#13 - JRL 7061
Power Struggle Between Russian Center, Regions Exemplified by Bashkiria
Moskovskiye Novosti
4 February 2003
Article by Dmitriy Yershov, Political Science Center for the Study of Regional Policy:
"The Bashkir Model"

The federal center's battle with the regions is entering the decisive stage.

The presidential election in Bashkiria is still half a year away, but the contest between the Kremlin and Murtaza Rakhimov is already a prominent topic in the federal news media. There is nothing surprising about this. For Vladimir Putin, the election in Bashkiria will be a general battle with the regional barons for power in the country. This confrontation has an equal chance of being the last or the first battle of Putin, who has been trying to unite Russia for a long time.

The upcoming election in Bashkiria has aroused considerable interest in this context. The federal news media have an intuitive sense of the significance of the Kremlin's battle with Murtaza Rakhimov, but they still are not aware of all of its implications. All of Russia's contemporary history is essentially a history of struggle between the federal center and the most influential regional leaders. Bashkiria has always been in the forefront of this struggle....

The Regions and the Country

In the interest of total objectivity, we must admit that the topic of the federal center's confrontation with the regions has never been absent from the front pages of the newspapers since the time when the four most influential regional leaders signed the treaty disbanding the Soviet Union in the Belovizh Forest. By the end of 1991, there were already problems with economic growth, with the new property owner, and with the birth of political radicalism.

Mikhail Gorbachev, the first and last president of the USSR, tried to respond to the conspiracy of the union elite with a conspiracy of the Russian elite (the autonomous territories), laying the basis for the future regionalization of Russia. The threat of the Russian Federation's disintegration did not frighten the future president of Russia, however. Boris Nikolayevich beat Mikhail Sergeyevich with one sentence: "Take as much sovereignty as you can swallow."

That was the time when the central Russian government was pillaged and taken away in pieces to various national territories. The "locomotives" of this process were the richest (oil-bearing) regions. Each oblast and each city with even one oil well dreamed of waking up in the morning as rich as Kuwait. For the sake of "a bright future within the territory of a single region," politicians established "independent states within Russia" and dismembered the Russian economy in an effort to keep their sovereign pails of oil in their own sovereign pockets.

Bashkiria then seemed to have more reason than the rest to experience the "Kuwait syndrome." It was producing about 30 million tonnes of oil a year. It had its own refining industry, and it was the largest in Europe. Besides this, it had huge "defense-establishment" enterprises, profitable agriculture, etc. The republic was "straddling the pipe"--i.e., the oil pipeline--and the transport of all West Siberian oil was organized in such a way as to keep the Bashkir cracking plants operating at full capacity. It seemed to many people at that time that this incalculable wealth would automatically stay in the republic's wallet as soon as it had gained its independence from the center.

When Murtaza Rakhimov was elected president of Bashkiria for the first time, he promised his fellow citizens abundance and prosperity. Furthermore, he asserted that only the complete and unconditional sovereignty of Bashkortostan, only its independence from Moscow, would make the republic wealthy. "Our state has been established not simply to live, but to live well," Rakhimov said at that time.

Now 10 years have gone by, and the output of oil in Bashkiria has declined from 30 million tonnes (in 1990) to 12 million. The prospects for this year are even more dismal. No one today can say that the republic is flourishing or that the people are particularly prosperous.

Dozens of examples of the trouble in the republic economy could be cited, but examples are not the main thing. The main thing is the set of principles underlying the leadership's economic policy in the post-Soviet territory of the republic.

From Power to Money

The new "sovereign" leaders essentially privatized governmental authority on the regional level, in the same way that the oligarchs privatized state property. The privatization of power is the road to lawlessness and tyranny, the road to the complete collapse of the economy. In his position at the top of the privatized government, the regional leader cannot convert this power into money legitimately, and this leads to constant contacts between Money and Power. These contacts, in turn, lead to corruption.

Using Bashkiria as an example, we can trace the degradation of an economy placed at the service of politics, in the interest of a small group of leaders endowed with power on the basis of family or clan principles. It is no coincidence that the republic government in Bashkiria is currently associated less with Murtaza Rakhimov than with his son Ural (he heads the boards of directors of several of Bashkiria's largest companies), who is the connecting link between Power and Money.

Taking control of virtually everything in the republic, Murtaza Rakhimov created a blend of "wildcat capitalism" and "developed socialism" in the last 10 years.

The economy of Bashkiria had a "socialist" emphasis on income from oil. We can assume that the "petrodollars" were distributed among a limited group of individuals. The state sovereignty of the republic was an excellent means of safeguarding these principles.

Rakhimov hoped to break out of the Russian economic zone by selling petroleum products to the West. He failed to notice, however, that while he was playing at independence from Russia, he was becoming a plaything in the hands of forces he could not control through his agreement with Yeltsin or through the decisions of the Federation Council. Standing alone against the vagaries of the world market, the Bashkir economy was like a tiny wood chip carried along by the flow of events.

After the declaration of Bashkiria's sovereign statehood, everything depended on the number of dollars the oil pipeline could generate. Sectorial imbalances in the Bashkir economy made the republic vulnerable.

The amount of "petrodollars" the pipeline produced was dwindling, and everything eventually reached its predictable conclusion: The people had been promised a new Kuwait, but they experienced the total crisis of the republic economy instead.

The process was self-perpetuating: The worse of the state of the economy became, the more political determination the new regional leaders displayed. The success of the "new rulers" essentially led to the continued fragmentation of the economy, the reduction of markets, and the escalation of monopolistic practices....

This process had to lead to an overt conflict sooner or later, between the seemingly invulnerable regional leaders and the federal center. It should have motivated the regional leaders to take radical steps.

The war never went beyond the State Duma elections, however. If the parties supporting Putin had been defeated, the president of Russia might have ended up with nothing more than the walls of the Kremlin and an honor guard.

The country was saved from the less desirable alternative by the oligarchs, who became actively involved in the elections.

By 2000, big national capital was more or less established and was aware that it would be helpless against bigger international capital without a policy of state protectionism. State protectionism, however, would be impossible without a strong national government. This is how the oligarchy became the federal center's sole (even if only temporary) ally.

Vladimir Putin took office, therefore, as the conqueror of the regional elite. His subsequent steps to reform the Federation Council, or essentially to raze the legal club of regional barons, are absolutely understandable in this context. This, however, does not mean that separatist tendencies have been suppressed completely in the regions.

A look at the history of the center's relations with the regions after the razing of the Federation Council, however, reveals that the Kremlin has never won a single victory (Kalmykia, the Far East, Yekaterinburg, etc.), and in this sense Russia is still a country of separate regions.

As the election in Bashkiria approaches, the Kremlin is in the position of a rifleman with only one remaining bullet. He must not miss. The dilemma is quite simple: Either the Kremlin will beat Murtaza Rakhimov in the election, or Murtaza Rakhimov will win Bashkiria from the Kremlin, and all of the regional leaders will then beat Putin.

"I am the boss," Rakhimov says today, and he means what he says: The government in Bashkiria (and the majority of other regions) turned into a big commercial enterprise long ago. A single family occupies the highest positions in the government and in business.

It would be difficult to argue with Rakhimov. He definitely is the boss in his region. A boss, however, always has a special responsibility to do his job well.