Publication: North Caucasus Weekly Volume: 4 Issue: 3

Federal subsidies to Chechnya are in effect financing the separatist guerrillas, according to an article by Valery Vyzhutovich in “Moskovskie Novosti.” Much of the federal aid intended for Chechnya goes through contractors, an anonymous federal bureaucrat told me, and that about half it never reaches Chechnya. Indeed, he said, most likely it never even gets outside Moscow’s Ring Road, but is simply divided between the federal agencies and their contractors. Of the remaining half, about 25 to 30 percent is thought to be embezzled within Chechnya, leaving perhaps one-fourth of the original sum to be spent on actual rebuilding projects, health programs and the like.

Even these projects, according to Vyzhutovich’s source, are characterized by artificially inflated costs and extended building schedules. For example, a school might take three or four years to build instead of the usual five or six months. Sometimes subsidies are repeatedly sent for repeated reconstructions of one and the same building, usually one located in the highlands where it is hard to verify claims that it has been repeatedly destroyed by guerrilla action.

Corrupt officials also use pre-war population figures to swell the flow of revenues. The federal Education Ministry has allocated subsidies for 60,000 college-age students in Chechnya even though the true figure cannot be greater than 20,000, many of whom are not in fact enrolled in any kind of educational institution.

Energy subsidies provide further opportunities. Some of the earnings of the Grozneftegaz (Grozny Oil and Gas) corporation, co-founded by the Moscow-appointed Chechen government, are supposed to be invested in rebuilding the republic’s oil and gas infrastructure–but instead, according to Vyzhutovich, they are simply diverted to the national Rosneft (Russian Oil) firm.

The Vyzhutovizh article claims that most murders of district administrators and other officials in Chechnya are caused not in fact by politics but by conflicts about extortion or about sharing the spoils of embezzlement. Guerrilla leaders such as Shamil Basaev try to assess a tribute from each bureaucrat, from which they are said to finance arms purchases or payments of bribes to the Russian forces. In the reporter’s opinion, the Russian state treasury is a more important source of funds for the Chechen rebels than any foreign terrorist group.