Size matters

 

‘No taxation without representation,’ was the motto of the British colonists in America, and neither now nor then, 250 years ago, was this simple truth challenged.

Whether representation without taxation is the formula that can keep together the country is the question debated in Russia today.

Boris Gryzlov, the chairman of State Duma (the lower chamber of Russian Parliament) and a close ally of Vladimir Putin, said that there should be no federal subjects that do not stand economically. ‘The Subject of the Federation is a high commission,’ were his actual words, ‘the Subject of the Federation must deserve it’. Those unworthy, he concluded, who need subsidies from the centre must cease to exist as political persons and be absorbed by their better off neighbours.

In 2010, only 12 regions out of 83 will not receive injections from the federal government. If what Mr Gryzlov is saying was set in motion, it would mean the most sweeping reform of the Russian state since 1993, the year when the current Constitution came into force.

The amount paid by the central government to the regions in 2010 is $13.7 billion. With the country confronting a budget deficit of more than $100 billion that drain is not only painful, it is a manifestation of the failure of Putin’s reform to centralise Russia yet keep stimuli for the regional elites to develop their constituencies.

In a wider perspective it tells us that Russia, at least economically, is not a federal state at all. While at least 70 per cent of tax revenues collected from a particular territory is now transferred to the centre, as compared to 50 per cent in Yeltsin’s time, and regional leaders, except for a few, beg for a hand-out from Moscow, the very idea of their independence sounds preposterous.

And here is the trap. The Kremlin cannot run the country from Moscow, yet it remains politically responsible for what is done locally.

It may threaten regional elites but there is not much they can do and they are not really scared. Enlargement of the regions, on the other hand, is a task of enormous political difficulty and, though a viable solution in theory, is hardly possible in practice. The Kr