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Transbaikal Region: results - 2015, trends - 2016

East Russia continues the cycle of analytical publications devoted to the results of the past year and the analysis of the situation in the current year in the socio-economic and political spheres of life in the regions of the Far East and Eastern Siberia

It is difficult to name a region in Russia that would be distinguished by the growth of social discontent and political protests as the Trans-Baikal Territory recently distinguished itself. Peripheral and extremely difficult from the point of view of organizing effective management and overcoming the crisis, which seems to be a permanent phenomenon here, the region was literally in a fever during the year. Ultimately, already in 2016, the Kremlin decided to resign Governor Konstantin Ilkovsky, whose rule is difficult to assess otherwise than as unsuccessful.

Transbaikal Region: results - 2015, trends - 2016

Rostislav Turovsky

Doctor of Political Sciences, Professor of HSE, Scientific Editor East Russia
It is unlikely that there was a region in Russia where protests for the resignation of the governor were held with the same regularity, and many thousands of signatures were collected in support of this decision.

The change of the governor has now led to a partial restoration of the positions of the old elites that had formed in the region before the arrival of the "Varangian" Konstantin Ilkovsky in 2013. The new head of the region was Speaker of the Legislative Assembly Natalya Zhdanova, who worked as Deputy Prime Minister of the regional government and was responsible for the social sphere under the former head of the region Ravila Geniatulina. A special political intrigue is associated with the party affiliation of the governor. Konstantin Ilkovsky was the only representative of Fair Russia in the governor's corps, and now the party has lost “its” head of the region. The new Acting Governor Natalya Zhdanova, as in the overwhelming majority of the RF subjects, represents United Russia.

"Transbaikal chain" of failures and failures

The course of events in Transbaikalia in recent years sometimes seems to be a chain of constant failures and failures. One of the "eternal" problems remained housing and communal services, because of which Konstantin Ilkovsky was officially "hurt". As is known, the reason for his resignation was the center's claims about the slow implementation of the resettlement program from dilapidated and dilapidated housing. Transbaikalia showed the worst result in the Far East and the Baikal region and 81-th around the country. Moreover, this problem was known before. For example, back in April 2015, Dmitry Medvedev demanded from Konstantin Ilkovsky a report on the reasons for such a slow work, and Transbaikalia was named in the four worst regions, along with Kalmykia, the Komi Republic and the Vologda Oblast. For its part, the prosecutor's office identified violations and made submissions to the former governor. It is worth noting that Transbaikalia is by no means the leader in Russia in terms of the share of dilapidated and dilapidated housing (but it is far from being an outsider, given the large number of cities and towns with a critical state of housing and communal services). But the conflict between Konstantin Ilkovsky and the center arose due to the lack of a solution to the problem, and this is already connected with the requirements of the "May decrees" of Vladimir Putin, not to mention the urgent need for society.

Another sore point of Transbaikalia was the social sphere. Delays in wages in the public sector have become a chronic phenomenon, again against the background of the center's demands to normalize this situation and raise wages. The most acute situation is in education, even leading to teacher strikes. The region could not cope with social payments either. For example, there were pickets of mothers with many children who protested against delays in benefits. Payments for the maintenance of orphans were also disrupted. The problems of wage arrears hit, of course, not only the budgetary sphere, but also industrial enterprises. In particular, protest rallies in this regard were noted at the Sretensky shipyard. Along with the political opposition (especially the Communist Party of the Russian Federation) and some prominent public activists, the protests were also supported by the trade unions, which held rallies against wage delays.

This, however, did not exhaust the list of problems of the Trans-Baikal Territory. In the region, where the role of the railway is very important, the situation with suburban rail transport is very acutely perceived. The regional authorities also could not really sort out the situation, being in debt to the Trans-Baikal Suburban Passenger Company (amounting to about 400 million rubles) and not seeing any other options other than raising tariffs and cutting trains. Rallies against tariff increases were held, for example, in January 2016, when it became clear that the situation was not getting better from year to year.

The situation with catastrophic forest fires, the areas of which reached a ten-year maximum last year, also developed unsuccessfully for the regional authorities. The entire reserve fund of the region was used to fight the fires. At the same time, the object of harsh criticism was the state forestry service of Transbaikalia, whose head Ruslan Balagur was, in essence, a random figure in this post. It is worth recalling that he played the role of the technical candidate for the governor in the 2013 elections and then received this position as a "reward". This story ended with the arrest of Ruslan Balagur, who is accused of negligence, which led to the death of people, and abuse of authority in the role of the head of the organization. The center was also very unhappy with these events, and, in particular, the Minister of Natural Resources and Environment Sergei Donskoy, who negatively assessed the actions of the forestry service in the region.

Finally, a very scandalous plot was the story of the alleged lease of 49 thousand hectares of land to a Chinese company for 115 years by the regional authorities. It is difficult to say how serious these plans were, but they received a serious negative response and became the reason for anti-governor speeches. The Liberal Democratic Party of Russia, which has quite stable electoral support in Transbaikalia and did not hesitate to take advantage of the chance to oppose the "sale of the Motherland", began to speak out especially sharply. A sensitive issue for the border region is, of course, the influx of foreign labor, although, of course, "Chinese expansion" remains a rather illusory topic.

This is not to say that the regional authorities did not make any efforts to rectify the situation. Konstantin Ilkovsky often visited the federal government, constantly trying to agree on one or another support and allocation of funds. Probably, the region did not have enough budget funds, and the governor lacked managerial experience and lobbying connections to avoid a political catastrophe.



Minor tones of the economy of Transbaikalia: from debt burden to recession in industry

As a result, the analysis of the socio-economic situation in Transbaikalia is still and, in essence, as always has to be done in minor tones. Among the negative and, moreover, expected trends in the public sector, the increase in the debt burden should be noted. According to its level (82,7% of the own revenues of the regional budget), Transbaikalia occupies 15-e place in the country, and the level itself is critical. In the Far East, there are two regions with the worst indicators (Chukotka and the Jewish Autonomous Region), but this, of course, does not comfort at all. The volume of public debt increased by 32,3% last year, i.e. the problem is not being solved, but only getting worse. Konstantin Ilkovsky took out new loans from the federal budget (debt grew by 60,45%), and debts to banks also increased (by 19,8%). Municipalities, however, were "more modest" and increased their debt by 9,5%. The amount of the state debt of Transbaikalia (26,5 billion rubles) is higher than in the Irkutsk region and Buryatia, and in comparison with the Far Eastern Federal District it is still inferior to Yakutia, the Khabarovsk Territory and the Amur Region. By the way, the neighboring Amur Region can be considered the closest analogue of Transbaikalia and also demonstrates the severity of its financial problems.
In the socio-economic situation, the past year in Transbaikalia became just a net minus, not showing a single perspective. The industrial decline was 1,3%. But this is still not so bad, but investments fell by 11% (only the Khabarovsk Territory in the Far Eastern Federal District and the Baikal region showed the worst rates). Construction work decreased by 29,2% (in the Far East and in the Baikal region, the dynamics was worse only in the Jewish Autonomous Region). The decline in agriculture, which is significant for the southern territories of the region and, in particular, for the Buryat regions, amounted to 5,2%.

There are many reasons to talk about the objective reasons for the deterioration of social well-being. Thus, the real money income of the population fell by 4,2%. Indicators of retail trade, which are especially sensitive to the standard of living and consumer behavior of the population, decreased by 9,9% (negative dynamics at the level of the Irkutsk region and worse than all regions of the Far Eastern Federal District). Thus, the Trans-Baikal Territory, unfortunately, fully justified its image of a depressed region with very vague prospects, the implementation of which, moreover, is endlessly postponed.

The financial and budgetary situation in the region, meanwhile, did not undergo sharp changes, but an obvious imbalance occurred in the expenditure policy. As for budget revenues, they increased slightly, and the center continued to provide considerable assistance to the region. Thus, the growth of budget revenues amounted to 7,5%, incl. own tax and non-tax revenues - almost 8%. The situation with the income tax has noticeably improved (an increase of 13%), but its share in the own budget revenues (11,75%) remains very low, indicating the absence of large and reliable taxpayers in the region. There was practically no growth in the most important source of income - income tax (by 1,2%). True, the region was able to seriously raise revenues from the corporate property tax (by 40,8%: fourth place in Russia in terms of dynamics) and the mineral extraction tax (by 26,35%). Interestingly, the share of property tax of organizations in the regional budget's own revenues is even greater than the share of income tax.

In the region, receipts from federal transfers also increased quite proportionally - by 7,2%. The volume of subsidies remained almost unchanged (a decrease by 0,8%), and receipts from subventions increased (by 8,8%). But the center has significantly cut subsidies to Transbaikalia (by 20,9%). The latter was probably a consequence of the weak lobbying potential of Transbaikalia, and just the funds from subsidies to the region would clearly be useful for a targeted solution of certain problems.



One of the problems of Transbaikalia is the lack of breakthrough projects

As for the expenditures of the regional budget, there is a feeling that Transbaikalia could not competently and thoughtfully dispose of its funds. Expenditures rose moderately - by 5,6%, the region remained in a significant deficit (-12,6%), but that is not the point. Apparently, realizing the growth of social discontent, the regional authorities tried to solve problems in the budgetary sphere. In this process, they sharply raised health care costs - by 23,3% (the fifth growth rate in the country, the best in the Far Eastern Federal District and the Baikal region). Expenditures on social policy also showed significant growth - by 11,8%: the authorities nevertheless tried to solve the problem of benefits and subsidies to the population. But at the same time, they cut education spending (by 3,1%), i.e. the sphere where protests and strikes took place (the share of spending on education in Transbaikalia - 33,3% - is the seventh in the country and the best in the Far Eastern Federal District and the Baikal region, and in terms of general education it is the fourth in Russia, but it is likely , shouldn't). The already small expenditures on culture (by 6,7%) and physical education and sports (by 20,5%) were noticeably cut. By the way, protests by cultural workers have also become one of the features of Transbaikalia.

The feeling of the ill-conceived nature of the expenditure policy also develops when analyzing the situation with the other items. The Territory sought to help agriculture (growth of expenditures by 26,4%), taking into account also the circumstances of last year's drought. A lot of funds were directed to roads (an increase of 22,25%). However, the housing and communal services received 12% less funds, which, as we recall, resulted in the disruption of the resettlement program from dilapidated and dilapidated housing and, in general, in citizens' dissatisfaction with the state of affairs in this sector. At the same time, expenditures on general state issues grew (by 4,5%) and, moreover, the costs of maintaining the head of the subject and heads of municipal administrations increased by as much as 10,2%, which in a crisis situation looks like a very dubious decision. Only prosperous Sakhalin allowed itself to increase these expenses in an even greater proportion in the Far East and in the Baikal region.

It so happened that the regional authorities last year significantly changed the structure of the regional budget in its expenditure side. As is clear from the above, the dynamics for many items was very sharp, which is striking against the background of all other regions. Thus, the role of education, the largest expenditure item, has diminished, and, we repeat once again, this had critical consequences. The importance of "economic" articles, health care and social policy became higher, however, this did not save the region and its previous authorities. Probably, the authorities of Transbaikalia will still have to seriously analyze their finances and decide how to properly dispose of them, since under Konstantin Ilkovsky, the authorities' expenditure policy had the most direct and negative socio-political consequences. At a minimum, housing and utilities and education require more attention.

Without entering the Far Eastern Federal District, the Trans-Baikal Territory was unable to use the development tools that are being created in the macroregion. Moreover, the interest in these instruments in Transbaikalia is great and inevitable, if only for the reason that this region not only borders the Far Eastern Federal District, but for many years has been included in the program of socio-economic development common with the Far Eastern Federal District. But this was not a reason to make an exception for Transbaikalia. As is known, it has not been done for the Baikal region as a whole, including Buryatia and the Irkutsk region.

Under these conditions, Transbaikalia still has to rely on the use of the TOP mechanism in problematic monocities. In this regard, activity is noticeable in one of the key economic centers of the region - Krasnokamensk, where Rosatom's structures operate. In essence, the lobbying capabilities of nuclear scientists could contribute to the creation of at least one special economic regime on the territory of Transbaikalia. The final decision on this issue has not yet been made, and the first ASEZs in single-industry towns have appeared so far in other regions (including the Irkutsk Region), but Krasnokamensk's chances remain high. The TOP project involves the creation of both industrial and agricultural clusters here. In addition, the most problematic category of single-industry towns in Transbaikalia includes a number of villages - Novopavlovsk, Novoorlovsk, Pervomaisky and Zhireken. They, in particular, receive subsidies to create new jobs. However, such monotowns are too small to create a TOP. Therefore, Krasnokamensk remains the most likely growth point.

At the same time, it is difficult to hope for raw material industrial groups in Transbaikalia. Too many projects were not implemented, or their implementation is being delayed. The most important of them - the unique and largest in the country Udokan copper ore deposit in the BAM zone - is only moving off the ground. Alisher Usmanov's structures, which have long been licensed in a difficult struggle, continue to agree on state co-financing of the project, which in this case will finally have real chances. Agreements were reached on financial support from Vnesheconombank. Probably, the project will still include Rostec, which has 25 percent option.

As for the FIG, which has already actually begun to work in the region, Norilsk Nickel, the results of its work are still ambiguous. On the one hand, the company announced that it was abandoning a number of unpromising fields - Kultuminskoye, Zergunskoye, Lugokanskoye and Serebryany. Work has also been halted at the Bugdainskoye copper-molybdenum deposit. On the other hand, Norilsk Nickel is concentrating its efforts on the Bystrinsky GOK in the Gazimuro-Zavodskoy region, which increases its chances, but the launch of the deposit is constantly being postponed (by that time, the state had already fulfilled its obligations to build infrastructure for this deposit). Now we are talking about putting the GOK into operation in the third quarter of 2017. Today, this is probably the main hope of Transbaikalia and a key realistic investment project that can improve statistics. Then Udokan will be next.

There is little movement on the rest of the raw materials projects. The growth of coal production is more likely. Now the development of the Zashulan coal deposit (not far from the border with Buryatia), which is being carried out by a joint venture between O. Deripaska and the Chinese coal company Shenhua, is gradually beginning. Last year, the companies signed an agreement with the regional authorities. But the field is small, and production is still far from reaching its design capacity (six million tons per year). The Zhireken Molybdenum GOK, controlled by the structures of the same Oleg Deripaska, has already stopped working. The project of the same FIG for the development of the Chineysky iron ore deposit in the BAM zone has stalled.

The situation with the assets of the coal company SUEK looks more optimistic - the Apsatskoye deposit, located in the BAM zone, is gradually reaching its design capacity (it should be 3 million tons of coal per year). With the general crisis of gold mining in Transbaikalia - in comparison with Soviet times, the structures of R. Abramovich's FIG, represented by Highland Gold Mining, operate relatively stably. At least they have the Novoshirokinskoye deposit in the Gazimuro-Zavodskoy region, revived to life after many years of inactivity, where gold production is gradually increasing. But at the Taseevskoye gold deposit near the town of Baley, work has not begun, and Konstantin Ilkovsky announced last year about the possibility of revoking the license from HGM, which in the meantime is trying to sell the asset.

Thus, the problem of Transbaikalia remains the shortage of breakthrough projects that could significantly change the socio-economic and financial-budgetary situation. The development of the resources of the BAM zone in the north of the region could play such a role, but it is proceeding very slowly, and there is still no final decision on Udokan. In the main part of the region, there are many medium-sized deposits of various raw materials, to which investors lose interest during the crisis years. In general, the history of the region, for example, in 1990-e biennium - this is the history of the closure of most of the deposits that were developed in Soviet times - due to unprofitability and depletion of reserves. While Transbaikalia was not far from this sad story, some mines were closed both in the zero years and more recently.



Change of political teams amid regional contradictions

Against this depressive background, regular political changes began in Transbaikalia. The stage of the “SR” governor's rule is over, preparations are underway for early elections. As one would expect, Konstantin Ilkovsky's team is forced to leave their posts, and Natalya Zhdanova is clearly not in the mood for any compromises, trying to demonstrate her intention to change the course of the regional government. However, regional problems do not have quick solutions, and once Konstantin Ilkovsky also said that he had inherited a difficult legacy, which cannot be dealt with in a matter of years. Most of the problems are objective in nature and are caused by a weak resource base and neglect of the region. Although, of course, elements of stagnation and passivity in the work of the authorities, in fact, were present in recent years 17-year-old the reign of Ravil Geniatulin, which had lost its authority and popularity. The problems of housing and public utilities and public sector employees demanding their legal salaries continue to haunt Natalia Zhdanova. In fact, the new authorities admit that they do not have the resources to cope with them, and even more so to bring the region into full order by the elections.

In the upcoming gubernatorial elections, surprises are hardly to be expected, but one should not underestimate the protest moods, which cannot be removed by the resignation of Konstantin Ilkovsky alone. In addition, the return to power of some representatives of the “old” team does not allow to convince the inhabitants of Transbaikalia that the situation will begin to change for the better. The Communist Party is active in the region. Its most prominent representative, Nikolai Merzlikin, a member of the legislative assembly and former first secretary of the Chita regional committee of the CPSU, showed himself weakly in the 2013 gubernatorial elections, but then became more active and constantly acted as a critic of Konstantin Ilkovsky. Perhaps he will become a party candidate in the elections. State Duma deputy from the Communist Party of the Russian Federation Vladimir Pozdnyakov, who is not a native of Chita, but oversees the region and intends to fight for his re-election, has also become more noticeable in the region. Another important player in Transbaikalia is the LDPR, which is also unlikely to remain aloof from the governor's campaign and, of course, will conduct an active campaign in the Duma elections. Therefore, one can expect that the gubernatorial elections will become relatively competitive. Konstantin Ilkovsky once successfully played on the effect of novelty, sowing considerable expectations in the region, but Natalya Zhdanova will no longer be able to repeat the same scenario, and she will need serious and meaningful argumentation in support of her nomination for the governor's post.

In general, despite all the problems, Transbaikalia still has a gradual prospect of improving the situation. At least, we can already talk about the phased introduction of the most important raw materials projects, first - Bystrinsky GOK, then - Udokan. But this process lasts for years, and even it will not qualitatively change the socio-economic and financial situation. The region still needs both the creation of new industries (not limited to the extraction and export of raw materials), and the use of the possibilities of its border position (of course, not for the illegal export of timber and other resources, or illegal Chinese immigration). Until now, the region seemed to be walking in one circle, from time to time referring to the same projects and ideas. Considering the loss of control over the socio-political situation that has already happened, a way out of this circle is extremely necessary.
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