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Russian Federalism Good: Economy

Russian decentralization key to economic growth

Kupchan, Deputy coordinator of U.S. assistance to the New Independent States at the U.S. Department of State, 2000
[Clifford., The Washington Quarterly-“Devolution Drives Russian Reform” Spring, http://www.twq.com/spring00/232kupchan.pdf ]

Devolution has hastened the breakup of the Soviet economic system and has created conditions under which private entrepreneurship has a chance to take root and grow. The centrally planned economy of the former Soviet Union left Russia with collective agriculture and huge enterprises, some of which employed entire cities. Few of these enterprises can be salvaged or restructured to function in a market economy. Their immediate closure, however, would result in massive unemployment and is simply not an option. Russia’s economic future thus depends on the emergence of new productive activities. Devolution promotes market reform and new productive activities in several ways. It has allowed the creation of successful regional models of eco more than national elites. Devolution promotes market reform and new productive activities in several

ways. It has allowed the creation of successful regional models of economic reform. The process gives progressive ideas at the regional level a better chance of being turned into policy. Indeed, the policies of forward-leaning regional leaders are creating a canon of success stories and models for other regional governments. The best example is Governor Prusak in Novgorod. Reform in Novgorod has produced a more favorable tax climate, more transparent budget procedures, streamlined licensing procedures, and clear land titling. As a result, the number of new small businesses and foreign investment has dramatically increased. Samara, where roughly 20 percent of the workforce is employed by small business, is also a success story. Governor Titov has strongly championed small business and passed a groundbreaking law permitting the privatization of agricultural land. The Siberian region of Tomsk is also implementing many of these same reforms. Devolution has also helped to promote market reform by producing economic stratification and competition among regions. Roughly 10 or so “winner regions” are emerging, either because of reformist policies or the presence of natural resources. Stratification leads to competition, increased efficiency, and the emulation of successful regions. At least 30 regions have sent delegations to Novgorod to study the success of its reform. Anecdotal accounts indicate that success in Novgorod has led to competitive innovations in Leningrad Oblast and St. Petersburg. Officials from many regions have also visited Samara to study successful reforms. Finally, devolution has helped create the space in which, slowly but surely, basic entrepreneurial, rational economic activity can occur. To Western observers the extent of this activity may not look impressive—for example, small business accounts for 12 percent of Russian gross domestic product (GDP), compared to roughly 50 percent of U.S. GDP. Efficient market behavior certainly remains the exception, not the rule, across Russia’s regions, and there is great variation among the regions on reform. While I have cited success stories, Kalmykia, Kursk, and Krasnodar are examples of areas that lag well behind. But devolution of power has given rise to economic opportunities of which certain regions and many Russians have taken advantage. There is a palpable economic vibrance in many of Russia’s regions. Ordinary Russian citizens and local government officials across Russia list the growth of small business as a top priority.5 A concrete indicator of this ferment is the demand for small-business starts among Russians, as demonstrated by several Western-supported loan programs. Before the August 1998 crisis, the European Bank for Reconstruction and Development (EBRD) Russia Small Business Fund had $300 million in outstanding loans placed through Russian banks, mostly in the regions, with a 99-percent repayment rate. Bank management believes it could have significantly increased its exposure were it not for resource constraints. The fund is reorganizing as a result of the crisis, but demand from Russian banks and entrepreneurs remains strong. The U.S.-Russia Investment Fund, funded by the U.S. government, is expanding the number of regions where it offers loans to small businesses, and current lending volume exceeds pre-crisis levels. Over time, small business is likely to grow and become a major political force for governmental reform. Winner regions can become engines of growth, generate employment, and anchor the federal system. Russia has not developed that far, because it still lacks labor mobility, clear winners, and reliable rules on how winner regions relate to Moscow and other regions. But a promising framework is emerging. Long-term institution building, involving the regions and the center, could eventually produce a full range of democratic and market mechanisms.

Russian Federalism Good: Proliferation

1)Russian Federalism key to preventing WMD proliferation
Hahn, visiting scholar with the Hoover Institution at Stanford University
, 2003
[Gordon M. “The Past, Present, And Future Of The Russian Federal State” Summer 2003 Vol. 11, Iss. 3]
Where did Russia's federal state come from, where has it been, where is it going, and why does it matter beyond a small circle of Russia specialists? Taking the last question first, the success or failure of Russia's transformation into a stable market democracy will determine the degree of stability throughout Eurasia. For such a large multinational state, successful political and economic development depends on building an efficient democratic federal system. Indeed, one of the main institutional factors leading to the demise of the Soviet partocratic regime and state was the considerably noninstitutionalized status of the RSFSR (Russian Republic) in the Soviet Union's pseudofederal, national-territorial administrative structure. Only a democratic federal system can hold together and effectively manage Russia's vast territory, the awkward administrative structure inherited from the failed USSR, and hundreds of divergent ethnic, linguistic, and religious interests. Dissolution or even any further weakening of Russia's federal state could have dire consequences for Russian national and international security by weakening control over its means of mass destruction.
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