The Politics of Intergovernmental Transfers in Post-Soviet Russia

Abstract

In Russia's lingering constitutional crisis, struggles over fiscal politics have taken on a broader institutional significance – at times even threatening to undermine the federal state. This article studies the evolving fiscal relationship between Moscow and the regional governments in the early post-Soviet period. To explain why some regions currently receive large net transfers (subsidies, grants, other benefits) from the centre while others pay large net taxes, net central transfers per capita have been regressed on a range of predictors reflecting social ‘need’, preferences of central politicians (electoral interests, pork barrel allocation, policy objectives) and lobbying capacity of regional governments. The most significant turn out to be three bargaining power variables that signal regional discontent and credible resolve to threaten economic and constitutional order – a low vote for President Yeltsin in the 1991 election, an early declaration of sovereignty and the incidence of strikes in the previous year.