RUSSIA AND REGIONALIZATION OF WORLD POLITICS 9783944611068

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Golden Mile GERMANY

Dr. Olga Tserpitskaya, Dr. Nataliya Markushina, Dr. Natalia Kovalevskaia

RUSSIA AND REGIONALIZATION of WORLD POLITICS

BERLIN · 2014

Reviewed by:

Y.N. Gladky, Corresponding Member of the Russian Academy of Sciences, Doctor of Geography

Academic Editor: V.S. Yagya, Honorary Academician of the Russian Federation, Honorary Professor of Saint Petersburg State University, Professor, Doctor of History

Published with support from the corporate group Club ROM (Russian Orthodox Maecenas), CLAN Magazine and TH Wildau. Dr. Olga Tserpitskaya, Dr. Nataliya Markushina, Dr. Natalia Kovalevskaia This book explores the theoretical and applied aspects of regionalization of world politics. It encompasses both negative and positive features of the spread of this process, providing an introduction to the role of regionalization in Russia. The book highlights regionalization data from a wide variety of political, cultural, economical and social contexts In the book the authors analyze the role of regionalization in the formation, development and settlement of political processes internationally, basing research on examining various ideas that can help in the formation of understanding and common outlook of the process of regionalization worldwide.

ISBN 978-3-944611-06-8

© Dr. Olga Tserpitskaya, Dr. Nataliya Markushina, Dr. Natalia Kovalevskaia, 2014

Regionalization is currently becoming one of the most vital elements of practice and theory in world politics. The book that both of us had a chance to read presents a lovely and factual account of the development of regionalization as a global process and explores the whys and wherefores of the history, current status and future of regionalization, based on trends that form important structural elements of transnational environment of world politics. The interesting and excellent studies in this book go a long way toward filling the enormous gap in our understanding of the role and importance of regionalization in the formation of sovereignty in Russia. This work brings together a diverse group of Russian scolars trained in political science and history to consider the interrelationship between developments in the issues of regionalization and the course of the Russian statehood process. Dr. Tserpitskaya, Dr. Markushina and Dr. Kovalevskaia exploring the issues of regionalization avoid taking sides and introduce their ideas in a measured but engaging way, backed by facts and figures. A fascinating and authoritative book that should be required reading for all scholars, decision makers, and others interested in regionalization process in today’s Russia.

Prof. Dr. László Ungvári President of the University of Applied Sciences Wildau

Konstantin Loskutnikov Baron von Bossner President of the Maecenas Club, COB of Directors of the Golden Mile Group

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The research of a role of the regional component in elaboration of the foreign policy of the Russian state Collapse of the Soviet Union featured one of the milestone events across the globe in XXth century. The Soviet Union Republics were replaced by new independent states. The Russian state initiated an active search for its position within the globalizing world. In doing so, it followed a track of expanding its participation in international organizations, setting up new interstate entities and coalitions, intensifying bi- and multilateral relations with the rest of the world, as well as deepening engagement of sub-federal entities (regions) into international cooperation. After a lapse of 17 years, one can consider it for sure that the role of regions in international cooperation has grown tremendously, especially when it comes to security and economic interdependence. That is why, promotion of security of the Russian Federation is tightly connected with evolution of foreign policy and changes in priorities of economic development. At present, scholars are putting forward two major forms of foreign policy periodization. The first one consists of three stages1. The first time span fell on 1991-1994, 4 Vardomskiy L.B., Skaterschikova Е.Е. External economic activity by Russia’s regions. M. 2002. p.92

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when control by centre was quite loose and legislative acts had common nature. At the second stage (1995 1998) the authorities (centre) were attempting at not only strengthening of control over international activity by regions, but also working out respective legislation. And, finally, the third stage has been going on since 1998. Its fundamental trend is enhancement of the power vertical. To a great extent, the second type of periodization was down to internal policy processes and management reshufflings, which had been preconditioned not only by parliamentary, but also, first and foremost, presidential elections. Thus, it has two stages, corresponding to periods of rule of Russia’s presidents B.N. Yeltsin and V.V. Putin, along with D.A. Medvedev (whose tenure fell on 2008 – 2012, without any deviations from the foreign policy launched by V.V. Putin2). Both types of periodization in course of 1990-s and early XXIst century concur in a common trend that proceeds from broader freedom of regions to enhancement of centre over executive and legislative powers in subfederal entities3. All this should be taken into account by defining a notion of a regional component in evolution of the foreign policy of the Russian state. To carry out the research, a set of criteria should be pinpointed and scrutinized: Markushina N.Yu. Foreign affairs of regions: from Yeltsin to Putin. Materials of the international conference “Russia between parliamentary elections: current issues in domestic and foreign policy”. St. Petersburg, 2004. p. 42. 3 Vardomskiy L.B., Skaterschikova Е.Е. External economic activity by Russia’s regions. M. 2002. p.92 2

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1. The Russian Federation, being an integral part of the global political process, incontestably, should take into account key features of contemporary international relations, which tend to globalization and regionalization. In XXIst century the Russian Federation has been keeping on solving a dual-purpose issue of restoration of national economic power, as well as its integration into global economy. In other words, having paid primary attention to interior development, Russia is providing for itself with a position on the global stage that is worth pursuing. The issue of working out a national strategy with regards to foreign affairs of regions is equally important. This circumstance manifests itself especially in the light of intense interest in regional development as a whole, and in Europe in particular. From viewpoint of the West, urgency of the regional factor is coercing many states to make efforts to develop legal (national and international) basis of their action4. Steps that have been made by Russia in this area can be noted by growing trust of foreign partners. Undoubtedly, two processes, which structure global social space and, at a first glance, renounce each other, have become predominant in modern Russia – globalization Likhachev V. Towards Europe of regions. Sub-federal entities of the Russian Federation possess a considerable potential for international cooperation //Nezavisimaya gazeta, September, 29 2000 4

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and regionalization.5 The scholarly community differs in the appraisal of globalization and regionalization. For instance, Charles Kegley and J. Wittkopf in their monograph “World politics” claim that nowadays any changes in global politics can be described by the term “globalization”. This word is used, either as a verb, or, adjective and noun, in order to explain global processes. It implies internationalization and integration of the world community into s single entirety, without any borders and obstacles.6 Regionalization is moving side by side with the global process. On the one hand, it precedes globalization, and on the other – regionalization confronts globalization. In opinion of the professor Khalikov M.S.: “Regionalization is typical of interdependence and extension of enterprise entities far beyond national borders, whereas regional boundaries are restricting scope of these trends”.7 Thus, regional hubs of economic, political and cultural-civilizational nature are evolving arbitrarily and purposefully alongside with globalization. According to a definition given by the professor Zeleneva I.V. “Formulation of identity concepts is turning into an urgent challenge, and its solution is inconceivable but for complicated account of intra-regional and international 5 Kononov I.F. Globalization and regionalization in the modern world // www.sociology.kharkov.ua/docs/chten_01/kononov.doc 6 Kegley Charles W. J., Wittkopf Eugene R. World Politics (Trend and Transformation) P. 20. 7 Khalikov M.S. “Regionalization and globalization as two trends in evolution of the modern world”. Volume №1

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political processes at the regional and interregional tiers”8. The notion of regional identity is coming to the forefront. The professor of the York University (Great Britain) Mark Beeson, in reliance on a Benedict Anderson’s concept of “imaginable communities”, believes that formation of such an identity or sense of immersiveness to a region is a principal precondition for establishment of a community. Emergence of formal institutions, on the contrary, appears for merely an external manifestation – “a marker” – of this phenomenon9. Authors of classical definitions of a “region”, regionalism, and regionalization paid attention, first and foremost, to search for the criteria of “objectively” existing regions and predictive valuation of opportunities for integration of member-states in these regions10. Such an approach was explained by the fact that empirical experience of integrational entities was utterly restricted. Today, accumulated experience is providing sufficient data to point out vision on regions and a role of separate factors, which precondition regionalization in the contemporary world. The concept of an “international region” implies presence of a spatial factor in form of “zones of reciprocal gravitation” as an essential prerequisite for regionalization.11 S.K. Pestsov suggests three 8 Zeleneva I.V. India’s foreign policy. St. Petersburg. 2003. p.2 9 Beeson M. Regionalism and Globalization in East Asia: Politics, Security, Economic Development. New York, 2007: 6-9 10 Gladkiy Yu.N., Chistobaev A.I. Regional studies. M., 2000. p. 26 11 Kazantsev A.A. Central Asia: institutional structure of international cooperation in a growing region // Polis. 2005, № 2: p. 78

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criteria for highlighting zones of reciprocal gravitation: a) inclination to group interactions with neighboring states; b) endurance (stability) of interrelationship; c) scopes of these interrelationships12. As E.I. Zelenev fairly notes, as a rule, a region is an entity that is wider or less than a country. Coincidence of boundaries of a region or country features a fairly rare historic phenomenon, which is not far from being an occurrence. In opinion of the Russian scholar N.M. Mezhevich, presence of specific economic, ethnographic, confessional, socio-cultural content, particular type of political life and power elites is a prerequisite for evolution of a region on a definite territory. Territory is a basic and determinant attribute of a region, but not a single one. “For a territory or community of states to turn into a “region”, occurrence of all or part of these traits is necessary: - commonality of historical destinies; - availability of features, which are distinctive of only this culture (material and mental); - geographic unity of a territory; - common type of economy; - collaborative working environment in regional international organizations”13 The professor of the Goteborg University (Sweden) Bjorn Hettne supposes that it would possible to reflect on regionalism, only having assured that a group of uniting Mezhevich N.M. Economic analysis of a region. St. Petersburg., 2007: pp. 5-6

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states possesses such conditions as natural geographic borders, institutions of regional security, high level of organized cooperation cultural, political, economic and military domains, and finally, availability of common values. An integrating region should be able to be posed as a consolidated player, vested with legal capacity and legitimacy in eyes of other participants of global relations. Such a region should be comprised of decision making institutions, although they do not need to be supranational14. B. Hettne devotes much attention to differences in understanding of the term “region” within various spheres of scientific knowledge. So, definition of the region varies: - in geography: a subnational unit, or a historically developed separate territory (which may become a nation state) or recently evolved territory. - in international relations: a supranational subsystem, being an element of an international system. - in context of macro-regionalist studies: a continent or supranational unity of countries, which shares common political and economic interests and possessing a certain level of identity. The simplest and most typical definition: a certain amount of states united by similar geographic layout and being interdependent to an extent. The conclusion is that: - social homogeneity (ethnicity, race, language, religion, culture, history, apprehension of common heritage); 14 Sorensen G. The Transformation of the State. Beyond the Myth of Retreat. London, 2004: 64-67

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- economic homogeneity (tendencies, economic interdependence) - political homogeneity (a type of a political regime, political ideology) - organizational homogeneity (existence of official regional institutions)15. A.D. Voskresenskiy puts forward such a definition of a region: “A region is a definite territory, which represents a complicated territorial-economic and national-cultural complex that can be highlighted by traits of presence, multitude and interconnectedness of phenomena, which expresses itself in homogeneity of geographic, nationalcultural conditions that can be drawn out to benchmark this territory16. Thereby, we can acknowledge that regionalization is a constituent of globalization, which has been moving in each and every region. It is a common knowledge that boundaries cannot hold Globalization back, it touches upon everyone, whereas under regionalization distinct marks of its spillover become visible at once. Hettne concludes that it would be sensible to set apart the notions of “region” and “regionalism”. Anthony Payne and Andrew Gamble, for instance, define regionalism as “a venture for rearrangement of a definite regional space in the sphere of economy and politics that is conducted at the state tier. Regionalism implies a certain activity 15 Hettne B. Beyond the “New” Regionalism // http://www.iei.liu.secontent1c43646autumn %202005h05%20-%20NPE_Hettne_3.pdf 08.11.2008 P. 2-3 16 East/West: Regional subsystems and regional issues in international relations. M., 2002 – p. 9

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of constant structuring and destructuring, initiated by concerted efforts of the mankind”. Andrew Herell divides regionalism into five variations: regionalization (informal integration), identity, interstate cooperation, interstate integration and interconnectedness17. Yet, several authors believe that regionalization is a more complicated process, which can advance both, spontaneously and intentionally. Among different scholars there is no unequivocal opinion. Mainly, regionalization is compared with buildup of a nation state – dynamically predetermines a transition of a geographic region to a particular political community. Iver B. Neumann elaborated the so-called post-structuralist approach, which explicates emergence of the notion “region” in discourse on “internal and external”18. For instance, in case of Turkey’s intention to enter the EU, theoretically it falls under quite vast area of the European community, still, on a range of accounts this state is perceived as exceeding the boundaries of “internal” space of the Union. As N.M. Mezhevich fairly notes, “globalization and regionalism are notions that correlate to each other. Simultaneous existence and interdependence of global and regional trends in the modern world brings about attenuation of state’s role. Decentralization effect can be viewed as a consequence of globalization and regionalization as well”. See above. P. 4-5 18 Hettne B. Regionalism and World Order // Global Politics of Regionalism. Ed. by Farrell M., Hettne B., Van Langenhove L. London: 2005. P. 270 17

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Professor Bjorn Hettne, having detected differences between “old regionalism” and “new regionalism”, suggests the following classification: Old regionalism

New regionalism

It existed in the bi-polar It is evolving as a modern world version of To a much extent, it evolved It is growing “from “from above”, under aegis beneath”, i.e. contains of two super-powers. elements of randomness and autonomy of its actors. Its nature was protectionist. It aspires to implementation of “open regionalism”, which is compatible with As a rule, it oriented at It is more multifaceted, as solution of either economic includes trade and finance, issues, or security issues. ecological, social-political and other dimensions. It included merely relations It implies participation of between non-state and subnational actors. Hettne В. Globalization and the New Regionalism. Vol. № 1. London, 1999. Р. 7–8.

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2. A Regional component in the concept of Regional Institutionalism For clearer designation of a system of outlooks at construction of a regional component and its constituents a completely new concept of Regional Institutionalism should be suggested. It implies institutions that are built up by a state. A system of intercourse – centreregion, specialized regional legislation, geopolitical code of a region, as well as religious, political and socialeconomic approaches, being formed by specificity of a definite geographic space, which is a region (subject) of the Russian Federation – belongs to this category. It is precisely the Regional Institutionalism theory that should become a keystone in the concept of regions development and creation of a model for implementation of the international policy “Centre-regions” (through the example of the Russian Federation). The Russian science has not still seen any effort to prepare an integral concept of Regional Institutionalism. Only separate aspects were explored. As such, scholars V. Mikhailin and Ts.V. Shvartsburd19, while suggesting an idea of the Institutional Chronotopos, reckon “presence of correlation between different norms and rules of conduct (institutions) and spatial (“territorialmagic)” visualizations at early stages of human culture Shvartsburd Ts.V. Institutional analysis of evolution of Russia’s small business in late ХХth century. Review of the dissertation in candidacy for a PhD degree in economic sciences. Samara 2008 19

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evolution”20. In Shvartsburd’s point of view, “V. Mikhailin virtually articulates the idea that nature of institutions and institutional differences are determined by Chronotopos (“a culturally marked territory”), which is correlates to a definite set of stereotypes (world outlook)”21. Several similar concepts one can come by in the monograph by A. Sh. Shtanchaev “Institutional environment of region’s development”, whereby he analyses evolution of institutional foundations for regional economic policy. He believes that “official and social institutions are obtaining a particular significance in evolution of institutional environment and construction of a civilized economic system as in entire Russia, as well as in each and every sub-federal entity”. Notions, being worked out in the Ukraine and the EU, are closer to Regional Institutionalism that is put forward in this study. So, from the viewpoint of the Ukrainian scholar and politician A.L. Derkach: “the issue of rational cooperation of a unitary state and its regions is one of the most complex for the democratic society, and moreover during a transition from the administration-by-fiat model to democratic statehood. Radical administrative reforms in Poland are not occasionally implemented across all CIS countries; at present, Russia’s new president Vladimir Putin is carrying them out”22. 20 Shvartsburd Ts.V. Economic anthropology of savings. Historic-institutional approach // http://cliodynamics.ru/index.php?option=com_content&task=view&id=86&Itemid=1 See also: Mikhailin V. A path of animals words: Spatially oriented cultural codes in the IndoEuropean tradition М. 2005. 21 Ibidem. 22 Institutionalism: regional aspects. Kievskiy telegraf. №19, July 16 2000

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The Swedish researcher B. Hettne highlights the so-called notion of “regionness” within regional institutionalism studies. It determines correlation of a specific region with regional distinctive features that can be regarded in context of the long-term historical process, rapidly changing as time goes by, as well as buildup of empires and nations in optional cooperation pattern. Apart from that, this notion can be defined as “a degree of regional ability to articulate interests of any newly emerging region”23. Likewise B. Hettne, F. Soderbaum, who also largely contributed to elaboration of this theory, emphasized three stages of “regionness”: 1) a pre-regional stage, at which a would-be region adds up to a social and geographic unit; 2) a stage of regionalization (here, foundations for further regional cooperation are being laid); 3) the so-called stage of ultimation, whereby regional identity is formed. As a whole, one can acknowledge five levels of regionness: 1) regional space (a united geographic territory, where any community is absent at; for regionalization to start out, this territory should be inhabited by people, who could maintain interrelationships); 23 Shokhzoda S. Several theoretical approaches to determining a region and regional macroprocesses of interaction (Regionalization, regionalism) // The centre for Central Asia research http://www.centralasia.narod.ru/articles/12.pdf 11.11.2008

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2) translocal social system (the so-called “primitive region”, social interaction allows to form a moderate system of security – the “European Concert” in XIXth century); 3) interstate community (formal cooperation in one particular sphere, treaties are adhered, however without tight connections basing on common interests and regional pre-requisites); 4) regional community (“more than the anarchy, but still not a community”, nevertheless, within this regional entity common values are spread, mutual communication on a voluntary basis is stepping up); 5) regionally institutionalized polity (a region as a functioning subject, possessing typical identity, legal capacity, legitimacy, and a structured system of decisionmaking; conflicts arrangement and welfare provision are key directions, that ascertain a status of a “region-state”)24. As a more important aspect, being discussed in context of regionalism is that this phenomenon is international in essence, because it touches upon as developed as well as underprivileged countries, and gathers these two categories within one organization. There are three different types of a region’s structure: axial regions, peripheral regions, and between them – median ones. Regions are distinct in, first and foremost, relative degree of their economic dynamism, secondly, in 24 Shvartsburd Ts.V. Economic anthropology of savings. Historic-institutional approach // httHettne B. Globalization, the New Regionalism and East Asia // Globalism and Regionalism. Global seminar 1996 Shonan Session by United Nations University http:// www.unu.edu/unupress/globalism.html 05.11.2008

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their political stability, while the borderline may lie across the territory of existing states. Region’s boundaries are variable. Structure of regions is hierarchical, consisting of zones, which are joined or left by countries depending on their economic development, political stability, as well as regionness. This means that regions can be located in different ways and characterized under various circumstances or period of universal history. Level of regionness may be intentionally altered. For instance, cooperation in security sphere may entail enhancement of stability that, in turn, lures international investment and foreign trade, and at the same time cooperation with the end of development may result in a more efficient use of available resources25. The outset of evolution of legislative basics is count with fundamental laws of the country. According to the Constitution of the Russian Federation Russia is a federative state with a republican form of rule. It consists of sub-federal entities (subjects) – republics, districts, regions, cities with federal status and autonomous districts.26 The general formula, which has been achieved, holds – subjects of the Russian Federation united to join their forces and resources to manage domestic and foreign affairs more successfully relying on traditions and historic background. What did it imply in practice? Retry a model of the USSR arrangement, whereby central government Hettne B. Beyond the “New” Regionalism // http://www.iei.liu.secontent1c43646autumn %202005h05%20-%20NPE_Hettne_3.pdf 08.11.2008 P. 12 26 The Constitution of the Russian Federation, M. 2000. p. 3. 25

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controlled all flows and streams of economy and political life or a new kind of relationships, emergence of new players in international politics? The way how to unriddle this perplexing issue hinged on buildup of state policy of nascent Russia. Because of shift in focus of economic reforms into regions and accretion of powers in foreign trade affairs, future development of modern Russia turned out to be dependent on region’s activity. Prior to conclusion of the federal treaty in 1992 the Russian Federation followed the national-territorial principle. It resulted in the fact that only autonomous republics, as well as autonomous regions and districts were deemed as its subjects. As far as territories and regions are concerned, which were only administrative-territorial units, the federal government maintained relations with them on a unitary basis. From this point of view, the Russian Federation stricto sensu could not be considered to be a federal state, as unitary principles prevailed in it. However, the matter remained open. Although the Soviet Union is considered to have in theory a federation, the sole system of state-administrative governance from Moscow to “down” was characterized by rigid unification, i.e. the USSR was a “unitary federation”. Any deviation from the standard hierarchy of power structures, distribution and implementation of power authorities was thwarted. Conclusion of the Federal treaty in 1992 led to formation of an asymmetric Federation. Inside it national republics enjoyed broader rights compared to regions that constitute Russia’s backbone. Republics were

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recognized to be sovereign states with the right to selfdetermination, adoption of constitutions and election of executive power heads, as well as indirect withdrawal from the Federation. Territories and natural resources passed into the ownership of these republics. Apart from that, the rest of regions were deprived of the right to their own constitutions: they were allowed only to adopt regional statutes, and their heads of executive power became appointed from “above”27. In the North-West of the country the Treaty was accepted without objections, with two exceptions. So, the Republic of Komi without titling itself sovereign, nevertheless stipulated a clause in its constitution on “extension of state sovereignty across the whole republic”. Karelia declared economic sovereignty.28 Yet, the federal authorities, in essence, retained in their hands mechanisms which allowed them to attain implementation of sub-federal entities regardless of their correspondence to the federal legislation. In this sense, arose a high necessity for setting up and adjusting relations with the federal authorities on a federal basis. Noteworthy is the fact that by early XXIst century all efforts by sub-federal entities to evade overhaul of their Statutes or Principal laws had failed: the Kremlin tightly insists on bringing regional legislation into conformity with federal one. The Federal treaty. M. 1992. 28 The strategy for Russia. Agenda for the President – 2000. M. 2000. http://www.svop.ru/ book2000.htm 27

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The Federal treaty had another crucial implication for strengthening of not only the Russian statehood, but also in foreign economic perspective. Federal form of government in Russia that is stipulated and boosted by this treaty represents a firm foundation for reputable and highperformance activity on the world arena for the benefit of the Federation as a whole and its constituents. The federal treaty confers republics, regions, districts, as well as historic capitals of Russia – Moscow and St. Petersburg – a new status of actors in international and foreign economic affairs. Alongside with accretion of powers of sub-federal entities, the Federal treaty stipulated a responsibility of the federal authorities’ for foreign Russia’s policy and international relations.29 That featured an important prerequisite for Russia’s promotion in global affairs. In December 1993 the Constitution of the Russian Federation captured in legislation equality of sub-federal entities as to each other, as well as to federal authorities. Unification into the federation is based on delineation of responsibilities: part of functions, first and foremost, allRussian and international ones, is implemented by federal authorities, whereas another part – jointly by the federation and sub-federal entities, and, finally, according to the art. 73, the Constitution of the Russian Federation: “outside administration of the Russian Federation’s affairs and its powers – Russia’s sub-federal entities enjoy full authority of state power”30. The Diplomatic bulletin. № 21-22. November 15-30 1992. p. 31. The Constitution of the Russian Federation. M. 2000 год. p. 31.

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Cl. 2, art. 3 of the Federal Treaty – the treaty on delineation of administration and powers between federal authorities of state power in regions, district and cities of Moscow and St. Petersburg, being an integral part of Russia’s constitution, envisages, in particular, that Russia’s subfederal entities “are self-consistent actors in international and foreign economic affairs… if it does not contradict to the Constitution and Russia’s legislation”31. The latter, namely, the ability of sub-federal entities to act as self-consistent players in international and foreign economic affairs is indirectly confirmed by the Art. 72 of the Constitution, which stipulates that coordination of international and foreign economic affairs of sub-federal entities rests with joint competence of the Russian Federation and its subjects. In essence, this article became a next stage in the legal sphere, which restricts operation of the third article in the Federal treaty, according to which sub-federal entities are self-consistent actors in international and foreign economic affairs32. In 1990-s identification of Russia’s exclusive capacity in contractual conclusion and performance of interstate, intergovernmental or cross-sectoral type precluded efforts by sub-federal entities to claim themselves subjects of international law. Still, persists a trend of “washing-out” of Russian sovereignty and separate sovereign rights of the Russian Federation by means of a constitutional (statutory) Gavrilov V.V. The Primorskiy region as a self-consistent actors of international relations // The Moscow journal of international law № 1. 1999 . p.143 32 The Federal treaty. М. 1992. С. 4 31

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right of sub-federal entities in guidance of foreign affairs and international relations issues, conclusion of international agreements (e.g. the republic of Komi, the Novgorod region). Furthermore, there are efforts by several entities to conduct their own foreign policy. Extension of international relationships of sub-federal entities is frequently accompanied by direct intrusion into competence of the Russian Federation. During existence of the Federation its entities have concluded more than 300 agreements with their foreign counterparts, including sovereign states (the so-called, “diagonal agreements” between a subject of international law and non-subject of it). Thus, international ties by sub-federal entities are ever more often touching upon sphere of foreign policy. The Constitution and Federal law have virtually identified rights of its subjects to set up relations with foreign states and organizations. If prior to early 1990-s foreign relations by members of the Soviet federation had been viewed as manifestation of separatism, whereas nowadays due to declaration of the will by the Russian state and leaning on positive experience in federalism’s evolution abroad, rights of sub-federal entities to international activity were given a legislative basis. However, contrary to foreign federal states, Russia’s constitution did not stipulate a clause that subjects develop their relationships within limits of powers conferred by the law. With adoption of the Federal treaty and new Constitution legal capacity of sub-federal entities in foreign affairs has been de-jure extended considerably.

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Their status was transformed from administrativeterritorial one to a status of a state formation – members of the Federation, which currently are self-consistent actors in international and foreign economic affairs from a regulatory viewpoint. Notwithstanding evident progress, the Constitution did not reflect several points. As such, the issue on adjustment of international activities by subfederal entities with the Federal authorities has not been raised so far. At a detailed presentation of powers of the Federation, there are no points, which specify powers by sub-federal entities, i.e. what exactly is included into and implied by “self-consistency” of regions in their foreign activity. Therefore, neither the Federal treaty, nor the Constitution worked out all the legal essence of regional foreign affairs entirely. For the short haul, lack of real leverages of influence on regions and profound legislative basis allowed regional elites not only to dictate their terms, but also made central authorities meet habitat. Russia could have obtained the most advantageous positions on the international arena merely acting as a consolidated country. Internal contradictions could destruct that subtle thread of mutual understanding that began to link the Russian Federation with its foreign partners in both economic and political terms. Search for an alternative led to use of a contractual system in the Russian Federation – implementation of state power basing on contractual distribution of functions, which accommodated interests of both sub-federal entities

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and the Federation as a whole. According to this practice, the key form of delineation of responsibilities between the Federation and its constituents is conclusion of a treaty or agreement between the executive branch of power of the sub-federal entity and federal authorities, which represent legal sources, as with reciprocal delegation of powers they delineate responsibility from the Federation to the entity. Such a system is applicable to many regions and such treaties were signed with a range of regions. The contractual system has its benefits and drawbacks. On the one hand, the contractual process creates opportunities for solution of issues, which emerge in course of evolution of federal relations. But, on the other hand, in centre’s viewpoint, treaties and agreements should strictly comply with the Constitution and federal laws that does not always suit regions, which look for more self-consistence. There are more than a half of subjects, which have been engulfed by a system of contractual relations so far. Consequently, every treaty on delineation of competence distinguishes in its specificity. As far as international and foreign economic affairs of regions in Russia are concerned, the current system of constitutional-contractual settlement of relations between authorities of the Federation and its constituents features a complex, which consists of several blocs. Among them – constitutional provisions (principles), norms of treaties on delineation of powers and authority matters (“grand treaties”), judicial settlements from special contracts related merely to a sphere of international relations.

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As one of the cases of foreign trade regulation, one should cite the Treaty on delineation of competence and authority affairs between state power bodies of the Russian Federation and the Kaliningrad region. The treaty records such a regulation of free customs areas, formed in the Kaliningrad region according to the adopted federal laws (art. 2 of the Treaty) with account for geographic and economic layout of the subject.33 This document, which is underpinned by the laws “On the order of conclusion, affirmation, implementation and termination of treaties and contracts, concluded by state power authorities in the Kaliningrad region”34 and “On representative offices of the Kaliningrad region in subjects of the Russian Federation and abroad” - provides for stable legal coverage to foreign affairs of this sub-federal entity. Another noteworthy case – a treaty dated from June 13, 1996 on delineation of authority and power matters between the power authorities of the Russian Federation and state bodies of the city with federal status of St. Petersburg also emphasizes that the latter may act self-consistently, as well as relying on the instructions of state bodies of the Russian Federation as a participant in international and foreign economic affairs, as long as it does not contradict to the Constitution of the Russian Federation, federal legislation and international treaties of the Russian Federation. It is entitled to sign treaties (agreements) with subjects of foreign Legal regulation of international and foreign economic relations of Russia. http://www/ bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM. 34 Imposes legal framework for agreements with foreign partners. 33

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states, administrative-territorial units of foreign states, as well as ministries and departments of foreign states (art. 16).35 And the city enjoyed its rights many times. Yet, treaties between federal and regional authorities of the Russian Federation not only point out delineation of competence and powers between the Federation and its constituents, but also violate the constitutional norm on equality of regions of the Russian Federation in their relations with federal authorities, prescribed in Cl.4, Art. 5 in the Constitution of the Russian Federation.36 So, the issue on virtual equal status of 55 regions with republics remains unsettled as before. Several subjects of the Russian Federation suggested their ways of solution of this issue by concluding treaties with the Federation aimed at strict abidance by the constitutional norm. Even back in 1995 drafts of such treaties with the Russian Federation were put forward by St. Petersburg. Parties to these contracts began juristically more correctly approach definition and compliance with constitutional clauses. The article 1 of that Treaty, brought into focus by the Legislative Assembly of St. Petersburg held: “if for a federal law or another legal act of general force, as well as other treaties concluded by the Russian Federation with its subjects are settled clauses, containing rights, benefits and advantages to separate subjects of the Russian Federation, then with regards to St. Petersburg the same Legal regulation of international and foreign economic relations of Russia. http://www/ bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM. 36 The Constitution of the Russian Federation. M. 2000. p. 35 35

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clauses of legal acts are applicable”.37 However, under B.N. Yeltsin despite requirements by the Constitution arrangements on advantages of one subjects over the other remained in force. Since early XXIst century, however, previously concluded contracts with the Kremlin on delineation of competence have been done away with. So, in 2001 St. Petersburg denounced such a treaty upon consultation with Moscow. So did many other regions. This was carried out within enhancement of a power vertical, including harmonization of the regional legislation with the federal one. Undoubtedly, taken steps towards settlement of federal relations indicate that Russian federalism has embarked on a new stage of its evolution. At the same time, this process is still underway. And the contractual system is highly likely to be crucial to development of Russia’s federalism. It is concurrency and orderliness of actions by the Federation and its subjects that influence the ultimate outcome. The formula of mutual cooperation between the centre and regions deems quite ideal. Many treaties with Russia’s participation in international organizations and states are implemented via sub-federal entities, their engagement and cooperation. And simultaneously international authority of Russia favours every constituent of the Federation. However, in practice Russia’s transition to its real federal form has been quite complicated and protracted. 37 Legal regulation of international and foreign economic relations of Russia http://www/ bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM.

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According to reckons by the Ministry for Justice, only for 1996-1997 at the local level approximately 20 thousand legal acts were passed (laws, executive orders by presidents of republics and governors of regions), which ran counter to the Constitution and federal laws.38 Conciliation procedures were applied by the President of the Russian Federation (apart from the Constitutional Court) (cl. 1 art. 85 of the Constitution39) for resolution of discrepancies between the federal bodies of state power and regional ones. Experience has proven that frictions spring up regarding issues of joint competence and (or) competence of state bodies to the most frequent extent. At the closest scrutiny even despite the contractual system, regulatory and legal framework, which guides foreign affairs of regions, was not worked out sufficiently enough. As an explanation one can say for sure that federal legislation in foreign economic affairs of Russia’s subfederal only started out to evolve. As such, the Federal law “On international treaties of the Russian Federation” from July 1995 did not construe foreign affairs issues of Russia’s subjects. But at the same time its several provisions had vital implications for regulation of foreign affairs. In particular, was envisaged adjustment of Russia’s international treaty with sub-federal entities, if it touches upon issues pertaining to competence of this subject (Art.4, cl.1). The draft of this treaty (its principal Granberg A.G. Basics of regional economy. M. 2000. p. 307. The Constitution of the Russian Federation. М. 2000. p. 35.

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clauses) was to be sent to the subject of the Federation for receiving suggestions from the former, as long as the treaty touches on issues of joint competence (Art.4, cl.2). This circumstance relates to all three categories of Russia’s treaties – interstate, intergovernmental and cross-sectoral ones (Art.3, cl.2). Subject of the Federation may also be engaged into preparation of a draft of an international agreement, should this agreement affect its powers or joint competences (Art.3, cl. 4). Moreover, Russia’s subjects are eligible nowadays to put forward recommendations regarding conclusion of a treaty, as well as suggestions to halt or suspend force of international treaties with Russia’s participation (Art. 35, cl. 1, Art. 36, cl. 1). The law lays state power authorities of sub-federal entities under obligation within their competences to provide for abidance by Russia’s international treaties (Art. 32, cl 3). Thus, the Federal law from July 15 1995 coordinates participation of subjects in contractual activity of the Federation. Still, it is rather reticent on relation of the Federation to international agreements of its subjects and on the very opportunity of such treaties. It “delineates real of its effect merely by establishing order of conclusion, implementation and termination of international treaties with Russia’s participation, rather than its subjects”40. Powers delegated to the subjects by the Federation lie at the root of their eligibility, rather than sovereignty, as it is the case with 40 The Federal law on international treaties of the Russian Federation from July 15, 1995. 101-Federal law // The Russian Newspaper. № 140. July 21 1995. p. 5-6.

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the state. So, sub-federal entities do not possess their own customs territory, and therefore, they may not conclude treaties with foreign states regarding principles and regime of foreign trade, exactly as agreements on other issues pertaining to exclusive competence of Russia (territory, status of the state border, exclusive economic zones, and continental shelf; financial and currency regulation, etc.).41 Notwithstanding legal force of this document, many subjects of the Federation frequently go beyond these frameworks and infringe on competence of the federal centre. They declare their right to define and implement “foreign policy of the subject”, make decisions on warfare and peace issues, as well as imposing nuclear-free status across territories. At times regions deviate from Russia’s pillars in foreign policy (in its relationships with the United Nations Organizations and its specialized agencies, agreements conclusion order with foreign counterparts) that adversely tells on Russia’s authority abroad. Nevertheless, imposing restrictions (or breaching them) is much simpler, than to suggest drastic measures. Insufficient framework and controversial nature of Russian legislation impede implementation by sub-federal entities of their legal capacity to participate in Russia’s foreign affairs. In legal rigmarole, current events are called – washing out of Russia’s sovereign rights by “unilateral impropriation”. With regards to foreign economic contacts the Federal law from October 13, 1995 “On state regulation of foreign Ibidem.

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trade activity” (№32-FZ) is in effect, albeit partially.42 The document proceeds from “unity of foreign trade policy of the Russian Federation” (Art. 4, Cl. 1). The legal act devotes attention not only to power of the Federation (20 points) and joint competence issues (6 points), but also to powers of sub-federal entities (8 points) – for the first time in Russian legislation. The second chapter of it gives a detailed account of Russia’s competence and its subfederal entities within the aforementioned realm. The latter are entitled to “sign agreements in foreign trade sphere with sub-federal and administrative-territorial entities of foreign countries”43, as well as take out foreign loans on budget income arrangements after negotiation of this issue with federal authorities (cl.3 art.7). This means that powers of sub-federal entities have been added by foreign trade activity on their territory, coordination and supervision over activities by Russian and foreign individuals, regional programmes, submission of guarantees and exemptions (they should not contradict Russia’s foreign commitments), creation of trade and pledge funds, upkeep of their own representatives at Russia’s trade representatives offices upon consultation with federal authorities, conclusion of agreements “with sub-federal and administrative-territorial entities of foreign states” (art. 8). Into a separate article were allotted coordination of activity on joint competence issues (art. 9), which envisages mutual adjustment of international The Federal law “on state regulation of foreign trade activity” // The Russian Neewspaper. № 30. February 17, 1999. p.5. 43 Ibidem. 42

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treaties with Russia’s participation, which affect interests of the sub-federal entity, as well as reciprocal informing on activity conducted, participation of a sub-federal issue in working out suggestions on issues concerned. The law contains a commitment by federal authorities to protect economic interests of sub-federal entities (8th chapter of the law is devoted to that).44 Coordination of foreign trade activity over sub-federal entities, along with development of free economic zones, taking out foreign loans on budget income arrangements (subjects, which receive dotation are obliged to adjust the amount of a loan with the Government of Russia), as well as launch and implementation of regional and inter-regional programmes, information support, coordination of cross-border trade (art. 7) belong to joint competence issues. There is a procedure for resolution of disagreements between the federal authorities and its entities (art. 12, cl. 6), moreover the President is entitled to suspend sub-federal acts before results of a trial (art. 12, cl. 7).45 This act instituted a range of innovations, which extend rights of Russia’s sub-federal entities. It stipulated provisions of not only preceding (abovementioned) federal laws, establishing order of supervision over international and foreign economic affairs of sub-federal entities, but also safeguarded their rights and legitimate interests during 44 Legal regulation of international and foreign economic affairs of Russia’s sub-federal entities http://www/bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM. 45 Legal regulation of international and foreign economic affairs of Russia’s sub-federal entities. http://www/bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM.

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setting up and developing these affairs. Furthermore, it accords a right to carry out such relationships upon approval from the Government of the Russian Federation and state power bodies of foreign states. Moreover, the act pointed out that by international and foreign economic affairs are meant relationships with foreign partners in tradeeconomic, science-technical, ecological, humanitarian, cultural and other spheres. Under the law sub-federal entities of the Russian Federation are entitled to let (upon consultation with the Ministry for Foreign Affairs of Russia) open representation offices of sub-federal and administrative-territorial entities of foreign countries on their territory.46 The next federal law “On production sharing agreements” from December 30, 1995, in its turn, in deep detail allocates powers of federal bodies of executive power and those of sub-federal entities with regards to conclusion, implementation and control over performance of the production sharing agreements, when subsoil assets are used by foreign individuals and legal entities. However, in general regulation over other international affairs is in essence still problem-plagued. The right of sub-federal entities to non-reliantly participate in foreign economic affairs, which is stipulated in Russian legislation, in practice leads to quite an extensive use of this right. Suffice is to mention the current law “On regional Council of people’s members of The Russian Newspaper. № 30. February 17, 1999. p. 5

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parliament and regional administration” from March 5, 1992 №2449-1. According to it, sub-federal entities are empowered: to register enterprises with foreign investment up to a certain share of equity; to participate in equity and incomes of joint enterprises via local bodies of the State Property Committee and State property fund (as well as via authorized business units) (art. 14.2 and 20.2); to alienate from or assign to foreign investors and joint enterprises for use (rent) and governance of their property (art. 13); this property can be used also as a subject of collateral (guarantees) against guarantees of foreign loans and investment (the law of the Russian Federation “on collateral” from May 29, 1992 №2872-1); to license economic activity of foreign investors in 27 spheres relating to their competence (Decree of the Council of Ministers – Government of the Russian Federation from May 27, 1993 №492); to exert mining claim to foreign investors and issues licenses for development of subsoil assets in conjunction with federal authorities; to allocate land with the same ends, determine form and amount for charge for subsoil assets, land and other local resources, as well as collect this fee (the law “On subsurface resources” from February 21, 1992 №2395-1, art. 4.8 and 4.11; the law “On regional Council of people’s members of parliament and regional administration” from March 5 1992 №2449-1, art. 51.1.4 and 51.1.8); to hold tenders, contests and auctions with participation of foreign investors and joint enterprises; to receive investment subventions to federal objects equipped with foreign capital (the law “On subventions

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to subjects of the Russian Federation” from July 15, 1992 №3303-1, art. 4.3. and 9.3); to grant permits on opening of representation offices of foreign firms on their territories.47 At the same time sub-federal entities are empowered to confer special-purpose privileges to foreign investors within their economic and tax competence. Currently, special legislation, which regulates creation of preferences to foreign investors, is being elaborated in sub-federal entities of Russia, however the most intensive efforts have been made within four regions of north-western Russia – the republic of Komi, Novgorod and Leningrad regions, as well as St. Petersburg. According to the law of the Novgorod region “On tax preferences to enterprises across the Novgorod region for 1997” exempts organizations implementing investment projects (approved by regional administration) from taxes on profit and property up to full cost recovery, but no more than during a payback period. The order and conditions to enjoy these exemptions are enlisted in “the Rules for calculation of return on investments, payback period and definition of other patterns for preferences to organizations, which develop investment projects across the Novgorod region”, affirmed by the decree of the Novgorod region Legislation Assembly in January 1997. As these rules put it, preferences can be granted only to those organizations, which capitalize revenue, more than 47 Legal regulation of international and foreign economic affairs of Russia’s sub-federal entities. http://www/bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM.

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75% of which accounts for production activity, and one of key requirements to carry out this investment project is a provision for a positive social return. Noteworthy is the fact that the main author of the Rules is the CJSC “Arthur Andersen” – an international audit company in Russia. Permanent attention from governmental authorities of the Novgorod region to creation of favorable environment for attraction of foreign investments (the regional law “On exemption of enterprises with foreign investments” passed on December 28, 1994) contributed to the fact that nearly 40% of entire production volume accounts for companies with foreign investments. Four international investment projects are successfully operating in the region. To improve the investment climate in St. Petersburg the local Legislative Assembly made significant amendments to the law “On state support of investment activity in St. Petersburg” in summer 1999. Additional privileges were introduced for both foreign and Russian investors, as well as individual entrepreneurs. In practice it meant that foreign firms or entrepreneurs might invest directly into St. Petersburg or arrange companies, whose equities would be invested into Russian companies, using, in their turn, these active forms as a city investor. That is why, the act offers back-up by St. Petersburg’s administration for those, who plan to invest into city economy.48 On April 13, 2001 the decree № 70-pa of city administration Information on activity by sub-federal entities of the Russian Federation on establishment and development of relationships with foreign countries is presented by the government relations department 48

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was passed “On support initiatives for investors, which implement construction and reconstruction of hotels and tourist infrastructure facilities in St. Petersburg”49. On July 6 2004 with the end of enhancement of investment activity in St. Petersburg members of the St. Petersburg Legislative Assembly elaborated a bill – the “Investment code of St. Petersburg”. This draft outlined forms and methods of state regulation of investment activity, guaranteed equal protection of rights, interests and property of investors regardless of business ownership and property forms50. The draft of the code consisted of 7 parts, 17 chapters and 73 articles. The first part reflected the following information: main notions and terms of the Code; legal foundation of the Code; principles of St. Petersburg investment policy and focal areas of investment activity on the territory of St. Petersburg; objects and subjects of investment activity; rights and liabilities of investors as well as participants of investment ventures; activity of foreign investors and investment financing resources51. The second part of the draft is devoted to basics of state and municipal regulation of investment activity on the territory of St. Petersburg. Ways of extension of investment facilities, scrutiny of investment facilities, order of investment offer consideration, approval of investment conditions and bidding, investment treaty and “ On support initiatives for investors, which implement construction and reconstruction of hotels and tourist infrastructure facilities in St. Petersburg” April 13, 2001 N 70-pa (with amendments by August 30, 2002)// http://stateinvest.spb.ru/laws/main/21.php3 50 The Investment Code of St. Petersburg// http://www.lgts.ru/_news/1/2004/7/525/ 51 Ibidem. 49

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participation procedure for citizens and their associations in discussion and making decisions regarding investment projects are regulated by the 3d part called “The investment procedure”. The investment tax credit and preferential tax treatment of investors found expression in the 4th part. The fifth part “Investment into property” is devoted to specific nature of town-planning investment. The other two parts are devoted to issues of responsibility and entering into force of this Code. As noted the author of the document, a member of the Legislative Assembly Igor Mikhailov in the explanatory note: “the Investment Code of St. Petersburg features the first experience in codification of investment activity at the sub-federal entity tier”52. Members of St. Petersburg Parliament enacted the Investment Code on October 28th 2004.53 The act “On attraction of investment into economy of the republic of Komi” was passed by the republican Supreme Council yet back in 1995. It pointed out kinds and forms of investment, clarified rights and liabilities of investors. However, time and practice have shown that application of the law, as it read, did not live up to its expectations. Keeping up with constantly flowing reality, the law had to be updated seven times in order to create a more favorable investment climate. Preparation and making amendments to the law was aimed at stabilization and revival of production, its Ibidem. 53 The Investment Code was passed reading by Members of St. Petersburg Parliament in the first // http://www.rol.ru/news/misc/newsreg/04/10/28_104.htm 52

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competitive growth, and rise in inflow of investment due to evolution of state system of guarantees to private investors in vital branches of republican economy. The law, which was enacted in April 2000, “On investment activity on the territory of the Komi republic” contains a row of fundamentally new provisions directed at investment boost and streamlining of mechanisms of state regulation. In particular, structuration of investment ventures into two categories that are stipulated in the law turned out to be a prospective novation. Those, which foster considerable growth in top branches of economy and open up new perspectives for its advancement, belong to the first category, whereas highly remunerative projects, implementation whereof gives high return in a very short time – to the second one. As the Chairman of the republican State Council Vladimir Torlopov claimed: “The law specified a role and functions of the Investment Council, - a collegial consultative body backed by the local administration head, it also stipulated principles of drawing up the republican Investment programme and effectuation of budgetary capital expenditures into investment facilities”54. Fairly important is the fact that the principles and terms for issuing investment tax loans, allocation of republican budgetary means for financing of preparation and implementation of investment projects, state guarantees on behalf of the Komi Republic were introduced at the legislative level. It should be particularly emphasized that they are issued not Trofimov N. Investment priorities // The Independent newspaper. 22.02.2001. p. 4

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only on account of budgetary means, but also due to aid of the republican State guarantee fund, which is formed from property belonging to the republic on the right of ownership, being in free circulation and integrated into the republican treasury.55 Apart from that, in other four regions of the NorthWest (the Kaliningrad, Vologda, Leningrad regions and St. Petersburg) statutory acts envisage preferential conditions to foreign investors.56 Rights of republics in foreign economic affairs are wider than regions according to the incumbent legislation. In particular, republics are able to adopt their own economic legislation, possess larger volume of property and authorities in budgetary and judicial spheres. At the same time these rights are often difficult to be implemented in view of gaps in legislation within certain areas, controversial and imperfect nature of statutory acts of various tiers, while legal capacity of sub-federal entities in the international realm seems to be extensive and enshrined in the law. For instance, it pertains to a legal status of joint possession, use and disposition of land, subsurface, water and other nature resources, stipulated in the article 72, clause “c” of the Constitution.57 Almost all subsoil assets and national riches belong to this form of possession (disposition). Yet, the mechanism of making Ibidem. 56 Information on activity by sub-federal entities of the Russian Federation on establishment and development of relationships with foreign countries is presented by the government relations department. 57 The Constitution of the Russian Federation. M. 2000. p. 34. 55

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joint economic decisions on disposition of these riches has not been clarified so far that brings on earnest difficulties in exercise of entitlements by sub-federal entities. As the most vivid example in this regard, one can draw a case, whereby federal authorities blocked a stance by the Sakhalin region during finalizing a bid for development of oil on continental shelf.58 Continental shelf within territorial sea is in joint management of the Federation and its constituents. Nevertheless, boundaries of sub-federal entities across continental shelf have not been delimited so far. Furthermore, subjects of the Federation are entitled to hold international tenders on use of natural resources according to the current legislation. Yet, it is the Federation that can only sign international agreements in this realm (the law of the Russian Federation “On subsurface”, art. 3.5, 3.13 and others). In the draft “On subsurface and gas” there is also no distinct division between powers of the Federation and its constituents over holding tenders, licensing and taxation of the Federation and its entities in foreign economic realm. State regulatory policy in this aspect, as well as conclusion of treaties and agreements with sub-federal entities seems to be rather vague. Incompleteness of dispersal of state property and regulation of budget and tax system entails substantial obstacles in centre’s collaboration with regions. For instance, sub-federal entities do not have their own share 58 Legal regulation of international and foreign economic affairs of Russia’s sub-federal entities http://www/bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM.

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in export duties (although part of revenue is deducted from the export duty in extractive and forest industry located on their territories) and import duties (meanwhile, sub-federal entities have their share in equipment of the customs border). Apart from that, turmoil in endowment of regional preferences within foreign economic sphere engenders complicated issues. It is a result from, firstly, difference in special regional requirements and, secondly, accordance of these preferences by various branches of power. All this brings to the forefront normalization in relationships between the Federation and its constituents in international and foreign economic activity. Thus, everything that has been carried out at the state level and is nowadays going on in regions draws us to an important conclusion – Russia needs a law, which would clearly distinguish powers and rights between sub-federal entities and the centre. A general concept of international cooperation with political, economic and judiciary aspects should be elaborated for Russia’s regions. A bulk of time was spent on federal authorities curbing rampant international and foreign economic affairs of the regions. Laws, having been enacted by 1999 testified that the process of power distribution in international affairs between the Russian Federation and its constituents has started out and is gradually advancing However, current gaps and controversies should be overcome by means of drawing up a special bill on international affairs of Russia’s sub-federal entities. Lack of it adversely told on conducting a single and balanced policy, and, moreover, integrity of the

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Russian state, as under the proposed statutory regulation such a situation unintentionally urges sub-federal entities to an idea of first possible steps towards self-sufficient actions in joint competence subjects, including international statutory nature, between the centre and its constituents. In absence of such an act, a situation might occur whereby issues of regulating a procedure for exercising by subjects of the Russian Federation of international affairs to a larger extent would be addressed on an independent basis by means of elaboration of their own legislation on international and foreign economic affairs within powers outlined by Russia’s legislation. Nevertheless, for purposes of the state legislation of sub-federal entities should work out basing on suggestions of a federal law in such a crucial domain as foreign affairs. This approach would allow them to avoid possible difficulties, ambiguities and disputes at various levels of inner-federal and international relations. As a panacea for harmonization of this activity should become a law “On coordination of international and foreign affairs of the Russian Federation’s subjects”. On November 19th, 1997 in State Duma was held the third reading of this draft, which ended up in a peculiar record of unanimity: 340 “pros” and only 3 “cons”. Almost all representatives from influential fractions became co-authors of this draft, which originated from the Committee for international affairs of the State Duma. Yet, efforts made by the state to pass this bill had failed, when it came to “desires” of the regions. The would-be law set upon strict rules in the game, confirmation of which promised significant losses

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in freedom of foreign affairs. On December 3d 1997 the Council of Federation rejected the bill. The outcome of voting in the Upper House of the Federal Assembly turned to be downcast. Merely 12 senators endorsed passing of the bill, the other 100 voted against it. Presidential structures, the federal government and leading fractions in the state Duma chose a beaten path of conciliatory commissions, so as to avoid adoption of the bill by jumping over the Council of Federation. Restrictions that are imposed by the law suggested moderating thoughts and plans of local authorities, rather than building up obstacles on the way to meeting real demands. So, the act suspended aspiration of several sub-federal entities to proclaim themselves as subjects of international law. In compliance with the draft of the law, Russia’s sub-federal entities could duly open their representative offices outside Russia, albeit without diplomatic functions. Regions do need, first and foremost, development of economic relationships. And here, the would-be law unleashed them, but laid down strict rules both for federal and regional authorities. Adoption of the bill protracted. Prior to its implementation regional official turned to looking for legal loopholes to establish foreign relations not in the federal law, rather than in instructions by the Ministry for Foreign Affairs (MFA), whereas sanctions for violations of these instructions are unclear even to authors of the document. The law on coordination of international and foreign economic affairs was passed on February 4th 1999. From then on, “Sub-federal entities of the Russian Federation are entitled to participate in

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international and foreign economic relationships with constituents of foreign federal states, administrativeterritorial entities of other countries, as well as take part in activity of bodies of international organizations that are created specifically for this goal within limits of powers, stipulated by the Constitution, federal legislation, and treaties between state power authorities of the Russian Federation and local authorities on delineation of competence. Upon consent of Russia’s Government sub-federal entities may get into communication with power authorities of foreign states… Power authorities of sub-federal entities of the Russian Federation are eligible for negotiating with foreign partners … as well as signing agreements with them regarding maintenance of international and foreign economic affairs within the limits of competence and authority accorded by the Constitution of the Russian Federation, federal legislation and legislation of sub-federal entities”59. All these agreements boiled down to one thing: among historic challenges facing Russia, one perplexed issue came to the forefront – to correlate unity and integrity of the country with a region gaining momentum and pretending on broader freedom of action. Even such prosperous regions as North-Western subjects, attempted to come into contact with foreign countries. However, search for “by-passes”, in order to evade “supervision” from the Kremlin did not Legal acts of the Russian Federation 1999. On coordination of international and foreign economic affairs of Russia’s sub-federal entities (the Federal law from 04.01.99 № 4-FZ; adopted by the State Duma on 02.12.98) 59

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always end up successfully for pioneers on their way to the global arena. For instance, Karelia independently declared organization of the “Euroregion”, when legislative basis had not been articulated yet60. As a result, the project was put off. At times efforts by Russian regions to self-consistently set up foreign relationships not only failed and brought on losses in considerable amounts of finance resources (because of inaptitude to come off international deals), but also dealt a reputational blow to the entire country. So failed St. Petersburg’s attempts to open up its representative offices in Tallinn and Ulan-Bator. These facts testified a necessity for bringing discipline in international and foreign economic activity of regions, along with handing over the issue of coordination of this activity under guidance of special power authorities. The 4th part of the art. 12, the act “On state regulation of foreign trade” is particularly focused on a special federal authority, which is designated for coordination of foreign trade activity and relationships with sub-federal entities: “Elaboration of suggestions on the state foreign trade policy of the Russian Federation, its constituents, conclusion of international treaties in foreign trade affairs is implemented by the federal authority of executive power, collectively with other federal bodies of executive power within their competence. If interests of Russia’s sub-federal entities are affected, elaboration of the aforementioned suggestions is The information is presented by Karelia’s administration.

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carried out involving the respective bodies of executive power of sub-federal entities of the Russian Federation".61 Yet, any reference to a specific body of executive power is absent and, obviously, this part of the law will call for drastic revision. In 2000 in St. Petersburg was adopted a law “On regulating international and foreign economic affairs of St. Petersburg”, in accordance to which (cl. 4 of the art.5) the city administration, drawing up any contractual setup with a counterpart (a city, region, national government) is obliged to secure consent from the Legislative Assembly on conclusion of the treaty. In the regional parliament itself discussion of any project usually proceeds quite tumultuously, bluntly and briskly. A case in point is a discussion, which broke out in February 2005 regarding recommendations to the city administration, on how to conclude the agreement on cooperation with Krakow62. The Federal law “On coordination of international and foreign economic affairs of Russia’s sub-federal entities” (from January 4th 1999) says nothing of that as well. It just makes a renvoi to the fact that this coordination lies with federal authorities of executive power in the procedure set by the President at the suggestion of the Government of the Russian Federation. Initially, functions of foreign economic affairs guidance of sub-federal entities (and with the purposes of The Russian Newspaper. № 30. February 17 1999. p. 5 The information is presented by St. Petersburg’s Legislative Assembly.

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ultimate efficiency of their export potential) was exerted by the Ministry for foreign economic affairs (MFEA). It was precisely the MFEA that featured a central body of the federal power of the Russian Federation, which coordinated foreign economic affairs, as well as worked out and implemented the state foreign economic policy, coordination and regulation of foreign trade in compliance with decrees by superior bodies of state power and governance of the Russian Federation. Coordination of foreign economic affairs of sub-federal entities is performed with the purpose of maximal realization of their exporting potential via63: 1. the institution of the MFEA64 plenipotentiaries in regions; a system of interaction with interregional associations. 2. the informational network of foreign economic complex of the Russian Federation; 3. the regional development programme and investment projects events on the territory of sub-federal entities, as well as establishment of free-economic zones and export oriented manufacturers. Apart from that, intergovernmental commissions on trade-economic and science-technical cooperation allowed regions to unlock their potential in foreign economic affairs without exceeding their powers. Aside from consultative and expertise aid, part of the MFEA responsibility was The order of the MFEA of Russia from 26.03.1998 № 149 “On the coordination council on foreign economic affairs at the MFEA of Russia” 64 Before 1988 – the Ministry for foreign trade 63

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also to supervise concurrence of activities by the federal authorities and sub-federal entities for implementation of international commitments of the country and, what is more important, maintenance of the whole system of foreign economic affairs regulation. Besides sheer control the state took action in practical contribution to foreign economic affairs of regions. The decree by the Council of Ministers – the Government of the Russian Federation from May 27th 1993 № 490 “On some measures on enhancement of coordination activity of the ministries and departments of the Russian Federation, republican Councils of within the Russian Federation, administrations of the regions, autonomous region and districts, as well as federal cities” also envisages development of mechanisms for coordination and improvement in collaboration between the federal authorities and regions within the Russian Federation.65 According to the provisions of this legal act and with the end of negotiating aligned positions the Coordination Council on foreign economic affairs was established at the MFEA. On the council were representatives of such ministries and departments concerned as the MFA and State Customs Committee, along with administrations of Russia’s cities and regions. During functioning of this Council it gave consideration to more than 60 incoming development programmes of foreign economic affairs by 65 Legal regulation of international and foreign economic affairs of Russia’s sub-federal entities http://www/bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM.

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Russian regions. These programmes outlined increase in exports, inducement of foreign capital, and setting up joint ventures on territories of regions. However their successful implementation required legislative distinction of powers between the federal authorities and sub-federal entities in international and foreign trade affairs, as well as strong state policy of foreign investor’s inducement. Changes that were brought in with V.V. Putin’s coming to power affected the Ministry for foreign economic affairs as well. The Government of the Russian Federation made a decision to do away with a range of ministries and departments. In May 2000 the MFEA was incorporated into the Ministry for development and trade.66 By the decision of the President V.V. Putin in 2000 commenced reorganization of the government’s structure with the purpose of enhancing its efficiency and flexibility, including in foreign affairs. It is quite obvious that a particular role in streamlining the federal centre based model of relations belongs to decrees of Russia’s President. The Decree of the President № 375, which was adopted on March 12, 1996, fixed a coordinating role in conducting a single foreign policy of the Russian Federation on the Ministry for foreign affairs. Since then “the Ministry for foreign affairs guided activities of other federal authorities and foreign affairs of sub-federal entities of the Russian Federation”.67 The Will the “father” of the economic programme become a back-up person of the primeminister //Nevskoye vremya. № 91(2214). May 23d 2000. 67 The decree of Russia’s President “On the coordinating role of the Ministry for foreign affairs of the Russian Federation in conduct of a single foreign policy of the Russian Federation” from March 12s 1996 № 375.// The Diplomatic bulletin. № 4. April. 1996. p. 3-4. 66

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federal authorities and sub-federal entities of the Russian Federation were prescribed “to inform the Ministry for foreign affairs of the Russian Federation under the established procedure on the performing foreign activity and affairs: official tours, consultations and negotiations, signed documents and other arrangements”.68 All drafts of agreements by Russia’s constituents with their foreign counterparts (including those on opening of representative offices) should be approved by the MFA of the Russian Federation. In this course, relations between the centre and regions came out to a higher level. At the same time, it is noteworthy that this decree did not strike down force of other decrees on these matters. Inter alios, remained the decree from March 14th 1995, which affirmed the enactment of the MFA, according to which the latter may establish its representative offices on Russia’s territory, as well as adopt normative regulations within its competence, which are compulsory to the executive power bodies of the Russian Federation (cl. 5).69 To answer the question, why it was exactly the MFA, which was charged with quite complicated functions, is easy. After August 1991 the MFA of Russia turned out to have been at the cutting edge of conceiving and formulating its stance at economic agenda and role in Russia’s economic reforms. Yet, back in the same 1991, when a perspective of Ibidem 69 Legal regulation of international and foreign economic affairs of Russia’s sub-federal entities http://www/bief.ru/LIBRARY/sciwork/992/992SOKOL.HTM. 68

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speeding up economic reforms opened up, the economic department of the USSR MFA (which consisted of two employees), suggested A.V. Kozyrev an idea of holding a meeting with representatives of nascent private sector of economy, so as to find its interest in foreign policy. On October 4th 1991 the meeting was held under the title “The Roundtable: entrepreneurship and Russia’s foreign policy”.70 “The Roundtable” proved to have been rather a useful form of search for new areas of the MFA activity. On participants’ suggestion in February 1992 under the auspices of the MFA the Foundation for Russia’s foreign policy was established. Through the offices of this forum in April 1992 in Kaliningrad the sciencetechnical conference “The Baltic region of Russia: growth prospects” was organized. The “Roundtables” themselves were held till consolidation of the USSR and Russian Federation’s MFAs. Such a practice demonstrated that the MFA was able to perceive economic trends while working out and conducting the foreign policy. It was vital during a transition from Russia’s behavior pattern on the world arena – “self-imposed dependence” on the West (under Kozyrev) to the model of “alternativeness”. The latter was down to E.M. Primakov and reflected an aspiration to hold back Russia’s positions, prestige, moral authority, campaigning as a moderate alternative to the United States and Western alliance on key international issues, first and foremost, thorny regional crises (Bosnia, Iraq, Kosovo). The Diplomatic bulletin. № 19-20. October 15-31. 1992. p. 36.

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Undoubtedly, positive sides of the MFA activity are presence of the central apparatus staffed with high performance specialists in various realms of international relations, a multidivisional “periphery” in the figure of manifold embassies, consulates as well as a communications system with the centre. The MFA began to play a crucial role to Russia, taking part in definition of the concept of national interests, political-economic strategy, keeping in the know of general principles of Russia’s economic security, both its domestic and foreign aspects, providing for favorable foreign environment, in order to carry out internal reforms. With Russia’s coming into existence, the MFA was added with another direction – collaboration with sub-federal entities in building up a model of constructing federalism. The idea of communicating with the MFA sprang up in 1992, albeit a great deal of time was spent on driving this activity into functional frameworks. At the suggestion of the MFA in 1992 the Government of the Russian Federation passed a guidance after the results of the May meeting between the MFA leadership and representatives of sub-federal entities. It prescribed the ministries and departments of Russia, as well as the government apparatus to secure immediate submission of all the necessary information regarding issues of their participation in international and foreign economic affairs on a regular basis, and set up working mechanisms for permanent communication with sub-federal entities (the order № 1513-p from

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August 19th 1992).71 Therefore, the state admitted that the MFA’s guidance and supervision functions on provision of a single policy in relationships with foreign states required formation of working mechanisms for regular contacts with sub-federal entities. The Consultative council at the MFA that was called upon to informational and methodological aid to Russian regions in their international and foreign affairs began to play a beneficial role. On December 15th 1994 in Moscow was held its first proceeding. All the 89 subfederal entities expressed their consent to participate in the Consultative Council. Among its members – heads of administration, republican deputies of government chairmen and minister for foreign affairs, deputies of regional administration heads, heads of foreign offices departments, heads of representative offices of sub-federal entities in Moscow and St. Petersburg. Representatives of 74 sub-federal entities took part in the first proceeding of the Council. High-ranking officials from the President’s Administration, Government’s Apparatus, federal authorities of executive power, members of the Council of Federation and State Duma were present at the meeting. The first Deputy Minister of Foreign Affairs of Russia I.S. Ivanov was appointed as the Chairman of the Consultative Council.72 A.V. Kozyrev in his speech at the Council’s session highlighted development of the The Diplomatic bulletin. № 21-22. November 15-30 1992. p. 33 The Diplomatic bulletin. № 1. January 1995. p. 58.

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federalism system as a modern model of state structure, which comes up to demands of a democratic rule-oflaw state, given the specific interests of various regions of Russia. Having touched upon issues of international and foreign economic affairs by sub-federal entities, their coordination and rendering of assistance to them, Kozyrev underscored that “any region, when it acts leaning on might of the Russian state – political, economic, military, etc. – it has qualitatively other opportunities to address its own issues”.73 At the end of the first session of the Consultative Council was made a decision to elaborate a specific roadmap, which involved discussion and making agreed bids to the government of the Russian Federation on drawing up federal laws, which would regulate international and foreign economic relationships of subfederal entities of the Russian Federation, engagement in building up a concept for cross-border cooperation between Russian regions and their foreign counterparts, elaboration of extension and advisory services between the two tiers of power. The Council took up practice of inviting subfederal entities to international negotiations and drawing up treaties and agreements, as well as representatives from other federal ministries and departments, in particular, was suggested interaction with the Consultative Council at the MFEA of Russia. The final document became the “Enactment of the Consultative Council of sub-federal entities of the Russian Federation on international and Ibid. p. 59-60.

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foreign economic affairs at the MFA of Russia”, which stipulated primary decisions of the Council.74 From then on, discussion of the urgent issues pertaining to collaboration between the MFA and sub-federal entities in conducting a single foreign policy, legal foundation and international and foreign affairs practice of regions became a norm at session s of the Consultative Council. At the third proceeding of the Consultative Council held on January 24, 1996, the minister for foreign affairs E.M. Primakov emphasized a primary assignment of the ministry: “the essence of a new stage is already not in normalizing a windstorm of international affairs of regions – mainly it has already been done, - rather than in a welldirected use of these relationships, both in the interests of the regions themselves and the state as a whole. As far as the federal government is concerned, it can and must put to use international affairs of sub-federal entities as an additional channel of cooperation with other countries”.75 The Foreign Service demonstrates readiness to go along with closer contacts with local authorities, in 89 subfederal entities of Russia (43 from them are cross-border or coastal) have been opened 88 regional representative offices of the MFA (the deadline by 01.01.06). The federal budget and economic affairs issues (as well as foreign economic), facilitated emergence within the MFA Department for Liaisons with the Subjects The Diplomatic bulletin. № 1. January. 1995. p. 62-63. The Diplomatic bulletin. № 2. February. 1996. p. 67.

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of the Federation, the Parliament, Public and Political Organizations (DSPO) in 1993. The DSPO was designed at acting as a specialized secretariat at the aforementioned Consultative Council of sub-federal entities on international and foreign economic affairs at the MFA of Russia, established in 1994 and uniting representatives from all Russian regions. In a prying look the DSPO may well appear to be a separate department with a full set of duties likewise a typical office on international affairs. The department supervises contacts of regions with other countries, when possible arranges such contacts and, in any case, facilitates them and puts them to order. Yet, primary duty of the DSPO employees is not only tutorship over regions, but also arrangement of conditions – first and foremost, in political and legal – for their successful entry into the global arena, which is a fairly new practice in this sphere. And, nevertheless, foreign affairs of Russian regions has seen considerable improvements in the recent years: contacts with foreign partners are becoming stronger and more focused, economic component is becoming predominant and investment-oriented, which is vital both for the regions themselves and Russia as a whole. The Ministry for foreign affairs is up-and-coming with regions, fosters them with setting up direct contacts with foreign partners in economic, cultural and scientific domains; facilitates acquaintance with global experience in interregional cooperation; prepares highly skilled specialists; provides for coherence in implementing international treaties, preventing deviations from Russia’s

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foreign policy and its international commitments. For instance, representatives of the Kaliningrad region administration took part in elaboration and signing ceremony of the agreement between Russia and Poland on cooperation involving the Kaliningrad region and northeastern voevodeships of Poland. And the aid of MFA can hardly be underestimated76. The same practice was taken aboard in the case with the Pskov and Murmansk regions, as well as the republic of Karelia. So, by March 2000 the agreement on economic cooperation between the Pskov region and Latvia’s seaport city of Ventspils had been drawn up and signed, which foresaw development of transit business, streamlining of customs procedures and launch of joint ventures77. Advocating maximal transparency in contacts with sub-federal entities, without acting “behind the back”, the MFA permanently attends to improvement in coordination mechanism78. Continual contacts between the MFA employees with administration of sub-federal entities cater for enhancement of cooperation between the ministry and regions. In 1995 alone the minister and his deputies carried out nearly forty operational meetings with heads of sub-federal entities, which resulted in a range of specific measures.79 Publishing of the Information Bulletin of the Consultative Council became an important back-up. It The information is presented by the administration of the Kaliningrad region. 77 Vardomskiy L.B., Skaterschikova E.E. Foreign economic activity of Russia’s regions. M. 2002. p.91 78 The Diplomatic bulletin. № 1. January. 1996. p. 38 79 Ibidem. 76

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featured a reliable channel of systemic informing of heads of regions on primary realms of foreign policy, bringing out of statutory documents and a platform for sharing experience. Attachment and participation of sub-federal entities’ heads into delegations at negotiations with foreign partners has become an integral part in tackling issue, which affect interests of sub-federal entities. Although this form did become a rule, it has not still become a statutory norm. From then on, abiding by this rational tactics, consolidation of federation’s integrity and extension of regions’ self-consistence do not represent opposite terms. However, one should admit that on the way to strengthening of Russian federalism merely first initiatives have been undertaken. So, efficiency of regional cooperation frequently decreases because of unreliability of Russian partners. The MFA often receives address from Russian embassies with a request to remind heads of regions of their pledges during official tours and a necessity for compliance with the signed accords. At times, having gone abroad and conclude a treaty, it is left in oblivion. This circumstance erodes credibility and puts under question an opportunity of further cooperation with Russia. For instance, in February 1997 the administration of the Kaliningrad region signed the Declaration to hold a constituent conference on creation of the Euroregion “Neman” on June 6th 1997. However, the administration evaded from preparation of agreements and Euroregion statute drafts, did not adjust it with the federal ministries

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and departments. And even when two weeks were left before the agreed date – June 6th – the administration of the Kaliningrad region failed to take part in this regional union or not, although previously it had been one of proponents of the “Neman” Euroregion organization.80 Evidently, reasons for “independence” of regions lies in Russia’s domestic state of affairs and, in particular, in economy, which was pinpointed in the “Concept of the national security of the Russian Federation” as the paramount national interest of Russia81. In the “Concept of foreign policy of the Russian Federation” adopted in 2000 it was also highlighted that the “Primary priority of Russia’s foreign policy in the international economic relations has been contribution to development of national economy, which is unconceivable without extensive engagement of Russia into the system of world economic relationships under globalization”82. Russia’s economy has become much more opened to international trade and flows of capital. Even after the 1998 financial crisis and virtually double devaluation of rouble, national economy persevered. Moreover, growth signs manifested, having been driven predominantly by internal sources, although equally important were soaring export prices. At the same time Russia has not 80 The Diplomatic Bulletin. №7. June 1997. p. 56. 81 The Concept of the national security of the Russian Federation. Enacted by the Presidential edict from December 17, 1997. № 1300 (as revised by the Presidential Edict from January 10, 2000. № 24). Legislation Bulletin of the Russian Federation, 1997, № 52, art. 5909. 82 The independent military review.// Nezavisimaya gazeta. July 14, 2000.

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still unlocked its potential as a country, which should be vigorously invested into; it has not yet coped to prove that these investments will be paid off. Still, as one of reasons for abrupt extension of scopes of regional-international cooperation one can mention search for sources of currency earnings not accountable to the centre. The latter, in its turn, is also interested in regional initiatives, which could relieve the financial pressure. The benefit lies with the opportunity of local authorities “launching” important programmes, which would have never been implemented by the Federation neither by financial, nor organizational, nor human resources. For solution of such challenges and the most efficient use of investment establishment of the federal districts in 2000 appeared to have been crucial to the country. Strong and constructive collaborative relationship between sub-federal entities and President’s plenipotentiary representatives was to achieve goals as efficiently as possible, which are of paramount importance not to a particular territory, but to a group and a country as a whole. Simultaneous participation of several regions in various ventures testifies a positive trend of successful efforts by the centre in strengthening horizontal and vertical power structure. It should be noted that the Russian Federation consists of 84 sub-federal entities, which are unequal economically. North-Western regions are well-located, however in the recent time the issue of ordination of inter-budgetary relations. The transition from a formal budgetary federalism to a real one is long overdue, while genuine

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budgetary self-consistency of sub-federal and municipal entities could go hand-by-hand with real accountability of their authorities to voters for issues in their competence, as well as joint competence with the Federation. In opinion of central and regional representatives, this cannot be accomplished, unless redistributive activity by federal authorities is restrained and self-dependence of the majority of territories is emphasized.83 Financial support of regions by the federal budget is legitimate, only given clearly outlined objective criteria. It is quite obviously that transformation of regions from ones dependent on the centre to self-sustained economic activity cannot proceed overnight, apart from that well-elaborated state policy is a pre-requisite in this sense. Real budgetary federalism will secure predictability of the budgetary policy. It will create lay the groundwork to drastic increase in involvement of power authorities of all levels in rational use of available opportunities and pave the way for working out long-term strategies of effective development of regions84. Furthermore, it will prevent the federation from escalation of unfeasible redistributive requirements to the centre, which is fraught with interregional political stand-off, and ultimately – separatism. Here, the issue of internal consolidation maintenance comes to the forefront; its importance equals to Russia’s integration into the global economy, The strategy for Russia. The agenda for the President – 2000. M. 2000. http://www.svop. ru/book2000.htm. 84 Ibidem 83

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and, at least, without which the latter is impossible. In the interests of Russia are still the same alliances and forms of international cooperation, which contribute to internal and especially economic integration of the country and curtail any efforts to undermine or put it under question. Solution of this issue will call for making of special – and fairly chargeable – economic decisions, alongside with a more mature concept of federalism that implies clear and effective distribution of authorities between the centre and regions. Tangible influence on state of affairs in Russia’s regions exerted uneven systemic manifestation of crisis developments in 1990-s, when regions initially started out from various backgrounds. As a result, financial instability became persistent across sub-federal entities and by nowadays the majority of them are enacting the budget with deficit. Regional social-economic gap per capita varies from 10 to more than 100 times.85 Differentiation among regions began to rapidly deepen, as federal relationships have been going on in the new Russian state. This fact can be explained by the two reasons. The first one is, undoubtedly, uneven adaptivity of regions with various structure of economy and mentality of population and power to both domestic and global market. Secondly, shrinkage in state backing and cancellation of main economic benefits and compensations are to blame.

Ibidem

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Huge contrasts among regions and complicated relations with the centre, emergence of numerous issues, collapse of economic space – all that illustrates a unique image of Russia to a certain extent. In the current situation, inequality among regions is hard to be addressed. Diversity of Russia’s regions rules out an opportunity of using foreign experience of federal states. In course of regional reforming Russia should create its own synthesis of global and homeland experience. Yet, a declared federal model and regional factionalism add new contradictions to country’s development. Reflecting on regionalism and federalism in Russia, it should be noted that the notion “regionalism” under modern environment closely correlates to the “federalism”. In opinion of foreign political scientists Konrad Reuter, Neiderose Kilmer and Willie Kraus, regionalism features a herald of federalism.86 The former manifests itself in aspiration of a region or district to distinct themselves from other territorial units on geographic, ethnic, religious or another basis, and at times regionalism may testify a strive towards wider self-consistency and autonomy from central state power. Concerning regionalism, it is advisable to view content of the term “regional policy” as well. The regional policy amounts to all political decisions, which aim at exerting influence on regional development, construction of cities, expansion of infrastructure, so that economic, social 86 Rudiger V. Europaischer Regionalismus und foderalistische Staatsstruktur. - Aus Politik und Zeitgeschichte. Berlin.1989. S. 25

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ecological and foreign political interests of regions were taken into account. In this sense, issues of regional planning and their harmonization with the system of regional policy is of particular value. In Russia regionalism constitutes an integral part of the Russian federalism, and requires power authorities to as much as attentively and all-roundly analyze the regional policy, especially international and foreign economic activity of regions. For a long period of time everything had boiled down to searches for the “golden mean” between the centre and regions. It influenced internal stability, which in its turn was to positively tell on country’s international activity, augmenting authority of the state in bilateral and multilateral diplomacy. Having concluded that regional policy of the state directly correlates to the foreign one, it is quite evidently that the centre will welcome any activity of sub-federal entities directed at evolution of equitable and mutually advantageous relationships with all countries and integrational entities, first and foremost, countries of the Commonwealth of the Independent States, traditional partners of Russia. For sure, here a proviso should be made that any cooperation should be approved by the centre. At the turn of centuries, discussions of federalism and, naturally, a role of regions in life of countries and world community got revived. From viewpoint of the Canadian scholar, the professor Ray, the XXI century will become a century of federalism. The similar thought was spoken by the parliamentarians of Lombardy at the workshop in St. Petersburg’s Legislative Assembly in 2005. It should be

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recalled that Italy’s Prime-Minister S. Berlusconi left open the possibility of the federative framework gaining foothold in this country in the foreseeable future. For this end, Germany’s and Russia’s experience will be taken on board87. However, in the West, let alone their own federal way of development, regionalism is reputed to speed up democratization and economic reforms in Russia, facilitate its integration into economic and political institutions and serve to prevent surge of nationalism and anti-western sentiments. Nevertheless, in its turn, in opinion of Russia, integration of its economy into the global one has already been solved by the life itself. One of the key changes, which have taken place in Russia in the recent decade – is qualitative enhancement of its economic dependence on the outer world and foreign economic affairs. The Russian economy is integrated into the global one to a much greater extent, than the former Soviet one, even at a “basic” level. If in the 1980-s the share of export production within manufacturing sector of Russian regions had figured up to approximately 5%, whereas in the mid 1990-s, according to some estimates, this index rose beyond 20%. And not only cross-border cooperation is being discussed. More than 50% of total export falls on 10 regions of the country, with merely one of them – a boundary one. As far as importing of goods is concerned, nearly 40% of all imported goods falls on 20 central regions88. Economic relationships with The information is presented by the Legislative Assembly of St. Petersburg. 88 The strategy for Russia. The agenda for the President – 2000. M. 2000. http://www.svop. ru/book2000.htm 87

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the global world, according to some reckons, is already by nowadays are directly defining economic and social status of, at least, one thirds of country’s population, and indirectly – vast layers of population.89 Yet, a new burgeoning international system, globalization and its primary constituents – economization, informatization and democratization of international relations, alongside with transformation of international relations into world politics, are offering unprecedented opportunities for development, but simultaneously make the system more vulnerable to terrorism, use of weapons of mass destruction (WMD), and, possibly, information weapon. As Russia’s Concept of the national security holds: “Adverse processes within the economy aggravate centrifugal aspirations of sub-federal entities and bring on swelling jeopardy of territorial integrity violation and country’s legal framework unity”90. On part of world powers, there is also intrusion on domestic affairs of regions without consent of the centre. It is only a strong state policy that would be able to prevent possible catastrophes. However, even here rational kernel can be found. The system of military alliances, number and type of deployment, as well as configuration of foreign troops, presence or absence of military conflicts near Russia exerts critical sway on development of cross-boundary regions. Ibidem 90 The Concept of the national security of the Russian Federation. Enacted by the Presidential edict from December 17, 1997. (as revised by the Presidential Edict from January 10, 2000. № 24). Legislation Bulletin of the Russian Federation, 1997, № 24. 89

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Incontestably, the North-West feature the most vivid example. A streak of circumstances is making the Russian leadership be attentive to military-strategic importance of the Baltic region to Moscow. Firstly, following the collapse of the USSR and the Organization of the Warsaw Treaty (OWT), along with emergence of new states (whose attitude to Russia is fairly antagonistical, and at times submitting territorial claims, like Estonia and Lithuania), the state boundary moved closer to main historicalcultural hubs of Russia. This fact confronts Moscow with the necessity to provide such regions as the Kaliningrad, Pskov, Novgorod, Leningrad and St. Petersburg with solid security. The events of the recent decades (such as NATO’s military campaign in Yugoslavia, as well as expansion of the EU and NATO eastwards, which have already turned the region into Russia’s exclave) afford enough grounds to view Kaliningrad as a crucial strategic outpost in the Baltic that puts under question plans of a series of local and Moscow politicians and businessmen to turn the region into the free economic zone (a certain resemblance of “the Russian Hong Kong”). Yet, in eyes of the plenipotentiary representative of the President of the Russian Federation on the North-Western federal district (NWFD) Ilya Klebanov, economic growth rates of the Kaliningrad region are to abruptly soar in several years to come precisely down to entering into force of the act “On exclusive economic zones in the Russian Federation” in January 1st, 200691. 91 Suggestions on exclusive economic zones on the North-West will be drawn up within a month //http://murmannews.ru/allnews/496768/

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“Provided that highly-skilled management team of this zone is formed, I do expect economic boom in the Kaliningrad region, - announced Ilya Klebanov. The Kaliningrad region itself is a unique region with colossal opportunities in the country”92. What is especially should be underscored is unity of the customs territory and integrity of the Russian Federation that features a pre-requisite for economic unity of the state. The system of state regulation is unified across the whole territory of Russia. Still, it does not opt out a wide range of competences of sub-federal entities on joint and self-consistent foreign economic activity issues, in particular, while implementation of interregional programmes on coordination basics. The state’s desire to control this domain of regional activity is quite strong. Under falling-off in consumers’ demand and breakdown of economic ties with the CIS nations and other regions of Russia, for any manufacturers export is turning into the most prospective direction of output distribution, whereas import – the means of supplying with necessary equipment, raw materials, as well as uninterrupted food supply. Lack of means and opportunities accommodates the state with efforts by regions to set up links with foreign countries on their, even in defiance of conducting the centrifugal policy. It should be particularly highlighted that powerful mechanisms of supervising and expertly organizations, Ibidem

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as well as a system of contracts and agreements are not always effective, where a well-functioning law is needed. The final cause of legal regulation over relations between the federal centre and regions should become a unified, decentralized and strong state. Therefore, the primary agenda for the authorities consists in a launch of an up-and-running mechanism of direct and feedback link between the Centre and sub-federal entities, whereby enormous power of governors could be counterbalanced by their accountability to the federal centre within legal framework, as well as force of federal institutions in regions themselves. From the expertly viewpoint, possible mechanisms represent creation of a rigid vertical of federal structures with their own sphere of competence, relying on a fundamentally new institution of presidential representatives, well-thought mechanism of federal intrusion into regional affairs under critical circumstances (through to imposition of presidential rule on a rigorously defined tenure, a constitutional possibility of the president to remove governors from their office).93 Implementation of the separation of powers concept within the strand “Centre – regions” should involve not only establishment of an up-and-running mechanism of direct and feedback link between echelons of executive power, but also dramatic enhancement of the role of courts in resolution of conflicts, as well as engaging bodies of legislative power. 93 The strategy for Russia. The agenda for the President – 2000. M. 2000. http://www.svop. ru/book2000.htm.

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The primary objective of the state, which was assigned to the government by the president B.N. Yeltsin, was provision of interests’ accommodation of the centre and regions, establishment of a proof foundation for solution of numerous challenges facing the country at that time. With the president V.V. Putin coming to power, started out enhancement of vertical of power. The edict from May 13th, 2000 in Russia 7 federal districts were introduced (the Central, North-Western, North-Caucasian, Volga, Urals, Siberian, Far Eastern federal districts) and the institution of the plenipotentiary representatives of the president in these federal districts, which was transformed from the institution of the presidential representatives in the regions of Russia. As key tasks of the plenipotentiary representatives in federal districts were set the following ones: activity management on implementation of primary areas of internal and foreign policy by state power bodies, being outlined by the President of the Russian Federation; supervision over execution of decisions by local power authorities within federal districts; implementation support of the human resources policy of the President of the Russian Federation within federal districts; submission of regular reports on national security protection within federal districts to the President of the Russian Federation, as well as political, social and economic state of affairs within and making necessary suggestions.94 On May The edict of Russia’s president from May 13th, 2000 N 849 “On the plenipotentiary representative of the President of the Russian Federation in the federal district” (with amendments from June 21st, September 9th 2000, January 30th, 2001) 94

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17th, 2000 in a televised address the president V.V. Putin confirmed his adherence to the policy of statehood consolidation. He reported that he had introduced to the Duma a succession of bills, “which enhance and cement the Russian statehood”.95 The suggested changes boiled down to the three points. Firstly, change in members of the Council of Federation – governors and spokespeople of regional parliaments the will be replaced in its sessions. The second innovation – order of dismissal from the office of regional heads as well as dissolution of legislative assemblies, which adopted acts running counter to federal legislation. And thirdly, the right to remove governors from their office “under certain circumstances” and the right of governors, in their turn, to dismiss members of lower echelons of power. The edict and televised speech launched the mechanism of enhancement of power vertical. The Washington Post96 called these reforms “the most drastic since adoption of the Constitution in 1993”. In opinion of the newspaper, ultimately Putin’s plans explained to the Western world, what the president had implied, when pledged to introduce in Russia dictatorship of law. So as to find out, why V.V. Putin opted for precisely the rigid approach to the regional policy, it is necessary to point out that Russia’s transition to federal rule may ultimately provide for mutual congruence of interests between the centre and local authorities, pave The end to regional outlaws // Nevskoye vremya. № 89 (2211). May 19, 2000. The Washington Post. 18 may. 2000.

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the way for solution of an extensive list of challenges that the country faces, protection of its unity and integrity. This transition is complicated and protracted. However, these are merely strong centre and regions that can and must become a prerequisite of might and historic magnitude of Russia, which hinges upon firm stance of the country’s leadership on this issue. Elections in 2004 did not modify Putin’s political strategy. A new formula of authorities’ elections met with a mixed reaction in regions. The president himself comments the ongoing reform as follows: “We should establish such a system of power, which could be susceptible to regional challenges and would be indissolubly related to nationwide interests”97. Regionalization process and all ongoing changes in Russia are still hard to be uniquely estimated. At the same time it seems possible to highlight a range of adverse and positive implications. Strive by several regions to rely on aid from abroad or trade-economic cooperation with neighboring nations at times engenders complacency or unreasonably optimism among both political leadership and population. This, in turn, retains development of their own manufacturing potential and entrepreneurship spirit, as well as disrupts loose economic ties with the rest of Russian regions. In particular, excessive devotion of the Kaliningrad and Karelia regions and a range of Far Eastern territories to cooperation with foreign states 97 Trubetskoy V. The president clarified the essence of reforms// http://www.vesti7.ru/ news?id=5227

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frequently put these regions in unreasonable dependence on foreign partners, breaking down traditional patterns of interregional cooperation inside Russia. Intensive collaboration with foreign countries of one part of Russian regions alongside with virtually complete isolation from international affairs of the other regions aggravates unevenness of social-economic development of the country, bringing on toxic interregional rivalry. Some analysts note presence of latent competition between Kaliningrad and St. Petersburg, as well as between Arkhangelsk and St. Petersburg for leadership in international cooperation with the regions of the Baltic and the Barents Sea. Extensive international contacts or territorial claims from foreign countries at times are the reason for using them as a pressure tool on the federal centre. As a rule, the latter responds quite strongly to such trends. Often, these feuds merely put off solution of backlog of issues and deal a blow to both competing sides. In most cases international factors are able to exacerbate separatist trends in regional affairs, which is Moscow particularly afraid of. At the same time, it is expediently to pay attention to the fact that international factors would likely pour water on mill of separatism, rather than just engendered them naturally. Meanwhile, external factors have a salutary effect on evolution of Russian regionalism. International contacts of Russian regions fostered dismantlement of the obsolete – odious – model of federalism, which in practice was based on hardly concealed principles of Unitarianism and centralism. Transnational cooperation made it possible to

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draw attention to elaboration of new concepts of federalism and regionalism, which turned out to be partially put into action and stipulated in the Constitution and other legal acts. In this sense, regionalization featured a tool in reformation of Russia’s state system. The point is even not in emergence of the civil society in Russia, as regionalism bolsters political life of region’s population, allowing them to participate in political life of their sub-federal entity.98 Regionalism served an important instrument in changing the very nature of the Russian foreign policy. Officially, Moscow ignores opinion of sub-federal entities no more, when working out and implementing the crucial areas of foreign and military policy of the country. Regions have become active players in foreign economic and foreign political activities. For the recent years they have drawn up and concluded more than 300 various international agreements through the offices of the centre. The very structure of federal authorities underwent changes: representative offices of the MFA were opened in 18 regional cities. Economic, ecological and humanitarian cooperation with foreign countries played a crucial role in tackling issues of the transitional period. It facilitated endurance in hardship to such territories as the Russian North-West, the Far North and Far East. In some cases regionalism was a successful response to challenges in Russia’s relationships with neighboring states. Kaliningrad’s collaboration with 98 Markushina N.Yu. Kharlampieva N.K. The North-Western federal district: foreign affairs. St. Petersburg. 2009

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Germany, Poland and Lithuania enabled Russia to avoid exacerbation of this issue and putting forward official territorial claims to Russia. Development of cross-regional cooperation between Karelia and Finland benefited relations between the latter and Russia. And, finally, regionalization contributed to Russia’s further opening up to new initiatives with the rest of the world and extension of international relations. In summary, everything that was done at the state level and has been going in regions brings us to the most important – build-up of regional institutionalism has been underway without eroding state sovereignty and setting up particular relations within framework “centre-region”99. Religion as a cultural platform for development of regional structure The necessity to highlight a specific religion as a primary factor for a state and authorities of a region (and notably, belief systems in both cases may not coincide, albeit their representatives should collaborate with each other) is one of key and hardly acceptable by the society, which considers itself to be democratic, tasks (yet, one of the crucial to normal functioning of multiconfessional region, like the North-Western region). The case in hand is neither on prevalence of one religious doctrine over the other that are present within the region (as a rule, this is preconditioned by a historic situation in the region; in case of 99 Markushina N.Yu. Kharlampieva N.K. The North-Western federal district: foreign affairs. St. Petersburg. 2009.

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the North-Western region of the Russian Federation typical is significant domination of the Orthodox population), nor on violation of the article in Russia’s Constitution, which stipulates secularity of the state. The very principle of secularity foresees not antireligious or antichurch essence of power, but reasonable distinction of areas of influence on the society and freedom from religious codes, rather than their negation. Thus, the contemporary secular state should depend on religious norms, but may well use them in the interests of its citizens. Objectively, the state may not intrude on a range of social processes, which can be influenced by a religious organization (at least among a group of its members), as, for instance, the majority of moral-ethic aspects of individual existence, from personal virtue to patriotism. Use of all religious organizations in this area, which are present in a region, allows its citizens, which dwell in this region, to co-exist harmonically. At the same time it is quite difficult to (in practice, virtually unfeasible) to interact with all religious entities equally successfully (this is down to both a personal factor certain protocol matters). Therefore, more often than not the authorities run in a groove: the central power picks the main religion, which predominates within the state, whereas regional authorities opt for the dominant one within the region. It allows them to maintain the “balance of interests” of both sides and achieve broader reciprocal understanding between the religious organizations themselves. Frequently, the “flagman” religious organization, which dominates in the state and being considered to be the chief partner,

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interacts with less presented more effectively100. It is worth bearing in mind that every religious environment contains its own norms and principles that are not always clear and acceptable to people “from outside”. Experience of the North-Western region has illustrated that mainly the Russian Orthodox Church had been chosen as the primary religious organization (represented by its archdioceses). Possibly, this choice was done not so much by population size, which worships the Orthodoxy, as due to dogmatic and historic legacy of the Church, which allows it to successfully co-exist and interact with the incumbent power within tolerable limits. Still, the difference in use of Church’s potential (along with other religious organizations) is felt inside the very region, and tangible, if to compare it with practice of other regions (in particular, the Chechen republic that has already been mentioned above). As a vivid example one can draw Kaliningrad, where one of the grand construction sites has been the Orthodox temple so far. This is fairly old (even Old Russian) technique: to build up large temples in those locations, where demonstration and approval of state sovereignty attendance is needed. At the same time, in some districts of the region intercourse of churchdom and secular power relinquishes – local state representatives felt themselves confidently enough to refuse from interacting with the Church (and religious organizations in general) on a 100 NB, the issue pertains to organizations with a traditional and existing system of governance and relations within communities.

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variety of issues – from teaching basics of the Orthodox culture (which is taught by people, who are far off religion at all) to welfare activity. This trend depicts (apart from overall civil service behavior) a definite confidence by the incumbent power in local authorities, which allows it to give up on support by the Church and other religious organizations that had been rendered during the whole period of its establishment. This move could be count as precipitate, although it lends both sides broader freedom of their activity within the region. Noteworthy is also the fact that goals of every organization in a region are dictated by its position within it: whether it is a dominant belief or not. If a religious doctrine does not hold a position, allowing its disciples to belong to the majority, then, the primary objective becomes the missionary activities (the homiletics) with the purpose of extending the amount of congregation. In some cases, the missionary activities boil over into proselytism that should be opposed by state power as well, because proselytism implies also negation and blackening of traditional norms and traditions in this region, along with impediment of dialogue with representatives of other religious organizations. If a religious organization dominates in this region, then the missionary activities will allow it to attend to other activities (for instance, welfare activity) without drawing attention to its religious constituent. For sure, this circumstance contributes to the dialogue with the state, as well as the fact that, as a rule, a specific religious doctrine

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becomes predominant after a long period of time that lets the state interact on social affairs with a religious partner, who imagines this life realistically and impartially. Significance of the religion factor in forming the regional components results from the following points: - a region is being formed in most cases proceeding from historic or administrative boundaries, which enframe definite mental ties of the population (religion; traditions and customs take roots in even more ancient religious state of affairs); - traditions and customs foster a particular code of conducts accepted across a specific area (for instance, demonstration of high esteem, organization of festivities)101; - a “religious roadmap” of a region (this notion means that statistical data on confessions within the region) may feature as a uniting, as well as a destabilizing factor; - “multireligiousness” of a region (“multi-confessional region”): co-existence several religious organizations within a region, which has considerable influence on the society; - religion and traditions may represent a factor, which distinguishes a region from the other (as an example one can draw the contemporary Chechen republic or Turkmenistan, where combination of religion and traditional norms deliver successful results in forming consciousness among the population). 100 For Islamic regions this point is crucial due to trade relations (in Sharia law exists a range of prohibitions on bargains with certain types of products).

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Thus, incomprehension and non-feasance by state power bodies may result from ignorance or reluctance to take into account factors of religion and customs in the region. To prevent this from happening, it is necessary to: 1. Regional studies with the aim of finding out common historic roots/contradictions among the population; 2. Statistical data acquisition regarding a “religious roadmap” of a region (indicating, which canonical territory of a Church the region belongs to); 3. Making well-grounded inquiries into belief system of the “religious roadmap” (preferably from primary source of information, so as to prevent distortion of information), including figures on presence of norms in a specific doctrinal statement, which regulate trademonetary relations (for instance, Sharia law); 4. Identification of common values, norms and traditions to religious organizations of the “roadmap” (for prior use of them with certain groups of population); 5. Analysis of long-standing controversies and opportunities for their addressing by means of the point № 4; 6. When conducting a dialogue with people to put an emphasis on presence of various religious groups, affinity in their traditions and history (see №4); 7. Popularization of traditions and history of a region with the end of forming among the population a stable link of events to a specific location (printed communications, TV- and radioprogrammes, public events, outdoor social adverts).

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Thus, undoubtedly the strategy of state regional development is rapidly advancing nowadays. Differences in strategies among regions are astonishing, that is why, currently the geopolitical regional tectonics and structural geopolitics are burgeoning. Both of them imply distinction of regions upon dominant development issues (T.E. Beizhina). The core objective for the new subject of global politics – the Russian Federation – is, first and foremost, maintenance of its own interior geopolitical space, integrity and national security. It is vital to retain the geopolitical area under Russia’s control on account of mutual colligation of regions’ interests among each other, between regions and the Centre under the aegis of federal relations, preventing destruction of historically evolved ethnosystem, consolidated political, economic and spiritual space in Russia. Otherwise, separate regions in Russia may orient at other centres that is fraught with Russia’s collapse as a geopolitical subject. A crucial task is to integrate into the global economy, WTO accession, however for this to come into life a complex of perplexed issues is to be tackled. (G.N. Nuryshev). As far as development of the “Centre-regions” model is concerned, main periods of interaction within this scheme should always be estimated. At the latest stage, the primary trend of the model is, on the one hand, enhancement of the power vertical, and, on the other, establishment of regional institutions, including legislative, religious, transporting, etc. Incontestable also is the fact that in course of

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conducting Russia’s foreign policy the principally new concept of Russian regional development and creation of the international policy model “Centre-regions” is a pre-requisite for understanding processes, which accommodate Russia’s regional policy and its relationships with the world community.

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Academic Publication Dr. Olga Tserpitskaya, Dr. Nataliya Markushina, Dr. Natalia Kovalevskaia

RUSSIA AND REGIONALIZATION of WORLD POLITICS

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