Business English

Moscow tested by tensions in outer regions

von Charles Clover (Makhachkala, Dagestan)

The downturn is challenging the Kremlin's ability to buy stability in distant republics

Vladimir Radchenko's first day on the job as acting chief tax inspector for Dagestan, a region in southern Russia, did not go smoothly.

As he stepped into the office on February 6, he was confronted by the son of the president of the autonomous republic, escorted from the building by two men with pistols, stuffed into a car, driven around the capital city for an hour and threatened with death if he ever set foot in the region again.

That was just the start of a very bad week. A lesser bureaucrat, faced with the same, would probably have put in for a transfer. But not Mr Radchenko, who stormed back to the tax inspectorate a few days later in the company, it seems, of a group of heavily armed men who work for a local governor, trying to gain entry to his office. Waiting there was a similarly armed gang who worked for a local bank, whose owner is friendly with Mukhu Aliev, the president of Dagestan.Officials in both Moscow and Dagestan are still not sure what happened during the week-long standoff nor can they explain fully the bizarre behaviour by both sides. In the end, no shots were fired, Mr Radchenko is now in hiding, and Mr Aliev told a television interviewer that the official "will never work in Dagestan".

Eduard Urazayev, an adviser to Dagestan's prime minister, said: "I really should know what that was all about because I am in the government. But I have to say I really don't. The main thing is that nobody was killed."

Perhaps the most surprising thing of all, however, is that having been seemingly complicit in ejecting a senior federal employee from his territory at gunpoint, Mr Aliev's relations with Moscow do not appear to have been damaged.

Last week, Mr Aliev met Vladimir Putin, the prime minister, after meeting Dmitry Medvedev, the president, twice in the past month. Masha Lipman, an analyst at the Carnegie Moscow Center, said: "They kidnapped a senior official sent by Moscow. In any other country, this would be a serious problem. Only in Russia is this not a crisis."

The events underline the balancing act that characterises relations between Moscow and Russia's outlying regions spread across 11 time zones, which is being tested as the economy contracts this year for the first time in a decade and federal subsidies to places such as Dagestan face cuts.

In spite of the temptation to view it as such, Russia does not always function as a centralised, authoritarian state and the Kremlin often has limited resources to enforce its will across the 11 time zones.

Moscow frequently cuts deals with men such as Mr Aliev, local bosses who keep the peace in exchange for Kremlin support. But while Moscow has long been able to buy stability in its restive outer regions usingwindfall oil revenues, the strategy is being undermined by low oil prices, budget cuts, plunging economic growth and high unemployment.

Unable to agree

There seems to be a lack of consensus in the Kremlin about how to counter simmering instability in its outlying regions.

At times over the past few months, Moscow has responded to rising discontent with overkill: in the far eastern city of Vladivostok last December, for example, the Kremlin sent special forces by air from Moscow to quell a revolt by used car dealers angry about an increase in vehicle import duties. The net effect was to alienate the city's population and spark resignations by officials of the ruling United Russia party.

Mr Medvedev this month also fired the governor of the far northern province of Murmansk after he hinted publicly that a mayoral candidate backed by United Russia had used dirty tricks in an election campaign.

In other vulnerable regions, however, Moscow is hands-off. Nowhere is this more apparent than in the predominantly Muslim auto-nomous republics perched on the snowy northern slopes of the Caucasus mountains, such as Dagestan. These regions, which have a history of rebellion and fierce independence, are also more dependent economically on the federal budget than any other in Russia.

Chechnya, Dagestan's neighbour, is still convalescing from a decade of civil war fought between radical separatists and federal troops that destroyed much of the republic. Dagestan still has powerful Islamist separatist movements with which to contend.Security forces this month fought a three-day pitched battle against a group of militants just 50km from the capital, using tanks and helicopter gunships, killing 17 and taking five dead themselves.

The unstable region shows the potential of the economic downturn to inflame simmering tensions. Moscow funds 70 per cent of Dagestan's local budget and 90 per cent of Chechnya's as well as a similar percentage in nearby Ingushetia.

Alexei Malashenko, an expert on the region, said: "There is no economy in the north Caucasus. It is all money coming from Moscow. So if this money stops, there will be an explosion in Dagestan, Chechnya and Ingushetia."

The Kremlin seems aware of the danger the plunging economy could pose for the region. This month, Ramzan Kadyrov, Chechnya's president, was engaged in a tense, if somewhat oblique, exchange with Mr Putin over the question of finances for rebuilding the autonomous republic.

According to a transcript posted on the Kremlin website, Mr Putin asked whether Mr Kadyrov's "discussion with the finance ministry was finished".

"Everything is great with the finance ministry now," Mr Kadyrov said.

"Friends?" Mr Putin asked.

"Friends, thanks to you, Vladimir Vladimirovich!" Mr Kadyrov replied, using Mr Putin's patronymic, the respectful form of address.

In Dagestan, the Kremlin seems to be giving Mr Aliev the benefit of the doubt.

Analysts say Mr Radchenko's appointment could have been an effort by Moscow to grab better control of local government spending and thus the response to the economic crisis.

Increase in crime

Unemployment in Dagestan is estimated to be anywhere from 18 to 50 per cent and likely to rise. Suleiman Udadiev, head of Dagestan's state television station, said Dagestanis losing jobs in more prosperousparts of Russia would return home and fuel at least part of the rise. And that would have consequences. "This is going to mean an increase in crime and an increase in the number of the men who go to the forests," he said, using the euphemism for joining Islamist groups.

Part of the problem for Mr Radchenko, it seems, was that the job of chief tax inspector has been given traditionally to an ethnic Lezgin, and he is Russian. "We have here what we call 'rotation'," said Mr Urazayev. "If a Lezgin, for example, loses his job to an Avarets [another local ethnic group], then an Avarets must give up his job somewhere else to a Lezgin. In this case, the protocol wasn't observed."

But kidnapping Mr Radchenko was an extreme response and the Dagestan president is not anxious to discuss it. "If Mr Radchenko was kidnapped, and I'm not saying he was, then it was only for about 45 minutes," says a senior official in the president's administration. Mr Aliev declined to be interviewed.