According to official data, in 2021, the number of Russia’s so-called “donor” regions—that is, not requiring subsidies from the state—stood at 12 out of 83, which is roughly half the number there was in 2006. Among all Russian regions, Tatarstan has always been among the leaders and enjoyed special status in its relationship with Moscow. But, in recent years, with the Kremlin’s push for centralization, the Tatar success story has been gradually fading away.
February 12, 2019: Russian president Vladimir Putin during his visit to Tatarstan’s capital, Kazan where he met with the republic’s current president Rustam Minnikhanov (center) and former president Mintimir Shaimiyev, who is now a state advisor to the president of Tatarstan. Photo: Aleksey Nikolskyi | Sputnik via AP.
In spite of various grand development schemes over the past two decades, Russia’s economic production remains highly concentrated in a small number of sectors and regions. According to Russia’s Ministry of Economic Development, in 2021, 56.3 percent of gross regional product (GRP) was created in just twelve regions of the country (of a total of 83 and two occupied territories). They are: the federal cities of Moscow and St. Petersburg; Moscow, Samara, Rostov, and Sverdlovsk Regions; Khanty-Mansi and Yamal-Nenets Autonomous Districts; Krasnoyarsk and Krasnodar Territories; and the Republics of Tatarstan and Bashkortostan. By 2024, the share of these regions is expected to rise to over 68 percent. These so-called “donor regions,” which pay more into the federal budget than what they receive from it, are thus worth taking a closer look at.
The significant centralization of political powers and fiscal revenues over the past two decades has resulted in the current system, where the income and rent generated by the regions is received by the federal government, which redistributes most of this money across the country. There are three main types of payments: grants—money collected and redistributed, according to a set formula, to reduce fiscal inequalities between resource-rich and poorer regions, and that regions are theoretically free to use; subsidies—money provided specifically to support budgetary functions that regions otherwise spend their own funds on; subventions—transfers allowing regions to carry out various functions that the federal government entrusts them with. In addition to the above three, a fourth category, “other transfers,” exists, and allows the government discretionary spending, which has grown significantly during the pandemic. While centralization has curbed the power of local elites, in case of the “donors,” it allowed them to extend their influence as key intermediaries of power and money.
The Republic of Tatarstan has consistently been a major donor to the Russian federal budget. Until 2020, when, due to the double whammy of the COVID crisis and a global oil glut, its revenues sharply fell, it was one of the top five net contributors, with roughly 500 billion rubles ($6.3 bn) of payments in 2019. In 2020, like all “donor” regions, the republic experienced a significant drop in its budgetary revenues due to decreased taxes (both on income and mineral extraction), for which it was partially compensated from the federal budget in 2021 in the amount of 40.9 billion rubles ($520 million). And, according to Tatarstan’s 2022 draft budget, the region expects additional aid from the federal government this year—53.8 billion rubles ($710 million), even as oil prices are set to rebound. To put this into perspective, the Russian government plans to spend 758 billion rubles ($9.6 bn) on budgetary grants to all beneficiary regions in 2022.
What makes Tatarstan a success story amidst Russian regions’ mostly grim record of economic and political performance?
Oil benefits
One of the key factors is that Tatarstan is an oil-rich region, one of the largest in Russia in terms of oil production—second only to Khanty-Mansi Autonomous District. It is home to Tatneft, one of Russia’s top ten oil companies, which currently produces more than 500,000 barrels of oil per day and plays a crucial part in the republic’s economy (59 percent of its budget revenues comes from oil and gas; 30 percent is generated by Tatneft). The region also boasts other important industries, such as machine-building, petrochemicals, and, most recently, a budding high-tech sector cultivated around the Innopolis Special Economic Zone, with a university and technology park.
Under Russia’s current taxation system, the federal budget receives from the regions all mineral extraction taxes and a portion of income taxes. In the past three years, out of all tax revenues collected in Tatarstan, 30-35 percent have stayed inside the region, which is much higher than in the Khanty-Mansi region, which produces little else than hydrocarbons and keeps only 8-10 percent of its significant tax receipts. The difference highlights how Tatarstan benefits from its more diverse income portfolio, whereas almost the exclusively hydrocarbon-focused Khanty-Mansi loses most of its income to the federal budget.
What makes the Tatar economy strong, however, also makes it vulnerable. During the 2014-2015 economic crisis, when Russia’s GDP fell by almost 4 percent, Tatarstan also suffered, but still showed minimal growth. Before the pandemic, the republic’s investment rate stood at 25.9 percent of GRP—significantly higher than in Russia as a whole, but still below the average of emerging countries (and has since fallen). In early 2020, the region put forward an ambitious plan of doubling its GRP to five trillion rubles ($63.2 bn) and its own revenues to 600 billion ($7.6 bn) by 2030, but this was undercut by the pandemic-related setback and, in spite of the 2021 recovery, may not materialize as quickly as the Tatar authorities would hope.
The rise and fall of special status
Another factor in Tatarstan’s ability to successfully pursue its interests is the special status that the republic has carved for itself in Russia’s power system. Elite politics has always played a key role, both in Soviet times and now.
Following heavy industrialization overseen by local Communist Party leader Fikret Tabeyev in the 1960s, the region’s politics has been connected to “liberating” the fruits of the Tatar economy from Moscow’s grip and keeping control over key companies in the hands of the Tatar elite. The first president of post-Soviet Tatarstan, Mintimer Shaimiev (in office from 1991 to 2010), a prominent political figure of national status, continued this line. In March 1992, in the wake of the USSR’s dissolution and against the Russian Constitutional Court’s ruling, he held a referendum on Tatarstan’s sovereignty. With a turnout of 81.7 percent, 61.4 percent of Tatars said yes and the republic proceeded to proclaim its independence from Russia. This threw off balance the politics of then-Russian President Boris Yeltsin, who had to renegotiate the federative agreement with the rebellious region to prevent an internal “parade of sovereignties” and further disintegration of the country. As a result, the agreement “On delimitation of jurisdictional subjects and mutual delegation of powers between the state bodies of the Russian Federation and the state bodies of the Republic of Tatarstan” was signed in 1994.
Tatarstan thus became the only Russian region that was allowed to promote indigenous national culture beyond its borders, open an official mission in Moscow, and have two official languages—Russian and Tatar. It was also allowed to pursue its own foreign policy, which it did, in the 1990s, focusing on large Muslim nations—Turkey, Egypt, Iran, the United Arab Amirates. While it was later curbed by the Kremlin, Tatarstan has remained an important actor in Russia’s relations with Central Asian countries, especially Kazakhstan and Uzbekistan.
This “special status” agreement was renegotiated in 2007 under Vladimir Putin, stripping Tatarstan of many benefits, such as its right to levy taxes, but preserved the status of the Tatar language. Local elites also managed to maintain control over the republic's economic assets. In 2010, Shaimiev’s handpicked successor, Rustam Minnikhanov, became Tatarstan’s new president, ensuring continuity of the republic’s relationship with Moscow. However, following the 2011-2012 mass protests and the 2014 annexation of Crimea, the Kremlin’s domestic policies took a much more authoritarian turn—including strengthening control over regions. In 2017, the vestiges of Tatarstan’s special status were fully removed when the agreement expired, even as the republic pleaded to Putin for an extension.
The same year Tatarstan was at the center of a legal controversy over the claim that its ethnic Russian residents were forced to study Tatar language—a development that followed Putin’s statement that it was “impermissible to force someone to learn a language that is not [his or her] mother tongue.” This prompted a backlash by the Tatar elite, and Minnikhanov even issued veiled threats to Moscow, reminding that school directors helped organize Tatarstan’s elections and that the Prosecutor General’s checks of schools ordered by Putin may undermine his authority. (It is noteworthy that Tatarstan has consistently delivered pro-Kremlin votes—most recently, 82 percent for Putin in 2018, and 79 percent for United Russia in 2021). But eventually, Tatarstan had to cede: since then, the Kremlin has forced a new school curriculum on all autonomous republics.
In 2021, Tatarstan lost another symbol of its special status when Russia adopted a new law on public administration, forbidding, among other things, that regional governors use the title “president.” At the time, Tatarstan’s leader was the only one using it, even as this had already been prohibited by a 2010 law, but the region was allowed to ignore it. While, admittedly, this had much less direct impact on the lives of residents as taxation or language education, it was nonetheless regarded as a feature of Tatar political and national identity.
Arguably, the law also had other, more consequential provisions—e.g., a larger say for the federal government in appointing key regional officials as well as a growing role for prosecutors, who are appointed by the president, in regional legislation. Tatarstan’s parliament, where the pro-Kremlin United Russia holds a significant majority, rejected the law, as did most Duma deputies from Tatarstan, but, in the end, it didn’t matter. The law also underscored the federal center’s varying attitudes to different “donor” regions. While they are all “special” in the Kremlin’s eyes due to their donor status, the federal center might perceive Tatarstan’s claims for special arrangements as political and therefore unnecessary in the current centralization course. At the same time, the claim for preserving the current budgetary arrangements voiced by energy-rich, sparsely populated “nesting doll” regions (conglomerates, such as Tyumen or Arkhangelsk Regions, which contain autonomous districts, e.g. Khanti-Mansi, Yamal-Nenets, or Nenets, and enjoy the benefits of a special social and economic program lobbied by former Tyumen governor, now Moscow Mayor Sergei Sobyanin in 2004) that have little identity of their own, could be seen as purely economic and, as such, permissible. Whatever the case may be, such defeats diminish Tatarstan’s bargaining power.
Some observers fear that in the near future, the federal elite will push Tatarstan to give up control over key economic assets. So far, the Tatar government has retained control over Tatneft, which is sometimes contrasted with the fate of Bashneft, the flagship oil company of neighboring Bashkortostan. In 2009, the latter was acquired by the Russian billionaire Vladimir Yevtushenkov only to be wrestled away from him five years later by the state giant Rosneft in a dubious legal case. As a result, Bashneft was folded into Rosneft’s operations, with its production artificially suppressedand profits funneled out of the region. This arguably also left the Bashkortostan elite significantly more dependent on Moscow’s goodwill compared to Tatarstan. But this advantage might already be slipping away.
In 2021, TAIF, Tatarstan’s major investment holding with assets in oil and gas processing and petrochemicals, telecommunications, construction, and other industries, merged with Sibur, Russia’s petrochemical giant (whose main shareholder is Russian billionaire Leonid Mikhelson with a 48.5 percent stake; his business partner and close Putin ally Gennady Timchenko holds another 17 percent), in a deal that was likely heavily lobbied by its political backers, among them Timchenko.
While, according to some experts, some people in Putin’s circle wouldn’t mind taking over Tatneft as well, others don’t deem such a scenario as realistic. But if Tatarstan loses Tatneft, it will be likely the most consequential blow to the republic’s autonomy.
Casting a wide net
Due to the Kremlin’s relentless centralization and Tatarstan’s own strive for a distinct identity, Tatar leaders have been building relations at the federal level and networking with other regions to grow influence and boost their positions vis-à-vis Moscow.
Minnikhanov spearheaded this drive, aided by his popularity as a tough hand on crime and provider of public services, plus Tatar leaders’ reputation as effective managers. These efforts paid off. Marat Khusnullin, who, as a minister in Minnikhanov’s government, had overseen a considerable construction boom in the republic, was recruited by Moscow in 2010, and, since 2020, has served as Deputy Prime Minister for Construction and Regional Development. Another Tatar transplant is Irek Fayzullin, Minister of Construction and Housing and Communal Services, who was, until 2020, the republic’s chief architect. The relationship with the federal center works both ways: the veteran Duma deputy Oleg Morozov (United Russia party), not a Tatar himself, but his wife is, ran for office as a representative of Tatarstan and now heads the powerful Control Committee (oversees the executive branch).
Members of the “Tatar party,” as they are sometimes referred to, have continuously held top government positions in Russia. Under Putin’s early presidency, Tatarstan’s Farit Gazizullin served as Minister of State Property Relations; Elvira Nabiullina, a Tatar from Bashkortostan, was first appointed as Minister of Economy and, since 2013, has worked as head of the Central Bank, becoming one of Putin’s most trusted technocrats.
Minnikhanov also used Tatarstan’s wealth and influence to expand horizontal networks, acting as a quasi-leader of Turkic and Sunni Muslim groups in the Altai Republic and the Altai Territory, two small, poor south Siberian regions, and Bashkortostan, which has a significant Tatar minority. His drive for horizontal connections is partially aided by the federal government’s ongoing public administration reform and its novel focus on urban agglomerations. New development policies seek to pool resources and allow richer regions to extend financial networks to urban settlements in other regions—e.g. from Kazan to Volzhsk, a suburb in the neighboring Republic of Mari El—and thus boost their influence. These development projects will be subject to approval and supervision by the federal government, but ostensibly they allow the Tatar government to have a degree of control over their neighbors.
On an international level, Tatar leaders continue to engage in soft diplomacy—from promoting Tatarstan as an Islamic finance hub to organizing various international events, such as the 2019 WorldSkills vocational competition, held in the region’s capital, Kazan, or hosting soccer games of the 2018 FIFA World Cup, held in Russia.
Lines of defense
According to the Russian Constitution, Russia is federation, but, as political analysts have recently been pointing out, also a de facto unitary state. This is at least one of the reasons why, when Tatar leaders contest federal legislation hurting their interests by appealing to the country’s Basic Law, their claims fall on deaf ears. Under these circumstances, the Tatar elite developed two conflicting views on how to pursue their interests better in Russia’s vanishing federalism. One view relies on the tradition of Tatars integrating with the federal elite and trying to influence politics from within.
The other view, espoused by Tatar nationalists, holds that the Tatar elite have lost their ability to represent the republic’s interests in Moscow; therefore, a more pronounced opposition politics is needed. This means that, at the very least, Tatarstan should not put (nearly) all of its political eggs in United Russia’s basket, as it does now.
For now, the first faction seems to have the upper hand in Tatarstan’s politics. Minnikhanov did not publicly comment on that law that strips him of a presidential title, perhaps in the hope of running for office again, once his current term expires. Tatarstan continues to promote its brand as a leader of innovation (last year, it took third place in Russia’s ranking of most innovative regions, ceding to only Moscow and St. Petersburg) and serve as a testing ground of digital governance policies. It was the first region to introduce lockdown digital passes in 2020 and QR codes as vaccination proof in 2021, although the latter were quite unpopular. As public grievances accumulate, it would not be surprising if interest in opposition structures has grown in the region, given that the regional elite feels increasingly threatened by outsiders.
But civic activism or louder opposition rhetoric, as recently seen in the Komi Republic, another Russian region with a distinct cultural identity, would require significantly more open institutions and honest votes than Tatarstan has produced so far. And if there is something that both Moscow and Kazan seem to be in full agreement on, it is that liberal democracy is better be avoided.
