Blaming Regions, Moscow Cuts Transfer Payments to Some of Them for Helping Smaller Nations

July 5, 2014
Reindeer herders in the Nenets Autonomous District, one of the areas affected by the decision to cut subsidies. Photo by

Staunton, July 5 – It is a longstanding observation that the power to tax is the power to destroy, but a corollary of this is now on display in the Russian Federation, where Moscow’s power to re-allocate resources for regions that can’t raise them on their own and then blame the regions for that decision will harm if not yet destroy some of the country’s smallest nations.

Yesterday, the Russian government announced on its website that it would not send any additional budgetary transfers to ten regions for work with ethnic minorities because those regions, Moscow said, had failed to meet the center’s requirements in this sector.

Moreover, the Russian government warned that it would transfer funds from still others if they failed to bring their programs into correspondence with what the center required.

Using budgetary leverage is normal in a federal system, but there are three reasons why what Moscow has just done should be a matter of concern and may generate more tensions. First, in ending the transfers, Moscow blamed the regional governments for failing to do what was necessary even though the regions lack the independent taxation powers to fulfill their obligations if Moscow doesn’t help.

Second, such cutbacks will hit the non-Russian groups involved especially hard. They will be the victims of Moscow’s decision however much the center may present what is happening as the fault of the regional authorities. As a result, more tensions between these groups and Russian institutions are likely to grow.

And third, these budgetary moves are a reflection of what has become an increasingly familiar tactic of the Putin regime: its use of nominally neutral budgetary decisions to advance an unspoken effort to undercut non-Russian nations in the Russian Federation and thus avoid the kind of criticism it might be expected to receive from a frontal attack.