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Money allocated for North Caucasus development to be less than expected

December 14, 2012, 14:27 UTC+3 Alexandrova Lyudmila

The rumours the North Caucasus – Russia’s most donated region – will receive a huge piece of the federal budget pie did not come true. The Russian Federation’s government decided to allocate for the region’s development to 2020 only 235 billion roubles. And by 2025, the North Caucasus is to become self-supporting. This must calm down the nationalists who demanded openly “Stop Feeding the Caucasus!” as well as most Russians who supported silently the slogan. However, experts warn things are not that straightforward: the state funds will go to the Caucasus by roundabout ways.

The Russian Federation’s government adopted on Thursday a state programme of the North Caucasus region’s development for the period to 2025. The programme turned out to be expensive only long-term, and between 2013 and 2020 the government will allocate only 235 billion roubles. The remaining 2.3 trillion roubles will reach the North Caucasus only after 2020 and following new discussions in the government, including public hearings.

Drafting of the state programme began in winter a year earlier. In August of the current year, the Ministry of Regional Development presented the programme for approval to the government, but the Finance Ministry could not approve the suggested financing at 3.9 trillion roubles, including 2.6 trillion from the federal budget. Later on, the Ministry of Regional Development reported the financing raise to 5.5 trillion roubles by use of additional private investments. However, the budget could not afford the amount.

It was back in summer that Deputy Prime Minister on the North Caucasus Alexander Khloponin announced the requested money was above any limits. “We cannot be asking for five trillion. Don’t forget the world’s economic crisis is not over and the federal budget is not endless, it has limits for expenses,” he said. “Besides, 180 billion have been sent to the region already, and this money should be reported – what was done, and what not.”

Khloponin said, the budget money would be used for development of social infrastructures only, for the roads and so forth. Up to 2020, the funding will make 235 billion roubles, and later on the officials will outline further expenses. The deputy prime minister explained that 90 percent will come from “outside budget sources of financing.” Following this logic, it seems the state programme is practically free for the federal budget – about 20 billion roubles for seven years for five regions.

Before 2025, the region will have to “earn” the total of 2.5 trillion roubles. They will come mostly from sources other than the federal budget – regional budgets will finance only 1 – 1.5 percent of the programme.

However, experts say off-budget sources do not include investors only. It is worth considering programmes of natural monopolies. Participants in the meeting with Prime Minister Dmitry Medvedev decided to allocate only for the region’s electric energy sector 100 billion roubles to 2014. Even without minding the existing record debts in the sector. Another source is the Resorts of the North Caucasus Company – the state will invest in the transport and housing infrastructures 60 billion roubles, and the remaining amount will come from private investors. The region will receive money also from the federal special programmes and from the Corporation of the North Caucasus Development.

Experts confirm importance of investments in the North Caucasus. The question is in control over the investments. The Nezavisimaya Gazeta quotes First Deputy President of the Russian Union of Engineers Ivan Andriyevsky as saying even the remaining 2.5 trillion is a huge amount. “Thus, it is complicated to believe that private investments will make 90 percent,” he said with a doubt. “In late summer of 2012, there were calculations that private investors are ready for 20 billion dollars’ investments in resorts of the North Caucasus, but even this figure sounds unrealistic. Meanwhile, the region truly requires investments, though their payback period – even with all the benefits – will be at least ten years, or even more. If we are planning to develop the North Caucasus resorts, it is necessary to make major investments. However, a result does not depend on money only. It is necessary to have security, people should feel there comfortably and safely, otherwise a major tourism inflow would be out of the question.”

At the same time, the slogan “Stop Feeding the Caucasus!” is gaining popularity in Russia. It is not for the first year that rallies organized by nationalists declare it. The slogan becomes more and more popular.

In November of 2011, the Vedomosti organized a poll on its website. The question was “Do you support nationalists’ slogan “Stop Feeding the Caucasus”? The poll’s 78 percent of participants responded positively, and only 18 percent chose to answer ‘no’.” It is worth stressing that the Vedomosti’s audience consists of entrepreneurs, businessmen and, generally speaking, wealthy people.

Earlier, the Ekho Moskwy (Echo of Moscow) radio station organized a similar poll. The radio station’s audience is made up of people adhering to liberal views. The poll demonstrated a more expressive result – almost 90 percent of the audience supported the nationalistic slogan.

Consolidation of nationalists from either side causes irrevocably a confrontation, RPR-PARNAS’ Co-Chair Boris Nemtsov said. “I do not doubt that “Stop Feeding the Caucasus” is a provocative slogan, which leads to an international massacre,” he wrote in his blog. “”Stop Feeding the Caucasus” will transfer inevitably into “Cut off the Caucasus”.”

Nemtsov is convinced Russia’s development in that direction would be a catastrophe for the country’s future, “as separated Caucasus is Russia’s Gaza Strip, a permanent source of violence, terror, murders and tortures.”


MOSCOW, December 14