with the law!"


The same kind of "rules" also govern the redistribution of property. Of all the factories seized during the past year, not one of them was seized without the approval of the governor.


There are many standard ways to seize an enterprise. You can sue it for recovery of 3 1/2 kopeks and bankrupt it. You can buy 20 percent of the shares and freeze the remaining 80 percent, call a shareholders meeting and name a new director. You can buy off the members of the board of directors, call a meeting of the board and fire the general director. All of these methods share two main features. First, they require the governor's cooperation, otherwise the OMON paramilitary police will not be available to escort the former owners from the premises of the business in question. Second, these methods are ostensibly perfectly legal, since each time the OMON troops act, they do so in accordance with the decision of a judge - a judge controlled by the governor.


But here's the question: If a governor-general is going to stand over the regional governor - and those very governors can be recalled - what will this change in terms of arbitrary rule? Will this change the system of payments? Will it lessen corruption among judges?


The obvious answer is no. It will only increase the number of instances in which arbitrary rule can be applied.


There is, however, a mechanism of control over the governors - they're called elections. I won't argue here about whether that mechanism is working: it isn't. But it is clear why it's not working: If an opposition candidate is to win, he's got to be financed. But anyone who finances him will find that their electricity bills shoot up three times, or their water will be cut off. These days, elections in the regions have turned into an instrument for squeezing capital out of large taxpayers.


But if you can't eliminate arbitrary rule even with the help of elections, who says you can eliminate them with the knout?


There's only one thing you can do with the knout - ensure that any seizure of property comes with the Kremlin's sanction. It's clear why the Kremlin wants to do this. But we shouldn't adopt centralized arbitrary rule to strengthen the rule of law.


Yulia Latynina writes for Segodnya.