Publication: Monitor Volume: 4 Issue: 112

Russia’s increasingly autonomous regional leaders protested loudly yesterday at rumors of a plan by Deputy Prime Minister Boris Nemtsov to assert federal control over borrowing by the regions. (Itar-Tass, ORT, June 10) Details leaked out of a draft presidential decree requiring regional governments to seek permission from the federal Finance Ministry before raising loans on either domestic or foreign markets. Nemstov justified the move by reference to the current instability on world capital markets. He said continuing to allow the regions to be a law unto themselves would be dangerous in light of Russia’ financial crisis. He said the government’s proposed restrictions on regional borrowing would operate only until the crisis was over. The government was alarmed, he added, that not all regions were repaying their debts on schedule. He did not identify these regions, but said they were tarnishing the reputation of the country as a whole and making it harder for the federal government to raise money on international markets.

An unidentified Russian government spokesman said that the decree will, in the future, require regions to coordinate their loan activity with the federal Finance Ministry. This coordination entails providing full information about the sums to be borrowed, from whom they are to be borrowed and the schedule for repayment. “Since the federal budget bears sole responsibility for paying off the regions’ debts, it is not surprising that they should be coordinated with the federal authorities,” the official claimed. (Itar-Tass, June 10) The governors see things differently. Moscow Mayor Yuri Luzhkov led the chorus of discontent, though he said he trusted Moscow would be treated as an exception. Luzhkov was backed by Krasnoyarsk Governor Aleksandr Lebed: “The center has been dead for a long time,” he said. “It has nothing to give. There will be a huge row and no good will come of it.” Saratov Governor Dmitri Ayatskov was phlegmatic: “There’s a way out of all tight places,” he said. “We look for the escape hole and we find it.” He claimed he had already gotten President’s Yeltsin’s agreement for Saratov Oblast to get special treatment. (NTV, June 9) In other words, Russia’s assertive regional governors intend to treat this latest attempt to bring them to heel with no more respect than they have shown for previous efforts.