Prime Minister Yevgeny Primakov told the leaders of Russia’s restless regions what they already knew. In a gloomy speech to the upper house of parliament, where the governors and presidents of Russia’s regions and republics sit ex officio, Primakov recited the numbers. Since the devaluation and default of August 17, imports have fallen by 75 percent, and food imports by even more. Real incomes are down 11 percent, and gross domestic product has lost 16 percent, even when measured in rubles.
The prime minister had many numbers to choose from. He could have reported that inflation will be running at an annual rate of 240-290 percent, by the Central Bank’s forecast. Or that (as he told a group of bankers) almost US$4 billion has left the country illegally since mid-August. Or that the grain harvest is the worst since the mid-1950s, and the emergency food reserve he established will do no more than feed a third of the population for two weeks.
He could have turned to politics. He could have spoken of polls indicating 80 percent of Russians want President Boris Yeltsin to resign, or of reports that the federal authorities can no longer rely on the support of the armed forces in a crisis.
The local leaders could have responded that their regions and republics will go their own way in this crisis. With Moscow out of revenue, the revenue-sharing that bound the provinces to Moscow has broken down. Though federal courts have repeatedly ruled that federal laws take precedence over local statutes, the federal government has found no way in law or practice to remove or even punish local leaders who flout federal authority. And so:
— Local price controls are in effect in Sakha-Yakutia, Chuvahsia, Belgorod, Lipetsk, Omsk, Yaroslavl, Primorsky and Krasnoyarsk, as well as in the cities of Moscow and St. Petersburg.– Local governments have interfered to slow or block payments to out-of-region creditors in Buryatia, Komi and Ulan-Ude.– In Stavropol and Vologda, food may not be sold to out-of-region buyers.– Local-government monopolies of alcohol production have been established in Kemerovo, Kirov, Sverdlovsk and other regions.– Several regions, including Kaliningrad, Altai and Khabarovsk, withhold or threaten to withhold federal tax payments. Others, Tatarstan and Sverdlovsk among them, are moving toward launching their own currencies, backed by local reserves of gold or precious stones.
All this is happening despite a constitution that gives enormous powers to the president. President Yeltsin’s physical exhaustion reflects and is reflected by the political exhaustion of the current system.