Irkutsk
Ulan-Ude

Blagoveshchensk
Chita
Yakutsk

Birobidzhan
Vladivostok
Khabarovsk

Magadan
Yuzhno-Sakhalinsk

Anadyr
Petropavlovsk-
Kamchatsky
Moscow

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EAO: results of the year

Poor orphan DFO?

EAO: results of the year

The Jewish Autonomous Region is traditionally considered to be one of the most economically weak and problematic regions of the FEFD. This year, for the first time after a long break, direct gubernatorial elections will be held there, and it is still not clear whether Alexander Vinnikov will retain his position or the president will appoint a new acting governor in February.

Weak base

It is worth recalling that the assessment of the effectiveness of regional authorities in 2013, carried out by the government of the Russian Federation, put the Jewish Autonomous Region in last place among all subjects of the Federation. First of all, the region is pulling down the social sphere, it took the last place in its development, and the penultimate in the dynamics of development. As for economic indicators, in terms of the level of economic development, the Jewish Autonomous Region was rather average (47th place), but the dynamics of development was again assessed by the government extremely negatively (78th place). In 2014, the trends in the socio-economic development of the Jewish Autonomous Region looked extremely ambiguous. On the one hand, there was industrial growth. In January-August 2014, the Jewish Autonomous Region took second place after Chukotka, another lagging and unstable region of the Far Eastern Federal District, in terms of the dynamics of industrial production growth. On the other hand, negative trends were observed in agriculture. In the first half of 2014, the region became the leader in the decline in agricultural production in the Far Eastern Federal District (which is partly due to the flooding of 2013).

It is not surprising that such a small region has the smallest budget in the Far Eastern Federal District. Moreover, its income is about two times less than that of Chukotka, the Jewish Autonomous Region is even more behind the Magadan Region. Also, the Jewish Autonomous Region is included in the group of the most subsidized regions of the Far Eastern Federal District and is among the most subsidized regions of the country. According to the results of January-October 2014, its own revenues amounted to 54,6% of budget revenues, the rest was "added" by the federal center. The weak development of the economy is evidenced by the low share of income tax in own income - only 20,4%. The largest receipts from income tax (42,8%). At the same time, the importance of revenues from corporate property tax (12,3%) and taxes on total income (6,8%) looks good. However, the tax base of the Jewish Autonomous Region looks clearly weak.

As for the financial dependence of the region on the federal center, it is, in fact, great. Subsidies for equalizing the budgetary provision are 24,3% of the budget revenues of the autonomous region. In addition, the center is well supported by its subsidies and subventions. In terms of the share of subsidies in budget revenues, the Jewish Autonomous District turned out to be the leader of the Far Eastern Federal District (8,5%), with respect to the share of subventions it is one of the leaders, together with the Amur Region (6,1%).

Budget dynamics is one of the achievements

Like some other regions of the Far Eastern Federal District, the Jewish Autonomous Region experienced a decline in budget revenues, caused mainly by a decrease in federal aid (over the same period, i.e., January-October 2014). The decline in subsidies was especially sharp (by 23,5%), which was due to a decrease in funding associated with the elimination of the consequences of the 2013 floods. But subsidies also slightly decreased (on the contrary, subsidies increased noticeably - by almost 20%).

The growth of the regional budget's own revenues was very good - by 8,3%, but this turned out to be insufficient, and in general, revenues fell by 5,5%, which negatively affected the financing of socially significant areas. However, the dynamics of the budgetary situation in the Jewish Autonomous Region can be called one of its achievements. For example, in terms of mineral extraction tax, the region showed the best revenue growth in the Far Eastern Federal District (one and a half times). The growth in corporate property tax revenues was just as impressive (by more than 40%). Revenues from the most important taxes for the regional budget - income and profit taxes - also increased.

However, the lack of own income and insufficient assistance from the federal budget make the financial situation of the Jewish Autonomous Region still very difficult. In particular, at the end of 2013, it ranked third in the Far Eastern Federal District in terms of debt burden (58,7%). The budget deficit as of October 1, 2014 was an impressive 22,6%. Despite the decline in income, the Jewish Autonomous Region, like many other subjects of the federation, did not reduce costs (they increased by 11,4%), incl. in order to fulfill the requirements of the same federal center, although they were not provided with finances. It became the leader in the Far Eastern Federal District in terms of growth in health care costs (almost 6,8 times), and the share of these expenses (13,9%) was among the best in the Far Eastern Federal District. Moreover, the Jewish Autonomous Region became the absolute leader of the Far Eastern Federal District in terms of the share of spending on social policy (the largest item is 33,1%), which grew by more than 85%. This was largely due to the assistance provided to the victims of the flood.

But the situation with other expenditure items looks, on the contrary, alarming. The Jewish Autonomous Region has increased spending on education, which accounted for 22,6% of budget expenditures. But these expenses are clearly not enough, and in their share the Jewish Autonomous Region is one of the outsiders of the Far Eastern Federal District. In addition, the region spends little on culture (2,4%), which is also one of the worst indicators in the federal district.

Where to go to be treated?

We have already noted above that, according to government estimates, the social sphere in the Jewish Autonomous Region is almost the worst in Russia. The region began to spend significantly more money on health, which is, of course, extremely important. For example, in terms of the availability of doctors, the Jewish Autonomous Region ranks last in the Far Eastern Federal District. At the same time, already in 2013 year in the Jewish Autonomous Region, the salary in the sphere of health care was almost brought to the average in the region. In 2014, the region became one of the leaders in the Far Eastern Federal District in terms of health expenditures per capita. A policy is being implemented to attract doctors preferential working conditions in the region. Nevertheless, the efforts of the authorities of the Jewish Autonomous District in this direction were not evaluated by the federal authorities. In particular, an on-site inspection of Roszdravnadzor was carried out, followed by criticism of regional authorities.

In the educational sphere of the Jewish Autonomous Region, however, the situation was also unfavorable, and at the same time there was obviously not enough money for it. In 2013, the region was one of the lowest in the DFO education salaries. At the same time, it is characterized by a low level of availability of teachers. At the same time, the authorities made efforts to improve this situation, despite the lack of funds. In 2014, salaries in the sphere of both education and healthcare have already exceeded the average for the region. In 2014, one of the successes of the regional authorities is the improvement of the situation with the provision of kindergartens.

Most striking is the actual refusal of the Jewish Autonomous Region from budgetary financing of housing and communal services (only 3,8% of budget expenditures). This contrasts sharply with others, especially the northern regions of the Far Eastern Federal District. The region was unable to increase spending on housing and communal services in 2014. There are not many dilapidated and dilapidated housing in the region, which is an absolute plus given the lack of funds. But at the same time, the Jewish Autonomous Region is the leader of the Far Eastern Federal District in terms of the share of unprofitable housing and communal services organizations. A little money remains with the Jewish Autonomous Region for the items of the national economy (12,3% of expenses). In particular, it is one of the outsiders of the Far Eastern Federal District in terms of the share of expenses on the road sector (6,3%). Spending on the economy in general and roads in particular had to be cut in 2014.

At the same time, the budget of the Jewish Autonomous Region spends an appreciable part of the funds (8,5%) on national issues. These indicators are higher than the average for the Far Eastern Federal District, but the leader of the Jewish Autonomous Region is not. However, the first place in the Far Eastern Federal District is taken by the share of expenditures for the maintenance of the head of the region and the heads of municipalities (1,1%). Like many small regions, the Jewish Autonomous Region is characterized by a high percentage of officials in the economically active population (third place in the Far Eastern Federal District). But with significant expenses for the first persons, the salaries of ordinary officials are not large. As for the share of media spending (0,23%), it looks rather average.

Thus, the socio-economic problems of the Jewish Autonomous Region do not resolve the noticeable improvement in the situation with the regional budget's own revenues. As a result, it is not possible to ensure a balance in the expenditure policy, when many articles remain clearly underfunded.

What slows down the breakthrough

To change the situation, the Jewish Autonomous Region is in great need of breakthrough investment projects. Recently, one such project has appeared in the region. It is associated with the development of the mining industry (the extraction of iron ore at the Kimkan and Sutarskoye deposits) and the construction of communications for the export of extracted products to China (the bridge over the Amur River and the railway). The implementation of this project could significantly improve the indices of industrial production and increase revenues to the regional budget. Along with this project, there are also prospects for the extraction of iron-manganese ores at the Yuzhno-Khangan deposit, it is possible to develop the Soyuznoye graphite deposit. The second most important for attracting investments is the agro-industrial complex, one of the traditional specializations of the Jewish Autonomous Region. In particular, the regional authorities intend to create a large agro-industrial park in Smidovichsky district.

At the same time, last year did not become successful in terms of attracting investment to the region. According to the data for the first half of 2014 of the year, the Jewish Autonomous Region experienced a decline in investment. The region has an extremely small amount of foreign direct investment (they reached a peak in 2011 and then declined again).

Under these conditions, regional authorities are trying to change the investment climate for the better. Last year, they created a council to improve the investment climate. The Legislative Assembly passed a law on preferential tax treatment for investors. As for international cooperation, the work of Chinese enterprises in the agro-industrial complex of the Jewish Autonomous Region is progressing well. Regional authorities were negotiating with the Israeli company LR Group for the construction of a dairy complex in Smidovichi district. Cooperation in agriculture was also discussed with representatives of the DPRK.

But it is possible that the implementation of investment projects at the moment was negatively affected by the uncertainty with the fate of the regional authorities in connection with the gubernatorial elections of 2015 of the year. The Jewish Autonomous Region, as well as other regions of the FEFD, was in the spotlight of the federal center. One of the major events of the past year was the visit of Dmitry Medvedev, which was a great sign of attention, given that the region was not at all spoiled by visits by top officials of the state. The most important role in relations with the federal center was played by the elimination of the consequences of the 2013 flood of the year. The authorities of the Jewish Autonomous Region, realizing their responsibility to the federal authorities (in particular, Yury Trutnev was in the region with inspection visits), actively tried to solve the problems of the floods, expanded their support measures. Governor Alexander Vinnikov introduced the responsibility of his deputies for certain issues related to flooding.

However, the influence of the regional authorities in the center, despite their efforts, still did not look stable. The governor began to be constantly criticized by the ONF, which was clearly associated with the approaching elections and the lack of an unambiguous decision to extend the powers of Alexander Vinnikov. So, the subject of criticism was the situation around the provision of housing for flooded residents, and high utility rates in the region. It should be added that local construction and utilities companies added fuel to the fire, whose representatives took to protest actions, accusing the regional authorities of failing to fulfill their obligations and calling for the governor's resignation.

Meanwhile, the need for federal support remained very high in the Jewish Autonomous Region, and the authorities used the available opportunities to obtain it. The key investment project of the region, the Kimkanskoye and Sutarskoye iron ore deposits, was included in the preliminary list of priority investment projects considered by the Ministry for the Development of the Russian Far East, but in the second group, where it was necessary to eliminate comments. The Jewish Autonomous Region is also interested in continuing federal support for the construction of the Nizhneleninskoe-Tongjiang bridge. As expected, she proposed her project for the territory of advanced development in the agro-industrial complex (on the basis of the villages of Volochaevka and Danilovka, Smidovichi district). However, this project is clearly not in the first positions from the point of view of the Ministry for the Development of the Russian Far East. In addition, the regional authorities want to secure federal support for measures to protect against new floods: funds are needed to build protective structures on the Amur.

Of the major economic entities, the main role in determining the economic prospects of the Jewish Autonomous Region is currently played by the Russian-British group Petropavlovsk by Pavel Maslovsky and Peter Hambro. It is represented in the region by IRC Ltd, 45,39% of which is owned by Petropavlovsk. It is this company that implements the Kimkano-Sutarsky GOK project. However, the events of the last year indicate that one cannot count on a quick implementation of this project. The initial plans to launch the mining and processing plant in the Obluchensky District in 2014 were revised and postponed to 2015. The formal reason is that the Chinese partners are behind schedule. At the same time, the financial problems of the Petropavlovsk group, which was on the verge of bankruptcy, received great publicity. This also negatively affects the implementation of the project and may lead to its shutdown (recall that the threat of shutting down the already operating iron ore mining and processing plant appeared last year for the Petropavlovsk group in the Amur Region).

Political uncertainty

The prospects for infrastructure projects in which the Russian state is investing look somewhat more favorable. First of all, the Russian Direct Investment Fund, which is a subsidiary of Vnesheconombank, has created a Russian-Chinese Investment Fund with the Chinese company CIC, which is to finance the construction of a bridge across the Amur. Capital investments are expected from Russian Railways, which received funds from the federal budget and the National Welfare Fund for the modernization of the Transsib. In particular, the reconstruction of the old Obluchensky tunnel begins.

The political background of the events taking place remained unfavorable. Closer to the expiration of Alexander Vinnikov's term in the public sphere, information began to spread that the Kremlin would nevertheless replace the leader of the Jewish Autonomous Region. As possible candidates for replacement, the speaker of the legislative assembly Anatoly Tikhomirov, the mayor of Birobidzhan, Andrey Parkhomenko, the first deputy prime minister of the Khabarovsk Krai government, Alexander Levintal, appeared. All this, of course, created a nervous situation in the regional elites.

The political situation in the region was negatively affected by contradictions in relations between the executive branch and the public. In particular, the formation of a public council in the management of housing and public utilities and energy sector, which included mainly officials and workers of the industry, caused criticism. Some local cultural figures protested when the head of the regional cultural department put their signatures on an appeal to the Russian president in support of his position on Ukraine, without receiving their consent. The negative image of the authorities was also created by corruption scandals, the first deputy governor Dmitry Prokhodtsev and vice-premier Sergey Krivosheev accused of bribery became the defendants.

Conflict situations arose at the municipal level, especially since in September 2014, elections of heads were held in four districts of the region. In particular, the head of the Birobidzhan region, Yevgeny Sukharev, resigned, who was criticized by the local community and, as it is believed, did not suit the governor. His 20-year reign ended in scandals and Yevgeny Sukharev's exit from United Russia. He no longer took part in the new elections. It is worth noting that the elections for the new head of the "capital" district of the Jewish Autonomous Region were relatively calm, and they were won by Evgeny Sukharev's deputy for agriculture, Yevgeny Kochmar, nominated by United Russia. The candidates of the "party of power" confidently won in the Oktyabrsky and Smidovichsky districts. However, in the Leninsky District, a split of the elite still occurred: the incumbent head Sergei Lavruk won the elections as a self-nominated candidate, ahead of his first deputy Viktor Knyazev, nominated by United Russia.

Later, however, the regional authorities decided to strengthen the power vertical, and the elections mentioned above were the last. Now a model of the city manager has been introduced in the districts and urban settlements. Direct elections remained for the future in the regional center of Birobidzhan.

Thus, political uncertainty left a big imprint on the situation in the Jewish Autonomous Region. But in the very near future there will be clarity on the issue of the governor of the region and, consequently, the main candidate for the forthcoming elections in September. Meanwhile, the region continues to desperately need breakthrough investment projects. From this point of view, it is very necessary for him to complete the project of the Kimkano-Sutarsky GOK, where, unfortunately, there began to be a hitch. A positive role can also be played by the implementation of investment projects in the agro-industrial complex, where the region has a chance to create its only territory of advanced development. If real progress is made on these projects, the region will be able to more confidently develop and solve its budget problems, which in their present form create the risks of growing social tension.

Earlier on EastRussia.ru the results of 2014 year Khabarovsk Territory, Chukotka, Yakutia, Kamchatka Territory, Primorye Territory, Sakhalin Oblast.

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