Business and Politics in the Russian Regions

Problems of Post-Communism

Volumn 51, Issue 2, 2004, Pages 48-60

  Orttung, Robert W ^a,b  

^a American University   (United States)

^b ETH ZURICH   (Switzerland)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 1842783619     PISSN: 10758216     EISSN: None     Source Type: Journal    
DOI: 10.1080/10758216.2004.11052162     Document Type: Review

References (64)

1. Peter Boone and Denis Rodionov of the Brunswick UBS Warburg research department reported, "In our sample of sixty-four companies, we estimate that 85 percent of privatized companies are now controlled by eight large shareholder groups, whose combined revenues in 2001 significantly exceeded total federal government revenues. The contrast is stark - in 1992 this figure was zero." Peter Boone and Denis Rodionov, "Reformed Rent-Seekers Promoting Reform?" Moscow Times (August 23, 2002).
2. For the most comprehensive analyses of this period, see David E. Hoffman, The Oligarchs: Wealth and Power in the New Russia (New York: Public Affairs, 2002), and Ia.Sh. Pappe, Oligarkhi: Ekonomicheskaia khronika 1992-2000 (Oligarchs: Economic Chronicle, 1992-2000) (Moscow: Higher Economic School, 2000).
3. For the most comprehensive analyses of this period, see David E. Hoffman, The Oligarchs: Wealth and Power in the New Russia (New York: Public Affairs, 2002), and Ia.Sh. Pappe, Oligarkhi: Ekonomicheskaia khronika 1992-2000 (Oligarchs: Economic Chronicle, 1992-2000) (Moscow: Higher Economic School, 2000).
4. The exceptions were Vladimir Potanin and Boris Berezovskii. See Stephen Fortescue, "Pravit li Rossiei oligarkhiia?" (Do Oligarchs Rule Russia?), Polis, no. 5 (2002): 66.
5. See Aleksei Zudin, "Neokorporativizm v Rossii? (Gosudarstvo i biznes pri Vladimire Putine)" (Neo-Corporatism in Russia? The State and Business in the Time of Vladimir Putin), Pro et Contra 6, no. 4 (fall 2001): 172.
6. The groups are Lukoil, Yukos, Interros, Surgutneftegaz, Alfa Group-Renova, Siberian Aluminum-Sibneft, and Severstal. See Andrei Belousov, "Economic Growth in Russia: Attempts to Overcome Low Levels of Competitiveness" (paper presented at the Center for Institutional Reform and the Informal Sector/Moscow Public Science Foundation Conference "Beyond Transition to Modernization and Growth: The View from Russia's Think Tanks," Washington, DC, April 10, 2003).
7. A.A. Mukhin, Novye pravila igry dlia bolshogo biznesa, prodiktovannye logikoi pravleniia V. V. Putina (New Rules of the Game for Big Business, Dictatorial Logic in the Rule of V.V. Putin) (Moscow: Center for Political Information, 2002), p. 164; Konstantin Smirnov, "Zachem oni tyda khodiat" (Why Do They Go There?), Kommersant vlast (May 21, 2002): 9-12; Zudin, "Neokorporativizm."
8. A.A. Mukhin, Novye pravila igry dlia bolshogo biznesa, prodiktovannye logikoi pravleniia V. V. Putina (New Rules of the Game for Big Business, Dictatorial Logic in the Rule of V.V. Putin) (Moscow: Center for Political Information, 2002), p. 164; Konstantin Smirnov, "Zachem oni tyda khodiat" (Why Do They Go There?), Kommersant vlast (May 21, 2002): 9-12; Zudin, "Neokorporativizm."
9. A.A. Mukhin, Novye pravila igry dlia bolshogo biznesa, prodiktovannye logikoi pravleniia V. V. Putina (New Rules of the Game for Big Business, Dictatorial Logic in the Rule of V.V. Putin) (Moscow: Center for Political Information, 2002), p. 164; Konstantin Smirnov, "Zachem oni tyda khodiat" (Why Do They Go There?), Kommersant vlast (May 21, 2002): 9-12; Zudin, "Neokorporativizm."
10. See the comments of Andrei Piontkovskii, director of the Moscow Center for Strategic Research, cited in RFE/RL Newsline (April 19, 2002).
11. See Richard E. Ericson, "The Post-Soviet Russian Economic System: An Industrial Feudalism?" (Department of Economics, Columbia University, May 1999), available at www.columbia.edu/%7Eree3/rus-eco-sys.pdf.
12. Timothy Frye found similar "elite exchange" in his survey of 500 firms in eight cities in October and November 2001. See his "Capture or Exchange? Business Lobbying in Russia," Europe-Asia Studies 54, no. 7 (2002): 1017-36. Peter Rutland also notes that "fearing social protests or communist revanche, business and the state leaned toward mutual cooperation, especially in times of crisis." See his "Introduction: Business and the State in Russia," in Business and the State in Contemporary Russia, ed. Peter Rutland (Boulder: Westview Press, 2000), p. 22.
13. Timothy Frye found similar "elite exchange" in his survey of 500 firms in eight cities in October and November 2001. See his "Capture or Exchange? Business Lobbying in Russia," Europe-Asia Studies 54, no. 7 (2002): 1017-36. Peter Rutland also notes that "fearing social protests or communist revanche, business and the state leaned toward mutual cooperation, especially in times of crisis." See his "Introduction: Business and the State in Russia," in Business and the State in Contemporary Russia, ed. Peter Rutland (Boulder: Westview Press, 2000), p. 22.
14. See Philip Hanson, "Administrative Regions and the Economy" (paper presented at the School of Slavonic and East European Studies Conference "Ten Years Since the Soviet Union," London, November 9-10, 2001), p. 9.
15. For a discussion of the way the Soviet system worked, see James R. Harris, The Great Urals: Regionalism and the Evolution of the Soviet System (Ithaca: Cornell University Press, 1999).
16. See the discussion in Irina Slinko, Evgeny Yakovlev, and Ekaterina Zhuravskaya, "Institutional Subversion: Evidence from Russian Regions" (manuscript, Center for Economic Policy Research, London, March 25, 2003), available at econpapers.hhs.se/paper/cprceprdp/4042.htm.
17. See particularly Kathryn Stoner-Weiss, "W(h)ither the Central State? The Regional Sources of Russia's Stalled Reforms," available at www.princeton.edu/%7Ekesw/pubs.htm.
18. On this point, see Laura Solanko, "Why Favor Large Incumbents? A Note on Lobbying in Transition," Bank of Finland, Institute for Economies in Transition [BOFIT], no. 6 (2003), available at www.bof.fi/bofit.
19. Gulnaz Sharafutdinova and Arbakhan Magomedov, "Volga Federal Okrug," in The Dynamics of Russian Politics: Putin's Reform of Federal-Regional Relations, ed. Peter Reddaway and Robert Orttung, vol. 1 (Lanham, MD: Rowman & Littlefield, 2003), 153-86.
20. See Andrew Yorke, "Business and Politics in Russia's Regions: The Case of Krasnoyarsk Kray" (M.Phil thesis, St. Antony's College, Oxford University, 2002). Aleksandr Lebed was later killed in a helicopter crash.
21. They include Viacheslav Liubimov, the governor of Riazan, Leonid Filippenko, the governor of Khanty-Mansii, and Kareliia's Sergei Katanandov. See Aleksei Makarkin, "'Alfa-Renova': Kollektivnyi portret lobbistov" (Alfa-Renova: Collective Portrait of Lobbyists), available at www.politcom.ru/aaa_c_econ5.php, March 13, 2002.
22. Peter Kirkow, Russia's Provinces: Authoritarian Transformation Versus Local Autonomy? (New York: St. Martin's Press, 1998), p. 116.
23. Nazdratenko resigned following a telephone call from Putin, who subsequently appointed him to a lucrative federal position in charge of the country's fishing industry. Yeltsin and his allies had tried unsuccessfully to remove Nazdratenko from office during the 1990s.
24. N. Lapina and A. Chirikova, Strategii regionalnykh elit: ekonomika, modeli vlasti, politicheskii vybor (Strategy of the Regional Elite: Economy, Models of Power, and Political Choice) (Moscow: Russian Academy of Sciences, 2000), p. 108.
25. Alla Chirikova and Natalia Lapina, "Regional Elite: A Quiet Revolution on a Russian Scale," Working Paper no. 4 (Zurich: Center for Security Studies and Conflict Research, February 2001), p. 21, available at www.isn.ethz.ch/russia/.
26. RFE/RL Newsline (April 19, 2002).
27. Of course, some of Russia's major companies, such as Lukoil, had extensive regional operations before 1998. By 1999, Lukoil had signed agreements with thirty regional administrations. See Sergei Peregudov, Nataliia Lapina, and Irina Semenenko, Gruppy interesov i rossiiskoe gosudarstvo (Interest Groups and the Russian State) (Moscow: Editorial URSS, 1999), p. 116.
28. Mukhin, Novye pravila igry dlia bolshogo biznesa, p. 24.
29. In the 1990s, some of Russia's big banks bought up regional enterprises, usually purchasing shares from the workers, who had received them as part of the privatization process, but generally they did so in order to quickly resell them at a profit.
30. Sergei Porshakov, "'Vrashchaiushchaiasia dver' ustanovlena" ("Revolving Door" Installed), Izvestia (February 17, 2002).
31. Dmitrii Butrin, "Tulskii gubernator zashchitil 'Shchekinoazot, '" Kommersant (December 1, 2001).
32. "The Boy Done Good," Economist (July 3, 2003).
33. Arkady Ostrovsky, "The Sciene of Forging a Steel Empire," Financial Times (August 27, 2003).
34. Solanko, "Why Favor Large Incumbents?" p. 11.
35. One-company towns are not unique to Russia. For a list of such places in the United States, see J.R. Romanko, "The Big Business of Small Towns," New York Times Magazine (September 22, 2002), 20.
36. Igor Rabinovich, "Bashkortostan's Rakhimov Sells off Oil Companies," Russian Regional Report (September 18, 2002).
37. Vedomosti (August 23, 2002), 1.
38. See Nicolai N. Petro, "Regional Democratization in Russia: Some Lessons from Novgorod," in Regional Politics in Russia, ed. Cameron Ross (Manchester; Manchester University Press, 2002), p. 121.
39. See Robert Orttung, "Investors Flock to Petersburg's Rural Neighbor," Russian Regional Report (August 12, 2002).
40. Phil Hanson notes, "Regional inequality increased from 1992 through 1998, dropped after the crisis of August 1998, and has on balance increased since 1999, but without a clear trend." See Philip Hanson, "Federalism with a Russian Face: Regional Inequality and Regional Budgets in Russia," in The Dynamics of Russian Politics: Putin's Reform of Federal-Regional Relations, ed. Peter Reddaway and Robert Orttung, vol. 2 (Lanham, MD: Rowman & Littlefield, forthcoming).
41. See Joel S. Hellman, Geraint Jones, and Daniel Kaufmann, "Far from Home: Do Foreign Investors Import Higher Standards of Governance in Transition Economies?" (draft for discussion and comments), available at www.worldbank.org/wbi/governance/pdf/farfromhome.pdf.
42. Mukhin notes this change as well, pointing out that with the beginning of the new decade, kryshi (roofs of protection) began to take on a less personalized nature. See Mukhin, Novye pravila igry dlia bolshogo biznesa, 26.
43. Based on their 1999 interviews in Rostov and Perm, Lapina and Chirikova note, "The question of who is stronger - business or the authorities - did not arise, rather the partners generally preferred not to use open pressure against each other." Lapina and Chirikova, Strategii regionalnykh elit, 129.
44. See the analysis by Natalia Zubarevich, "Big Business in Russia's Regions and Its Role in the Federal Reform," in The Dynamics of Russian Politics: Putin's Reform of Federal-Regional Relations, ed. Peter Reddaway and Robert Orttung, vol. 2 (Lanham, MD: Rowan & Littlefield, forthcoming).
45. See, for example, Ben Aris's comments in his Russia Business List, no. 430 (November 5, 2002), available at www.mbj.ru/search.jsp.
46. Center for Economic and Financial Research Conference "Monitoring the Administrative Barriers to Small Business Development in Russia: The Second Round," www.cefir.org, n.d., but the research was conducted in fall 2002. The paper notes, "The presence of very large firms in a given region slows down the reform in licensing, but accelerates the reform in inspections. Entry barriers are removed at a relatively slow pace, but burdens on existing firms become lighter relatively quickly."
47. Yurii Shabaev, "MDM Group Assumes Larger Role in Komi," Russian Regional Report (February 18, 2003).
48. See the analysis by Vadim Volkov, "The Selective Use of State Capacity in Russia's Economy: Property Disputes and Enterprise Takeovers After 2000," PONARS Policy Memo no. 273 (October 2002).
49. Russian classical liberals complain that the state places a heavy burden on business. See Evgenii Yasin, ed., Bremia gosudarstva i ekonomicheskaia politika: liberalnaia alternativa (The Burden of the State and Economic Policy: Liberal Alternative) (October 22, 2002), available at www.liberal.ru/issue01. asp.
50. In May 2003, the shadowy National Strategy Council caused a furor when it issued a report entitled "State and Oligarchs," which claimed that the oligarchs were planning a coup. See "V Rossii gotovitsia oligarkhicheskii perevorot" (The Oligarchs Are Preparing a Coup in Russia), available at www.utro.ru (May 26, 2003). Some observers claimed that the document laid the groundwork for the federal government's attack on Mikhail Khodorkovskii.
51. Vek (June 29, 2001).
52. This analysis and terminology follow Nataliya Zubarevich, "Russia's Big Businesses in Regional Elections," Russian Regional Report (January 30, 2002).
53. Porshakov, "'Vrashchaiushchaiasia dver' ustanovlena"; Dariia Sobakina, "Sibirskie tiazhelovesy" (Siberian Heavyweights), Delovaia khronika (May 7, 2002).
54. Porshakov, "'Vrashchaiushchaiasia dver' ustanovlena"; Dariia Sobakina, "Sibirskie tiazhelovesy" (Siberian Heavyweights), Delovaia khronika (May 7, 2002).
55. See Natalya Zubarevich, "Southern Federal Okrug," and Sharafutdinova and Magomedov, "Volga Federal Okrug."
56. See Natalya Zubarevich, "Southern Federal Okrug," and Sharafutdinova and Magomedov, "Volga Federal Okrug."
57. See the interview with Rossel in Ekspert Ural, no. 48 (December 23, 2002) and Olga Antonova, Nikolai Manvelov, Elena Starostenkova, Marina Talskaia, and Ekaterina Titova, "Uralskii federalnyi okrug" (Ural Federal District), Delovaia khronika (May 2, 2002).
58. See the interview with Rossel in Ekspert Ural, no. 48 (December 23, 2002) and Olga Antonova, Nikolai Manvelov, Elena Starostenkova, Marina Talskaia, and Ekaterina Titova, "Uralskii federalnyi okrug" (Ural Federal District), Delovaia khronika (May 2, 2002).
59. See the analysis in Center for Political Technology, Politika v regionakh: gubernatory i gruppy vliianiia (Politics in the Regions: Governors and Interest Groups) (Moscow: Center for Political Technology, 2002).
60. Kommersant vlast (February 26, 2002). For a list of business ties to Federation Council members, see Kommersant (June 6, 2002), p. 3.
61. Kommersant vlast (February 26, 2002). For a list of business ties to Federation Council members, see Kommersant (June 6, 2002), p. 3.
62. For a list of the industries represented in the Federation Council, see Aleksei Makarkin, "Sovet Federatsii: Novyi sostav, novye problemy" (Federation Council: New Membership, New Problems), in Politika v regionakh: gubematory i gruppy vliianiia, 53-75.
63. Moskovskii Komsomolets (March 26, 2002).
64. Quoted from Prusak's February 7,2002, presentation at the Woodrow Wilson International Center for Scholars, as summarized in the Kennan Institute Meeting Report for March 2002, available at www.wilsoncenter.org.