Why is the Russian government planning to drag out the implementation of an upcoming reform of municipal self-governance? And does it matter? And why is it difficult to take the Kremlin’s infrastructure development plans at face value? Below I am trying to answer these questions and also highlight some of the other notable developments in Russian regional politics over the past weeks.

Municipal reform

One of the potentially most consequential bills on the agenda of the State Duma’s fall session is the reform of municipal self-governance.

The reform of municipal self-governance is the second stage of a public administration reform that started in 2021 with the adoption of the first part of the reform. This strengthened the powers of the federal government and the Kremlin over governors and regional governments, including codifying the president’s right to dismiss governors at will and influence the appointment of key ministries. That reform is still prompting further centralization attempts, e.g. a recent proposal by sports minister Mikhail Degtyaryov that regional governments should be obliged to get approval from his ministry before appointing regional ministers for sport (in classic Russian policymaking fashion, the norm, once adopted, could then gradually be extended to other portfolios).

The second part would have followed the top-down logic of the first, firmly incorporating Russian self-governments into the existing vertical of power, or, as the 2020 constitutional reform called it, the “unified system of public power”. Most notably, this would have meant the elimination of thousands of free-standing municipalities, but not only that. Regional governments would have vastly more power over the appointment of the heads of these districts, as well as, it increasingly appears, the mayors of regional capitals. Governors would be given the right to dismiss mayors who fail to meet key performance indicators set by the regional government, a month after warning them – allowing them to deal with potential local opposition effortlessly.

The bill was adopted in the first reading in early 2022, but the parliamentary procedure was then frozen for more than two years, only for the initiators of the law to dust it off for the fall session of the Duma this year, with almost immediately postponing the planned implementation of it again.

One of the bill’s authors, Pavel Krasheninnikov, who officially co-initiated several of Russia’s major political reforms over the past years, recently gave an interview to Kommersant, in which he explained that the law would likely be adopted before the end of the year, but with the implementation curiously postponed to 2026-35, dragged out over a ten-year period. This is unusually long: the original draft envisaged a transitional period of only five years. Krasheninnikov also partially walked back on another proposed measure, the elimination of roughly 18,000 free-standing municipalities and their institutions, folding them into city and municipal districts and doing away with their elections, by allowing the possibility for regions to pick and choose whether they want to preserve “historically significant” municipalities and “walking distance to government” (that is, the easy availability of government services). What the reform still does not answer – as I have pointed out in the past – is how to improve the state of municipal finances. At least, it seems, municipal officials will be exempt from legal responsibility if they fail to execute policies for a lack of money.

It is unclear what prompted the change, which postpones the implementation of the bill essentially indefinitely (considering how long 11 years are in the current political circumstances). The bill received more than 700 amendments, including from municipal representatives, thus it would be logical to assume that the authors simply took into account the political risks associated with such sweeping changes. Even with the current level of domestic political repression the Kremlin is likely too cautious to simply pull the rug out from under tens or hundreds of thousands of local officials on whose cooperation it has so far relied to exercise and maintain power.

But it is also questionable whether the concessions and the postponement matter at all.

Parliamentary hearings on the bill may have stopped in 2022, but the reform itself did not. Following the full-scale invasion of Ukraine the Kremlin used the tools of elevated domestic repression to roll back pluralism and local self-governance. Direct mayoral elections were scrapped in Tomsk, Novosibirsk and Ulan-Ude, all cities with vibrant (by Russian standards) pluralistic politics. Soon Yakutsk – which also elected an opposition mayor in 2018 – could be the next. The appointment of “outsider” mayors to manage major cities – e.g. in Tomsk or, most recently, Samara (a region where a team linked to State Council secretary Alexei Dyumin is taking over) – has become increasingly common, as has the appointment of officials from the governor’s team by city assemblies. In a number of regions municipal electoral systems were amended to benefit the ruling United Russia party. The authorities used the continuously expanding “foreign agents” legislation to expel independent local legislators from municipal and regional assemblies and to prevent new challengers from being able to stand. A growing number of regions have started folding municipalities into municipal districts, in spite of local opposition almost everywhere. The federal government launched the “School of Mayors”, based on the example of the School of Governors, to uniformize the cohort of municipal officials, and discussed introducing key performance indicators to monitor and evaluate the work of mayors.

It seems very likely that, instead of implementing sweeping changes over a short period of time and led by the federal government, the reform will instead serve as a directive for regions to observe and implement changes on their own territory and, crucially, not to implement anything that runs counter to the reform’s stated principles. With this, the Kremlin would essentially build on the first part of the reform, which was expected to strengthen loyalty to the federal government, as well as utilizing the crisis management mechanism that has been tested during the COVID crisis and military mobilization, which empowers regional governments to act with their own tools and on their own timeline to meet the goals defined by the Kremlin – and to take full political responsibility for any backlash or failure.   

Inflation and investment

The business news site RBC drew attention to the fact that 2024 will likely turn out to be the year with the lowest degree of execution of public funds allocated for trunk transit infrastructure development projects since the program was launched in 2019. In the first three quarters of the year only 35% of the funds allocated for these projects were paid out (contrast with more than 57% at the same time last year). In particular, projects concerning high-speed railways (except for those linking Moscow with neighboring regions), the Azov-Black Sea area ports and the Northern Sea Route saw a low degree of financing, in spite of the latter two being stated development priorities. While some pointed out that this is partly due to changes at the helm of the Ministry for Transportation this year, and partly to a reorganization of National Projects and the reallocation of funds – which perhaps indeed has to do with it – the vaguely defined “geopolitical crisis” was apparently also brought up as a possible cause.

I have recently written specifically about the government’s development plans for the Russian Far East, for Riddle. I am not going to repeat the piece here, but the core takeaway is that while the Far East will likely develop at a faster pace than before due to Russia’s trade pivot to Asian markets, as long as the federal budget’s priority remains the war, the Russian government is not well placed to set the pace of this development. Development plans are fairly good at defining priorities but are often based on inflated expectations of funds and efficiency. They also envisage the use of significant private funds, a questionable assumption at a time of rising interest rates, rising cost of equipment, uncertain returns and a labor market crunch squeezing profit margins further – unless, of course, companies can rely on subsidized loans, which however amounts to state support. The weight of budgetary funds in public-private partnership projects has also grown over the past two years.

In reality the development of trunk infrastructure requires significant additional backing from the government even when there are strong private interests involved: in a recent example, the borders of the Khabarovsk Priority Development Area were changed to include a private railway connecting the Elga coal mine in Yakutia to a port on the Pacific coast, and the project was also added to the government’s list of priority development projects that can be executed faster.

Regional governments will be incentivized to spend more on development projects themselves by the government gradually writing off two-thirds of their debt on budgetary loans. But – after benefiting from the economic growth related to war production in 2023 – this year has highlighted problems with regional financing, as regions, on the whole, struggled to raise expenditures to match the level of inflation, and several municipalities and regions are struggling to raise funds on the market due to growing rates. Meanwhile, federal transfers are going to be cut in 2025. Several regions have drafted budgets with high deficits.

And it is not only regional budgets that face heightened pressure: in 2024 the federal budget will spend up to 1.5 trillion rubles more – backed by unclear resources – on war-related expenses and on supporting mortgages amid rising interest rates. Neither priority can be questioned without raising political risks, and war-related spending will grow further next year, crowding out development priorities. Furthermore, the draft 2025 federal budget was adopted assuming an average key rate of only 15%, even as the Central Bank raised its key rate to 21% in October.

Also-happeneds

• Further restrictions on migrants: As the State Duma continues discussing several bills having to do with stricter regulations regarding migrants, regions have also continued adopting restrictions. The Ulyanovsk Region prohibited migrant workers from working in transit and retail; in the Irkutsk Region they won’t be able to work in transportation and education. The Omsk Region also forbids them to work in health care and pharmaceutical factories. The Maritime Territory will set up a migration agency to control the inflow of migrants and to provide “cultural education”. Certain regional officials – e.g. Kaluga head Vladislav Shapsha – have been calling for migration restrictions for years, but the current wave was triggered by terrorist attacks earlier this year, which led to a backlash against Central Asians (and also non-Slavic Russian citizens). Now more than thirty (of 83) regions limit migrants’ access to their labor market, even though several industries are struggling with worsening labor shortages. Last week Andrei Pertsev and Alexandra Prokopenko discussed this contradiction between political and economic interests in Meduza’s podcast on Russian domestic politics; it’s worth a listen.
• FSB and law enforcement activity in the regions continued in October, leading to a handful of arrests of public officials, several of them connected to the local construction industry. In Dagestan the mayor of Izberbash was arrested at the beginning of the month for accepting a bribe from a developer. In Smolensk, a local United Russia deputy and head of a construction company was arrested in October, while in Ryazan the FSB arrested a former regional minister for construction. In the Krasnoyarsk Territory Alexander Gliskov, a local politician of the Liberal Democratic Party – who was arrested a year ago, shortly after he ran in the region’s gubernatorial election – was sentenced to ten years in prison for accepting a bribe from a road management company.
• Personnel changes: The latest “veteran of the special military operation” to likely receive an appointment to a position in public administration is Sergey Sechenov, a former commander of the GROM assaulting squad who will reportedly soon be appointed to head the Tomsk city council. As in most previous cases, Sechenov would essentially be appointed to a relatively weak position, which depends on continued support from United Russia deputies (that is, established pro-government elites), but his elevation does suggest a rising trend of regions complying with the expectations of the federal center to put war participants into elite positions. At the same time, Belgorod governor Vyacheslav Gladkov was complaining to the Defense Ministry that too many regional officials were signing up as volunteers in the region’s territorial defense unit, causing “personnel issues”. Gladkov later prohibited law enforcement officers and employees of the Ministry of Emergency Situations from joining the unit. The governor, who is known as a savvy communicator, is likely angling for additional federal help to staff and finance the region’s territorial defense forces.  
• A failed appointment: The regional assembly of Tuva did not appoint former deputy defense minister Ruslan Tsalikov member of the Federation Council from the region before the set deadline. Tsalikov was one of several deputies of Sergey Shoigu dismissed earlier this year after Shoigu was transferred to the Security Council. Several former Defense Ministry officials have since been appointed, but Tsalikov – whose name never officially emerged as a suspect in a corruption case – was seen as a shoo-in for the Federation Council from Shoigu’s home region. The fact that this did not come to pass could indicate that the purges at the Defense Ministry are not over yet.
• Rumors on gubernatorial dismissals: The Vedomosti daily cited sources from the Presidential Administration that two governors – the Rostov Region’s Vasily Golubev and the Republic of Komi’s Vladimir Uiba – could be dismissed before the end of this year. Both of them are “outsider” governors, albeit Golubev – a former Moscow Region official – has led the Rostov Region since 2010. Uiba is a more recent appointment: a doctor tipped to head the region at the height of the COVID crisis in 2020, who nonetheless struggled to establish a working relationship with the region’s residents and elite and remained highly unpopular. Neither dismissal would be a surprise, especially as the Kremlin has seemed to move on from the practice of entrusting outsider technocrats to lead regions this years, but often such rumors turn out to be mere warnings to the officials in question.
• AvtoVAZ wants higher tariffs: Russia’s car industry was one of the early casualties of international sanctions triggered by the war in Ukraine, as Western investors pulled out and supply chains became more complicated. The main beneficiaries were Chinese carmakers that quickly became dominant on the Russian market. It appears that the situation increasingly concerns domestic market players. In October, the president of AvtoVAZ, Russia’s largest carmaker requested help from the government to increase the market share of Russian manufacturers, even after the government recently increased the recycling fee. Currently, according to the company, almost 90% of the money spent on new cars ends up with foreign (primarily Chinese) carmakers. AvtoVAZ’s leaders also hinted that the government should provide subsidized loans to the company.
• A political prisoner walks free: To end this dispatch on a high note – in mid-October Alexey Moskalyov, the father who was jailed because of his daughter’s anti-war drawing, came out of prison and was reunited with his daughter, Masha. Moskalyov was forced to spend almost two years behind bars, while Masha was transferred to her estranged mother – a deliberately inhumane and absurd sentence to discourage even the most innocent forms of anti-war activism.