Russian regional officials are still appointing war participants to various positions, mostly to signal loyalty to the Kremlin, but some of the more recent appointment may represent a slight an potentially consequential shifting of gears. Meanwhile, Russian Railways will be forced to cut its investment program, which may not change much in the short term, but highlights some of the struggles over limited resources and priorities. More on these and some other developments from the past weeks, below.

“New elite” updates

The appointment of officials with war participant credentials continued in November and it looks like that this is increasingly becoming an expectation of the Presidential Administration of regional administrative elites. War participants are now also actively promoted in the “Leaders of Russia” competition of public officials, by Sergey Kirienko, the deputy head of the Presidential Administration who oversees domestic politics – this is yet another sign that the Kremlin would like to see regional governments hiring more of these people. No doubt the purpose is partly to underline Putin’s promise that war participants are Russia’s “new elite”, even as the government is effectively cutting payments for injuries.

The fact that these appointments continue at a steady pace, however insignificant the positions may be, suggests that sitting governors have understood the assignment and are now treating the appointments as a way to ingratiate themselves with the Kremlin, even when there is little substance behind the decisions. Notably, Tambov’s new governor, the aforementioned Yevgeny Pervyshov, a former mayor of Krasnodar highlighted the (rather questionable) war veteran credentials of his former chief of staff Valery Karasev when appointing him to the same position in the Tambov regional government, even though such appointments were completely commonplace in the past for outsider governors. Changing times call for changing ways of presentation of the same thing.

So far, nothing new, apart from, perhaps, where regional officials put an accent. But some recent developments suggest that we might be seeing a gradual, but more substantial change in what kind of war participants receive appointments and what they are going to be entrusted to do.

One notable example in November was the appointment of Lipetsk’s new vice-governor, Roman Balashov. He is not the first war participant in such a position (and remember: Tambov governor is technically also a war participant), but the first without prior experience in politics, which means the crossing of another line in the ongoing, but so far fairly cautious, process of building a “new elite”.

It should be noted that, for all his lack of experience in public administration, Balashov is nonetheless a former soldier, thus not a complete outsider. As regards responsibilities, he is going to oversee issues related to sports (an area with relatively minor resources) and the well-being of other war participants, which could simply be regarded as a publicity stunt. But these issues are becoming more important for how regional administrations are judged, as is reflected in the new list of key performance indicators approved this month by Putin. Overseeing policies affecting veterans will potentially give those responsible a say over a growing amount of money in regional budgets. According to a recent investigation by IStories, regions on average are spending 13% of their social policy expenditures on payments to soldiers and their families. In Lipetsk this figure is 26%.

Meanwhile in Dagestan, the local assembly of Dagestanskie Ogni, a town of 30,000, elected Zamir Gadzhimuradov, another former soldier, deputy commander of the “Akhmat” battalion, and participant of the “Time of Heroes” program, as mayor. Gadzhimuradov had previously been appointed advisor for Sergey Melikov, the head of the republic. Vyacheslav Fedorishchev, the governor of the Samara Region announced that former war participants who took part in “Time of Heroes” would now supervise the work of the heads of municipalities on his behalf, and may, in future, do the same with the deputies of the regional parliaments, which is where regional business elites are typically represented.

Just as with the recent appointment of Artyom Zhoga to serve as presidential plenipotentiary in the Urals, we will have to see exactly how much autonomy the new appointees are going to be allowed to have vis-à-vis existing elites, but these decisions are potentially consequential as they may upset privileges for the sake of the ambitions of governors.

RZhD trouble

In spite of continuing logistical bottlenecks, it now appears that the 1.3-trillion-ruble investment program of the Russian Railways (RZhD) will be reduced by more than a third in 2025, and most of the remaining money will be spent on buying new engines, not the development of trunk infrastructure (that is, the improvement of the company’s throughput capacity). In particular, the third phase of the expansion of the Baikal-Amur Mainline, a key transit artery to the Far East, will likely suffer further delays as its budget will be reduced by around 80% next year.

RZhD is already raising its tariffs by 13.8 percent in 2024-26, but the company says that this is simply not enough to cover its increasing debt servicing and planned investment costs, not to mention rapidly increasing wages for workers, which is partly the consequence of the government’s focus on the defense industrial complex. Both aging rolling stock and worker shortages represent a growing problem causing delays in both directions. But producers who are also facing higher taxes and wage costs are unhappy about it. Meanwhile, both the Energy Ministry – led by Sergey Tsivilyov, himself interested in the coal sector – and the Kemerovo regional government, which Tsivilyov used to lead, are pushing hard to force RZhD to keep subsidizing coal exports at the expense of its investment program, and for the government to set prices for transshipment in ports. The railway company had previously proposed both to raise tariffs and to remove guaranteed transit capacity for coal producers, but the coal sector is facing its own deepening crisis due to falling prices and growing transit costs, a consequence of the loss of European markets.

The RZhD is not the only state-owned company that has indicated that it would reconsider investments next year due to high interest rates (which in all likelihood will grow further in the coming weeks as the Central Bank will probably consider another rate hike to stop the weakening of the ruble and mitigate the inflationary pressure that it generates), but perhaps it’s the most surprising, given the overload on Far Eastern railways and the stated priorities of the government.

In reality, it is unlikely that the investment program, or the cuts to it, will affect transit in the short term, as actual transit has increasingly been lagging behind stated throughput capacities in recent years. This is another major problem that is related to a lack of labor and throughput capacity, but is not fully explained by it. Last month railway operators reportedly complained to presidential adviser Igor Levitin that in mid-October, 35-40% of cargo intended to be shipped to Central Russia was not loaded in Western Siberia. RZhD blamed this on a lack of personnel, but it is also a result of Russia’s lopsided trade flows: its exports are mostly raw materials, making it less profitable to take container wagons back to the Far East (think of it as city bike rental schemes where, without trucks to shuffle the bikes around, the city center would be overloaded by abandoned bikes, at the expense of suburbs). The problem, however, is now so pressing that Putin himself instructed the government to figure something out. In the end, once again, someone will have to pay the bill, and it looks like the federal government is less and less willing to do so.

Regardless of whether or not additional investment would be able to change anything in the short term, both developments underline the incompatibility of Russia’s current war economy with investment goals, the heightened urgency of which is a consequence of the very same war.

Also-happeneds:

· Rostov sprint: It has been interesting to look at the mad dash of Vasily Golubev, the recently resigned governor of the Rostov Region, for a position in the Federation Council. The upper chamber of the Russian parliament has long since been a refuge of former regional leaders and elites (albeit this might be changing as seats are needed for the retiring security elite and war participants), but Golubev’s scramble was remarkably fast. On November 4 he resigned as governor. Ten days later, he received a mandate in the region’s legislative assembly, for which a United Russia deputy had to resign. Six days after that, one of the region’s representatives in the Federation Council, Irina Rukavishnikova, also resigned, opening the way for the chamber to approve, two days later, the appointment of Golubev in her place, as a member proposed by the regional legislature. The haste is probably not unrelated to the FSB’s interest in the region’s officials: just days after Golubev’s ship sailed into the safe haven of the Federation Council, one of his erstwhile proteges and deputy governors, Vitaly Kushnarev who was also regional minister for transportation, was arrested together with his deputy.

· Downscaling domestic flights: According to Kommersant, the Ministry of Transportation has not come to an agreement with the Finance Ministry on the conditions of roughly 19 billion rubles of aid that the government pays out to airlines to guarantee cheap flights between the Russian Far East and the Central (European) regions of the country and flights between Far Eastern population centers. This could lead to airlines reducing the number of flights, and reportedly many of them expect the government to cut these subsidies anyway. There are also technical bottlenecks. Airlines have recently also suspended flights on a total of 34 Airbus 320/321 aircraft due to a lack of spare parts or to reduce wear on engines, expecting them to expire soon. Aeroflot is taking over smaller planes from minor airlines to use for flights between Moscow and the Far East, with a refueling stop along the way, but industry insiders think that this is far from enough to ensure an adequate level of service. The issues highlight the tight corners, in which the government is operating as it is trying to guarantee and improve standards of living in an increasingly important macroregion.

· What is considered good politics: One way for the Kremlin to increase loyalty and internal coherence among the overseers of domestic and regional politics has been the promotion of various seminars and competitions, not only for officials, but also for so-called political technologists. One such competition is the annual “Hamburg Score” awards (the name comes from a Russian expression meaning, roughly, “fair judgement”) where the jury, headed by Kremlin-adjacent political analyst Yevgeny Minchenko, gives out prizes for the best electoral campaigns of the year. Of course, it would be quite absurd to treat these as genuine democratic electoral campaigns, given Russia’s current repressive political environment. But since local politics still tends to be more pluralistic than politics at the regional and federal level, and regional officials and political technologists still need to produce the figures demanded by the Kremlin, it’s interesting to see who was rewarded and why. The award for “best municipal campaign” was, for example, given to Alexander Dubrovin, the United Russia politician who, with the backing of local elites, defeated his incumbent rival – also from United Russia – in the mayoral election of Bratsk, in a rare intra-party split and in one of the very few semi-competitive votes held this year. The jury also praised the Liberal Democratic Party’s “use of artificial intelligence” in its campaign for the Solnechnogorsk assembly (supposedly to analyze voter data – but this is the party that had earlier created a neural network modeled on the late Vladimir Zhirinovsky). Unsurprisingly, the “best campaign for Putin” was found to be conducted in the Far East, where regions reported unrealistically high figures in March, which other regions then had to catch up with. The special award for “technologically challenging campaign”, given to St. Petersburg’s highly unpopular governor, Alexander Beglov, must have elicited at least a polite giggle from the audience. Notably, the jury also praised war participants running for seats in the assembly of the occupied Sevastopol for not touting their war credentials, but focusing on local issues instead. A soft pushback against The Narrative, if you’ve ever seen one.

· Municipal reform updates: The government-supported reform package, which will ultimately incorporate thousands of nominally free-standing municipalities into the existing vertical of power and extend the influence of regional governors over municipalities, is now expected to be adopted in December. However, the past weeks have seen municipal reforms in several cities and regions roll on. Yakutsk, where the scrapping of direct mayoral elections triggered a small protest, was perhaps the most heavily discussed case, but no less important changes have been adopted in other regions. In Smolensk and Voronezh discussions started to scrap party lists in municipal elections completely, which would see city all council deputies elected in single-mandate districts according to the first-past-the-post principle. As earlier examples of this reform have shown (e.g. in Vladimir), this would essentially mean ruling party candidates sweeping the vote, with the local opposition eliminated or reduced to a minimum. Meanwhile, Ryazan became the latest in the series of regions scrapping municipalities ahead of the adoption of the federal reform. Given the importance of municipalities both as (often) the last vestiges of pluralistic politics in Russia, but also for the authorities as a means to maintain grip on regional politics (e.g. through the “municipal filter” used to control the field of gubernatorial candidates), these reforms matter.