Russia’s Government Approves the State Program for the Development of the North Caucasus Until 2025
A few days ago the RF Government gave its approval to the State Program for the Development of the North Caucasus Until the Year 2025, which will cost around Rb 2.5 trillion. 10% of funding for the Program will be allocated from the state budget, while the remaining 90% is expected to come in the form of equity investment by private investors. In order to attract banking sector financing for the Program, the latter envisages the granting of considerable state guarantees for credits.
A few days ago the RF Government gave its approval to the State Program for the Development of the North Caucasus Until the Year 2025, which will cost around Rb 2.5 trillion. 10% of funding for the Program will be allocated from the state budget, while the remaining 90% is expected to come in the form of equity investment by private investors. In order to attract banking sector financing for the Program, the latter envisages the granting of considerable state guarantees for credits.
It should be noted that, in fact, the mechanism of state guarantees has already been used in the North Caucasus. In 2012, in Kabardino-Balkaria alone, the procedure for granting state guarantees with regard to two projects was implemented in full. However, there is still no evidence that the implementation of that measure has resulted in stirring up wide interest in the North Caucasus on the part of private investors, whose attention is presently focused on the economy and not on politics. As for now, most of those economic agents that have already invested in the projects envisaged by the Program or have shown any serious intention to do so are foreign companies with state stakes and big businessmen hailing from the republics of the North Caucasus. Both these groups of investors are primarily guided by political rather than economic motives.
Some questions have also arisen with regard to the ways of implementing a number of specific projects envisaged in the State Program - for example, the creation of a cluster of alpine ski resorts. This project has been met with mixed feelings by the expert community. Firstly, everybody doubts that, given the current security situation in the North Caucasus, the cluster will indeed be able to attract the planned number of customers. Secondly, the North Caucasus already has a couple of well known ski resort clusters in the Dombai and Elbrus areas. Over the past fifteen years, local businesses, renowned for their ability to cope with the specific conditions of the North Caucasus, have made huge investments in these ski resorts. But nobody has so far answered the question as to how these ski resorts can actually manage to survive when their government-sponsored competitors emerge.
As far as the implementation of many other projects envisaged in the State Program is concerned, the land issue also looms large. Conflicts around the allocation of land for the construction of new enterprises have already flared up in a number of North Caucasian districts. The situation is very complicated because, on the one hand, the juridical status of many areas in the North Caucasus has not been sufficiently clarified (vague land ownership); while on the other hand, the local communities have a very clear idea as to which land plots are ‘inherently’ theirs, and therefore they voice their protests against any decisions concerning the future of such land being made without their participation. Also, a number of actions dealing with the transfer of land are taking place simultaneously with the implementation of the land reform program. For example, Kabardino-Balkaria is currently planning to lift the ban on agricultural land privatization. The legitimacy of any legislative acts adopted during the transition period will inevitably be flawed.
The personnel issue represents yet another problem. Even today, the personnel for a number of large enterprises built in the North Caucasus in the post-Soviet period is being brought from Russia’s other regions. In spite of the large number of unemployed in the republics of the North Caucasus, these enterprises do not figure high on their job search priority lists. The unemployed evidently prefer to apply for work in small businesses, or to migrate. The most prestigious hotels of the local tourist centers also prefer to recruit personnel from areas outside the North Caucasus region.
The most important drawback of the Program is that it has put emphasis not on the real examples of modernization already existing in the North Caucasus but on ‘modernization from above’, which does not take into account the numerous specific features of the situation currently unfolding in the North Caucasian republics.
K.I. Kazenin – Candidate of Philological Sciences, Senior Researcher of the Center for Political Economy and Regional Development