Tag Archives: Russian regions

At the present time, the political life of Russia’s regions is all but destroyed. There are no organizational or financial resources for it and such a state of affairs is the result of a deliberate strategy to destroy democracy in Russia which has been implemented throughout the last 20 years.

Despite the fact that various regions of Russia have their own nuances and special features, on the whole, the situation is the same everywhere: the head of the region and the heads of the major municipalities are approved, and de facto appointed by the presidential administration, and all the rest of the regional leadership is appointed and approved by the governor. Those who disagree with this state of affairs are forced out of official politics.

On the whole, it should be acknowledged that after the presidential elections of 2018, political life in the regions was completely sterilized; so in that sense, there is only a point in discussing the reasons which led to this state of affairs and to think about the prospects for Russia to get back on track to democracy and federalism. Obviously, without radical changes in the leadership of Russia, the situation will not change, and as long as the laws, and most importantly, the president of Russia remains unchanged, any sort of revival of regional politics cannot be expected.

Democracy and Federalism in Russia

Democracy and federalism in Russia turned out to be powerless before the onslaught of autocracy in the early 2000s, because they had no real support either in the government itself or among citizens – and such a state of affairs had been programmed by the creators of the political system of Yeltsin’s Russia.

Even those government agencies which were formed directly by citizens had no real autonomy from the higher levels of government, primarily at the federal level, because the president was able to rid himself of inconvenient regional leaders and the regional leaders were able to oppress the municipalities. Naturally, in such circumstances the level of citizens’ trust in municipal and regional government was rather low, so the Kremlin was not afraid that some mayor or governor would be bold enough to argue with it, that they relied on the real support of the people, rather than on fixed elections. The local elites wasted so much effort on fighting among themselves that they were gladly ready to agree to the federal center’s terms, just to get rid of their rivals. In the end, a tactical alliance with the federal center became a trap; once they fell into it, local elites lost their political agency. This is what Putin exploited when he set about sterilizing regional politics completely.

The current state of affairs and its incorporation into the renewed text of the Russian constitution is the result of a constant and consistent attack on democracy and federalism. This has been under way for the entire 20 years of Putin’s rule, but as has been noted, it began much earlier. Essentially, the system created by Yeltsin in 1993-1996 had to guarantee the president that even if he had a minority in parliament and his personal rating was low, and if members of the opposition come to power in a number of regions and major cities, he could still remain in power and successfully block all the efforts of his critics.

Precisely within the framework of this concept, the prospects for local and regional self-government were in fact destroyed. Since all real powers were concentrated in the president, and all the other branches of government (parliament, the courts, the regions, and local self-government) were intentionally weakened, the deliberate course of the new President Putin enabled him to destroy both federalism and democracy in several years, without encountering any real resistance.

The Attack on Self-Government

Thus, as has already been said, the constitution of 1993 was written not so much to create a firm foundation for democracy and federalism in Russia, but rather to serve the interests of Russian President Boris Yeltsin. Its authors were motivated by fear of a communist revanche, which they expected “from below.”

Obviously, local elites fully shared that fear of Yeltsin’s entourage, or rather exploited it for solving their own tactical problems. The presence in Russia in the 1990s of the so-called “red belt,” that is, the regions where the Communist Party of the Russian Federation (CPRF) traditionally garnered many votes, forced the Yeltsin team to search for any allies for themselves who were prepared not to allow a victory of the CPRF and in exchange for that, forgive them any abuses.

Thus, emerged the phenomenon of “electoral reservoirs,” that is, regions guaranteed to show a high turn-out at all elections with high indicators for the party of power and its candidates. Essentially, a number of local leaders simply changed their loyalty for financial bonuses and impunity. This is exactly what defined the nature of interrelations between the federal center and the regions. Therefore, when Putin took the line of restricting the real powers of local bodies of government, the elites of the regions were already rather isolated from the citizens and did not have high authority among them which would have enabled them to rely on the support of voters in opposition to the Kremlin’s policy – if they even had such a wish at all.

Nevertheless, under Yeltsin, political life in the regions was preserved – among other reasons because the Kremlin played on the contradictions of the local elites, in each case wishing to find a counterweight to an ambitious governor through the head of a regional center or in some other way. Taking into account that Yeltsin’s ratings were extremely low all through the second half of the 1990s, the Kremlin was forced to reconcile itself to a certain level of political freedom in the regions, in the wealthiest of which quite interesting political systems had been formed and operated relatively successfully. For example, in Sverdlovsk Region there was a bicameral regional parliament where the upper house was elected every two years through elections in the districts, and the lower house by party lists; in fact the main fight was usually among the regional parties, whereas the federal party did not have significant influence. But all of this was possible because Sverdlovsk Region was relatively wealthy, which enabled numerous regional industrial groups to exist, which were interested in political representation among other things.

This is why we must not forget that Alexei Kudrin’s tax reform finally put to death the prospects for political life in the regions, the result of which led to the total financial dependency of the regions on the center and made struggling for power in their regions pointless; if the center distributes cash and everything comes from the center, then it is quite logical that a person appointed from the center is at the head of the region.

The local elites accepted the rules of the game and instead of resistance to the changing viceroys, tried to cooperate with each new governor because any other strategy is fraught with serious problems and losses.

Local Elites

We cannot overlook the quality of the local elites as well; in the absolute majority of cases, already by the mid-1990s, power in the regions had wound up in the hands of the Soviet nomenklatura. On the one hand, it preferred the administrative-command methods of leadership and leaned toward the necessity of taking part in honest and competitive elections, but that is why it was prepared to obtain powers from the leadership and not the public. On the other hand, it turned out to be involved in corrupt schemes which enabled the federal government to control any local leader by the kompromat [compromising material] compiled on him. In many cases, it was these people who kept power in their hands all through the 1990s and 2000s, until the Putin administration gradually, but methodically, got rid of them.

The situation in Sverdlovsk Region was illustrative, where Arkady Chernetsky, mayor of the regional center, remained in his post from 1992-2010, but Eduard Rossel, governor of Sverdlovsk Region, had in one way or another headed the region from 1991-2009 (with a break from 1993-1995). Both of them came out of the Soviet nomenklatura, and despite the undoubted political talents and readiness for participation in competitive politics, both were drawn to authoritarian methods and were not ashamed of using manipulative techniques in the elections.

All the years they were in their posts, these politicians and their teams waged an unceasing war, but in the end both of them gave up their power, not by losing elections, but by subordinating themselves to order. Now both of these rivals represent Sverdlovsk Region in the Federation Council without any real weight in regional politics.

It is noteworthy that even after the departure of Chernetsky from the post of head of Ekaterinburg, his team resisted pressure from the regional government for several years, which created a certain space of political struggle and even enabled the non-system politician Evgeny Royzman to win the elections to head of Ekaterinburg (by that time, this position had already become symbolic). But this resistance had purely economic reasons and in no way presupposed criticism of the federal government and its policy. On the eve of the 2018 presidential elections, the city team finally capitulated, and with that, politics in the region ended. In May 2018, Evgeny Royzman was forced to give up his powers as head of Ekaterinburg prematurely, and the city charter no longer stipulated new direct elections. Despite the specific nature of the situation in Ekaterinburg and Sverdlovsk Region, in the end even there, the Kremlin achieved its aims – as in all other regions of Russia, rich and poor, national republics and ordinary regions and territories.

What Is to Be Done?

What can and should be done, so that democracy is returned to Russia and cannot be so simply overthrown? As was said at the very outset, without changes at the federal level, we should not expect a flourishing of politics in the regions. But it is important not to repeat the mistakes of the past and not create the prerequisites so that democracy and federalism in Russia could be overthrown some time again.

First, it is necessary to have the constitutional transfer of the maximum number of political, legal, and financial powers to the level of local self-government. Even the regional level of government must be not be as influential as the municipalities. Essentially, the regional administrations must be involved only in the creation and maintenance of the general infrastructure and coordination of the efforts of local communities. It is much harder to take control of thousands of municipalities with great powers, elected by direct elections, than several dozen regional governments. This is exactly why the municipalities must become the foundation of democracy and the guarantor of the separation of powers in Russia, or otherwise everything will rapidly return to the current state of affairs.

Secondly, the restrictions on the creation of regional parties must be removed. Taking into account the dimensions of Russia, it is more logical to prohibit federal parties as such, motivating regional parties to form blocs at the federal level around common program lines and interests. Federal politics must be made in the regions and municipalities and not the opposite.

Third, the incorporation of a parliamentary system of governance at all levels of government – from the federal to the municipal – seems correct, that is, in both the regions and in the major cities, executive power must be in the hands of the head of government elected by the parliament. This will enable the destruction of the prerequisites for a revanche of Putinism several years after the departure of Vladimir Putin from politics, because it will destroy even the theoretical possibility of subordinating one level of government to another through personal agreements or blackmail. On the whole, all of Russia’s history teaches us that any opportunity to concentrate power in the hands of one person rather quickly leads to authoritarianism and a lack of change in government – and not only at the level of the head of state.

Fourth, any attempts to return Russia to the path of democracy and federalism are unthinkable without lustration not only at the federal but also at the regional and even municipal level. The main reason why the democratic endeavors of the 1990s were so easily overthrown was the fact that in the early 1990s, real power in Russia was left in the hands of descendants of the Soviet nomenklatura. Taking into account by whom and how the regional and municipal bodies of governments were formed in recent years, keeping these people in politics will inevitably lead to a revanche in a very short time. There are quite enough new people for politics at all levels in Russia, but for them to get involved and not lose at the very first elections to the re-painted Putin nomenklatura, the latter must be lawfully excluded from the process. Otherwise, everything will come full circle in this new, reimagined future.

Translated by Catherine A. Fitzpatrick

Does Siberian separatism exist?

There is no Siberian separatism yet. And this is the main problem of Siberia. While speaking of Siberian separatism, people mostly mean the “special rights” of Siberia, unfortunately. There is no ethnic community, horizontal links between regions are weak, there’s lack of civil society institutions – all this could not make a good ground for regional separatism. The idea that Moscow is draining all the Siberian resources, leaving little of them locally is probably the only one point that unites the Siberians. After a brief upswing of regional activity in the 1990s, while the “Siberian Agreement” Association and the Ural Republic of Eduard Rossel were created, today’s regional elites are focused on the President’s administration, rather than on the interests of Siberians.

Continue reading All power to the bears!

Valeria Jegisman of Free Russia Foundation recently sat down with Denis Sokolov, an expert on security and the North Caucasus, to talk about Russia’s current power structure, its link to criminal networks, the danger it poses, and the need for the West to work with Russia’s regional leaders in order to tackle these challenges.


The “market of violence” is spreading internationally

“In principle, we can say that the Russian government today is a political elite consisting of the post-Soviet bureaucracy, intelligence officers and criminals. Together they form a political class that governs the Russian state, in which criminal networks are built in, and their activities go far beyond Russia,” says Sokolov.

Over the years, the security services, which have risen to a position of power, have incorporated these criminal actors into the system. This differs from pure organized crime in that, in addition to direct violence, there is also the violence that is facilitated by authorities – the judicial system, law enforcement agencies, intelligence agencies and administrative bodies.

In the 2000s, adding to income generated from illicit activities, the ruling powers introduced economic institutions into the system, providing revenues from energy sources, natural resources and infrastructure enterprises. “They receive most of it legally, through dividends from public companies such as Rusal, Rosneft, Gazprom,” says Sokolov.

As the system has become entrenched, its threat to the international community has grown due to the emergence of political interests within this mafia. There may be economic motivations, but when it comes to control in the Middle East or Ukraine, political interests clearly prevail, says Sokolov. And the “mixed ontology” of the system – fragments of the state, organized crime and the security services – have manifested in the hybrid tools used by the Russian political elite: unleashing wars in local conflicts, informal armed groups, outright bandits, agents networks, criminal money, co-opting Western politicians, propaganda and disinformation.

The North Caucasus plays a significant role in the spreading of this “market of violence,” says Sokolov, having significant influence within Russia and spreading beyond borders as well. One of the most powerful criminal groups is that led by Ramzan Kadyrov, head of the Chechen Republic, with its private army and FSB backing. It represents an inseparable mix of criminals, intelligence officers and jihadists, with a network operating in Georgia, Ukraine, Turkey, Syria and Europe. According to various sources, up to 7,000 combatants who took part in the war in Syria came from Russia, primarily from the North Caucasus. Of these, according to various studies, about 2,500 primarily came from the North Caucasus, 500 people have gone to war from Chechnya, and 2,000 second-generation of emigrants after the Chechen wars have traveled through Istanbul from Europe. Those who survived have later gone to Turkey and Ukraine, says Sokolov.


Losing control

The question that arises is whether Putin maintains control over this spreading network. “I think that his control is constantly diminishing,” says Sokolov.

Over the last five years, Russia’s involvement in various conflicts and the use of hybrid tactics has led to a transfer of decision-making from the top to the bottom, says Sokolov. The situation is complicated by the various competing interests, which range from entrepreneurial activity to economic and political motives.

“This is a mosaic, which has not been described in detail – I have not seen publications describe this mosaic in detail, but it would be useful to understand how it is organized,” says Sokolov, adding that if Putin himself is no longer in control, it would be useful to know who is. “It’s a matter of security,” says Sokolov.

And in the case of Kadyrov, with his private army and transnational networks of gangsters and agents, the Chechen strongman sometimes acts on direct orders from Moscow, but other times makes decisions independently, at his own risk.

In a way, the North Caucasus represents Moscow’s declining influence, says Sokolov. There are fewer people who represent Moscow, and generally speaking fewer Russians as well. In the eastern and western Caucasus, Islam and alternative ideologies of independent statehood are developing. In some regions, conflicts in the criminal world are no longer resolved through gangster methods, but through sharia. For now, it is more convenient for Kadyrov to maintain the status quo, rather than to embrace separatism, but when Moscow runs out of money, Sokolov asks, how will it remain in control?

The network as a whole is fueled by and kept together by revenues from natural resources, and Moscow can more or less hold on to its authority as long as there is enough money, says Sokolov.


Growing risk of conflict and violence

There is a growing danger of conflict and violence within and outside of Russia, due to rising tensions between Moscow and Russia’s regional powers, says Sokolov.

The parallel process of a generational shift is underway among the ruling elite, says Sokolov, and to maintain control Moscow has appointed bureaucrats and siloviki to replace regional heavyweights. However, the new appointees are not integrated into the regional powers, says Sokolov, forcing them to rely on the FSB to assert their power.

“Thus, the chief of the regional FSB becomes a ‘warlord’ of a vast territory,” says Sokolov, “and I think that regional politics will see the development of competition with these warlords. They will try to strengthen their positions and deprive the centralized powers of the opportunity to change the composition at the regional level of the FSB.”

On the other hand, these FSB officers are driven mainly by economic interests while the regional elites – local politicians, regional business owners and criminal actors – will try to protect their own economic interests. Yet in order to protect these interests, Sokolov says, they must rely on ethnic, religious or regional groups. This is the case in the North Caucasus, he says, where there are many such groups, which can easily be mobilized. Raising the role of these regional identities may lead to the emergence of a process of de-colonization.

Moreover, in the absence of fair political processes, the only option for regional elites in this conflict is to resort to violence – all types of violence, says Sokolov.

“There is a risk that the whole network will fight among themselves and compete for favoritism with the centralized powers, as we saw in the Caucasus,” says Sokolov, adding that such conflicts could take place in many other regions, including outside of Russia.

If at some point, the situation gets out of control to the extent that the global community imposes tougher sanctions against the major companies that generate financing for the network, it can be a double-edged sword. On the one hand, this would help decrease violence outside of Russia, since there will be less money to finance external military initiatives, says Sokolov. But on the other hand, cutting off funding could increase criminalization within Russia even more. Revenues from natural resources would still find their way into the system – in ever more disintegrated and illicit ways – creating more players and making this “market of violence” more competitive. “We need to be prepared that it doesn’t all turn into Iraq,” says Sokolov.


The role of the West

To avoid the worst, the West should build closer ties with Russia’s regional elites, says Sokolov. To some extent, this work is already underway, mainly between business communities, yet more should be done.

“It is clear that at the political level, there is no such work going on today. There are no legislative or administrative mechanisms for this, and there is no motivation to develop these mechanisms due to the risks involved,” says Sokolov.

“It is, of course, a challenge,” says Sokolov, “yet there is a need to at least develop policies toward working with the regional and industry elites in Russia, and to at least understand who these people are.” In addition to the business communities, this cooperation could also include regional political, community, ethnic and religious leaders, says Sokolov.

But is it possible to have such cooperation within Russia? “There is a clear need for discussions in the regions today about how to organize life inside the regions, how to arrange the rules of the game within the regions. Because everyone understands that the system in its current state does not have a future. It will not be able to exist for long and it is impossible to develop in this system. There is a definitely a demand for change,” says Sokolov.

On May 19, 2018, in Moscow, supporters of Alexei Navalny founded a new party “Russia of the Future” (Россия будущего). Navalny himself is under an administrative arrest for a “repeat violation of the law pertaining to the organizing of a public event” which refers to his May 5, 2018, countrywide demonstration under the slogan “He is Not Our Czar”. Around 1500 demonstration participants have been arrested throughout Russia.

Around the same time, on May 21, 2018, about 15,000 Circassians joined a memorial march dedicated to those who lost their lives fighting for the independence of Circassia. This is the largest turnout since the march originated in the early 90’s. Circassians clearly are harboring historic and contemporary grievances against the Russian government.

From the video coverage of the two events, it is evident that the majority of participants of both, the Navalny demonstration, as well as those in Nalchik, have been born after the mid-80’s and grew up using social media and smartphones. Today they constitute about 30% of Russia’s working age population, and by the end of Putin’s current term will amount to about 60%. This population wants to live in a different Russia.

If they are to realize their vision of living in a different country, those fighting for democracy, those fighting for a free Circassia, and many other groups, must make deals with each other. This has to be done directly, without Kremlin intermediaries. Moreover, in order for this to happen, the new social contract must involve regional elites, — those who control the financial flows, assets, and violence within the various regions of the Russian Federation.

Regional business owners, criminal bosses and law enforcement officials— in essence, all former or still active bandits—can gain political and economic sovereignty only with the support of the population at large.  This piece is an attempt to explain three points: 1. Why the entrepreneur strongmen must be involved in modernization efforts; 2. Why they should be interested in getting involved; and 3. How this process would look in practice.

 

Well-Armed Gentlemen

Simply passing good laws is not enough for political modernization to take place. Armed elites must be compelled to observe these new laws. And up to now, this has only happened, crudely speaking, in two ways:

  1. As described by the American sociologist Charles Tilly, the modern state is created by organized crime as a way to settle military and political competition among more or less equal opponents. This has been the case in Western Europe and North America. Mature democracy, therefore, is a product of competition between stationary bandits and institutionalized organized crime through political mechanisms, including labor unions. This is a long and expensive process; the pioneers that took this approach did so due to the lack of alternatives, and, thereby, willingly or unwillingly, created a contemporary open society.
  2. As a result of the absorption of one entity by another already mature jurisdiction (including ones created by means described above), with simultaneous acceptance of rules by all social groups (including strongmen) integrating them into the democratic society. This can happen as the result of an occupation and removal of military aristocracy from power (the way it happened in Japan when it was occupied by the U.S.) or voluntarily, for example, the way it happened during the secession of the three Baltic States from the U.S.S.R. The Norms and institutions in the newly independent Baltic States were, for the most part, borrowed from the E.U. National elites; and almost all of the social groups perceivedsaid transition to denote the country’s return to its original historically ordained path. By the early 2000’s, former criminals and strongmen of the Russian-speaking Narva in Estonia had cleaned up their act and turned into law-abiding entrepreneurs and politicians. Some have even agreed to serve prison terms in order to remain within European jurisdiction.

Georgia is a telling example of a policy reversal, after the political defeat of Mikheil Saakashvili, exposing the social mechanics of such a transition. During his time in power, Saakashvili succeeded in consolidating parts of the Georgian elite around the idea of importing good institutions and integrating into the European Union. He even managed to temporarily usurp the monopoly on violence, sidelining organized criminal networks. However, to Moscow’s satisfaction, his successor Bidzina Ivanishvili managed — with the help of the revanchist old political and criminal elites with ties to Russian organized criminal networks, the Georgian clergy; and by using the institution of elections, capitalizing on his opponents’ crude mistakes as well as on the post-Soviet infantilism of certain civil activists — to freeze Georgian reforms and push the Saakashvili team out of Georgian politics.

At this point, Ukrainian reforms also look like forced concessions by the Petro Poroshenko Administration to civil activists and business associations in wartime and under pressure from Europe and the U.S. Criminals networked with Russian organized crime as well as law enforcement officials remained in the camp of the corrupt bureaucracy.

In Russia, the rut is even deeper, yet there are practically no real forces outside of the ruling class similar.For example; to the networks of entrepreneurs in Ukraine, the only functioning political mechanism in Russia is the FSB, whose regional directorates control investigations, law enforcement agencies, courts, criminals, bureaucrats (including governors sitting atop financial flows), and large business enterprises. Its structure and culture is similar to organized crime which has taken control of the state, society, and even international businesses.

Therefore, paraphrasing Benjamin Franklin, conditions of political modernization are equal to the conditions of change in rules of behavior of well-armed gentlemen in this society.

A question follows: why would the armed gentlemen accept such a change?

 

Why Bandits Need Democracy

This “Chekist Order” that has subjugated courts, the police and organized crime in Russia is a completely new state, no longer the U.S.S.R, nor a criminal post-Soviet Russia.  It’s a police state in which the monopoly on violence, in fact, is delegated by the FSB regional directorate heads. With the threat of criminal investigations, they keep a firm grip on everyone, from governors to owners of gas stations. When direct physical violence is required to deal with activists, they turn to the Department of Countering Extremism and when violence is needed to deal with public figures, even with representatives of the law enforcement bureaucracy, they turn to private paramilitary forces.

Neither business owners nor criminals like this arrangement. As an entrepreneur from Dagestan put it, “when in Moscow even the smallest commercial entities started increasingly to employ people who introduced themselves as former officers of the KGB, FSK, FSB, GRU, and others, or who were even on active duty, it has become clear that capitalism would not be taking hold. Instead, there would be banditry served under different sources (in law, outside of the law), but not capitalism. There is no point in trying to think in economic terms.”

Russia’s regional business is hemorrhaging. In the early 2000s, carbons, ferrous and non-ferrous metals, lumber and fertilizers were taken away from the regions. In the decade after that, the manufacturing of vodka, local electric power networks, and gas pipes were taken. As we speak, the regions are losing control over chain retail, agricultural production.  New tariffs are being levied on long-haul truck drivers, and ideas are floated on taxing the self-employed.  My friend who owns a small chain of stores used a metaphor to describe the situation: “it is as if your bloodstream was open with a small cut. The blood flows, and you are slowly growing weaker and weaker. There are fewer resources and no means to fight back.”

As small and medium-size business is degraded, the income of the corrupt system itself at regional levels is dropping as well. The only remaining source of profit is government contracts. But Moscow meddles with a heavy hand even there. More or less powerful governors and mayors that cannot be controlled from Moscow are imprisoned and their replacements are sent from the capital — young bureaucrats trained by the Kremlin’s Personnel Reserve Program or former law enforcement agents. This is a result of a generational change within Putin’s circles, which has entered the indefinite stage of the political golden years.

All of this is part of Putin’s attempt to raise the stakes by taking the Russian world hostage and securing his rule indefinitely.  He is walking on thin ice, however, and the current regional policy is more dangerous for the regime than even a moderate drop in oil prices or protests against toxic landfills.

Owners and beneficiaries of liquid assets in Russia’s regions— electrical power companies, retail, natural resources and agricultural complexes— are losing assets as well as the ability to pass property on to their heirs. They either run, like Akhmed Bilalov and Yevgeny Chichvarkin; or sell their assets, like Sergey Galitsky, vodka manufacturers and intensive garden owners from Kabardino-Balkaria, and owners of private oil service companies from Khanty-Mansi Autonomous Region; or they are already in detention or prison, like Vyacheslav Derev and the Magomedov brothers; or they have just been released from prison like Magomed Kaitov.

Whether they understand it or not, the only way for regional elites and large businesses not only to preserve their assets but to survive and keep something to pass down to their children is by taking down the political system. This process can notionally be divided into two phases.

The first phase— decentralization. Large land-owners in Southern Russia could easily strike a deal with rural communities; organized crime can do the same with mayors, governors and labor unions. They need each other’s support. Regional politicians and civil activists would not survive without the protection of the well-armed gentlemen. This was a lesson learned long ago in the North Caucasus due to the traditional importance of familial and communal ties. But other regions, little by little, will come to the same realization.

The Second Phase entails the transfer of functions of safeguarding persons, private property, contract, civil liberties and transparent elections to independent judiciary and law enforcement institutions. Today, due to advances in communications technology, a wholesale direct import of institutions is possible. The only political issue to resolve is what choices to make from an array of good institutions. Open and just courts, the protection of property and civil liberties, are not policy issues but prominent features of contemporary society, akin to a smartphone connected to the internet.

Russian Guard soldiers in riot gear or Cossacks with whips may personify state authority only for the older generations, but Young Russians see them as a zoo with extinct specimens, and demonstrations as a dangerous safari. Modernization of the Russian mind has already taken place. What is needed to be available on the market, are institutions such as property registries, contract enforcement systems, good educational and health care systems, and financial services. It is not necessary for each village to invent its own iPhone.

If this does not happen, regional elites and corporations will be forced to flee, the way the Baltic Republics once fled from Russia’s atavistic tentacles and to a modern jurisdiction. They, along with the FSB generals keeping tabs on them, will either run or vanish into obscurity.

 

Contract to Occupy

Putin’s Administration has been forced to replace seasoned regional politicians with the boy scouts from the Personnel Reserve Program and former bodyguards in order to create a safe environment for their own heirs. However, these local powerhouses are supported by desperate people with nothing to lose, or with youth with their own political aspirations. They are also supported by local mafia bosses whose assets are being expropriated; by former mayors and municipal heads kicked out from their posts and unable to find a spot in Putin’s United Russia party; and by bankrupt entrepreneurs. In fact, there is a handful of other protest movements that could be mobilized with ease.

The well-armed gentlemen, business owners, and opposition movement leaders already possess a full spectrum competence in order to take over control of any regional assets and entities— from municipalities and agricultural production facilities to aluminum plants and oil processing companies. De Soto’s contract for the takeover of political, industrial assets and infrastructure would work well as the action plan for economic decentralization and secure the monopoly on violence.

In the Kabardino-Balkar Republic, for example, it can happen in the following manner.  Let’s suppose there are several million acres of land formerly a part of a collective state farm and now leased for 49 years to an entrepreneur with connections within the local government. With government funds, this entrepreneur has built intensive gardens on this land and leased those too poor local farmers to operate. The local community is unhappy they have lost the collective land. The landowning entrepreneur faces a real threat of a raid takeover by federal law enforcement agents— they initiate criminal investigations against him, attempt to impound his property, and their ransoms demands keep growing.

One way for this entrepreneur to liberate himself from the direct pressure of the strongmen would be, together with civil activists, to organize mass demonstrations, and with the pressure from the local population to take the land out of the jurisdiction of the Republic. For example, the land can be turned into a shared ownership property and a collective venture could be created. In such a scenario, of course, the large landowner would have to make deals with the local community. But there he is likely to have relatives, he would have enough money for such negotiations, he is known by local farmers, and his small security detail would turn into the core of a national movement.

There are real-life examples of municipalities in Dagestan receiving compensation for land flooded for hydroelectric power station reservoirs as the result of the municipal leader airing the issue with the local community. In this case, neither strongmen nor the mafia dons were willing to go against several thousand angry men and women.

In theory, RUSAL’s aluminum plants and northern oil companies from Western Siberia are not that different from collective farms. The young bureaucrats from the Personnel Reserve Program would have a hard time dealing with the armed men if they all of a sudden side with labor unions or with those protesting new landfills. Several such scenarios playing out throughout Russia would amount to a de-facto decentralization.

It is, therefore, precisely regional criminal networks and associated entrepreneurs and protest movement leaders that hold the potential to launch a decentralization process. The paradox here is that the only measure available to Moscow in such a scenario would serve to facilitate the takedown of the police state.

Trillions of rubles that Putin has promised to support infrastructure and social services, such as healthcare, education, and construction, will, no doubt, be expropriated (i.e. stolen). Regional actors would either transfer these funds offshore or use them for re-privatization of assets into their own private property. The balance of forces will inevitably shift.

Sanctions against Russian companies brought about by the foreign policy adventurism of Putin’s government, as well as the Russian counter-sanctions, are destroying corporate control over finance, decreasing the value of assets, facilitating the takeover of regulatory control as offshore funds return to Russia, and making devalued assets more attractive to investors. For example, the much cheaper shares of RUSAL (РУСАЛ) and Rosneft (Роснефть) now can be bought by regional players along with the global businesses and thereby protected by both, the international law and the “bayonets” on location.

Technological progress with its global education, market, Internet and the invincible Telegram erase borders and devalue local political sovereignty. Contemporary financial and legal instruments allow almost anybody to go to the global market and a more transparent jurisdiction. Insurance companies, retirement funds, property ownership registries, educational programs and even healthcare companies now can be headquartered in any spot on the globe. The less a government meddles in redistribution of collective resources, the less cost is imposed on its population. Regions and networked communities that join the global market and global jurisdiction would lower the cost of political institutions, compared to old democracies. Old democracies, in turn, would successfully sell their jurisdiction globally.

To end on a positive note, profit can be made from the modernization of the post-Soviet space. This motivation, in practice, is much stronger than any higher humanitarian goals. The moment this huge (and still with a future potential to expand a hundredfold and by hundreds of billions of dollars) market of the gentrification of institutes and infrastructure opens up, it will be impossible for any archaic criminal regime to counter free capital.

This article first appeared in Russian at the Republic site