Eliminating Local Government in Russia

An elderly woman pulling a metal container with water past a snow-covered wooden house with carved window frames in the village of Kondratyevo, Omsk Region, February 17, 2017. Photo courtesy of Dmitry Feoktistov/TASS Россия. Омская область. 19 февраля 2017. Жительница села Кондратьево в Муромцевском районе Омской области. Дмитрий Феоктистов/ТАСС
An elderly woman pulling a container with water in the village of Kondratyevo, Omsk Region, February 19, 2017. Photo courtesy of Dmitry Feoktistov/TASS

Duma to Legalize Elimination of Settlements by the Regions
Maria Makutina
RBC
February 22, 2017

The Duma has tabled an amendment that would legalize converting municipal districts into urban districts. RBC’s sources have informed us the move to eliminate local government in settlements would be supported by the relevant committee. In Moscow Region, such mergers have sparked grassroots protests.

An “Elegant Way” of Eliminating Local Self-Government
Mikhail Terentiev, an United Russia MP from Moscow Region, has submitted amendments to the law on general principles of local self-government to the Duma Committee on Local Self-Government. (RBC has the document in its possession.) The MP has proposed amending the law to make it possible to merge all settlements, including rural settlements, that constitute a municipal district with an urban district. Under such a merger, the settlements and the municipal district would forfeit their status as municipal entities. Decisions about such mergers would be taken by regional authorities “with the consent” of local representative bodies.

Terentiev has also proposed changing the definition of an “urban district,” as stipulated by the law. Currently, it is defined as a urban settlement that is not part of a municipal district. The new draft law defines it as “one or more contiguous populated areas that are not municipal entities.”

Moscow Region authorities have found an “elegant and simple  way” to legalize the single-tier system of local government that, in recent years has, been established in a number of Russia’s regions, including Moscow Region, Andrei Maximov, an analyst with the Committee of Civic Initiatives, explained to RBC.

Moscow Region Governor Andrei Vorobyov. Photo courtesy of Sergei Fadeichev/TASS
Moscow Region Governor Andrei Vorobyov. Photo courtesy of Sergei Fadeichev/TASS

Protests
In November of last year, Andrei Vorobyov, governor of Moscow Region, announced plans to convert around twenty municipal districts into urban districts in 2016–2017. According to Vorobyov, the reform would save money by reducing the number of officials.

The proposed move sparked popular protests. Moscow Region municipal district council members, unhappy with the dissolution of local executive and representative bodies, held protest rallies. Public hearings on reforming local systems devolved into clashes with the Russian National Guard.

A Local Self-Government Congress was held in Moscow in February. Local council members from Moscow Region requested that Prime Minister Dmitry Medvedev and law enforcement agencies investigate “numerous incidents in which local government bodies, including municipal districts, rural settlements, and urban settlements, have been forcibly dissolved.”

“The law does not provide for dissolving a municipal district or converting it into a urban district, so Moscow Region authorities conceived a way of getting round the law. First, they merge rural settlements with an urban settlement, and then they turn it into an urban district.  But the municipal districts are left in a limbo,” said Maximov.

The Presidential Human Right Council has argued that the reforms in Moscow Region violate the public’s right to local self-government. HRC deputy chair Yevgeny Bobrov said as much to Vladimir Putin at the council’s December 8, 2016, meeting. The president promised to “work” on the issue.

Nevertheless, in 2015, the Russian Supreme Court ruled that the merger of two rural settlements and the Ozyory urban settlement into an urban district was legal.

Simplifying Governance
MP Terentiev explained to RBC that his amendments were motivated by the need to optimize the budget in Moscow Region.

“The governor and I realized that money could be saved on officials,” he said.

Thanks to the reforms, “there will be an overall approach to wage policies and the opportunity to reduce administrative barriers to business,” Terentiev argued.

The current law stipulates that Russia is divided into settlements, which are organized into municipal districts, and particularly large settlements, which are organized into urban districts, Maximov explained. According to Terentiev’s draft amendments, any territorial entity in Russia can be turned into an urban district, meaning it can be moved from the two-tier system to the one-tier system.

The authorities have been attempting to confer the status of urban districts on municipal districts in order to dissolve settlements and simplify governance. Rural authorities can interfere with the plans of regional authorities to implement urban planning projects and create obstacles to resolving land use issues, which currently require the consent of the settlements affected, political scientist Alexander Kynyev explained to RBC.

The Total Deterioration of Settlements
Experience has shown that populated areas lacking elements of self-governance deteriorate and disappear, RBC’s source on the Local Self-Government Committee told us. According to the source, the draft amendments would lead to the total deterioration of the settlement-tier of governance throughout the entire country.

“It is nonsense to eliminate settlements in densely populated Moscow Region. It doesn’t fit into any paradigm. It is just the governor’s whim. It will be easier for him to manage his affairs this way, and so the law has been mangled for this sake. He has to demolish everything so it will be easier to build it up again,” RBC’s source said.

The reform has been opposed by people of different views and parties. Local self-government as such has been threatened. As the 2018 presidential election approaches, the federal authorities want to avoid such controversies, argues Kynyev.

Through the Back Gate
Terentiev tabled his draft amendments as part of the second reading of a draft law bill that would abolish direct popular votes on whether to change the status of urban and rural settlements. The government tabled the draft law back in the spring of 2015. It was passed in its first reading the same year, after which the Duma has not returned to it.

Radical change in the territorial basis of local self-government has been brought in “through the back gate,” noted our source in the Duma, although the 2014 local self-government reforms were “seriously discussed” in society, he recalled.

Alexei Didenko (LDPR), chair of the Duma’s Local Self-Government Committee, agreed the draft bill could “eliminate the machinery of popular self-government,” and ordinary people would find it harder to defend their interests. According to Didenko, the draft amendments were at odds with what the president said during his 2013 state of the nation address: “Local governance should be organized in such a way  anyone can reach out and touch it.”

Didenko told RBC  the decision whether to support Terentiev’s draft amendments or not would be made by his committee, most of whom are United Russia members, in March. Two sources in the Duma told RBC the committee would approve the draft amendments.

How Local Authorities Have Been Stripped of Their Powers
In his December 2013 address to the Federal Assembly, President Putin asked that the organizational principles of local self-government be clarified. According to Putin, the quantity of responsibilities and resources of municipal officials were out of balance, “hence the frequent confusion over powers.”

In May 2014, a law reforming local self-government was passed, endowing the regions with the right to assume a considerable number of the powers previously exercised by local authorities in taking economic decisions.

The original draft of the bill called for the abolition of direct elections of big-city mayors and city council members. The final draft stipulated the heads of municipal entities could be either elected directly or appointed from among council members.  In the first case, the head of the municipal entity could lead the administration himself. (If the municipal entity in question is a city, he would become city manager.) In the second case, the head of the municipal entity would chair its representative body.

Regional legislative assemblies were accorded the right to divide cities and towns into intra-urban municipal entities. Two new types of municipal entities were introduced for this purpose: urban districts with intra-city divisions, and intra-urban districts.

First-tier council members (that is, council members of urban and rural settlements) are elected directly by voters. Second-tier council members (of municipal districts and urban districts with intra-city divisions) are either elected or delegated from among the heads of settlements and first-tier council members, in the case of municipal districts, or only from among first-tier council members, in the case of urban districts with intra-city divisions. The method of electing council members was also to have been defined by regional law.

In February 2015, two other methods for electing heads of municipal entities were introduced. The first method allows the head of a municipality, chosen by the municipality’s council from among its members, to lead the local administration. However, he surrenders his mandate as a council member. The second method allows a bureaucrat, chosen by council members from a slate of candidates suggested by a hiring committee, to lead the local administration. This had made it possible for city managers to become autocratic mayors.

Translated by the Russian Reader. See my December 15, 2016, post on the same topic, “In Tomilino.”

How the Partisans of Suna Have Spooked Karelian Officials

Everyone shall have the right to [a] favourable environment, reliable information about its state and […] restitution of damage inflicted on his health and property by ecological transgressions.
Article 42, Constitution of the Russian Federation

How the Partisans of Suna Have Spooked Karelian Officials
Valery Potashov
Bilberry (Muistoi.ru)
February 7, 2017

The so-called partisans of Suna, defenders of Suna Forest. Photo courtesy of Inna Kondrakova

It seems the Presidential Human Rights Council’s visit to Karelia, scheduled for February 8, has frightened the republic’s authorities so much that they have made every possible effort, if not to disrupt the council members’ meeting with the defenders of Suna Forest, who for several years running have been trying to assert their constitutional right to a healthy environment, then, at least, to discredit their better-known activists. Several days before the HRC’s on-site meeting, Karelian news websites loyal to the republic’s leadership published articles, written under pseudonyms, meant to persuade the council members that the conflict over Suna Forest had been “sparked” not by the pensioners from the village of Suna, who are opposed to clear-cutting to make way for a sand and gravel quarry in a forest where villagers have traditionally harvested mushrooms, berries, and medicinal herbs. And during a February 6 meeting with members of the Karelian Legislative Assembly, Alexander Hudilainen, head of the republic, stated outright it was not the village’s pensioners who were standing watch in the forest in winter, but young people whom someone had supposedly “stimulated.”

Alexander Hudilainen, head of the Republic of Karelia meets with members of the republic’s parliament. Photo courtesy of gov.karelia.ru

Actually, we could expect nothing else from the current governor of Karelia. Several years ago, when a grassroots campaign calling for his resignation kicked off in the republic, Mr. Hudilainen saw the machinations of “foreign special services” in the mass protests of the Karelian people. However, when a resident of the town of Kondopoga phoned the governor live on Russian Public Television (OTR) and asked him what solution he saw to the issue of Suna Forest, Hudilainen promised to “sort out” the situation.

“We will not allow the environment and the residents to be hurt,” the head of Karelia told the entire country.

A question about the Suna Forest “spoiled” the mood of Alexander Hudilainen, head of the Republic of Karelia, during a live broadcast of the program “Otrazhenie” (“Reflection”) on Russian Public Televisioin (OTR).

In the intervening two and a half months, however, neither Mr. Hudilainen nor anyone from his inner circle has found the time to visit the Suna Forest and see for themselves who exactly is standing watc in the minus thirty degree cold in a tent to stop the clear-cutting of a forest the village’s old-timers call their “provider” and “papa forest.” Moreover, when it transpired that members of the Presidential Human Rights Council planned to meet with the defenders of Suna Forest, Karelian officials attempted to move the meeting to the administration building of the Jänišpuoli Rural Settlement, which includes the village of Suna. But the so-called partisans of Suna insisted council members come to the forest and see what the village’s pensioners have been defending.

“Why should we meet in the administration building? We have been standing vigil in the forest for over six months, in the rain and the frost, and we will stay here until the bitter end,” said pensioner Tatyana Romakhina, one of Suna Forest’s most vigorous defenders.

Tatyana Romakhina. Photo courtesy of Alexei Vladimirov

Romakhina also told Bilberry that the day before she had got a call from the Kondopoga District police department, and a man who identified himself as Captain Viktor Korshakov had cautioned the old-age pensioner against unauthorized protest actions during the visit by the Presidential Human Rights Council. Romakhina regarded the phone call as yet another attempt to put pressure on the defenders of Suna Forest, noting the partisans of Suna had long been ready for anything.

Translated by the Russian Reader. Thanks to Comrade Koganzon for the heads-up

______________________

Residents of the Village of Suna Address President Vladimir Putin (October 2016)

Farouk Mardam-Bey: To “Leftist” Admirers of Assad’s Syria

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Farouk Mardam-Bey

To “Leftist” Admirers of Assad’s Syria
Farouk Mardam-Bey
Pulse
December 24, 2016

As a Syrian who has always identified politically with the left, I am particularly appalled by those men and women who call themselves left-wingers—and are therefore supposed to stand in solidarity with struggles for justice worldwide—and yet openly support the regime of the Assads, father and son, who are chiefly responsible for the Syrian disaster.

Following four months of intense bombardment by the Russian air force, Bashar Al-Assad’s army, along with Shiite militias hailing from everywhere and mobilized by the Iranian mullahs, have now finished “liberating” Eastern Aleppo. Liberated from whom? From its inhabitants. More than 250,000 inhabitants were forced to flee their own city to escape massacres, as had the people of Zabadani and Daraya before them, and as will many more Syrians if systematic social and sectarian “cleansing” continues in their country under the cover of a massive media disinformation campaign.

That in Syria itself wealthy residents of Aleppo, belonging to all religious sects, rejoice over having been rid of the “scum”—meaning the poor classes who populated Eastern Aleppo—is not surprising at all. We are accustomed to it: the arrogance of dominant classes is universal.

That Shiite mullahs stuck in another era celebrate the event as a great victory of the true believers over Umayyad disbelievers, or proclaim that Aleppo has been Shiite in the past and will turn Shiite again, can also be understood if one is familiar with their doctrine, as delirious as that of their Sunni counterparts.

Finally, that in the West politicians and opinion makers of the far right or the hard right reaffirm, loudly, their support for Assad is also quite natural. Such people have nothing but contempt for Arabs and Muslims, and they believe, today as ever, that these “tribes” must be led with a big stick.

But how could one fail to explode in anger when one reads statements in support of the regime of the Assads, father and son, issued by men and women who claim to stand on the left, and who should therefore sympathize with struggles for justice everywhere? How could one fail to become exasperated when one hears them praise the independence, secularism, progressive character, and even “socialism” of a lawless clan that took power in an army coup more than forty-five years ago and whose only concern is to keep exerting power forever? “Assad forever,” “Assad or nobody,” “Assad or we burn the country,” chant Assad’s partisans. And his “leftist” supporters nod approvingly under the pretext that there is no other choice: it’s either him or ISIS.

And yet the Syrians who rose in 2011 were the first to vigorously condemn the jihadi groups of all sorts and kinds, and in particular ISIS, that have infested their popular uprising after it was forced into militarization. Completely alien to the demands of liberty and dignity of the popular uprising, these jihadi groups focused their attacks principally on the vital forces of the opposition, whether civilian or military, and cracked down on the population in the areas that they managed to control. In so doing, they buttressed Assad’s propaganda inside Syria as well as internationally, allowing him to portray himself as a defender of religious minorities.

The same Syrians who rose in 2011 have moreover often expressed their distrust of those who have pretended, and continue to pretend, to represent them, and who proved to be incredibly incompetent. Hoping for a Western military intervention that was obviously never envisaged by the Obama administration, subservient to this or that neighboring country (Saudi Arabia, Qatar or Turkey), divided among themselves and non-existent on the ground, these self-proclaimed representatives were incapable of addressing the world with a coherent political discourse.

But neither jihadi intrusion nor the shortcomings of the self-proclaimed representatives of the Syrian revolution, nor any argument used to justify the unjustifiable, can invalidate two fundamental facts: that the Syrians had a thousand reasons to revolt, and that they did so with exceptional courage, under conditions of near-universal indifference, countering the ruling clan’s limitless terror, Iran’s imperial ambitions and, since September 2015, a US-approved Russian military intervention that has already killed several thousand civilians.

Is this “Syria of Assad”—where Iran and Russia act as they please, together as well as separately, and whose future now relies exclusively on their agreements and disagreements—independent and anti-imperialist? Let left-wing admirers of the Assad regime read the unconscionable treaty that it signed on August 26, 2015, granting Russia exorbitant privileges as well as complete and permanent immunity regarding all damages caused by its air force.

How can anyone seriously describe as “secular” a regime that, since its beginning and in order to perpetuate itself indefinitely, has striven to poison relations between religious communities, held Alawis and Christians hostage to its policies, presided over the contamination of Syrian society by the most obscurantist form of Salafism, and has manipulated all sorts of jihadists, and not only in Syria?

How “progressive” is it to promote the wildest type of capitalism, impoverishing and marginalizing millions of citizens who barely survive in the suburbs of the main cities? These impoverished Syrians were the main social component of the revolution, and they became the main target of the regime’s heavy artillery, barrel bombs and chemical weapons. “Kill them to the last” demanded the Shabbiha (Assad’s thugs) from the beginning of the uprising, so that the new “progressive” bourgeoisie could securely plunder the nation’s wealth and pile up billions of dollars in fiscal paradises!

If the above is not enough, one can also remind Assad’s “leftwing” supporters of the crimes against humanity perpetrated with complete impunity by Bashar’s father, Hafez, during his thirty years of autocratic rule. Two locations summarize them: the city of Hama, where over 20,000 people, possibly 30,000, were massacred in 1982, and the prison of Palmyra, the equivalent of an extermination camp where the jailers used to boast about turning the men they tortured into insects. It is this same impunity that some on the left alas want to extend to Bashar Al-Assad, the principal culprit responsible for the ongoing disaster with over ten million displaced, hundreds of thousands of dead, tens of thousands imprisoned facing torture and summary executions in jail.

Until the executioners are defeated and punished, Syria’s endless martyrdom risks foreshadowing many others in the world — a world from which Syria will have vanished.

Translated from the French by Joey Ayoub. Photo courtesy of Publishing Perspectives. Thanks to Danny Postel and the rest of the Pulse team for posting this article and their invaluable work in general. 

About Farouk Mardam-Bey

Farouk Mardam-Bey is a Syrian historian, author, and editor who has been living in exile in France since 1965. He was Head of Arabic at the library for the National Institute for Oriental Languages and Civilizations in Paris (1972-1986), an editor and then director of a French journal of Palestinian studies (1981-2008), and a consultant for the Arab World Institute (1989-2008). Since 1995, he has been director of the Sindbad series, part of the publishing house Actes Sud, which aims at translating Arabic works into French. His co-authored/edited books include the two-volume Itineraries from Paris to Jerusalem: France and the Arab-Israeli Conflict (1992-1993), Being Arab (2007), and Our France (2011). He has also edited and published a number of historical, political, literary and bibliographical texts and translated the works of the Palestinian poet Mahmoud Darwish into French.

In Tomilino

Tomilino
Tomilino

Public Hearings in Tomilino Snowball into Makeshift Protest Rally Outside School
On December 7, public hearings in the village of Tomilino on its incorporation into the Lyubertsy Urban District focused not on the announced topic, but on a confrontation between law enforcement and locals
Zhukovskie Vesti
December 7, 2016

Administrative reform in Moscow Region has come to Zhukovsky’s neighbor the Lyubertsy District, which the governor wants to transform into the Lyubertsy Urban District. The regional government and the governor believe this step will help decrease and optimize expenditures. Opponents argue that centralizing authority will simply leave the rural settlements without people to represent their own interests, which will lead to budget cuts and infrastructure collapse. Many experts argue that administrative reform of this kind is against the law. This, for example, was the conclusion reached by the State Duma’s Committee on Federal Organization and Local Self-Government. A similar stance has been adopted by members of the Presidential Human Rights Council. This, however, has not slowed down the determination of the governor and his team. However, others have not resigned themselves to this approach, and the residents of the village of Tomilino are a striking example.

On November 29, Vadim Lapitsky, head of the Tomilino village administration, resigned, and the independent website vtomilino.ru, which had served as a venue for expressing viewpoints opposed to the regional authorities, was shut down. Grassroots activists believe this was the response of authorities to resistance by locals to their top-down decisions. Indeed, discussion of the planned reforms has been the main topic of conversation recently.

The Tomilino town council decided to hold a referendum in which villagers would vote the reforms up or down, but this was met with objections from the Lyubertsy prosecutor’s office, which claimed that holding a referendum on an issue like this would be illegal. According to the prosecutor’s office, public hearings, which are advisory in nature, were sufficient to resolve the issue. A pressure group collected 2,800 signatures in favor of the referendum, but the authorities simply ignored the petition.

Ultimately, the villagers came to the public hearing, the only official event at which authorities had decided to listen to the voice of the people. However, the police, led by the police chief of Lyubertsy, were waiting for Tomilino residents at Prep School No. 18, where the hearings had been scheduled. The school’s large auditorium was unable to accommodate all comers. (According to the pressure group, around a thousand people came.) People stood in the hallways, and around a hundred people were left outside, since the police had barricaded the door. As a result, the people outside the school held a spontaneous protest rally at which they chanted slogans against unification with Lyubertsy.

photo_2016-12-07_21-31-05_thumb_

Meanwhile, in the auditorium, Vladimir Ruzhitsky, head of the city of Lyubertsy, initially tried to explain the benefits of enlargement to the audience, but in the heat of ensuing discussion he got personal. The locals also expressed their opinions emotionally, without mincing their words. In the end, a detailed discussion proved impossible. The majority told the authorities exactly what they thought, while the authorities demonstrated the were indifferent to these opinions and that public hearings were conducted merely to comply with procedure.

At the moment, the public hearings are continuing in Tomilino. Find out all the latest news at www.vtomilino.ru, the Tomilino group on VK, and the Telegram channel https://telegram.me/vtomilino.

Screenshot from the Telegram channel Vtomilino on December 7, 2016. “We’re opposed! 19:30.” “Ruzhitsky has threatened audience members with criminal charges if they continue chanting, ‘Opposed.” 19:31.” “Police are bullying people at the entrance. 19:36.” “Ruzhitsky has had nervous breakdown, is taking like hysteric. 19:37.”

Continue reading “In Tomilino”

Farewell to Matyora

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Experts Predict the Closure of All Rural Hospitals by 2023 
Ilya Nemchenko
RBC
December 9, 2016

If the number of social welfare institutions continues to decrease at the same pace, there will be no hospitals in rural areas within seven years. Experts argue that all rural schools and medical clinics could be closed within seventeen to twenty years.

Due to “optimization” processes, over the past twenty years, rural areas have lost much of their social infrastucture, experts at the Center for Economic and Political Reform (TsEPR) have concluded. In report entitled “Russia, Land of Dying Villages,” they note the numbers of hospitals, schools, and clinics in rural areas will continue to decline in the coming years. RCB has a copy of the report.

Based on Rosstat’s data, the TsEPR has calculated that, over the past fifteen to twenty years, the number of rural schools had shrunk by nearly 1.7 times (from 45,100 in 2000 to 25,900 in 2014), the number of rural hospitals by four times (from 4,300 to 1,060), and the number of rural clinics by 2.7 times (from 8,400 to 3,060).

The upshot is that all rural hospitals could close in seven years, while all rural schools and clinics could close in seventeen to twenty years, claims the report.

“It is clear that this is not possible and that all ‘optimizations’ have their limits. However, there are fears that social welfare institutions will continue to close in the countryside in the coming years, albeit at a much less impressive pace,” write the report’s authors.

The optimization of schools and hospitals is often justified by decreases in population, although it is socio-economic problems that facilitate flight to the cities. The experts argue the government has deliberately pursued a policy of depopulating rural areas and has deprived the countryside of its “last hope for the future.” They call the current circumstances a vicious circle. Optimization of social welfare facilities has proceeded at a much faster rate than rural depopulation and the abandonment of villages.

According to the report, the rural population has been in constant decline over the past twenty years. This has happened due both to migration outflows and the fact that the death rate has exceeded the birth rate. The number of deserted villages increased by more than six thousand from 2002 to 2010, to 19,500. Moreover, less than one hundred people live in more than half of all rural settlements.

The experts note that while the number of depopulated villages has continued to grow in Central Russia and the north, rural areas have been developing vigorously in the south. In 2016, the North Caucasus Federal District had the largest population in terms of percentages (50.9%), while the Northwest Federal District had the lowest (15.8%).

The study underscores that the main causes of depopulation in the countryside are social and economic problems. The standard of living is low in rural areas, while unemployment is relatively high, and this has spurred a growth in the crime rate. The experts note that prices in rural areas are high, so country dwellers spend more money on food than city dwellers do.

Population outflow has also been due to the poor quality of utilities and housing. According to the TsEPR, only 57% of rural housing stock is supplied with running water, while only 33% of houses have hot water. The condition of the water mains in the countrsyide has constantly grown worse: only 54.7% of residents are supplied with safe drinking water. The experts note that only 5% of villagers have sewers. (This figure has not changed since 1995.) However, the provision of natural gas is relatively better. According to Rosstat, approximately 75% of the rural housing stock is supplied with pipeline or liquefied gas.

TsEPR’s researchers write that the government policy has concentrated capital, jobs, and people in the large cities, while attempts to maintain the rural population have failed, because there are no conditions for developing the villages. The experts believe that comprehensive socio-economic reforms are needed to solve the problem. Otherwise, the number of deserted villages will have increased by the time of the next census.

Translation and photo by the Russian Reader

See some of my previous posts on life in the Russian countryside:

Downhill

"Lose weight with us. LPG from 890 rubles. You'll feel thinner after the first procedure." Photo by the Russian Reader
“Lose weight with us! LPG from 890 rubles. You’ll feel thinner after the first procedure.” Photo by the Russian Reader

Raw Materials, Grain, and Transport
The Russian economy has been shrinking and devolving
Pavel Aptekar
Vedomosti
November 9, 2016

As many experts had predicted, the inertia of economic policy has led to an ever-increasing shrinkage of the economy and devolution of its structure. In the last two years, the role of primary industries and the cargo haulage they generate has grown even more.

In the latest issue of Commentaries on the State and Business, Nikolay Kondrashov of the Higher School of Economics has calculated that, in the third quarter of 2016, agricultural output grew in comparison with the annual averages for 2014 by 6.6%, mining by 3.6%, and cargo haulage by 3.4%. During the same period, the volume of retail trade has decreased by 14.7%, construction by 12.8%, and manufacturing by 7.2%. According to Rosstat, real wages decreased by 13% from the third quarter of 2014 to the third quarter of 2016. This has reduced domestic demand, purchasing power and, consequently, the production of a number of consumer goods and the tempo of new construction. Sales of domestic products have increased relative to banned or seriously inflated imported goods, but overall food consumption has fallen. The contribution of manufacturing, construction, and trade to GDP has decreased, while, on the contrary, the role of extractive industries, agriculture, and the cargo turnover they generate has grown.

It is extremely difficult to break away from a resource economy and get on the path of growth. It is impossible to radically restructure the economy without major investments. They are currently at a low level and, according Vladimir Nazarov, director of the Finance Ministry’s Finance Research Institute, they are unlikely to increase. Stronger guarantees of property rights are needed,  at least, for investments to start flowing.

We can take satisfaction in the growth of agriculture, which has received a good deal of government subsidies and import-substitution preferences, but it is unlikely to provide a robust multiplier effect: the agricultural sector is heavily monopolized, and it requires less and less manpower. Agricultural equipment manufacturers may still profit, but they face serious competition from the Belarusians. Given low economic growth, the best we can look forward towithin the current framework is a slight downtick in the primary industries due to an increase in retail sales and construction, notes Nazarov.

Some growth in the manufacturing sector can be attained through defense contrats, whose impact on demand and economic growth is generally quite small. Russia can produce a limited number of products that are popular not only in the domestic market but also foreign markets, but we should not expect them to be the source of structural improvements.

The Russia economy’s structural focus on extractive industries was also typical during the fat years, but then it was mixed with windfall profits from oil sales. Nowadays, there is no hope that oil will generate growth. During a crisis, we need freedom of entrepreneurship and the development of new sectors from the bottom up, thus increasing the demand for human capital, more than ever. Otherwise, human capital degrades as well. It does not take a lot of smarts to maintain pipelines and a small number of latifundia.

Translated by Death of a Salesman. Thanks to Gabriel Levy for the heads-up

Hoe Your Own Row

Nearly Half of All Russians Have Switched to Subsistence Farming
Natalya Novopashina
RBC
October 21, 2016

The percentage of Russians who grow food in their gardens has increased to 46%. At the same, food sales in stores have decreased, according to GfK Russia.

In two years, the percentage of Russians growing vegetables and fruits in their own gardens has increased from 39% to 46%. Moreover, production of their own vegetables is the main source of nutrition for the 15% of “active” gardeners, GfK Russia CEO Alexander Demidov told RBC.

“We have noticed a fairly big burst. People have been switching to growing their own produce. It is definitely a crisis,” he said, adding that the percentage of Russians engaged in subsistence farm not as a hobby, but to feed themselves, will only grow.

Irina Koziy, general director of industry news website FruitNews, confirms the trend, noting that it is most visible in medium-sized towns for now.

“Besides, there are a number of programs in the regions under which needy and large families are supplied with seed potatoes for planting in the spring. Such programs operate in Buryatia, Kuzbass, and a number of other regions,” said Koziy.

“The consumer moods of Russians have improved slightly, but they still remain in the negative zone,” notes GfK Russia’s report “The Russian Consumer 2016: Adapting to the Crisis.”

In April 2016, 53% of respondents reported the crisis had had a direct impact on their lives. In July 2016, this figure was 46%.

And yet, in reality, the actual financial circumstances of Russians have not improved. They have simply adapted to the crisis and regard the current economic reality more calmly.

“The effect of adjusting to the situation has kicked in, because people don’t believe the crisis will be resolved soon,” said Demidov. “So crisis consumerist strategies are still in effect.”

According to GfK, the vast majority of respondents (75%) said they were willing to give up purchasing certain goods. In particular, according to the company, the greatness number of Russians (17% of respondents) have been saving money by cutting out trips to beauty salons. Other expenditures that had been cut included purchases of household appliances (16%) and cosmetics (15%).

The sales of most foods have also decreased. According to GfK, during the year beginning July 2015 and ending July 2016, sales of dairy products and meat decreased in physical terms by 0.5% and 0.8%, respectively. Most of all, consumers scrimped on sweets and snacks (a 3% decrease), bread products (a 7% decrease), and fish and seafood (a 7.4% decrease). A slight increase occurred in sales of frozen products (1.1%), eggs (1.4%), fresh fruits and vegetables (1.5%), and baby food (2.2%).

During the same period, the volume in terms of price of goods purchased through promotions grew by 45%. And the share of promotions throughout the fast-moving consumer goods sector increased from 12.2% to 14.1%, according to GfK’s calculations.

Translated by the Russian Reader. Photo courtesy of russiannotes.com