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#271 "Russian Regions in Expanding : The Connection" by Mikhail Alexseev and Vladimir Vaguine

This paper was presented at the Annual Meeting of the American Political Science Association, Washington, D.C., 31 August 1997. The authors are grateful to Douglas Blum, Stephen Hanson, Stephen Crowley, and Stefanie Harter for their extensive and thoughtful comments and suggestions. Research for this paper was funded in part by grants from the Kennan Institute for Advanced Russian Studies. The Kennan Institute for Advanced Russian Studies The Woodrow Wilson International Center for Scholars

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© August 1998 Woodrow Wilson International Center for Scholars edited by Kate Moore RUSSIAN REGIONS IN EXPANDING EUROPE: THE PSKOV CONNECTION

In the six years since the collapse scientists call a "unitary actor." The of the Soviet Union, policy makers in more pertinent, and interesting, the eighty-nine constituent regions of question is what kind of Russia­ the Russian Federation have been capable of implementing what kind increasingly self-assertive, of policies in its relations with the splintering the whole concept of outside world-is going to evolve "Russia's foreign policy." out of the present conditions. Diamond-rich -Yakutia- an Meanwhile, in dealing with Russia, autonomous republic in the Far East the world will increasingly have to the size of India-negotiated trade deal with the diversity of Russia's deals with De Beers and even regions and also take into account attempted to coin its own currency the complexity of center-periphery featuring the governor's profile relations. instead of Russia's official In this paper, we first examine two-headed eagle. St. Petersburg's political and legal foundations for government issued its own foreign center-periphery relations in Russia, policy declaration. opened and post-Soviet economic realities a foreign ministry and placed its own that define the scope of the regions' representatives in key Russian independent role in Russia's foreign embassies abroad. Oil-rich Tyumen relations. We then focus on a exchanged "embassies" with paradoxical case of -regions . Moscow joined the U.S. by divergence in Russia, namely, Pskov opening a foreign ministry office-a ', where independent regional de facto consulate-in Sverdlovsk policies favoring Russia's economic region. A coalition of Russia's integration with Europe have Siberian regions this spring took over emerged despite the fact that local policing of the Mongolian border, by political elites have been dominated agreeing to maintain thirty-six guard by the nationalists (the Liberal posts along the 2,175 mile long Democratic Party or LDPR) and the border with , as well as to communists (KPRF) advocating build twenty-four new guard posts tighter political and economic and three command centers at their centralization under Moscow. In this own expense.1 sense, ' is a fairer test of These striking examples hardly Russia's prospects for integration suggest that Russia will splinter just with the European and global like the Soviet Union. After all, the economies than more advanced Russian Federation has survived regions such as Novgorod or military defeat in -thus Samara. If the current nationalist and contradicting those communist elites in Pskov give doomsayers who unleashed the war priority to integration with Western under the slogan of preserving economies, most of Russia's other Russia's integrity. Acute regions will follow. constitutional crises in Tatarstan and Moscow and the Regions: have also abated. At The Political Balancmg Act the same time, all these recent developments show that Russia is Nearly half of Russia's regions hardly a monolith, or what political now base their relations with 1 Moscow on power-sharing regions' activities in building agreements unthinkable in the Soviet economic ties outside of Russia.4 era-all consistent with Russia's The diverse body of regional Constitution. Many ethnically political leaders also has a collective non-Russian regions, such as the powe:::' base in Moscow. They are republics of Bashkortostan and members of the Federation Tatarstan, require their leaders (both Council-the upper chamber of the elected and titled "president") to Russian parliament. When regional speak the local language and have administrators owed their extended the local residency record. appointments to Yeltsin, the Kremlin Of the fifty incumbents-appointed could count on the Federation earlier by Yeltsin-who ran for Council's compliance. The governor between September 1996 gubernatorial elections have broken and January 1997, half were voted this circular flow of power. Now the out of office. Yeltsin' s allies expected democratically elected governors to lose no more than ten incumbents. wield many significant powers. Sixteen of the twenty-five newly Without the Council's approval elected governors ran on the ticket of Yeltsin cannot declare war, deploy the communist alliance, the National Russian troops outside Russia, Patriotic Union of Russia. Most introduce martial law, set the federal winners of gubernatorial races-be it budget and taxes, change borders communists or "strong managers"­ between Russia's regions, or openly aspired to become "local nominate Constitutional Court and Luzhkovs"-in reference to the Supreme Court justices. The Council highly successful mayor of Moscow may ratify or denounce Russia's who has frequently challenged the international treaties and is granted a Kremlin on nationwide policy issues, key role in the president's notably on privatization and impeachment procedure.5 In handing the Crimean port of November 1997---consistent with its over to Ukraine.2 regionalist orientation-the Deposing elected governors is Federation Council rejected also a hazard-as in the case of legislation that would have required Yevgeny Nazdratenko in the Far center-region power-sharing East's , where Moscow agreements, including existing ones, backed off, fearing the follow-up to be ratified by the upper house. In elections would return a communist this case, the Council's position was to the local gubernatorial office. closer to that of Russia's two Besides, Moscow must now be strongest regional rights champions, mindful of opinion polls saying that Tatarstan and Bashkortostan. The trust governors and mayors Council also turned down a bill to about three times more than they limit the regions' power to conduct trust the federal govemment.3 Even their own foreign policy.6 the Russian State Duma-where the The erosion of Moscow's political Great Russia nationalists have a influence is combined with the working majority-has passed a law, erosion of economic leverage. on the first reading-and with the Moscow has been unable to deliver unusual majority of timely payments to federal workers 318-10-legalizing many of Russian in the region8--€ven to those 2 manning intercontinental missile property committees, and regional sites and nuclear power tax inspectorates. Federal agencies plants-putting regional officials on that have continued since the Soviet the spot in dealing with various era-such as the ministry for internal protesters and lobbies. In remote affairs, the regions of the Far East, Moscow's (domestic branch of the former economic clout has also been KGB), and state procuracy-have weakened. For example, it was maintained the initiative in cadre reported in October 1997 that 70 nominations for regional positions, percent of Kamchatka's revenues but have largely deferred the choices came from trade and joint economic to regional chief executives. The activities with the countries of the regional hold on key personnel Asian Pacific and the United States appointments is also strengthened by West Coast, rather than with the rest the collapse of the Soviet system of of Russia? In addition, with "horizontal shifting of cadre," in widespread corruption and local which a successful executive from sensitivities about joblessness, the Kazan could get a promotion to regional elites have also been Sverdlovsk and then to Leningrad or skeptical about having Russia's new Moscow. The rise of Boris Nemtsov commercial banks-most of which from Nizhni Novgorod to the made their fortunes in Kremlin is not replicated at the lower Moscow-buy assets and expand levels of government. As a result of operations in their territories. these changes, most federal officials Between 1995 and 1997 the regions in the regions owe their political passed at least 44,000 laws careers to their regional bosses, contradicting the constitution and rather than to Moscow? federal legislation and dealing In the crucible of this new power mainly with financial, hard currency, game, the regions are beginning to credit, licensing, and customs issues. articulate and implement more Meanwhile, Russia's anti-monopoly coherent local policy agendas--often committee filed nearly 500 cases including foreign affairs. These against regional administrations for agendas emerge out of the tension givin~ unfair breaks to friendly between the interests of diverse firms. players within local administrations With its economic leverage and diverse players in Moscow and weakened by the nonpayment of outside Russia. Regional policies are wages, Moscow de facto ceded also emblematic of the tension-now political control to the regions over also affecting the Kremlin's foreign most issues that the Russian relations-between the geopolitical constitution puts under"dual interests of Russia as a unitary state, jurisdiction" between the central and the manifold economic and government and the subjects of the political interests of the regions. Russian Federation. Chief executives The Pskov Puzzle in the regions have consolidated their control of appointments in key The case of Pskov oblast' is post-Soviet federal agencies at the especially instructive. Covering an regional level, such as heads of ar£3. larger than regional anti-monopoly and state immediately to the east of , 3 , and , Pskov region These geopolitical pressures came finds itself at the interface of Russia out loud and clear in the 1996 and the West. Accounting for nearly gubernatorial campaign, when a 500 miles of post-Soviet Russia's moderate Yeltsin protege and then external boundaries, Pskov has all of incumbent, Vladislav Tumanov Latvia's and most of Estonia's (running on the Nash Dom Rossia borders with Russia. The of ticket), in the final weeks before the Pskov is equidistant from , election made a major issue out of , and St. Petersburg. By the threat of NATO expansion. default, Pskov found itself at one of Portraying himself as a tough Russia's critical junctures with bargainer with Moscow for Pskov's post-Soviet Europe. The Soviet greater military muscle and citing collapse left regional politicians "NATO's push to the borders of geopolitically shocked. They now Pskov region," Tumanov publicized increasingly have to grapple with a letter he had sent to Prime Minister foreign policy and foreign trade Chernomyrdin and Defense Minister issues for which they had little Rodionov protesting the General understanding, while defining Staff's decision to disband the 237th Pskov's strategic role in paratrooper re~ent stationed in Europe-Russia relations. This Pskov oblast'.1 role-largely determined by Pskov's On the other hand, Pskov has location-has been traditionally been Russia's major trade link to twofold. Europe, and, at one point, Russia's On the one hand, Pskov has foothold in the prospering Hanseatic become firmly associated in the League. After the Soviet collapse, Russian mind with uncompromising political players in Pskov have had resistance to the West's push many opportunities to see that the eastward. Pskov is the site of Lake West-even with the expansion of Peipus, where Russian NATO-is not coming to the region - later sanctified with a sword, but with trade carts. If by Russia's Orthodox Church-in Pskov looks up only to its legacy as a 1242 defeated the army of Teutonic geopolitical barrier against the West, knights expanding eastward. Most of it risks ending up as a backwater Russia at the time was devastated by province with fewer trade carts to the Mongol hordes. Since the and from Europe passing through it. collapse of the USSR, Pskov has With severe shortfalls in federal primarily been used by Moscow as a financing, these economic stage for rhetorical saber opportunities have been the sole rattling-evoking Pskov's historical hope for economic survival precisely role. The analogy with the expanding in those districts (raiony) within NATO at the time of Russia's decline Pskov oblast' that were directly has been too tempting. The spirit of threatened by the territorial claims of Alexander Nevsky's most famous the . And so, Pskov's utterance-"he who will come to growing cross-border trade with the Russia with a sword, will perish by Baits coincided with electing as the sword"-is still alive in governor a member of Zhirinovsky's Moscow's view of Pskov's nationalist (and grossly misnamed) post-Soviet role in European affairs. Liberal Democratic Party, Yevgeny 4 Mikhailov. In late 1996, Pskov implied enhancing Pskov's benefits became the only oblast' in Russia from Baltic trade-- irrespective of where an LDPR member won a geopolitical sloganeering by the gubernatorial race. LDPR at the national level. Yet this victory was not so much It is the acuteness of this tension due to the Zhirinovskyites beating between geopolitical and the Yeltsinites at geopolitical rhetoric, geoeconomic pressures at the but to Mikhailov offering a better regional level that makes Pskov mix of geopolitical assurances and unique and that underlies the regionally sustainable economic oblast's policy choices in crafting development. Whereas at the post-Soviet relations with Moscow national level, Zhirinovsky ran and with its Western neighbors. The parliamentary election campaigns in essence of the conflict between 1993 and 1995 pledging to recapture Moscow and the oblast' is that the Alaska and -as well as build Kremlin has the luxury of a huge fan to spread radioactive dust emphasizing either the "barrier" or over the Baltic states-Mikhailov's the "juncture" role for Pskov, while election platform in Pskov stressed Pskov elites have to balance these regional economic grievances, two roles in a way that would enable especially, "the absence of a regional them to hold onto power and financial resource base, and the engender a sustainable regional futility of counting on help from the economy. federal government [emphasis added]." As a solution to this The Hand of Moscow problem, Mikhailov pushed "the In Pskov, the Soviet collapse ' model," implying initially evoked a strong Alexander greater regional economic Nevsky and Fortress Russia sustainability and lower taxes. Syndrome. Pskov leaders had to do Mikhailov's main campaign something about a largely unmarked slogan-"Clean hands, clear 500-mile long external border, as goals"-has little, if ani'i semantics of Estonia and Latvia claimed territory geopolitical posturing. in three districts of Pskov oblast'. In Not surprisingly, the distribution addition to the 76th airborne of for the LDPR in Pskov division, thousands of newly c::,last' ran contrary to the general stationed Russian troops, still pattern of LDPR vote distribution in smarting from being pulled out of Russia. Whereas throughout Russia, Eastern Europe, had to be housed, the LDPR mainly won in regions fed, and regain the sense of mission adjacent to external borders or in amidst economic and administrative areas of interethnic conflict, in Pskov mess. When explaining his strong oblast', the LDPR candidate won anti-NATO rhetoric during the 1996 more votes in the raiony located election, then-governor, Vladislav farther away from the Baltic borders Tumanov, stated: "I am mindful that than in the raiony where the Baltic one in ten residents of the [Pskov] states c1 anne . d R uss1an. terr1tory.. 12 In oblast' is in uniforrn."13 At the same other words, Mikhailov carried time, the Baits cast off Soviet-era Pskov oblast' while suggesting an constraints on trade with the West, economic development program that thereby opening the floodgates to 5 lucrative trade in oil products, Pskov public became particularly metals, food, manufactured goods, sensitive about the rights of the drugs, and weapons. A few small, Russian diaspora in the Baltic makeshift cabins along the border states.14 and occasional border patrols did In 1992, Yeltsin appointed a little to stop largely unregulated and protege, Vladislav Tumanov, as ~ead often illicit export-import operations. of the Pskov region Pskov region lacked the resources to administration-a de facto governor. provide the regulatory Tumanov's major economic policy infrastructure-trained personnel, successes were associated with his roads, customs offices, and leverage in Moscow. Pskov leaders checkpoints-for this bustling successfully lobbied Moscow to foreign trade. build the customs infrastructure and Economic hardship also checkpoints on the Pskov-Baltic encouraged pork barrel .Kremlin border to European standards. hustling and, hence, Pskov elites' Amidst many decaying buildings dependence on Moscow. The fall of without window frames strewn the exposed the glaring around Pskov, the customs building inadequacy of largely obsolete local at the border with Estonia-with its machine-building, electromechanical spotless beige walls and solid blue and electronic industries, and tile roof that could place it as hot real agriculture. The pressures of global estate anywhere from Prague to San economic competition squeezed the Francisco-stands out as a symbol of region hard and fast, with the Pskov economic promise. With better mix of manufacturing industries border protection and customs being one of the least competitive services, illegal smuggling and internationally among Russia's violent crime plummeted. The regions. Locally made goods rapidly customs office in the city of Pskov lost markets in the region, in Russia, alone now generates five million U.S. and in the Soviet successor states dollars a year-more than any without gaining a market share in industrial manufacturer in the the West. By 1996 only one-fifth of region. The regional leaders have Pskov's large and medium-sized also extracted economic factories had stable work orders and development funds from the were able to increase production. Kremlin, twice exceeding Pskov's Nearly half of the industrial entire. tax revenue. 15 enterprises were virtually bankrupt. Another factor that enforces With its manufacturing tax base Moscow's hand in Pskov is that most depleted, Pskov's budget expenses in top regional officials- under both late 1996 exceeded pro-Yeltsin Tumanov and his revenue-counting federal funds pro-Zhirinovsky successor, already disbursed-by 30 percent. Mikhailov-focus on the old game of The economic pressures were squeezing payments out of Moscow, aggravated by the disruption of ignoring many broader issues of Soviet-era migration from Pskov to emerging economic competition in the Baltics. With opportunities to Russia's northwest. In addition, escape economic hardship restricted while Mikhailov defeated the and many family ties disrupted, the incumbent Tumanov in the late-1996 6 elections, an estimated 90 percent of painfully aware that it is often easier Pskov's government officials stayed to get the Kremlin to formally pledge on, with only a handful resigning out fed2ral funding, than to get paid. The of unwillingness to serve under a prcolem of nonpayment in Russia Zhirinovsky party member.16 became so deeply entrenched that Another piece of evidence the Russian State Committee for suggesting that the hand of Moscow Statistics keeps two sets of data-one is still strong in Pskov is the region's for moneys allotted and one for recent strategy of westward trade moneys actually paid.17 Also, once expansion through Belarus. Local Moscow invested in new border and observers regard integration with customs facilities and had much of Belarus as much less promising than the illicit trade under control, the integration with the Baltic states, on Pskov goverrunent realized that both political and economic grounds. formerly unregulated cross-border Nevertheless, beholden to Moscow's trade with the Baltic states kept budget subsidies, regional elites have many local producers, traders, and been wary of pushing the Baltic their customers afloat and alive. integration option hard, at least Moreover, as the nonpayment publicly. And so, during his last crisis became entrenched, Pskov official business trip to Minsk, in leaders found cross-border trade 1996, Pskov's former governor, with the Baits a safer, if not the only, Tumanov, advanced the project of tangible alternative to dwindling and rebuilding the abandoned railroad sporadic federal subsidies. Now link between the district centers of unsure when (and if) the are in Belarus and in going to hit their coffers, Pskov Pskov region. This railroad could officials wistfully look back at the divert much of the Europe-bound Soviet era: in 1990, for example, container traffic around the Baltic about 10 percent of Russian exports s~ates to region. As of went West through Pskov. If this this writing, Tumanov's successor practice had continued in post-Soviet (and Zhirinovsky party member), times, Pskov would have a perfect ·.:evgeny Mikhailov, has also actively niche in the regional division of labor pursued the Belarus leg of Pskov's and a solid revenue source. At this external trade strategy Tapping time, however, the key actors in Pskov's anti-Western sensitivities, Pskov's economy realize that this strategy fit right into the Moscow cares little about their geopolitics of the 1996 and 1997 priorities--most federally-controlled Russia-Belarus union exports can be transported just as agreements-arguably constituting well via St. Petersburg, or the Kremlin's major controversial Murrnansk. Moreover, it has dawned response to the eastwardly enlarging on many among the Pskov elites that NATO. the more their region is subject to Moscow's leverage, the more tiley Europe's Pull stand to lose economically. The Playing up to Moscow's Kremlin currently charges all goods geopolitical priorities carries serious coming from or through Estonia into risks for Pskov leaders, however. For Pskov twice the normal import one thing, Pskov administration is tariff- in what many in Pskov see as 7 an increasingly senseless geopolitical shipments, and container carriers.20 game. Plugging into this trade system is The emergence of post- more advantageous for Pskov than "geoeconomics" of the Baltic-Nordic waiting for Moscow, which entered area is also beginning to pull Pskov the post-Soviet Baltic trade race with away from Moscow. The Kremlin's a handicap. After the Soviet collapse, loss of the Baltic ports after the Soviet Russia lost nearly half of its ports Union collapsed gave Pskov a and merchant ships, including the chance to position itself as a gateway Baltic ports and vessels, which in to the newly emerging Baltic-Nordic 1990 accounted for nearly a quarter free trade area-seen by the Balts as of the 200 million tons of freight a kind of "Northern Hanseatic shipments going through Soviet League of the twenty-first century."18 ports. Moscow's loss was Pskov's gain. Pskov also has to be increasingly However, for Moscow, enhancing watchful over other Russian Pskov's role as a major trade northwest regions-what they do gateway to Europe means foregoing may affect Pskov more than the capacity to apply economic whatever goes on in the Kremlin. pressure on the Balts. Moreover, ' governor, Vladimir Moscow deals with a bigger picture. Gustov, played very well on The Kremlin sees the Baltic-Nordic Moscow's geopolitical sensitivity zone as an arena of competition with and the interests of Russia's Estonia, Latvia, and over commercial banks and oil companies trade flows in the . But for by developing the Timan-Pechora Pskov oblast', the Baltic trade has basin-prospectively, Russia's largest been increasingly a matter of basin. Pointing out that Russia's economic survival, rather than a :-...1erchant fleet transported only 10 great power game. percent of Russian freight shipments, Several factors make this "New Gustov pushed through an " integration ambitious "Project of the Century" attractive to Pskov. A free trade designed to give Russia the maritime agreement with the European edge in the Baltic area. In June 1997, Union-which Russia lacks-gave Yeltsin put his signature to this the Baltic States an edge over project, according to which Russia is Moscow in reaching out to West planning to build three new ports: a European ports-especially to dry cargo and container port at Rotterdam, whose cargo turnover of Ust-; an oil-transfer port at 300 million tons a year is four times Batareinaya Bay in the south of the larger than Russia's entire cargo ; and a port of turnover from the Baltic to the Primorsk, in the north of the Gulf, to Pacific.19 Estonia secured sizable ship crude oil, oil products, and international funding to enlarge the liquefied gas. The Golden Gates port New Tallinn port at Muga and the at St. Petersburg is also being deep water port of upgraded. \Vith a combined capacity Paldiski-aspiring to create a of more than 100 million tons, this "mini-Rotterdam" on the Baltic Sea. project will more than double the These ports will be refurbished to port capacity that Russia lost with handle oil tankers, dry chemical the collapse of the Soviet Union?1 8 After the sigr.ing ceremony, Yeltsin's constituency to develop the oblast' as spokesman said that Russia will have a major Russia-Baltic trade less need for ports in the Baltic States corridor-whatever Moscow says or and that "the Baltic countries should does, short of brutal coercion. This think hard about their policy toward poir~ is driven home on a daily basis 22 Russia." From the Pskov in Pskov's borderline raiony perspective, this "Project of the comprising approximately a quarter Century" is a Trojan horse. If, indeed, of the oblast's territory and Moscow diverts most of Russia's population. Heads of these raiony trade flows around the Baltic ports, have frequently acknowledged that Pskov will no longer be at a key if it were not for the cross-border trade juncture, but on the periphery trade with the Balts, the economy of of the new Baltic-Nordic trade area. their districts would collapse. Those ?skov also needs to watch out regional administrators who have for-and learn how to cooperate traveled to Western Europe would with-'. This now like to emulate the prospering oblast' is an "exclave"-stuck cross-border clusters--such as between Lithuania and , it has Lorraine or Alps-Alsace-that once no overland border with Russia. were the epicenters of bitter Articulated a few years ago by geopolitical contests. To become a Yeltsin with great bombast, Russia's "boom region" in the same fashion, "grand design" in this area was to they feel, Pskov will have to focus on build a superhighway to Kaliningrad developing transit cargo services, primarily through Belarus, customs business, transportation bypassing the Baltic states and networks and services, as well as cutting through the conference and recreation facilities. Lithuanian-Polish corridor. This This is what the region's "new grand vision, however, has dwindled Russians" and government officials into oblivion. Meanwhile, work has in borderline districts increasingly been underway on a quite different advise-advice upon which any initiative, vigorously pursued by the regional government wanting to be governor of Kaliningrad, Leonid elected will eventually have to act. Gorbenko. The port of Kaliningrad is Speaking loudly for this strategy will being linked with the rest of Russia be revenue and jobs generated by via the shortest possible cross-border trade and joint ventures route-going mainly through in the entire Pskov oblast' --80 Lithuania and giving Latvia, Estonia, percent of which are and also Pskov the opportunity to Russian-Estonian and benefit more from post-Soviet Russian-Latvian. In pursuing this geoeconomics. In fact, the agenda, Pskov leaders will have to implementation of the Kaliningrad be more proactive and self-assertive governor's plan will boost Pskov­ with Moscow. which in 1997 accounted for the Pskov leaders also had a taste of transit of 60 percent of all Russian Moscow's fundamental ignorance of freight shipments to the Baltic area.23 the region's outlook on economic The elected governor of Pskov integration with Europe when Yeltsin will be increasingly under pressure was campaigning for reelection in from a sizable and active 1996. First, Yeltsin signaled- when 9 Russian bureaucratic doublespeak is Estonia's president, Lennart Meri­ translated into plain language-that though deeply convinced that the prospects for turning Pskov into a Kremlin suffers from incurable free-trade zone were remote. Yeltsin expansionist malaise-proposed at talked only vaguely about "a the 1996 Lisbon OSCE summit to possibility, in principle" to set up a sign border agreements ending free trade area in the Russian Estonia's claims on Russia. In a northwest, to be called similar manner, Latvia dropped its "Pleskov"-or Pleskau, as Pskov is territorial claims to Russia in the known in . Moreover, the south of Pskov oblast'. Estonia and only reason Yeltsin cited for setting Latvia also offered Russia an up "Pleskov" was development of agreement on visa-free crossings for (rather than the easing of people living in borderline districts taxes and tariffs on businesses on both sides. Moscow asked for engaged in cross-border trade).24 The time to think, but Estonia and Latvia Russian president bypassed the unilaterally lifted many trade tariffs simple truth that making Pskov a and allowed visa-free border tourism Mecca would require crossings. massive investments in the While Moscow pondered, the construction of hotels and in global Baits realized that their leverage in marketing-resources both Pskov the West-and hence their admission and Moscow clearly lack and in to European institutions such as which few outside of Russia would NATO and the EU--depended on bother to invest. their leverage in the East. Besides, Much of Europe's pull is the Baltic leaders have been increasingly coming from the Baltic increasingly plugged economically capitals themselves. W 1ile NATO into the neighboring Russian enlargement is to take place in regions-€ven while remaining at Poland, the Czech Republic and loggerheads with Moscow. Estonia's Hungary are yet to be debated in the GNP growth- unique among the U.S. Senate-to say nothing of the Soviet successor states in the first few "second wave" when the Baltic states years after the collapse of may be considered. Pskov oblast' has communism-depended critically on already enjoyed some tangible Russian freight shipments. One in benefits of Eastern Europe's race to four jobs in Latvia has been linked to the West. Once it was made clear to trade flows to and from Russia. Tallinn by Washington that territorial Sensing that Russia may undercut claims to Russia (most of them in these economic benefits by diverting Pskov oblast') will have to be trade to the newly constructed ports dropped in order for the Baltics to at Ust-Luga, Primorsk, and join NATO, Estonian parties adopted Batareinaia Bay, the Baits started to a "pacification with the East" compete among themselves for strategy Former Estonian foreign better trade relations with Russia minister and the chief architect of and, especially, the Russian regions this new strategy, Sijm Kallas, was next door.25 In this sense, while supported both by the Coalition and presenting a conundrum for the the Centrist party- as well as by the Kremlin strategists, the Baltic fiercely oppositionist Russian Party. movement toward Europe 10 immediately improved prospects for has been to keep the pipeline trade and family contacts across the issue quiet. Pskov-Baltic border-and economic Yet, the increasing competition prospects of the region's nearly one with new business entrants, such as million people. Yukos, and the port reconstruction Local governments making up race along the Baltic coast, will by the Baltic states-also spurred by default raise the pipeline control Europe-have been actively seeking issues to prominence. The dynamics partners in Russian regions. Thus, in of private business differs greatly 1996, the Pskov administration was from state-spawned economic contacted by officials in Palanga-a geopoliticking. With no single actor Lithuanian port-Dffering having a monopoly on oil and gas cooperation to set up a flows and transit points, the Baltic-Russian Northwest free trade multinationals are seeking to zone. One of the key incentives for diversify supply routes and increase Palanga district to reach out to Pskov opportunities for port access. Thus, was getting development money unsure when the new Ust-Luga port from European institutions- which in Leningrad oblast' may be built, now often encourage projects LUKoil invested in expanding the featuring partners in Russia's loading-unloading capacity of the reg10na. 1 governments.26 port at Tallinn. The diversity stemming from this Pskov's location will also give the regional elites more economic interplay of agendas pursued by leverage due to the competition for Russia's regions, Moscow, the Baltic building export routes for the states, and district governments Timan-Pechora oil between Transneft within Lithuania, Latvia, and Estonia and the "Northern Gateway" is further enhanced by the agendas consortium. Transneft, a state-owned of private businesses-€specially pipeline operator that relies on just transnational corporations. Thus, the one outlet, the old Druzhba pipeline Russian-owned LUKoil and Yukos running across Belarus and Ukraine oil companies have been into , has come under reconstructing the oil terminal at the pressure from oil producers to Lithuanian port of Klaipeda, diversify the network of export positioning themselves to purchase outlets. Whereas some economists majority shares. Yukos plans to estimate that Russia's oil producers export two to three million tons of oil could earn an additional $12 billion and LUKoil wants to ship about half annually if they could find new a million tons of diesel fuel through export routes, the Druzhba network is the port of Klaipeda annually. quickly corroding and cannot LUKoil also owns the oil flowing manage separately the flow of oil through the pipeline in Pskov to its from different fields. Outlets to the large processing plant in Baltic states have been thin and often Novopolotsk, Belarus. Russia's clogged. The "Northern Gateway" state-controlled giant Gazprom also consortium, which includes Conoco transfers ~as through Pskov to and Amoco, has been poised to make Estonia.2 So far, the main objective the Druzhba network irrelevant by in Pskov of both Gazprorn and building either its own terminals on 11 the Barents Sea or a pipeline to the unloading the same products at Baltic (most likely to the Latvian port Estonia's ports. Gazprom and of Ventspils). The route from Russia LUKoil will not be able to keep the to Latvia can make Pskov a player, if pipeline issue off the region's the region offers attractive economic political agenda for long. In Pskov, options to the "Northern Gateway." this issue is attractive to both the Not only does the entire proponents of the nascent "Baltoplex Russian-Latvian border run through zone" and to the traditionalist Pskov oblast', but an outlet through "Kremlin hagglers"- constantly Pskov will also be attractive by angling for more federal subsidies offering passage to the oil refineries from the Kremlin.29 in Novopolotsk. This coming diversification of oil export networks Regions Matter: Recognizins the New Europe-Russia Dynamic westward from Timan-Pechora fields-bankrolled by private money The time is ripe to recognize the from Russia and the West-is also paradoxes and opporhmities of expected to weaken the leverage of Russia's regional diversification, as the Russian Foreign Ministry that has well as its tangible impact on been keen on using oil toward Europe-Russia :integration. Even if geopolitical ends. Other federal Moscow decides to clamp down on agencies, centered in Moscow, will regional governments who push for have less of a monopoly on oil and European :integration, it will have to gas as a source of political patronage, offer people in the regions alternative strategies for economic development­ whereby export quotas and priority and Moscow has been chronically export rights have been assigned impotent on that score in recent years. under the "state needs" scheme, to While the Kremlin is mired in entities such as the army and the 28 geopolitical anguish over balancing Orthodox Church. With market NATO and EU enlargement with a forces inexorably gaining ground, tighter Belarus-Russia union, the Pskov leaders will have more panoply of regional and local activism incentives and leeway to raise the is increasingly linking Russia's region's stakes in northwest oil northwest with the budding transfer politics. Baltic-Central European trade area. nus increasing competition will The new and more diverse regional inevitably induce Pskov politicians power game in Russia's northwest to point out to Moscow that after the cold war calls for a number of neighboring Estonia charges millions recommendations for the U.S. and of dollars for Russian oil going Europe's policies on integrating Russia through its territory-while Russia's into a broader Europe. First, Western own Pskov oblast' receives not a cent leaders-despite whatever the Kremlin for providing the same transit tells them-need to be mindful that the services. In 1994 Tallinn collected regions matter. As one U.S. some six dollars per ton of Russia's Congressman, Lee Hamilton, argued oil products transported by rail recently in The Washington Post, the through Estonia- about half of U.S. should "pay more attention to the which went through Pskov 'Federation' part of Russian region-and an additional five to Federation."30 A number of small seven dollars a ton for loading and scale, workable adjustments may 12 :include opening up branches of U.S. Russia's finest hour so far on the embassies or state-private sector trade European stage came during the rise missions :in Russia's regions; :inviting of the Kievan Rus about a thousand Russian governors to policy relevant years ago. As Francois Mitterrand meetings with U.S. and European once reminded Gorbachev, was agencies; identifying and "a veritable center of the common support:ing-:in word and European home" at the tirne.31 The development funds-enterprising Kievan Rus was a rather loose local leaders show:ing progress in association of strong, self-assertive implement:ing political and economic pr:incedoms, diversely integrated reforms; setting up internationally :into Baltic and Black Sea trade areas. sponsored tra:in:ing programs for Finally, European institutions, regional government officials and especially the EU agencies, need to bus:iness leaders; and fund:ing studies consider regional priorities :in Russia of Russia's regional issues and when designing programs that will center-periphery relationships. affect Russia-Europe integration. For Western leaders will do well by example, on a key issue of rail and these actions to :indicate to the Kremlin road connections that may one day the fundamental po:int the Kremlin unite Europe from the Atlantic to the often forgets-i.e., that the Russian Urals, the European Commission state will be stronger if regions would do well to revise its recently :integrate from the ground up-as designed blueprint for what is known America's states did under a in Eurospeak as a a complementary seem:ingly "scary" constitutional network of transport corridors in principle of dual sovereignty-rather Eastern Europe. a According to this than if Yelts:in tries to hold them in blueprint, all three a corridors" going check by force. Unlike in the crumbling :into Russia from the West converge in USSR, only one Russian region­ Moscow (from M:insk, Kyiv, and St. Chechnya-wants secession, pure and Petersburg). There are no corridors simple. Even after the Chechens forced link:ing the natural trading the Russian army to withdraw and partners-the Baltics and Russia's proclaimed their sovereignty under northwest regions. The northeast :international law, none of the bound roads from Eurofe are all cut rema:in:ing eighty-eight Russian regions off abruptly :in Tall:inn.3 jumped on the independence In the end, Russia's integration bandwagon. A larger stake :in foreign with Europe will depend on the policy-:includ:ing :integration with success of regional integration at key Europ~that is sought by Russian junctions, such as Pskov. As the largest regions is not to secede, but to promote country on earth, Russia can only jo:in local :interests and values. Particularly Europe incrementally. As Catalonia now that Russia's eighty-n:ine boosts Spain's economy by bridging it governors are democratically elected, with the vibrant South France­ these local :interests will be more Northern economic zone in actively pursued. This will make the Western Europe, and as Shenzhen Russian state more diverse regionally, galvanizes China's economy by but no less Russian. linking Southern provinces with Hong To Russia's leaders-who often Kong, like Pskov, Leningrad, or forget lessons from Russian Kaliningrad hold the key to the history--one may also point out that incremental and regionally-driven 13 integration of Russia into a broader policies across Russia to encourage Europe. Diversity has always been a the conversion of old geopolitical strong suit of democratic societies­ battlegrormds into prosperous trade and the West must diversify its zones.

14 1. Foreign Broadcast Information Service (FBIS), Collection: Soviet Union, FBIS-1992-067 Gune 26, 1992); FBIS-1992-047 Guly 28, 1992); FBIS-1992-025 (March 27, 1992). Institute for East-West Studies (), "Foreign Ministry Opens Office in '," Russian Regional Report, Vol. 2, no. 17 (May 15, 1997).JEWS, "Siberian Governments Begin Policing Mongolian Border," Russian Regional Report, Vol. 2, no. 14 (April24, 1997). 2. Laura Belin, "Russia's 1996 Gubernatorial Elections and the Implications for Yeltsin," Demokratizatsiia 5 (Spring 1997): 167-74. By November 6, 1997, Moscow had thirty-eight power-sharing agreements with regions. The thirty-eighth agreement encompassed three constituents of the Russian Federation: Krasnoiarsk Krai, Taimyr Autonomous , and Evenk Autonomous Okrug. JEWS, "Yeltsin, Nemtsov Sign Power-Sharing Treaty with Krasnoyarsk, Taimyr, Evenkia," Russian Regional Report, Vol. 2, no. 38 (November 6, 1997). 3. IEWS, "Mayor's Most Trusted Elected Officials," Russian Regional Report, Vol. 2, no. 24 Guly 3, 1997). 4. IEWS, "Dwna Drafts Law on Regions' Foreign Policy," Russian Regional Report, Vol. 2, no. 13 (April17, 1997). 5. Ibid., p. 179. 6. JEWS, "Regional Leaders Reject Ratification of Power-Sharing Agreements, Foreign Policies," Russian Regional Report, Vol. 2, no. 43 (December 11, 1997), Internet Edition. 7. Finansovye izvestiia (October 14, 1997). 8. IEWS, "Regional Law Contradicts Federal Legislation," Russian Regional Report, Vol. 2, no. 38 (November 6, 1997). 9. Vladimir Vaguine, "Evoliutsiia konfliktov i protivorechi federal'nykh vlastei i vlasti sub"ekta Federatsii v sfere administrativnogo upravlenia" [The Evolution of Conflicts and Tensions between the Federal and Regional Governments in Public Administration], unpublished paper, July 1997, pp.12-13. One small exception to this pattern is p ro-Yeltsin candidates who lost 1996 gubernatorial elections. Many of them have been given federal jobs-including the ex-governor of Pskov region. Ibid., p. 14. 10. Anatoli Veslo, "Opasaias' NATO, Pskovski gubemator trebuet podkrepleni" (Fearing NATO, Pskov governor asks for reinforcements]. Segodnia, (October 20, 1996). 11. See Mikhailov's election program, "Nash real'nii shans," Russkii zapad, 15 (October 28, 1996). 12. A. G. Manakov, "Razgadki 'pskovskogo fenomena'" [Solutions to the Pskov puzzle], Vash vybor2 (1996): 17-19. 13. See note 7. 14. Ye. Ye. Skatershchikova and L. V Smirniagin, "Zhisnennye migratsii rossiian kak faktor territorial'noi splochennosti Rossii," [Migrations of 15 Russians as a factor in territorial cohesiveness of Russia] Rossiia regionov 1 (1994): 10-11. Official Pskov data, reported by Vladimir Vaguine. 15. Vaguine. 16. Ibid. 17. Daniel Rosenblum, //They Pretend to Pay Us... The Wage Arrears Crises in the Post-Soviet States," Demokratizatsiia 5 (Spring 1997): 300. 18. M. Bronshtein, "Estonia: ekonomika i geopolitika," [Estonia: Economics and Geopolitics] Voprosy ekonomiki 2 (1995): 114-122. 19. Ibid., p. 118. 20. Ibid., p. 120; Vaguine. 21. Ibid., p . 121. 22. RFE/RL, "Russia to Build New Cargo Terminals on the Gulf of Finland," Newsline, Vol. 1, no. 48, Part I Gune 9, 1997). 23. Ibid. 24. Vaguine. 25. Marina Kalashnikova, "Baltiiski uzelok v 'besshovnoi' Evrope" [The Baltic Knot within "Seamless" Europe], Itogi (December 17, 1996). 26. This seems to be part of an emergent tendency for city-to-city treaties to restore economic relations between the Baltic and Russian that were severed after the collapse of the Soviet Union. For example, in October 1997, the Latvian port of Liepaya and the Russian city of signed a treaty on friendly relations (the most direct trade route between Tver and Liepaya lies through Pskov region, which Tver borders in the northwest). On November 28-29, 1997, thirty Liepaen business people came to Tver to discuss restoring economic ties with some leading local businesses such as Tsentrosvar, Volzhski Pekar, Tverskaia Manufaktura, Intersphere Shareholding, Trado Bank, and the Association of Commercial Organizations. IEWS, Russian Regional Report, Vol. 2, no. 43 (December 11, 1997), Internet Edition. 27. Itogi. 28. "Connections Needed," The Economist, (March 15, 1997): 69-70. 29. Vaguine. 30. Lee H. Hamilton, "Inside Russia, A Regional Takeoff," The Washington Post, July 9, 1997, p. A23. 31. Pravda, December 7, 1989, p. 2 (In response to Mikhail Alekseev's question on Kyiv's role in Europe). Marrying into the Kievan royal family became an honor in European capitals from to France, and one Kievan princess even became Queen of France when her husband died. 32. Charles Batchelor, "Corridors Promise Efficient Transport," Financial Times Guly 4, 1997): 4.

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