Moscow Losing Grip on Regions

Aman Tuleyev, the governor of Kemerovo, thought the coal miners creating havoc in his region would calm down when Moscow promised them a huge handout last month. But Russia's lack of a government and recent financial collapse have changed all that.

The Cabinet no longer exists that offered the 300 million rubles to pay the miners' back wages so that they would stop blocking railroads. There is no finance minister authorized to disburse the money. And even if there were, thanks to the ruble's devaluation the sum has shrunk from $50 million to $15 million.

"The people feel cheated. Where is the guarantee that they won't stand up in a social explosion?" Governor Tuleyev told the Monitor. "If this situation continues, regions like ours will pull away and find our own money."

This is no idle threat from a man whose area produces half of Russia's coal. And he is not the only one considering going it alone without Moscow. Across Russia's 89 regional districts, central economic authority is disintegrating.

Since President Boris Yeltsin sacked his government Aug. 23, and the ruble and banks collapsed, the federal government has been unable to transfer money to most of the regions. Regional bosses have taken matters into their own hands to protect their constituencies, demanding the right to control companies, resources, and policies formerly under Moscow's domain.

At least five governors have set their own price controls on dwindling food supplies. The gold-producing region Yakutia has restricted sales of the metal to the federal government and banks. Other regions are looking at increasing ties with each other or outside countries, and are considering paying soldiers themselves to avoid unrest.

Talk is of the Russian Federation eventually crumbling, like the Soviet empire did in 1991, if parliament and Yeltsin cannot agree soon on a prime minister who can devote himself to the crisis. Continued disarray could fuel ethnic tensions and even lead to the breakdown of armed forces loyalty to a center that cannot feed them. "If you don't have real government and control and management in Moscow, inevitably there will be independent moves in the regions," says Nikolai Petrov, an expert on the regions at the Carnegie Moscow Center.

The debate about the federation's future was going on even before Chechnya's unsuccessful war for secession in 1994-96. Chechnya and its neighbor in the north Caucasus, Dagestan, have been largely ungovernable by Moscow.

Meanwhile, regions along the Volga River, including Tatarstan, Samara, and Nizhny Novgorod, have long managed their own finances, sometimes withholding taxes from Moscow.

Currently, no district is untouched by the financial crisis. Even big, rich cities like Moscow and St. Petersburg have been hurt by their dependence on imports and collapsed financial sectors.

Particularly vulnerable to the rising cost of imports are isolated areas such as the Far East and Kaliningrad. The former, 5,000 miles from Moscow, imports 80 percent of its goods from China, Korea, and Japan. In the west, Kaliningrad is cut off from Russia, wedged between Poland and Lithuania.

Also hurting are areas that receive as much as 70 percent of their funds from a now-bankrupt federal budget. They put a burden on the nine "donor" regions, such as agricultural Saratov on the Volga, which provides food for all of Russia.

Saratov Gov. Dmitri Ayatskov has put a lid on prices and introduced a system whereby growers sell their products without paying trading dues. His priority is to look out for his own people first.

"We are in the midst of a breakdown of the federation," Governor Ayatskov told the Monitor. "The center's power is diminishing."

Self-sufficiency has rippled elsewhere. Yakutia's restrictions on gold sales could reduce Russia's gold exports by 10 tons this year. Kemerovo has a monopoly on vodka production. Yekaterinburg is forming hard-currency reserves in gold, independent of the Central Bank.

The question is whether increasing financial autonomy will spread to other institutions, such as the Army.

Alexander Lebed, a former general who governs the Krasnoyarsk region in Siberia, has warned of Army mutinies. He has threatened to put on his payroll a local unit that has nuclear missiles. "In many regions, the security forces, the executive power, and the people are all in the same foxhole," he said recently.

Many observers dismiss this as yet more melodrama as Mr. Lebed electioneers for the presidential vote in 2000. But they concede that notion of independent nuclear states is worrisome.

Some analysts say that while Moscow's economic grip is eroding, it is strong enough to keep its political grip on the regions, because it still holds enough residual financial sway.

"Economic disintegration is going on, but political collapse of central power is unlikely," says Ekaterina Filipova at the Panorama think tank in Moscow. She points to the vote Sept. 4 of the Federation Council, the upper house of parliament that groups regional bosses. There, unlike in the Duma, Yeltsin was able to muster ample support for his candidate for prime minister, Viktor Chernomyrdin.