In this week’s roundup: one of the somewhat overlooked developments this week was an idea, introduced by the Economic Ministry, to divide Russia into 14 macroregions. Some experts view it as a precursor to potential constitutional reform. In the follow-up discussion of the presidential aide’s controversial proposal to seize corporate “superprofits,” the government reframed the idea as “voluntary investment.” Finally, the Moscow election campaign has hit the home stretch, with the incumbent mayor promising Moscovites all kinds of perks.

 

This week, Russia's Economic Development Ministry led by Maxim Oreshkin (above) proposed to divide the country into 14 macroregions. Photo: Mikhail Metzel | TASS.

 

  1. Redrawing the Map of Russia? 

The story: Through its Strategy on Spatial Development initiative, the Russian Economic Ministry has suggested dividing Russia into 14 macroregions. These regions, analogous to the preexisting standalone Far East and North Caucasus regions, would be formed on the basis of established socioeconomic relations.

  • The ministry assumes that these divisions—reminiscent of federal districts, but with larger fragmentation—will provide better conditions for interregional relations. Each is expected to have at least one major center of economic growth as well as infrastructure that ensures connectivity between regions and with international markets.
  • The plan aims to fulfill the ministry’s goal of increasing exports almost 30 percent by 2025—about 85 percent of the increase should comprise non-commodities, including food, chemical products, timber, and engineering products.
  • The president of the Siberian Federal District Sergei Menaylo insists on a single macroregion in Siberia rather than the proposed three of South Siberia, Yenisei, and Baikal. The draft will be considered by parliament in September and a policy will be confirmed in November. [Kommersant]

What for?

  • Dmitry Gudkov, opposition politician: The new superficial bureaucratic structure will be managed by Putin’s appointees. The only goal of the new proposal is to “domesticate” a new generation of officials. The argument about economic growth is thus an old fairy tale, as if the only thing standing in the way of economic growth was the lack of 14 macroregions. [Ekho Moskvy]
  • Valery Soloviev, economist: In the context of other steps undertaken by the Kremlin, the idea of dividing Russia into 14 economic macroregions is in essence a preparation of the constitutional reform, implying that the country will be comprised of 14 political macroregions. Other ideas include the elevation of the status of the State Council or the introduction of the position of Vice President. [Ekho Moskvy]

 

  1. How to Ensure “Voluntary” Investment

The bargain: At a meeting with the Russian Union of Industrialists and Entrepreneurs (RSPP), Presidential Aide Andrei Belousov softened the claim in his letter to Putin, which vied for the withdrawal of 500 billion rubles in what Belousov deemed “superprofits” from companies in the metallurgical and petrochemical industries.

  • Together with First Deputy Minister of Finance Anton Siluanov, Belousov assured the companies that their taxes will not be raised. Instead, the companies themselves will “voluntarily” invest funds into national projects for infrastructure development, ecology, and the digital economy—all projects linked to Putin’s May Decree. [RBC

What it means:

  • Kirill Rogov, political scientist: The biggest expenses for the oligarchs who control the oil and gas industries are in processing raw materials. Logically, the government should not impose additional taxes on production, as Belousov is proposing, but rather use their rental payments to fund pension expenditures.
  • As in most authoritarian regimes, it’s much simpler and more profitable for the government to impose formal taxes on the poor while resolving issues with business entities informally, i.e. “voluntary investment,” instead of coercion. [Novaya Gazeta]
  • Andrei Kolesnikov, Moscow Carnegie Center: The government lacks money, and given the hugely unpopular pension reform, it’s impossible to ask Russians to wait longer for necessary social programs. Taking resources from the military or the FSB is off limits, so the state has turned to the oligarchs, whose umbilical cord to the government has never truly been severed.
  • Though Siluanov is masking this “voluntary investment” as a public agenda, it has nothing to do with the public. This is not about development, but about how to withdraw money from the economy, and then spend it as the state wants, regardless of what the economy needs.
  • The involvement of Belousov and Sulianov is also indicative of a growing trend whereby loyalists compete for the attention of their patron (Putin), who does not give preference to either side and does not make a final decision, leaving them to sort it out amongst themselves. [Carnegie.ru]

 

  1. The Most Predictable Election

The story: In the runup to the Moscow mayoral election scheduled for September 9, the campaign for a bigger turnout is reaching new levels of creativity. For the first time, people are being lured to the voting stations with promises of free bottles of champagne and free concert tickets.

  • Incumbent mayor Sergei Sobyanin’s press secretary says that neither the mayor’s headquarters nor the Moscow authorities have a stake in these campaigns.
  • Still, Sobyanin tweeted in August that, upon reelection, the first month of travel on public transportation in the city would be free. He has also received various celebrity endorsements, as well as the backing of figures with close ties to Putin. [Kommersant]
  • Sobyanin also recently announced that he would implement his own version of the pension reform and essentially cover the losses expected by future pensioners due to the increase in the retirement age. [Vedomosti]
  • Out of 33 hopefuls who submitted paperwork to be registered as candidates, only four were eventually confirmed: Sergei Sobianin, Ilya Sviridov (A Just Russia), Vladimir Degtyarev (Liberal Democratic Party), and Vadim Kumin (Communist Party). None of the members of the non-systemic opposition has been registered this time. [Meduza]

Experts weigh in:

  • Alexander Baunov, Moscow Carnegie Center: There is no real competitive election in Moscow because it’s impossible to separate the city’s agenda from the federal one. It is difficult to create an election centered on transportation, sidewalks, and parking rather than on pension reform and the Donbas.
  • The Moscow authorities are carrying out a broad reform of urban space, which was noted during the World Cup, but this doesn’t necessarily lead to a free, competitive electoral policy.
  • It is a pity that the Moscow (and federal) authorities did not dare to allow for the same type of competition as in previous elections. The upcoming vote is a far cry from 2013, when a real oppositionist, Alexei Navalny, threatened to overthrow Sobyanin’s administration, active since 2010. [Carnegie.ru]
  • FoRGO (Foundation for Development of the Civil Society): all 2018 elections will follow a predictable scenario, especially in Moscow and the Moscow region, where there is no real opposition to the current leaders. Besides, political competition is oftentimes not even demanded by the public, as people treat elections as a formality. [Vedomosti]

 

Other stories that mattered this week (in Russian) 

  • Country of Lost Theories: What the pension reform tells us about the future of the Russian regime”: Alexander Baunov discusses three basic theories that are often used to describe the Putin regime and concludes that none of them applies, arguing that Putin’s slight softening of the unpopular pension reform shows that he is not planning to rule the country forever. [Carnegie.ru]  
  • Giving Ground: Why Doesn’t Moscow Negotiate on Sanctions?”: Vladimir Frolov, expert in international affairs, writes that given the Kremlin’s narratives and propaganda regarding the U.S. sanctions, the only way out of the “sanctions dead-end” it sees in ignoring the real problems and hoping for the best. [Republic]
  • Empty Throne: Why President Putin Creates Political Uncertainty”: Journalist Konstantin Gaaze posits that under the veil of his unavailability or political uncertainty (such as the scare over the government’s threat to seize corporate “superprofits”), Putin’s outlook of the political material that he will be dealing with in the upcoming six years is in fact clear. [Carnegie.ru]

 

Every Friday, we release a comprehensive digest of the most compelling articles related to Russia.

If you are interested in getting a rare insight into what Russia is really about; what the Russian government and the Russian people are really thinking; what the Russian expert community is really discussing; subscribe to our weekly newsletter below or by letting us know at info@imrussia.org.

Truly yours,

IMR team

Our newsletter delivers a digest of analytical articles and op-eds published on our website, along with the latest updates on the IMR activities on a monthly basis.