The Façade of Fiscal Federalism in Russia

Since the early days of privatization, political conflicts between Moscow and Russia’s other regions have helped determine the contours of the country’s political space. Tax revenue centralization is one such outcome of this constant tension. For instance, the percentage of levied funds which are allocated directly to federal subjects fell from 65% in 1999 to 30% today. With these resources gone, unstructured transfers from the capital to the regions have become an important component of regional budgets, as well as a powerful instrument to reward loyalty.

Continue reading at

Russkiy Business: Russia’s “Franchise” Diplomacy

At the end of October, Verona hosted the 11th Eurasian Economic Forum, which was one of 2018’s most anticipated business conferences.

The importance of the forum is evident if we consider the participation of VIPs such as Rosneft’s CEO Igor Sechin. His presence has attracted most of the spotlight, mainly because of the recent difficulties encountered by joint ventures between Rosneft and Italian energy company ENI. However, this gathering is not just a photo opportunity and a chance to discuss formal economic cooperation. Events such as the Eurasian Economic Forum are part of a broader strategy which focuses on building personal networks between Russia-oriented entrepreneurs.  These ties are fundamental in compensating for Moscow’s inability to create a positive business environment and attract foreign capital organically. Moreover, these events also aim at filling the gaps in Russia’s wider business diplomacy, which is restrained by the country’s slow progress on market reform.

Continue reading at Bear Market Brief