TATARSTAN HELPS TO DEFINE A NEW FEDERALISM FOR RUSSIA

Tatarstan helps to define a new federalism for Russia

by Mikhail Gershaft

Moscow’s demonstration in Chechnya of its resolve not to allowRussia to go the way of the Soviet Union has led many to focuson other regions of the Federation which have also shown an interestin a more independent path but which, unlike Chechnya, have notchallenged the center so directly. First among these objects ofattention is Tatarstan, whose behavior over the last two yearscan now be given an "A-" but whose actions only a littlewhile before could be graded "B-." Given this improvement,it is worth tracing the course of events both for the sake ofTatarstan and for the other regions as well.

The course of negotiations and the compromise which Moscow andKazan have achieved demonstrate the possibilities the regionsand Moscow have to reach out to one another even if, at first,the regions make maximum demands. A short history of the interrelationshipsbetween the Russian government and the Tatarstan authorities providesevidence that Boris Yeltsin has learned much in managing thisrelationship and that Chechen leader Dzhokhar Dudayev has grosslymiscalculated what is possible and what is not under current conditions.

During a comparatively short period around the time of the collapseof the USSR, Tatarstan was able to adopt a Declaration of StateIndependence and a constitution which proclaimed the priorityof the laws of Tatarstan over those of Moscow, to conduct a referendumwhich declared Tatarstan a subject of international law, to electa president, and also to achieve certain concessions from Moscowconcerning economic questions. Like Chechnya, Tatarstan refusedto sign the Federation Treaty of the subjects of the Russian Federation,but unlike Chechnya, it conducted long and difficult negotiationsover its special status as an "associated member" ofthe Federation and sought to achieve a special interstate treatywith Russia.

But after the events of October 1993 when Yeltsin crushed theold Supreme Soviet, this separatist policy became both dangerousand untenable, and Tatarstan began to retreat from its earlierdemands.

The bloodbath in Moscow in no way generated a new trust in theRussian leadership of the Tatarstan population, and the leadersof the republic were able to achieve a boycott of the December1993 elections to the parliament of the Russian Federation andof the referendum on the new Russian constitution.

The new constitution offered all the regions–national republics,national autonomies and Russian oblasts and krays–complete legalequality. Such "equality" represented a challenge tothe special privileges that many of the non-Russian regions enjoyed,at least on paper. As a result, nationalists in Tatarstan demandedthat Kazan not recognize the constitution of a "neighboring"state and not subordinate themselves to a president the peopleof Tatarstan had not voted on.

But it was quickly obvious that the test of wills between Moscowand Kazan could not continue for a long time. Insisting on thepriority of republic legislation was harming the Tatarstan’s positionin its relationships with foreign partners, more and more of whomwere interested in dealing with a republic with solid economicpotential and stable political relations, both within its bordersand with Moscow. Such investors were troubled by any suggestionthat there might be a conflict between Tatarstan and Russia andindicated their concerns very clearly to the Tatar government.

Moreover, it was clear that Russia could not agree to Tatarstan’sconditions, lest many other subdivisions of the Federation demandthe same privileges. The leaders of Tatarstan had to be able to"save face" as defenders of sovereignty, but they alsohad to find a way to back off from some of their earlier demands.In the spring of 1993, elections were held for the local parliament,and the moderates backed by the government did well.

What kind of a treaty could be concluded in such circumstances?

In February 1993, after a relatively intensive last series oftalks, Moscow and Tatarstan concluded a treaty dividing authoritybetween them. At the same time, the two sides signed more than10 other agreements. The texts of the latter were not publishedlest they inflame public opinion in Tatarstan by virtue of theconcessions Kazan had made, or inflame Russian or regional opinionby virtue of the concessions Moscow had made.

The basic accord guarantees the territorial integrity and unityof the economic space of Russia, a major concession by Tatarstanto Russian wishes. But Tatarstan received the right to participatedirectly in international economic activities. True, the formsof this participation and the legal status of economic agreementsreached by it were left somewhat undefined, and were limited bya provision that they must not violate the international obligationsand constitution of the Russian Federation. A clever, if not entirelyclear, formulation.

Under the accord, Russia retained administration of state propertyand control over federal policy in a variety of social and economicspheres. Moscow also retained control over customs and over asingle country-wide market including tax policy, monetary emission,and regulation of banking and investment. But it would be incorrectand unjust to see these measures as a "retreat" by Tatarstan.In fact, most of the Tatarstan elite understood that they couldchallenge these ideas only at a significant cost to their, andtheir people’s, economic well-being.

The treaty also gave Russia unquestioned control over the country’senergy system and arms industry. While control of the latter reassuredmany in the international community that there would be fewerproblems were radicals to take power in Kazan, it also meant thatthe rising tide of dissatisfaction in the military-industrialcomplex located in Tatarstan would fall on Moscow rather thanon Kazan.

In sum, from an economic point of view, the treaty introducedclarity in the relationship between the Tatarstan government andthe central authorities, particularly in the budgetary sphere.Not only did the agreement effectively end Tatarstan’s non-paymentof taxes to the center; it gave Kazan the right to formulate itsown republican budget and to collect its own taxes. Tatarstanalso received the right to collect excise taxes on alcohol andpetroleum products and to receive monies from the privatizationof state-owned objects on its territory. And it gave Tatarstanthe right to levy taxes on all enterprises on its territory, subjectonly to a federally established limit on its upper extent.

The agreement also stipulated that Tatarstan’s contribution tothe central budget via value-added taxes, would be set annuallyby agreements between the finance ministries of Moscow and Kazan.Such a requirement clearly sets the stage for future disagreementsabout who owes what.

Conflicts over this have already taken place. Earlier this summer,Tatarstan’s premier Farid Mukhametshin declared that since Moscowhad not paid defense industries on Tatarstan’s territory whatMoscow owed, Tatarstan would not pay an equivalent amount intothe state budget. Given the problems that Moscow faced with Chechnyaand a possible vote of no confidence in the Chernomyrdin government,Moscow could not afford to spend much time dealing with this threat.

But from this episode, one can predict that Tatarstan ruling eliteswill not support any politician who is inclined to recentralizeauthority in Moscow. And even Yeltsin’s more gradual efforts torecoup power are likely to be resisted fiercely, albeit in lessdramatic fashion than in Chechnya. But in the future, as therewas in the past, there will be a major limiting factor: the behaviorof foreign investors. If the latter fear that any region has becometoo unstable, they will not invest in it. As the market economyputs down more roots, such calculations will only gain in strength.If it does not, other, more openly political, forces are likelyto return to their former prominence.

Mikhail Gershaft is a former professor at the University ofKazan