Until the population becomes economically self-sufficient,
it is pointless to talk about local self-government on the regional
- There is a certain mysterious level of government in Russia
called a region. Russia is made up of a multitude of them. The
federal government doesn't seem to know much about how people
are living, or rather scraping by, in these mysterious places,
especially in remote areas. It's hard to imagine that a Moscow
bureaucrat has a clear idea what a "drunken village" far from
the capitol actually looks like. It's just as hard to imagine
him knowing what lengths local governments are going to in order
to feed school kids, when they receive only 1 ruble and 73 kopeks
a day to this end from state budgets. Can he fathom how former
state farms, now called co-operatives, make ends meet, and how
next to them, private farmers are struggling to establish themselves?
Can this bureaucrat understand how the traditional Russian sentimentality,
seemingly directly opposed to economic pragmatism, is actually
helping people survive in market conditions? Rural Russia is still
alive and kicking, thanks for the most part to informal economic
The Russia outside of Moscow has been the object of study for
the Center of Strategic Analysis in the Privolga Federal District
for several years now. Vyacheslav Glazychev, Professor at the
Moscow Architecture Institute, shared the results of the center's
research in one of the regions of Orenburg Province.
- What is this region like?
- It is extremely complex. There are a several dozen basic types
of socio-economic structures and entities. These include villages,
autonomous (meaning outside regional control) municipalities,
a couple village councils, a military base, an airport, and hundreds
of dacha communities. There are state-owned areas, some of which
at one point were government agricultural research centers. There
are farms. There are orphanages which belong to the region but
are included in the federal system. Out of 48 thousand inhabitants,
six thousand are engaged in some type of small business (transport,
trade, and so on). And that's just those who are officially registered.
- How does such a complicated region manage to administer
- In most cases, there is very little local administration. Most
of those working on this low level of government are in fact appointees.
In the Orenburg Province, the regional heads are "voted in" from
among the provincial congress representatives as suggested by
the governor. A similar situation can be found in the majority
of provinces in the Privolga District, not to mention in the autonomous
- But according to the Constitution, the regional level of
government is supposed to be democratically elected. There could
be some debate about governors, but local self-government is clearly
stated in the Basic Law.
- Yes, local experience strongly contradicts federal law. The
contradiction is gradually being resolved, but this hasn't yet
touched the regional level yet.
- Of course, the federal law on local self-government is only
an outline, and, as far as I know, gives those in power lots of
room for interpretation.
- Exactly. Every federal entity, for instance, would have a hard
time deciding according to which principles local self-government
should be established: according to territory or population? The
second option means apply self-government to every inhabited place,
right down to the tiniest of hamlets. With the first option, people
could decide to re-group into larger units but for this to happen
there needs to be a push from below which doesn't exist at the
moment. At first, officials latched on to the population principle
and ended up with 579 self-governing entities. Three-fourths of
them didn't have two coins to rub together. It ended up ridiculously:
almost all the entities were subsidized and their bosses all democratically
elected. Then, they went to the other extreme and defined regions
as self-governing units, of which the province had thirty-one.
Yet the region isn't uniformly populated and there are twenty
to thirty towns fairly distant from one another. So, again, they
ended up with nonsense. Moreover, in the region where I'm working,
there are several municipalities that lie outside its jurisdiction
and make their own laws independently.
- Most likely these municipalities are economically self-sufficient
and therefore want to keep to themselves. At least that's the
story with complexly structured federal entities like Tyumen Province.
- Yes. One of the municipalities receives all its income from
a natural gas factory within its limits and only shares these
revenues with others via the provincial government. But it gets
even worse. There are a couple areas where the population was
somehow convinced to join the municipality. This means that they
became part of the city, not the region, and all the subsidies
and benefits offered to rural dwellers disappeared. It's easy
to trick people. I'm bringing all these details up because this
needs to be understood, as in order to understand anything about
our economy, you have to understand what's happening at the lowest
level. This is exactly what our macroeconomic analysts don't want
to think about. There is no economy "in general." Economics are
something concrete. Here's a region with twenty-six settlements
and half of them are on a kind of life support. This statement
doesn't even express the real situation, because in one of these
settlements, there are a thousand discharged officers-healthy,
reasonably well-educated guys-who can't find work. But in the
next village, they are dying for mechanics. In another village,
there is no place to take out a small loan to bring a quarry into
operation. Economically, about half of these settlements need
to die a natural death. So the administration is faced with a
political decision: to work to encourage the strong communities
or keep feeding the weak ones. It's a difficult choice, because
there are people trying to survive everywhere. Many villages have
fewer than a hundred inhabitants and could never support any industry.
If they aren't fed by the provincial government, they'll die out.
- Do they have anyone capable of working in such villages?
- By legal standards, sure, but in reality they have no desire
or ability to work.
- What about kids?
There are kids there and they need schools. It is a well known
fact that a school is the last thing to go. If you lose your school,
your village is doomed. Many people are saying that in other countries,
they've learned it's less expensive to bus kids to other schools.
But in reality it doesn't turn out that way. With the current
level of teachers' salaries and price of fuel, it could end up
more expensive. The roads would have to be cleared at least half
the year. It's the same situation with medical facilities and
other social services. These, by the way, employ three thousand
of the forty eight thousand inhabitants. Here's another story
along the same lines. This region has a fairly successful private
enterprise, a meat packing plant. Not great at marketing, but
still on its feet. What does the regional government do? They
tie it to a dying state farm. What does the company tolerate this?
Partly because it would cost them more to fight the administration,
and partly out of pity. This is an important point: our traditional
sentimentality hasn't died. When it comes into conflict with economic
efficiency, it usually wins.
- Is there no rational explanation for this kind of behavior?
- Almost none. Of course, as agricultural reform is put into
effect, you could see this as some kind of very long-term investment,
and probably the private businessmen have something like this
in the back of their minds. But nonetheless, traditions remain
strong, including Soviet ones. Here's another story. The region's
businessmen get together, for the most part the state farm heads.
They have been dealing with the market for a while now but are
still addicted to the concept of government purchase orders. They
simply refuse to believe that the good old days are gone, never
to return. We are going to get beyond this, but it will take at
least ten years. But the most surprising thing is that along side
these state farms are strong private farms. By 1998, their number
had decreased from 564 to 369, but last year their number again
grew to around 500.
- How have they managed to survive?
- That's a difficult question to answer but I have my own ideas
why. I think for the most part it's due to illegal migrants at
whom we are so eager to throw harsh words and stones. But the
main labor force comes from Tajikistan, Kazakhstan, and Uzbekistan,
which is fine with many people.
- Are they seasonal workers, or do they come to the region
with their entire families? How many are there?
- There are all sorts of migrants. My estimates are very rough,
but I would say that around half of the laborers on the larger
farms are seasonal. They can also be found in the co-ops but I
couldn't give you any numbers at this time. This is a really important
issue and yet it isn't taken into consideration at the official
level at all. But it has to be, because otherwise we won't get
a realistic picture of migrants and the social issues that come
- But any social issues regarding illegal migrants are the
problem of their home countries.
- It only seems that way. In reality, they become our problems,
taking our sentimental inclination into account. If a pregnant
woman on a stretcher comes gets wheeled into the maternity ward,
she would never be turned away. And she isn't turned away. Now,
providing medical treatment to those without insurance, knowledge
of Russian, or even passports is already eating up 10% of the
regional budget. This is a big economic loss, but has a kind of
- What kind benefit can there be when locals' problems are
on the increase?
- Alas, they are on the increase. I recently learned a very unpleasant
fact: the number of orphans and abandoned children has risen sharply
in the villages, something that never existed before. There are
already several hundred children in the region, a fact that demands
that children's homes be expanded, as current facilities only
cover one fourth of the need. We could just ignore the problem,
but that would be hiding our heads in the sand. I recently spoke
with a director of a rural orphanage who asked me, "I can get
these kids to adulthood, but what will they do when they leave
us?" Neither the nation nor the province is addressing this question.
We need to create jobs for such individuals in the very near future,
or the burden on smaller cities will only increase. Small cities
won't have them, and they'll move on to the big cities, where
social services cost considerably more than in rural areas.
- Is the shadow economy really obvious at the lower level?
- I would call it the informal economy, especially in rural areas
where everything is in the open and everybody knows about it.
It is really noticeable at the lower level, and the informal economy
can be divided into two connected but very different parts. The
first I would call the economy of compensation for state incompetence.
For decades we lived under conditions which forced farms to over-report
their harvests, and now they under-report them, by as much as
50% according to some experts. Here we have actual, useful resources
that go to fix roads neglected by the government, to school lunches,
to medicine at the hospital, and other such things. This money
keeps cultural centers and libraries afloat, where there is a
waiting list for the works of Nietzsche, believe it or not.
- So, pilfering actually helps rural communities survive?
- Not everywhere, unfortunately. Drunken villages are lost causes.
Some witnesses have informed me that there are places where the
only food to be found is ground wheat soaked in boiling water.
Rehab can work, but it is incredibly expensive. There are villages
with two hundred families and not a single person with a job.
Ideally, we should send in a whole team of doctors, psychologists,
and social workers to deal with each situation on a case-by-case
basis. As a rule, these people are truly ill. Including the women.
We simply don't have the resources, and so these villages will
die. Or, if the location is nice, new people will move in. There
are extreme differences in the quality of life in different parts
of the same region. Do you know how much is officially allotted
for one child's school lunch each day? 1 ruble 73 kopeks. Do you
know that sometimes the kids whose parents pay extra are fed separately
from those whose parents can't afford to? Talk about a great way
to ignite class tensions!
- How do local governments react to this situation?
- I would like to bring up one issue that's widely known but
not taken very seriously. Most farms and communities operate according
to the "grow it and sell it" principle, which means there is no
processing capacity that could increase the products' value. Long-term
financing for small loans is no longer a question of economic
development, but of economic survival. Even a basic grain elevator
with a mill in such conditions becomes an important resource for
storing grain, grinding flour, and baking bread. The local administration
would seem to be a key player in this, but they have only organizational
and not financial resources. This means the local administration
doesn't have the main thing it needs: its own budget. Everything
comes from above. The main task of the local administration is
to find promising sectors in the local economy and try to develop
them. Moreover, it's not enough just to grow your crops; you also
have to sell them, which makes it clear why former state farm
directors still think in terms of state purchase orders. Many
of them have to continue playing the state purchase order game
on the provincial level. This doesn't mean they are all reds.
This state charity action eats up huge amounts of money, though
a market approach is being attempted. For example, the province
says, we can buy a certain amount of grain. Whoever offers a lower
price, sells more. This is already a step toward a competitive
atmosphere, which will increase efficiency and decrease costs.
But this step is proving difficult, as is making the process fully
- This is a very grim picture you're painting…
- There is a silver lining, though. Recently, the province opened
bidding for contracts on pillows, blankets, and other such things
for the prisons, hospitals, and so on. The bidding was open. The
provincial economic department was hoping to save 20% by doing
this, but ended up saving almost half. However, it cost a lot
of effort, as the openness of the process disrupted the mutually
convenient relationships between producers and buyers. Another
positive development is the rise in officials' education level
in the last five to seven years, with improved education in economics,
administration, and general subjects. You could even talk about
a revolution in cadres in some places. The director of the regional
economic department is today a well-educated specialist with whom
you can discuss economic problems of great complexity. This is
major progress. Another big improvement is in roads, not just
major highways, but also smaller roads connecting villages. The
entire region now has natural gas, and little by little, the president's
program "Electronic Russia" is bringing in access to computers.
- Could any of the experience of other former socialist counties
be of use here?
- I think so. I know an interesting example from Poland of a
dirt-poor village whose only resource was its huge willow thickets.
The Poles organized a wickerwork festival and set up a promising
enterprise to provide jobs for members of the community. We also
have a unique product, Orenburg scarves, but no one has thought
to market them.
- Do local governments have enough autonomy in your opinion?
- They are handed down budgets which are carbon copies of the
federal budget and prevent people from seeing reality. The budget
in and of itself is far from rational. Too much money is being
spent on building new things like schools, clubs, and cowsheds.
Yet we don't seem to be able to or want to fix what's already
there. The reason is obvious: it's easier to build something new
and it's easier to steal more on remodeling projects than on construction
ones. Agriculture is under-subsidized if you consider its potential
role in the local economy. Skill in manipulating these funds is
absent at both the provincial and the regional levels. The budget
categories and amounts are strict, and changing them punishable
by law. But anything outside the budget gets used very creatively.
Creative energy gets pushed into the informal economy and working
in the open becomes impossible. If administrations are elected
or appointed is important, but not as important as their ability
to use their resources independently, which is the basis of self-governance.
The current rules of the game don't give them any room to maneuver.
However, our local administrators have prepared themselves mentally.
For example, the mayor of Omutninsk in impoverished Vyatsk Province
knows all the European documents about local self-government by
heart. And my region has its own official anthem, which is really
- Does local politics have a strong influence on the local
- The role of politics in regional budgeting varies. It depends
on the grace of provincial officials. One of the most terrible
things about province-region relations is their complete arbitrariness.
There are good regional administrations and there are bad ones.
I can assure you that the political battles being fought below
are no less brutal than those above. In fact, local officials
use the same tactics as those in the Ministry of Economic Development:
that guy gets something, and that guy doesn't. The only difference
is that here we're talking about millions, and up there, billions.
- How would you sum all this up?
I would say that if we pay attention to the local level, we are
forced to throw out the idea of self-government that has been
crudely copied from European models, as too awkward and paralyzing
for Russia. European communities have centuries of experience
in local government and relative prosperity. But if the population
isn't financially self-sufficient, then it's pointless to talk
about self-government. If I were a lawmaker, I wouldn't start
worrying about self-government before a third of the population
reaches that point. In a suburban village council, where there
are ten times more weekenders and summer residents than year-round
residents, it still costs the same to maintain emergency services
regardless of the season. In such cases, local autonomy becomes
a cruel game, even if coming from good intensions. The fact that
regions can't always support themselves is only half of the tragedy.
In the end, if budget resources from above were stable and guaranteed,
they could get by. But we still live by the old Soviet habit of
promising ten but only giving three, and this is still done by
higher administrative units. The only solution is to legalize
informal economic activity. And the only way to truly understand
and analyze Russia's economy is to get down to the local level,
the region or even the village council.