Tatarstan Is dissatisfied with the Kremlin

Minnikhanov criticized the federal center for "pumping out" money from successful regions.
On Monday, during the last in 2016 meeting of the Parliament of the Republic of Tatarstan President Ruslan Minnikhanov criticized the federal government's fiscal policy, aimed at "pumping out" of money from successful regions. Minnikhanov said that to cover the losses, Tatarstan would have to spend all its earnings for the next year. His words were supported by the chairman of the State Council Farid Mukhametshin,who stressed that "donor regions" were forced to provide financial assistance to poorer regions, thus violating the Russian Constitution. The reason for the public expression of Tatarstan's dissatisfaction was the government's decision on the additional seizure of 1% income tax from the regions.

Difficult Regions

Minnikhanov's speech is not the beginning of a major conflict, but the next round of negotiations, quite characteristic of relations between the Kremlin and Tatarstan, said political analyst Rostislav Turovsky. "To date, the authorities in the region accumulated a need to start bargaining over budget policy with Moscow. The game rules suggest that Tatarstan loudly announces its grievances and claims, after which, as a rule, everything finished rather successfully. "The same rules apply to the Chechen Republic, where the authorities recently managed to defeat the Ministry of Finance in a dispute on the amount of federal subsidies to the regional budget. Other subjects lack negotiation and lobbying opportunities; they are completely dependent on Moscow's decisions.

In addition to its special informal status,Tatarstan has little in common with Chechnya:it's one of the most economically successful regions in the country. All Russian donor regions can be divided into two groups: large cities with high concentration of human and financial resources (Moscow, St. Petersburg), and oil- and gas-producing regions (Khanty-Mansi and Yamalo-Nenets Autonomous District): just over 10 regions. "Tatarstan is a very advantageous position somewhere in the middle," said political analyst Dmitry Oreshkin. "It has developed industry (KAMAZ, chemical industry), and oil and gas deposits, and at the same time there is a large modern city of Kazan".

The economic independence is not only the strength of Tatarstan, but also its weakness: unlike Chechnya, the region does have a lot to lose, the analyst believes. But if Minnikhanov still wants to start further confrontation with the Kremlin and will be able to gain the support of regional elites, there are possible leverages: "For example, Tatarstan may "suddenly" see the revival of nationalist movements, as it was back in the 1990s," - says Oreshkin.

Life Saving

Even if we close our eyes to the "donor regions" claims, the policy to support poorer regions with the help of subsidies from the federal budget is still far from ideal: the equalizing effect of subsidies is very small, because the money is allocated in accordance with the budget sufficiency levels, and other, less obvious criteria. "The result is that the money is received by not those who need it, but those who can take it this or that way," said the head of the budget policy lab of RANHiGS Alexander Deryugin. "All regions including those with good budgetary parameters are involved in the wheedling of money. For example, Moscow gets fairly large budget transfers." As a result, experts say, the gap between the rich and poor regions has reached gigantic proportions unseen in any more or less developed countries.

Today the regions get about 40% of the taxes collected, the rest is transferred to the federal treasury. In the 1990s, the distribution was 50% to 50%, so there were twice as many donor regions, said Dmitry Oreshkin: "Vladimir Putin, seeking to ensure the loyalty of the dependent and subordinate territories, weakened their independence, by taking away their incentive to develop their own economic base." As a result, today some 40 regions are on the verge of default, and the balance between the regional and central elites is starting to collapse.

And while this year's growth in the tax burden on the regions has slowed down due to the tough financial policy of the Ministry of Finance, the economic agenda of heads of regions in the near future will consist of finding new opportunities for spending cuts. "The situation is very dire; the regions do not really have enough money for the execution of its powers," says Deryugin. "In this situation, we need to save the drowning, not to feed everybody."