Dagestani billionaire Suleiman Kerimov is set to leave the Federation Council, the upper chamber of the Russian parliament, according to a report published in the newspaper Izvestia on March 29. Kerimov is among the wealthiest Dagestanis close to the Russian government. The parliament’s lower house, the State Duma, is considering new legislation that expressly forbids Russian officials, including members of the parliament, from owning any property abroad, and Kerimov was reportedly pressured by the Kremlin to give up his seat on the Federation Council. A source in the Russian newspaper Izvestia claimed that Kerimov did not want to leave the Council and tried to find a way around the rule, but “the Kremlin took a tough position and set [Kerimov] a clear choice—either [his] foreign assets or the seat on the Federation Council. He chose the former.” Formally, Kerimov’s term was not set to expire until 2016 (http://izvestia.ru/news/547603#ixzz2PLUwl5UL).
Also on March 29, an aide to Kerimov told the Interfax news agency that the Dagestani billionaire had no property abroad and no plans of leaving his Federation Council post. According to some reports, as of 2011, Kerimov held shares in foreign companies (http://www.gazeta.ru/politics/news/2013/03/29/n_2824293.shtml).
Observers in Dagestan fear that if Kerimov leaves the Federation Council, he will stop altogether funding economic projects in the republic. “Kerimov was one of the few Dagestani businessmen who actually invested money in the republic, trying to implement some projects,” academic Abdulnasir Dibirov told the Kavkazskaya Politika website. Dibirov asserted that the construction of a glassworks factory and reconstruction of the soccer stadium in Makhachkala were the most visible indications of the Dagestani billionaire’s seriousness. Reportedly, $1 million “disappeared” during the reconstruction of the soccer stadium. So Kerimov dispatched his special envoy, Oleg Lipatov, to the government of Dagestan to provide oversight for the ongoing economic projects. After Ramazan Abdulatipov was appointed acting head of Dagestan in February, Lipatov was fired. Other projects planned by Kerimov, such as new housing developments in Makhachkala, the reconstruction of the Uitash airport, expansion of the Caspian seaport and agricultural projects are now in jeopardy. In addition, the Anzhi soccer club, which is a prestige project for Kerimov and Dagestan, now faces a very uncertain future. The billionaire reportedly invested 250 million euros ($320 million) in the team (http://kavpolit.com/kreml-i-kerimov-est-li-doverie/).
The Dagestani billionaire’s travails appear to reflect the shifting power balance in the republic after Abdulatipov suddenly emerged as the new head of Dagestan. Abdulatipov may be unhappy with the strong position in Dagestan of Kerimov’s group, which has close ties to the Russian government. However, in order to attract private investment, Abdulatipov will have to live with the fact that he cannot put all economic activities under his personal control. In a time of economic uncertainty, Moscow will be less likely to provide for Dagestan’s needs if there are no private investors.
So far, the new leader of Dagestan has shown a propensity to rely upon quasi-Soviet ways of responding to the republic’s challenges. For example, at the end of March, Abdulatipov decreed establishing a group of special representatives, who are expected to travel throughout Dagestan, meet with people, organizations and local officials and compile a joint report on economic priorities for the republican government for 2014. Municipal authorities reportedly are not interested in expanding their sources of tax revenue, because the more revenue they collect from local sources, the fewer funds they receive from the government. Municipalities do not compete with each other for investors, since they are used to accepting funds from the government. This problem is not new and not unique to Dagestan, but the government so far has come up with few approaches to solve it (http://kavpolit.com/municipalitety-fundament-dagestana/).
The new leader of Dagestan appears to be falling into the same trap as his predecessors and current counterparts elsewhere in Russia. The government is bound to fail whenever it tries to replace genuine popular participation in self-governance with administrative zeal. While the problem of timid, non-entrepreneurial municipal units is often blamed on the leaders and local residents themselves, there are strong indications that the government also contributes to the creation of inefficient municipalities. For instance, since elections for municipal leaders are not transparent or fair, they cannot provide people with leaders they can trust. Or if municipalities become self-sufficient, the government becomes less able to manipulate them in order to achieve desirable results in the elections. So as the government suppresses political freedoms and habitually rigs elections, it should not expect flourishing democracy and self-sufficiency at the municipal level. The strenuous attempts by Moscow to reform municipal governance in the North Caucasus and elsewhere in the Russian Federation invariably stall as a result of the internal contradiction between the Russian political system and the needs of the country.