Introduction Stiftung Wissenschaft und Politik German Institute for International and Security Affairs Comments Dress Rehearsal for Russia’s Presidential Election WP S Moscow Tightens Grip on Regional Governors and Budgets Fabian Burkhardt and Janis Kluge Fifteen Russian regions and annexed Sevastopol elected new governors on 10 September 2017. The process reveals the Kremlin’s response to rising socio-economic tensions in Russia’s regions: changing their leaders. A string of older regional bosses rooted within their local elites have been forced to make way for a younger generation of political managers over whom Moscow holds greater sway. The regions’ financial independence has been curtailed again too. For the Kremlin, this round of voting represented the final test before the presidential election scheduled for 18 March 2018 – and it passed off largely successfully. But the next presidential term will also see growing uncertain- ty over Vladimir Putin’s successor in the Kremlin. These latest centralisation moves are designed to counter potential political risks ahead of time. But they weaken the incen- tives for governors to invest in the long-term development of their regions. The regional and local elections held on respectable showing with 262 of 1,502 seats 10 September 2017 in eighty of the eighty- (17.4 percent). In these 125 Moscow districts three federal subjects (plus annexed Crimea however, United Russia also increased its and Sevastopol) included sixteen guberna- share to 77 percent of the seats. torial contests. The results confirm a trend The Presidential Administration under already seen in the 2016 Duma elections: First Deputy Chief of Staff Sergey Kiriyenko the already ascendant United Russia was treated the sixteen direct gubernatorial able to expand its hold on power, while the races as the principal dress rehearsal for Kremlin-loyal “systemic” opposition parties the 2018 presidential election. Overall, can- all lost ground. A Just Russia was worst af- didates supported by the Kremlin gained fected, but the far-right LDPR and the Com- 75 percent of the votes, although figures munist Party (CPRF) fared little better. Only who might have represented a credible in Moscow’s municipal elections was a coa- alternative were excluded from standing. lition of Yabloko, independents and a num- However, as in the 2016 Duma elections, ber of CPRF candidates led by former Duma the average turnout of 40 percent was notice- deputy Dmitry Gudkov able to achieve a ably down on earlier ballots. The Kremlin Fabian Burkhardt is a Visiting Fellow, Dr. Janis Kluge an Associate in SWP’s Eastern Europe and Eurasia Division SWP Comments 37 October 2017 1 needs strong participation in the 2018 nors were made to resign before the end of presidential election to secure the regime’s their official term by order of the presiden- legitimacy vis-à-vis the elites and the popu- tial administration, allowing President Putin lation. Turnout for presidential elections to appoint interim successors who then is traditionally higher than for Duma and entered the races with Moscow’s explicit regional contests – almost 70 percent in 2008 backing. They also benefited from high-pro- and 65 percent in 2012 – but also declining. file meetings with and visits by President And low turnout at the presidential election Putin and Prime Minister Medvedev. would be interpreted as a sign of weakness The upshot of these moves by the Krem- by potential counterelites. lin has been to severely narrow political competition. All the country’s governors, with the exception of Smolensk, Oryol and Centrally Controlled Irkutsk, now either belong to United Russia Regional Elections or enjoy its support. Since 2012 only one Governors play a special role in Russia’s governor has even had to enter a run-off; three-tier administrative system. In the during a comparable period before elec- executive power vertical they represent tions were abolished in 2004, twenty-nine the link between the federal organs and contests remained undecided in the first local administrations. Direct elections were round. abolished in 2004, with governors de facto appointed by the president until 2012. Presidents Putin and Medvedev concentrated Between a Rock and a Hard Place on installing regional bosses who would Moscow’s personnel policy has shifted of ensure comfortable majorities for United late. After pursuing a principle of stability Russia. Successful economic policy was less until 2016, the Kremlin switched in 2017 to of a priority. In response to massive protests rotation and new blood. The average age of over electoral fraud following the 2011 the eleven newcomers in the September 2017 Duma elections, however, the Kremlin had elections was forty-four, ten years younger direct elections reinstated. But the motiva- than the previous cohort of governors. tion was not to fulfil the demonstrators’ Yet despite the dearth of political com- demands for liberalisation. Instead Moscow petition, governors are finding themselves believed that its appointed governors had squeezed. The recession dragging on since lost the ability to guarantee satisfactory 2014 has heightened rivalry over scarce election results without resorting to unduly resources within regional elites, while obvious manipulation. strikes and social protests are growing. In In order to avoid undue surprises, several the first half of 2017 more than 650 pro- precautions were taken when gubernatorial tests were reported nationwide, most of elections were reintroduced in 2012. A “mu- them outside Moscow and Saint Petersburg. nicipal filter” requires candidates to obtain At the same time Moscow is pressing its the backing of 5 to 10 percent of their governors to reverse the long-term trend of region’s local councillors. Given that most falling turnout and shrinking majorities in of these are controlled by the serving gover- federal and regional elections. The centre nors, this arrangement creates a significant would also like to see governors desisting obstacle to opposition candidates. In the from overtly abusing their privileges of 2017 gubernatorial elections the electoral office and access to the financial and or- commission turned down about one-third ganisational levers of the state (“adminis- of applicants, with legal challenges getting trative resources”), and if possible refrain- nowhere. Those accepted included spoiler ing from open electoral fraud. This leaves candidates supported by the regional govern- little room for political objectives like the ment. In the run-up to the elections, gover- long-term development of the regions. SWP Comments 37 October 2017 2 In the meantime the risks associated cient tax revenues played a role in the with the position have grown too: federal ouster of the former governor of Kirov control is no longer channelled only Oblast, Nikita Belykh, who was charged by through incentives like transfers, but since the FSB for corruption in 2016. In August 2015 increasingly exercised by repressive 2017 the finance ministry threatened the means. In three of the sixteen regions where governor of North Ossetia–Alania with elections were held in September, the serv- dismissal over the failure of his borrowing ing governor had been arrested and forced and budget policies. to resign after investigations by the Federal Yet despite a situation of widespread Security Service FSB. Criminal investiga- regional budget strictures, the distribution tions are currently ongoing against about of tax revenues was readjusted to the detri- 2 percent of the regional elite. ment of the regions this year. They now For these young technocrats, their quasi- receive only a portion of the indirect tax appointment represents something of a revenues (excise taxes) on the sale of petrol baptism of fire. If they can deliver the re- and diesel (hitherto 100 percent). And at quired results in the upcoming presidential the beginning of 2017 the regions’ share of election and survive the socio-economic taxes on commercial profits, which repre- challenges of coming years, the door to a sent about one-third of their tax revenues, career in the Presidential Administration or was reduced from 90 to 85 percent. So the the government will be open. On the other regions now receive a smaller share of the hand, the new personal risks detract from returns on their economic policies. the prestige of the office. Instead Moscow has increased its centrally controlled transfers. Seventy of the eighty- three Russian federal subjects currently Financial Centralisation depend on an annual top-up. Annexed Cri- Russia’s regions have lost a great deal of mea and Sevastopol receive subsidies far their financial independence over the course exceeding the average, and just thirteen of recent years. One reason for this is their regions are net contributors (compared to debt, which has doubled since 2012 after twenty-five in 2006). These transfers partially Putin issued a series of decrees drastically compensate lost tax revenues, but also increasing public sector pay. The regions – solidify central control. Funds from Moscow already struggling with the impact of the come with political strings attached: some- economic crisis – had to find the required times the regions must fulfil formal criteria funds from within their budgets, without laid down by the centre; other types of sub- adequate recompense from the centre. Ini- sidy and transfer function completely with- tially they borrowed at high interest rates out formal guidelines and are granted at will from commercial banks, later the finance on purely political grounds. So regions with ministry granted low-interest loans. While strong interest groups of their own are allo- this reduced the burden of interest, Mos- cated smaller amounts, while the Kremlin’s cow tied subsidised loans to conditions that new favourites receive a financial bonus. restrict the regions’ financial freedoms. Closer examination of the September 2017 election suggests that Moscow has Outlook concentrated on changing the governors The early-autumn test for next year’s presi- of highly indebted regions: in the fifteen dential election passed off to the regime’s regions where gubernatorial elections were satisfaction.