01.06.09

Dmitry Medvedev all but admitted in the budget message that Russia was far from being out of the woods yet and that the fall would continue for years. At long last, the Russian leadership recognized the truth. In the meantime, it seems that Russia's struggle against what was once branded as "consequences of the global economic crisis" and finally recognized as the crisis itself is somewhat quixotic.

FBK experts say for example that only every third Russian region formulated and adopted an anti-crisis program. Does it mean that the crisis spared two thirds of Russia? Some Federation subjects of those that did adopt anti-crisis programs are still trying to "minimize" those "consequences of the global economic crisis". Where is the vaunted power vertical?

In a word, Russia lacks an integral and all-encompassing framework of anti-crisis measures. Some regions concentrate on reduction of administrative barriers, others support small businesses, the third (they number 44) focused attention on reduction of costs, and some go out of their way to strengthen their budgets (25). Only 20 or so regions rely on tax stimulation of regional economies.

Regions are essentially left to their own devices. The ones with objects of metallurgy in them are in a tight corner. Production there plummeted more than 20%, thousands became unemployed practically overnight. Regions with economies centered on oil production are better off. All in all, production in the first quarter of 2009 increased in 15 regions and dropped in all others. Growth of income of the population was reported in 32 regions. In all others, income dwindled. Food prices soar all over the country (unlike in the EU where they are going down).

Economic difference of the regions is Russia's worst problem, these days. Unfortunately, the authorities wasted years on development of the power vertical when they should have been developing regional economies.

Unless the powers-that-be recognize gravity of the situation and try to ameliorate it, getting out of the crisis without considerable political losses may prove impossible.

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Source: Nezavisimaya Gazeta