Paul Goble

Staunton, October 31 – Aleksandr Khloponin, Presidential Plenipotentiary for the North Caucasus Federal District, has called for the formation of a special "Caucasus Mineralny Vody agglomeration” tax district consisting not of whole federal subjects but rather of portions of Kabardino-Balkaria, Karachay-Cherkessia and Stavropol kray 
On the one hand, this arrangement which will involve only parts of the three federal subjects will have the effect of reducing still further the powers of the regional heads who will lose part of their authority to direct development in a significant portion of the territory of their republics or region.
And on the other, it will further anger people in Stavropol who are seeking to have their kray transferred from the North Caucasus to the Southern Federal District but who will now have three districts and eight cities of their kray, including Pyatigorsk and Essentuki, more tightly linked to the former (rian.ru/economy/20101029/290644987.html).
Speaking on Friday to a Pyatigorsk seminar of heads of municipal bodies, Khloponin said that "it is necessary to make out of the Caucasus Mineralny vody zone a special economic zone” with its own tax arrangements, benefits and preferences, adding that "the plan of the development of the agglomeration is [currently] at the developmental stage.”
The Presidential plenipotentiary argued that he expected to be able to clear such a program at the federal level and make it "one of the key projects of the strategy of the social-economic development of the North Caucasus Federal District,” an indication that the idea of such trans-border tax districts may be expanded to other parts of that Federal District.
Khloponin added, "Novosti” reported, that "the strategy must consider all the particular features of the region, including transportation logistics, tariff policies, and standards of the quality of sanatoria and resort services,” an indication that Moscow may be pushing for this project as part of its plans to stage the Olympics in Sochi in 2014.
However that may be, this proposal, the kind of administrative innovation that many in Moscow believed Khloponin was selected to come up with and then implement, is certain to provoke negative reactions not only among the governments of these federal subjects but also among the populations there.
For many of the non-Russians, this step will look like a kind of covert amalgamation of their republics into Russian regions, something that they have clearly indicated they oppose. And for the Stavropol residents who have petitioned Moscow to shift their kray to the Southern Federal District, this step will be viewed as Moscow’s negative answer to their request.
Because of the near certainly of resistance, this plan, although it attracted the attention of the Moscow media, may never be put into practice, but it is a measure both of Khloponin’s casting about for some means of gaining control of his district and of Moscow’s concerns about the run-up to the Sochi games that such a controversial idea is being floated now.