The Transition Project: Devolution of Power

The previous chapters have discussed the vulnerabilities of the current political regime in Russia, focusing on the sources of instability of non-democratic, particularly personalistic systems. It is important to understand that if democratic reforms are attempted against the backdrop of a possible collapse of Vladimir Putin’s regime, it will be necessary not only to create a new political system with democratic characteristics, but also to minimize the negative consequences of the crisis and destruction of political institutions that preceded the reforms, and to prevent the reestablishment of a non-democratic regime. Moreover, in the context of a huge and diverse country, it is important (and difficult!) to maintain a model of a state that will not only be strong yet limited, but also one where the principles of federalism are practiced.

To avoid a return to another version of Putin’s model of the state, the post-Putin model must create and maintain a state that is both strong and limited, not only by institutions but also by active public participation. Historical experience shows that the key elements of society — elites, population, business and regions — proved unable to effectively coordinate their actions to prevent the degradation of the political system and the consolidation of Putin’s personalistic regime and then his overt external aggression. Therefore, the new reforms need to introduce institutions, or rules of the game, that allow different political and social actors to coordinate their actions against new attempts to concentrate power. The key here is to change the incentives for central elites, political parties, civil society, and regional leaders.

Political scientists and economists describe the division of public decision-making as being organized horizontally and vertically. The horizontal level is the principle of separation of powers with checks and balances. The vertical level is federalism and devolution of decision-making. By choosing a system of separation of rules, one can try to change the motivations of the elites and the population and thereby create a strong democratic state. The mechanisms of sharing state decision-making horizontally and vertically are closely related and should complement each other. Devolution is the transfer of political power and administrative authority from the central level to lower levels: regions, provinces and municipalities. Importantly, this form of decentralization does not simply transfer executive powers, but also creates or strengthens autonomous local governments that are accountable to local populations.

Although redistribution of powers between the executive and the legislature is not formally classified as devolution, without such redistribution decentralization is often impossible. On the other hand, decentralization affects the nature of relations between the executive and the legislature, defining their roles and limits of authority. In this context, the «big devolution» in Russia should be carried out along two vectors: redistribution of real power between the parliament and the president (horizontally) and redistribution between the central level, regions and municipalities (vertically).

It is crucial to ensure that the limitations and framework for the state should not be merely formal, enshrined in documents, including the Constitution. What matters most is how institutions function in reality. The effectiveness of institutions is determined not only by the legislative framework, but also by the willingness of elites and citizens to abide by these rules, to demand compliance from others, and to have mechanisms to enforce them. The Constitution and laws, while important, do not serve as automatic constraints. A complex and effective system of multiple safeguards and constraints is required. For starters, it must include the institutions of federalism and decentralization, expanding the powers of parliament and representative bodies in the regions. But it also should include competitive elections at all levels, political parties, independence of the judiciary, and incentives that make politicians dependent on the regions and the business community rather than oligarchs, and motivate them to work in the regions and with business.

Putin’s model of the state is a simple hierarchical model, a model of vertical power. We can call this state criminal, dysfunctional, or inefficient. It is clear, however, that if it is inefficient, it is not so in everything: its stakeholders receive enough dividends to sustain the system. The state is inefficient in other respects, however: it is unable to facilitate social development (in any sense of the term) and contribute to the competitiveness of the national economy internationally. In many ways, it drags the country backward, and one of the conditions for the efficiency is the simplicity of this state.

A strong but institution-limited state that we are envisioning is a complex model. Such a state must not only be built, but also customized and finetuned. Moreover, it is not a question of a one-time, but a permanent adjustment, which should involve elites as well as society.

A very important issue concerns the role of veto holders — stakeholders whose consent is required to change the status quo. A complex state, limited by a multitude of institutions and characterized by horizontal and vertical separation of powers, presupposes recognition of many such veto-holders. Unlike the situation in contemporary Russia, the interests of these actors will be very diverse. And at the same time, they must find incentives to cooperate, otherwise the decision-making process will be paralyzed, which may lead to a crisis of the state.

If the system is not set up properly, the state weakens as veto-holders refuse to cooperate. In this case, society may demand a return to a simplified model of governance with a strong leader. It should be taken into account that the existing body of work on democratic transit emphasizes a strong state as a key condition for the successful completion of the reform process. Accordingly, we must find a balance between maintaining a strong state, which is necessary for a successful democratic transit, and the existence of multiple veto players.

The basic principles of selecting rules and institutions (institutional design) can be crystallized from the lessons offered by political science and economics over the past 30 years.

Since the collapse of the USSR, political science and economic science have accumulated a considerable amount of new knowledge about the conditions necessary for the beginning of democratization and successful consolidation of democracy, but much is still controversial. Nevertheless, based on a number of theoretical findings and generalizations, it is possible to summarize some general principles of what the political science and economics literature calls constitutional, or institutional design. This literature seeks to answer questions about how to create the right incentives to maintain an effective and stable democratic system. It is about incentives for everyone who affects the political system, from government managers and political leaders to bureaucrats, regional leaders, and voters. The assumption is that these incentives can be adjusted by changing the rules of the game (institutions) in society.

There are two interrelated definitions of institutions. According to the definition proposed by Douglass North, institutions are restrictions on the interaction of people in society. These constraints can be both formal and informal, and together they constitute the rules of the game. Another definition, presented by James March and Johan Olsen, views institutions as a relatively stable set of rules and organized practices embedded in structures. For example, the institutions of federalism and decentralization constrain the election of politicians and citizens while at the same time functioning as relatively autonomous structural actors interacting with other institutional actors (president, parliament, courts). This duality in the understanding of institutions is important for analyzing their role and significance. Institutions as rules of the game influence the incentives, expectations and strategic choices of political actors. The significance of institutions as organized actors lies in their relative autonomy from other institutions and the individuals who constitute them.

A particular institution can strongly influence political strategies while having little autonomy as a political actor. For example, in the United States, politicians are virtually without exception affiliated with one of the two major political parties. In this context, political parties are very strong and influential institutions. As organizations, however, they are relatively weak: they are often internally divided and do not have well-defined political agendas or party discipline. This organizational weakness and flexibility contribute to their continued role in shaping political strategies in the United States.

Ultimately, the goal of institutional design is not only to form autonomous organizations that can act independently of each other, but also to create incentives that guide the actions of all players influencing the political system in the desired direction. Based on this logic, a strong parliament is not just a body capable of acting independently of the executive and judiciary, but a structure that influences the changing priorities of politicians and civil servants. Similarly, strong regions are not those that simply have autonomy from the center and pursue their own policies, but those that actually influence decision-making in a federal state. Thus, the effectiveness of individual institutions should be assessed primarily not by their autonomy, but by their ability to influence the incentives and choices of actors in the political process.

This approach emphasizes the importance of an integrated view of institutional design, where each institution is part of a broad system of interrelated rules of the game and incentives. It also calls for a more balanced and critical understanding of the role of each individual institution in the overall system, based on its ability to influence the behavior and choices of key actors.

The key findings of the institutional design literature are as follows:

1. Formal rules enshrined in the constitution and other legal documents are a necessary but not sufficient condition for successful institutional design. In this context, even with an unchanged constitutional text, political practices can be significantly transformed if actors choose to ignore or reinterpret formal provisions (the example of the U. S. Constitution). Formal norms are valid to the extent that they are respected by major political actors. This finding is particularly important for the institutional design of federal and decentralized systems.

2. Political institutions act as part of a complex interconnected system. The effectiveness of their real influence on the behavior of politicians and other participants of the political process depends on the system of given incentives. These incentives are not determined by isolated rules, but are shaped by the entire political system. For example, at the level of central and regional government, politicians face a multitude of constraints and incentives set by different institutions. One such constraint is the principles of federalism. However, the principles of federalism are not always prioritized in specific decisions. Thus, the actual functioning of federalism depends not only on the formal provisions of the constitution, but also on a host of other factors, including the judicial system, budgetary constraints, parliamentary organization, political parties, and local governance practices. This finding emphasizes the importance of an integrated approach to institutional design and the need to consider multiple factors to achieve effective and sustainable political systems.

3. Assessment of the role of institutions in the political system is possible only in conjunction with other elements of this system and the dominant conditions in it. Let us illustrate it by the example of the institution of the presidency. Even within a stable constitutional framework, its role can be subject to serious changes and is conditioned by many factors. Fluctuations in public sentiment, internal and external threats, the emergence of new political figures or the fragmentation of opposition forces — all this can redefine the spheres of influence and powers of the president without formal legal changes. The practice of federalism is even more susceptible to contextual influences. As the examples of the United States and Canada show, even with unchanged constitutional provisions, federalism and decentralization systems can undergo significant transformations. This adaptability of institutional roles within a constant constitutional framework emphasizes the need for in-depth contextual analysis. (In the next section, we will look more closely at the fluidity of the role of the presidency. The analysis will cover the interaction of the presidency with other institutional factors, as well as the conditions under which its influence may increase and decrease).

4. Unilateral changes to a rule or institution often do not have foreseeable positive outcomes if they do not fit harmoniously into the existing institutional matrix. Such initiatives not only fail to achieve their goals, but may also generate unintended negative consequences. As an example, consider the modification of electoral rules in order to stimulate political competition. If this modification is not coordinated with other institutional elements, such as the party system and the judiciary, the outcome may be counterproductive. In particular, a new, seemingly more competitive electoral system may unexpectedly reinvigorate the role of informal donors and strengthen patronage ties, thus encouraging political corruption.

5. Similar or even the same formal institutions may produce different results depending on the political and social context. What has proven effective in one country does not guarantee success in another. The same constitutional provisions may serve as a basis for stability and development in one country, while in another they may lead to social tensions and even political crisis. A classic example is the choice between a unitary and a federal system of government, which has different consequences depending on a set of territorial, ethnic and historical factors. Or a more specific example: in the same society, or even in different historical periods of the same society, detailing the powers of the federal center can be either successful or counterproductive. Under certain conditions, the federal center may need to reserve the right to additional powers.

Thus, the social, cultural and historical characteristics of a country play a key role in the functioning of its institutional system. Expectations also have a significant impact. The same institution may differ significantly in its effectiveness under different cultural codes, social expectations, levels of education and economic development, which, in turn, may influence the social and political outcomes of its application.

6. It is necessary to take into account the phenomenon, which in Russian-language scientific literature is referred to as institutional inertia (in English path dependence). This term indicates that historically established practices and decisions significantly limit the range of possible future changes in the institutional structure. Thus, the choice of certain institutions and their potential role are to a large extent determined by previous decisions and existing patterns. Even if it seems to policy makers that various options for institutional change are possible, in practice the choices are often limited by pre-existing norms, laws or even informal practices. This usually greatly reduces the effectiveness of attempts to radically restructure the system and creates significant risks, such as weakening the state and increasing social tensions.

Analyzing the institutional track is crucial not only to understand the current functioning of institutions, but also to assess their potential for future change. Ignoring this factor can lead to decisions that will be ineffective or even harmful in the long run. It should be emphasized that attempts to modify institutions that do not take into account the institutional track often entail the reproduction of old practices in a new context. In these conditions, even seemingly significant changes may turn out to be only superficial; new institutional forms may function according to the old mechanisms, acquiring only a new formal shell. This dynamic in the Russian context is vividly illustrated by the popular expression: «no matter what one tries to do, one still gets a Kalashnikov assault rifle.”

7. Different systems of institutions can create similar incentives for key political actors and thus lead to the desired outcome. For example, it is possible to «customize» the presidential system in combination with other institutions and political parties so that it functions similarly to a parliamentary system. A comparison attributed to Peter Ordeshuk, an American professor and prominent theorist of institutional design, is appropriate here. He reminded that engineers have at their disposal many different models (systems) of flying machines — from a rocket to an airplane and a helicopter. The key is to create and maintain lift. However, and this is fundamentally important, it is impossible to take the best of one model and combine it with the best of another. Such a machine will not fly.

Similarly, one cannot take the best of one institutional model and combine it with the best of another. In practice, such mixed combinations of institutions often bring together the worst rather than the best. Therefore, in the course of discussing alternative constitutional proposals, the creators of institutions are forced to make compromises.

When we create new institutions, we change the rules, and accordingly, the results change for the participants in the political arena: someone wins and someone loses. In practice, institutions always have a redistributive character and cause discontent on the part of those who would like to block the changes or return to the previous system. In order to prevent the destruction of new institutions and regression, it is necessary to create many safeguards, which are, in fact, also institutions. All these institutional safeguards must work in concert, as part of a unified system, and at the same time reinforce each other.

We have listed seven conclusions that can be drawn from the literature on institutional design. There are considerably more, but hopefully this is enough to convince the reader: the problem of institutional design is extremely complex and requires careful consideration, discussion and, most importantly, anchoring to a specific political and economic and cultural situation.

At the current stage, our task is to identify problem areas and formulate key issues, as the specific context and conditions for reforms have not yet been defined.

What form of interaction between the executive and the legislature is the most effective for establishing a balance of power and promoting democracy? The current practice of the Russian state is based on the model of a strong presidential system, which some experts call the super-presidential model. However, after the fall of Putin’s personalist regime, a transition to one of the variants of semi-presidentialism is most likely. Understanding the variety of variants of semi-presidentialism is key to assessing Russia’s institutional capacity.

A semi-presidential system combines a president elected in general elections with a prime minister and a cabinet of ministers who are accountable to the legislature. Political scientists distinguish two subtypes of semi-presidential systems:

This distinction is crucial because it defines the relationship between the executive and the legislature and sets the framework for presidential dominance. It also determines the ability of the president and prime minister to implement necessary policy reforms in the event of disagreement. In a large and diverse country such as Russia, a prime-presidential model in which the prime minister/cabinet is solely accountable to parliament is likely to provoke conflict between the president and a significant proportion of parliamentarians. Such a model may, however, be workable in small and homogeneous countries.

It is important to note that both forms of semi-presidency may in practice result in a very wide sphere of influence for the president. Formal constitutional powers are only one of the factors that shape the opportunities for the president to dominate the state. Informal levers are of enormous importance. Assessing the full range of formal and informal resources is critical to assessing the president’s real political power.

In Russia, the Constitution formally envisages a presidential-parliamentary model. However, in practice, as is well known, the country has received a super-presidential system due to the limited role of the parliament, the dependence of political parties on the Presidential Administration, and the high popularity of the president. (As we noted earlier, situations where formal constitutional provisions work differently depending on the context are the rule rather than the exception.)

Possible reforms of the presidency and parliament are likely to be dictated by the desire to reduce the likelihood of the formation of a new personalist regime and to create a more balanced system of power. However, as we noted above, any institutional reforms in a country as large as Russia need to be carried out in such a way that the state remains strong and capable of implementing the necessary decisions.

The presidential-parliamentary model may be preferable if the priority is to rebuild the country after the political and economic collapse that is likely after the fall of the Putin regime. However, if the main objective is to reduce the potential for concentration of power in the hands of the president and his administration, the prime-presidential model may be more effective, provided that decisions that could cause conflicts and divisions in parliament are consciously avoided.

The experience of Ukraine should be taken into account, where changes in the model of relations between the president and parliament have often been the result of political compromises rather than a long-term strategy. This practice of compromise can lead to political instability, unpredictability of the political system and interregional conflicts over parliamentary representation. It is therefore important that any changes are well thought out and based on careful analysis, taking into account the specifics of the Russian context.

The academic literature has analyzed the impact of presidential and semi-presidential models on the quality and survivability of democracy compared to parliamentarism and presidential system. However, the theoretical conclusions remain contradictory. On the one hand, parliamentary regimes often provide for greater democratic stability. On the other hand, presidential and semi-presidential models are often chosen in countries with less favorable conditions for democratic transition, such as large and diverse countries with high levels of social inequality. At the same time, it should be kept in mind that any reforms that strengthen the role of parliament in the Russian context will increase the potential for conflict between the president and parliament until new political parties are formed.

In a presidential system, power is divided between two separately elected institutions, the executive and the legislature (i.e., the president and the parliament). In a parliamentary system, the executive is elected by the parliament and answers to it. As is well known, the presidential form of constitutional democracy first emerged in America. Instead of the monarch, the office of the president was created, elected for a fixed term and responsible for controlling the state bureaucracy. In parallel, a Congress (parliament) was elected as a legislative and political counterweight to the office of president. Since then, separate elections for president and parliament have been a feature of all democratic presidential regimes. But copying only this feature of the American model, many countries have encountered significant difficulties: it turned out that to realize the principle of separation of powers it is not enough to prescribe in the Constitution the powers of the president and parliament. It is also necessary to create incentives for effective interaction and cooperation between the branches of government.

The principle of a president elected for a fixed term means that (except in the unlikely event of impeachment) the president cannot be recalled or resign early. The majority of the researchers focused on the presidential model agree that it is in this inability to dismiss a president elected independently of parliament that the potential for the separation of powers to develop into a conflict between the president and parliament lies. To prevent this conflict, the electoral fate of the president and parliament must be linked in some way: the practical experience of many presidential regimes suggests that crises are inevitable where heads of state rely on electoral support independent of parliament. In practice, various constitutional and political measures have been proposed to create common electoral incentives for the president and parliament. In the Russian Federation, for example, the constitution gives the president the tools to dissolve the Duma early and thus to some extent links the fate of MPs to their willingness to cooperate with the president.

Political incentives for constructive cooperation between the president and parliament are created by reliance on political parties during elections. If the president and the majority in parliament rely on the same political parties or coalitions during elections, their political fate is linked. In this way, common political incentives for cooperation are formed.

The fundamental practical question is whether the government is consolidated or divided. The government is consolidated when the president’s party has a majority in parliament and divided when a minority of parliamentarians are behind the president. In the case of a divided government, two situations are possible: the other (non-presidential) party (coalition) has a majority or neither party has a majority. In either of these situations, it is assumed that presidential regimes (compared to parliamentary regimes) increase the number of veto players whose consent is needed for legislation and other policy decisions. Researchers on presidential regimes generally agree that divided governments are almost always associated with confrontation, unconstitutional and unilateral actions, and conflicts between branches of government.

Since the likelihood that the president’s party will win a majority of seats in parliament decreases as the number of independent parliamentary parties increases, the number of politically independent factions in parliament becomes critical to the functioning of a presidential regime. Presidential regimes are said to be «intolerant» of real multipartyism. The potential for conflict between the president and the parliament is reduced if the president belongs to a party that controls the parliament. This has been the situation in Russia since 2000.

What can be expected with the beginning of democratization of political life in the country? Unfortunately, with political competition and, consequently, increasing uncertainty about the chances of re-election to the Duma, a conflict between the president and the parliament is possible even if the political party to which the president belongs controls the parliament.

Given the peculiarities of the Russian political system, the provisions of institutional theories on the role of strong democratic political parties may not be fully applicable. Therefore, we believe that constitutional norms and other institutional mechanisms of power sharing among the elite are key. Changing constitutional limits on term lengths, emergency powers, or executive appointments could help create a more sustainable structure to limit presidential powers. But this would require the political consent of the State Duma as well as broad public support, which can be a daunting task.

There are informal constraints as well: the president’s relations with law enforcers and heads of major state-owned enterprises, business elites, and regional leaders. If the president deviates too far from the interests of these influential groups, it can lead to a weakening of his support, both financial and political. The president must also take into account the interests of regional governors, whose support or opposition can have significant consequences.

For any restriction to work, which would prevent the new president from reviving a personalist regime, the actual distribution of power must change. In a moment of political crisis (and such a crisis is likely to be the backdrop of post-Putin reforms), incumbent politicians will be forced to make compromises. It is necessary that once the political conditions change, the president cannot circumvent or abolish these restrictions. That is, it is necessary to create a combination of adjusted constitutional norms and a carefully negotiated balance of power with elite groups.

Federal relations are an intertwining of interdependencies: regional politicians in some spheres are authorized to act independently, in other spheres they act as agents of the federal center. On the other hand, federalism requires reciprocity: in some spheres, federal politicians must be dependent on the regions and their representatives. Regions, in addition, need to find a balance of relations with local authorities, especially mayors of large cities. In each federation, the balance of relations between the center, regions and local authorities is subject to constant revision; in fact, each generation of politicians considers it necessary to reform relations between the center and regions in one way or another in order to solve emerging problems.

For federalization to be successfully implemented, it is not enough, having calculated the balance of benefits and costs, to build an effective scheme of decentralization of state functions; the main difficulty of federalization is political. From the political point of view, the choice of the degree of decentralization in a federal state is significantly complicated by the interaction of several equal levels of power, between which a balance must be maintained.

Russia is formally a constitutional federation, but the relationship between Moscow and the regions (governors) is not essentially federal. Under the existing model, the governors, deprived of their own legitimacy, not only fulfill Moscow’s instructions, but also have a personal interest in preserving the stability of the current regime. And since the stability of the entire political system depends on the popularity of the incumbent (the incumbent president), regional politicians are interested in maintaining his rating. In the current system, incentives for regional governors are structured in such a way that they themselves prefer to «lend a shoulder» to Putin in times when the federal government has to take unpopular measures. Moscow shifts the blame and responsibility to the regional authorities, and they not only accept this, but also actively support it.

Importantly, governors prefer to maintain Putin’s popularity even at the expense of their own popularity among the population. Governors are not interested in expanding regional autonomy because they do not need to go through the procedure of competitive elections. In addition, a condition for the functioning of the current model is the weakness of horizontal ties between governors, at least in terms of political cooperation. Each governor works one-on-one with Moscow, and Moscow carefully makes sure that conditions for horizontal coordination between regional heads do not arise (this, by the way, is a standard technique of authoritarian regimes: to prevent coordination of potentially oppositional groups and politicians). In Russia, such coordination is also hindered by geography itself — huge distances between regional capitals, especially in Siberia and the Far East.

The Russian model is more complex than a simple vertical power structure. Moscow exercises firm control only over strategically important areas: the results of turnout and voting in national elections (for Putin and United Russia) and the fulfillment by governors of Moscow’s social obligations to the population (primarily the May decrees). During the pandemic, this was expanded to include morbidity and mortality figures in the regions (which motivated governors to actively manipulate the information); and after the start of the full-scale invasion, the so-called «military agenda» (implementation of the mobilization plan, support for family members of the warriors, etc.). In these spheres, any deviation of the governor from the «official line» is indeed tantamount to political suicide. However, in other spheres, Moscow is surprisingly indifferent to the results of their activities. Besides, it is impossible from a practical point of view to spiritualize total control over the activities of governors on the scale of a country like Russia.

This impacts the prospects for reform in several ways. First, as the two wars have shown, the current model of authoritarian federalism in Russia is not only stable but also resilient to stress. Second, the governors have an interest in maintaining it, since their political survival depends on the preservation of Putin’s personal regime. Any alternative, be it the arrival of a new authoritarian leader or democratization, is more dangerous and risky for the current governors than maintaining the status quo. Third, the current model is fundamentally unreformable; it can only be broken, but not «repaired» (therefore, the hopes of many for the transformation of the model into «true federalism» are completely unfounded). It is important that the destruction of the model implies not the placement of new «correct» politicians in the regions and the center, but a fundamental change in their incentives, in other words, the emergence of their interest in behaving differently.

At the same time, it is very likely that federalism (at least as a constitutional formality) will be preserved in any version of post-Putin Russia, since it is both too risky and impractical to abolish it by changing the Constitution. However, how exactly the institutions of federalism will work depends directly on the work of institutional constraints.

Democracy does not emerge overnight; it is impossible without a period of democratization (for some reason this is often forgotten, jumping from Russia’s authoritarian present straight to a wonderful democratic future). One of the most serious problems arising on the path to Russia’s democratic transformation is related to the size of the country and its territorial structure. The fact is that in the case of Russia, democratic reforms will only be at the beginning of the road while the federal structure is already set. In addition, Russia’s vast geographical space and its multinational composition will inevitably limit the speed and nature of reforms, greatly increasing costs and risks.

On the other hand, federalism itself is a complex and «capricious» constitutional form of state, which requires at least a well-functioning democratic political system. Without full-fledged democracy, especially at the regional and local level, it is impossible to ensure the stability and, therefore, the effectiveness of the federation. Moreover, in the absence of a developed democratic process and multiparty system, federalism as a constitutional form leads to the growth of anarchy, which either ends in the dissolution of the federation or provokes the transition to rigid political centralization, i.e. the actual rejection of federalism. This theoretical conclusion is confirmed by both the experience of the last years of the Soviet Union and the political dynamics of the Russian Federation.

It is important that the problem of interdependence of democratization and the construction of federal relations is not reduced to which of the two processes should start earlier. More importantly, the period of democratic transformation will inevitably entail political instability in the regions, even threatening the territorial integrity of the country. (This threat gave a serious argument to opponents of democratization when it was discussed during Putin’s first and second terms. On this basis, they supported the rejection of democratization because the issue of Russia’s territorial integrity was simply excluded from the discussion).

Any democratic reforms inevitably weaken the center and its ability to control the situation in the regions, at least in the short and medium term. And the loss of the center’s political and economic leverage over the regions brings Russia back to the chaotic decentralization of the 1990s. At that time, many democratically oriented experts proceeded from the «zero-sum» principle, i.e. «either a strong center or strong regions,” but this opposition turned out to be erroneous. In stable federations, both the center and the regions are strong.

An extremely serious problem of democratization is also associated with the «winners», or, more precisely, with the «early winners» as a result of partial reforms. In the process of transformation, they are quite satisfied with the situation of half-hearted reforms, as it allows them to hold their positions and extract various «rents» from both the state and society. Representatives of the group that benefits from half-hearted reforms will strive to maintain the current situation until it ceases to benefit them. In the case of federalization of Russia, this may mean that some time after the start of democratic reforms, regional leaders may decide that it is profitable for them to freeze the «transitional», unstable nature of federalism.

The main, and most difficult, task is to create the political conditions for federalism. Federalism is not a self-sustaining process, it needs framework conditions or guarantees to preserve and develop. Thus, an extremely important factor determining the stability of the federal structure is the party system. In stable democratic federations, there are not only parties that actually compete with each other, but also parties organized in an integrated way, where politicians at one level have permanent institutional relations with politicians at other levels.

Other important conditions supporting federalism are respect for the rule of law, as well as the role of the Constitutional Court in the political process. The court has an important role in creating a climate of trust between the federal center and the subjects; the latter — if the court adequately fulfills its role — can be confident that their rights will not be infringed and the court will not play on the side of the strongest player, which is usually the federal center. Finally, the very competitive order in the politics and economy of society is the most important supporting force for federalism.

At the same time, lacking a competitive environment and a developed party system, federalism as a constitutional form leads to growing anarchy, which ends either in the dissolution of the federation or provokes a reaction leading to political overcentralization and the transformation of federalism into a constitutional formality. The second scenario has materialized in a post-Soviet Russia.

Even in the early Soviet years, the RSFSR, having abandoned the provincial principle of regionalization of the Russian Empire, was built as an ethnic (or semi-ethnic) federation. A part of the regions was allocated on the basis of the ethnic principle (regional borders were to delineate the territories of compact residence of ethnic groups), and another part of them were so-called «Russian» regions. In the Soviet Union, this approach lost political relevance, as all regions were embedded in a vertical structure controlled by the CPSU structures.

Real problems began with the collapse of the Soviet Union and the construction of a new statehood in Russia. With the emergence of public politics, splits in society, especially ethnic ones, took on political significance, so that in ethnic regions, voter mobilization took place under the slogans of sovereignty or even autonomy of the respective republics. The history of the confrontation between Moscow and Tatarstan in the 1990s is well known; the history of the conflict and two wars between Moscow and the Chechen Republic are even more infamous.

Having come to power, Putin managed to strike an agreement with the heads of problematic ethnic regions, and (almost paradoxically) it is these problematic regions that have shown the greatest loyalty to Moscow in recent years. A special relationship — a kind of personal union — has developed between Putin and the head of Chechnya, Kadyrov. This relationship is actually insulated from the national legal space (even in its diminished form in which it exists in Russia).

When democratic reforms begin again, a return to the situation of the 1990s with its ethnic mobilization and confrontation with Moscow is very likely. Claims of the elites of ethnic regions for a special status are to be expected. This means that ethnic federalism for Russia is also inevitable (if the condition is to preserve the territorial integrity of the country and avoid open conflicts and violence). This forced decision should be taken with the full realization that ethnic federal systems are asymmetric, complex and potentially unstable. The experience of other countries (Ethiopia, Pakistan, South Sudan, Yugoslavia and apartheid South Africa) tells us that the problems inherent in building and maintaining an ethnic federation have led some states to either collapse or resort to authoritarian repression, ethnic segregation and even ethnic cleansing and pogroms.

The ethnic model of federalism is based on the recognition of the special rights of national minorities, and this inevitably leads to the restriction or even infringement of the interests of the majority. However, this can be a reasonable price to pay for minimizing the centrifugal pressure on the state from ethnic regions. Critics of the ethnic model of federalism rightly point to its numerous shortcomings: organizational complexity, decentralization and inevitable chaos, asymmetry with its inherent «injustice» against the majority. Nevertheless, territorially integral Russia has no real alternative to ethnic federalism. The ethnic model of federalism is the price to be paid for preserving the integrity of the country.

Importantly, the choice in favor of the ethnic model should be made permanently, not as a transitional solution. Moreover, the political system should be designed in such a way that ethnic minorities are sure that the choice in favor of the ethnic model of federalism is not empty words, but a bona fide commitment of the national majority. This is the link between federalism and democracy: only in a fully-fledged democratic political system do ethnic minorities have reason to trust the commitments made by the majority.

Before examining specific aspects of local government design in Russia’s new attempt at democratic transition, it is important to emphasize again that new and old political institutions do not function in isolation; they are part of an integrated system of formal and informal rules in society. This systemic relationship is particularly critical at the local level, where the institutional context is often determined primarily by historical experience, traditional informal practices, the stability of local elites, and a myriad of practical challenges. In any political regime, local authorities are expected to deliver municipal services and utilities. In other words, local politics is one of the most «conservative» in the political system and difficult to reform; at best it can evolve, especially on the periphery of a large country. This is why it is particularly important when discussing local government reforms to consider how potential innovations will interact with existing institutions and inherited practices.

It is also important to emphasize that, as in the case of federalism, when developing recommendations for local governments in transitional democracies, it is advisable to look to examples from countries that have undergone (or are undergoing) similar transitions, rather than to stable liberal democracies. It is more fruitful to discuss not «ideal schemes» but how to transition to workable alternatives that contribute to the democratization of the country at the national, regional and local levels. It is not very practical to dream that Russia should have local self-government on the model of Germany or the United States. Conditions in liberal Western democracies differ significantly from those in transitional regimes, especially against the backdrop of political and economic crisis. One should also avoid referring to the experience of «successful» development of regional and local self-government in Putin’s Russia, such as in the Perm region. It took place against the backdrop of the development of undemocratic practices and was the exception, not the rule. At best, these were so-called «pockets of efficiency» that existed due to non-democratic redistribution of resources in their favor.

For local governance reformers in Russia, the main challenge will be the need to reconcile reforms aimed at creating conditions and guarantees that facilitate the democratization process at the national and local levels, while preserving the effectiveness of state and local governance for the period of reforms. This problem is particularly acute at the local level because of the limited resources available there, from budgetary to human resources.

Democratizing local authorities in Russia will be particularly difficult in the context of the country’s political and economic crisis. The end of the war and the reduction of spending on military industry will affect the economy of many regions and cities. At the municipal and local level, citizens will be willing to sacrifice conditions favorable to democracy, and indeed democratic principles and procedures themselves, in the name of economic efficiency and the preservation of governability.

Unfortunately, the experience of democratizing countries does not provide examples of quick and successful devolution attempts that create and sustain democracy at the local level. On the contrary, this experience shows that local elections often turn into a formality and, moreover, stimulate the development of patronage and corruption. For Russia, the most useful experience is the experience of devolution against the background of attempts at democratization in large countries: Indonesia, the Philippines, Nigeria and, of course, Ukraine. Note that in these countries devolution was used by national governments primarily to limit the influence of regional elites on national policy.

In Russian practice, attempts to strengthen city and local self-governance have led to the weakening of regional leaders, and vice versa. Studies of local politics in Russia in the 1990s and early 2000s have shown that key local government reforms and the struggle to create and sustain democratic practices at the local level were inextricably linked to the broader struggle for power and authority between the regions and the Kremlin, as well as to Russia’s asymmetrical practice of federalism. Relying on the rights and powers granted to them by special bilateral treaties, regional leaders, especially in Russia’s ethnic republics, were able by 2000 to establish regional authoritarian regimes and block attempts to democratize municipal and local governance. In turn, Moscow has often tried to use conflicts between regional and municipal to weaken regional leaders.

To the extent that future democratic reforms limit the powers and opportunities of governors through the creation of strong regional parliaments and the development of local self-governance, governors will find themselves in a weakened position to «bargain» with the center for decisions favorable to the region (if only because they will no longer be able to guarantee political support for national politicians in elections). This means that those regions where the development of local democracy will be blocked are likely to be more able to «squeeze» resources from the center. This situation will threaten the demand from the population of all regions for «strong» leaders, whose opinion is listened to in Moscow.

In general, in the Russian context, it would be overly optimistic to assume that local politics and local voters will be able to drive positive changes in the national political system. It should also be remembered that in Putin’s Russia, local governance structures and elites are embedded in an undemocratic national political and institutional landscape that has had a determining influence on the behavior and priorities of local political actors for many years. While regional and local governments can serve as testing grounds for innovative policy solutions or governance models, their ability to exert transformative influence at the national level is limited even in liberal democracies. In transitional regimes, democratic reforms are initiated «top-down», at the national level, rather than evolving from local «bottom-up» initiatives.

Moreover, future reforms related to democratic transformation at the local level will require significant financial resources, which (at best) will be available only to the national government. Therefore, a model that envisages limited forms of devolution at the initial stage of democratic reforms at the center seems reasonable. Such a cautious approach seems justified in the Russian context, where local authorities are under the control of elites loyal to the authoritarian regime and are interested in maintaining the existing undemocratic practices. All the more so, since no mechanism has yet been created to redistribute resources sufficient to ensure the financial conditions of devolution in favor of local authorities.

At the same time, local democracy and self-governance are the most important prerequisites for successful devolution of federations. The role of municipal and local levels of government is one of the least studied but most relevant aspects of federalism research. This is due to the profound transformations that modern federal and large states are currently undergoing. The classical model of federalism assumes a two-tier system of state governance: the federal government and its constituent regional subjects of power. In this model, local self-government is seen as falling under the exclusive competence of the federating entities. Constitutional recognition of local governance as an autonomous level of government is a relatively new phenomenon in federal states. The oldest federal constitution in the world, the US Constitution, does not mention local self-government at all. This approach is becoming obsolete, primarily because of the practical significance of local governance in a multi-level and multi-actor system of governance.

The growing role of local governance strongly influences federal systems. Local structures are usually vested with competencies related to the daily life of citizens — such as public services, construction and zoning of cities, villages and rural areas, social welfare, culture, leisure, local economic development, education and the like. Moreover, this level is open to the application of new management tools because it is closest to citizens and more participatory.

Unfortunately, in most transitional countries, decentralization and devolution have been imposed from the top down, becoming a tool used by the central government to control regions and cities rather than to increase fiscal independence and empower independent local governments. In transitional regimes, effective devolution requires creating incentives and opportunities for politicians to represent the interests of local communities, and this can only be achieved through local democracy. In the absence of local democracy, devolution risks not only failing to achieve its intended goals, but also leading to new forms of local authoritarianism and elite capture of political space.

Roger Myerson, a renowned institutional design researcher, argues that the institutions of decentralization and federalism are necessary for democratic change to occur. Myerson presented this argument in the form of a formal game-theoretic model in which voters rationally assume that while they may be dissatisfied with corrupt incumbent politicians, they can assume that alternative challengers will not be better because they lack a proven track record. Rationally acting voters who take into account the uncertainty and costs of replacing a corrupt incumbent politician with another politician have no incentive to replace him or her — and this leads to the corrupt incumbent politician being repeatedly re-elected.

Competitive elections at the local and regional level can at least mitigate, if not solve, the problem of low confidence in alternative candidates. They give opposition politicians the opportunity to gain practical experience in regional and local governance and thus build reputation and credibility. If subnational (local and regional) politicians prove capable of effectively exercising their political authority, this, as Myerson writes, «can be used to demonstrate their qualifications to lead the country.” In a democratic society, in most cases, a politician progresses from the local level to the regional level and then (sometimes) to the federal level. His success at the lower levels serves as evidence of both his ability to win competitive elections and his overall professionalism. Thus, in political systems with multi-level elections, voters are more likely to hold incumbent politicians accountable and replace them when they are corrupt and unprofessional. This may set different incentives for incumbent politicians as well.

To better understand the challenges of state-building, institutional design and political stabilization, more attention needs to be paid to the importance of local politics and its relationship to national politics. Negotiations and other interactions aimed at establishing a balance of power between national officials and local politicians that is acceptable to all players are a fundamental aspect of democratic state-building.

So, it is impossible to implement the project of vertical devolution and build truly federal relations between the center and the regions in a democratic state, ignoring the local level. In all effective federations, local governance and self-governance are also effective.

In Russia, the key moment for the fate of local self-government (LSG) was the constitutional choice of 1993. According to Article 15, paragraph 5 of the Constitution of the Russian Federation, «Bodies of local self-government are not part of the system of state authorities. The exercise of local self-government by bodies of state power and state officials shall not be permitted». It would seem that this democratic decision should have averted the danger of the state taking over LSG and making it truly independent. In reality, the opposite happened.

In the 1990s, municipalities, with the exception of mayors of large cities (almost all of them are regional capitals), did not become players in the national political process, they were actually cut off from it. The political bargaining unfolded between Moscow and the regions, ignoring the local level. The level and quality of democracy in the regions were then lower than at the national level, and many regions became a kind of «laboratories of authoritarianism.” The local level was virtually suppressed by the regional executive authorities, which was especially characteristic of ethnic regions. Regional authorities perceived LSG either as insignificant, as eternal beggars and dependents, or as dangerous and undesirable competitors for the governor’s office (in the case of mayors of regional capitals and large cities).

As correctly noted in Chapter 3, the 1993 Constitution only declaratively proclaimed local self-government without providing it with real mechanisms to guarantee its sustainability and influence. The Federation was both disinterested and unable to defend the autonomy of local self-governance, limiting itself to opportunistic ad hoc support for the gubernatorial candidates from cities in order to reduce the electoral chances of the incumbent «undesirable» governor.

In 1995, the federal law «On General Principles of Organizing Local Self-Governance» was adopted. The law took a very important step: it enshrined the variety of organizational forms of LSG, with local communities having to determine for themselves within which territories (village, city, district) local self-government would be established and according to which model municipalities would function. However, the state power in the regions easily suppressed the non-state power on the ground, regional authorities were not going to share their powers and financial resources. This is evidenced by the long reluctance of the constituent entities of the Federation to develop laws on municipal self-government, to hold elections to local authorities, and to divide property into regional and municipal. At the same time, numerous cases of abuse of power were registered at the local level (which is not surprising, given the scale of the country), which later became Moscow’s argument to justify the elimination of the autonomy of local self-government.

In a number of large cities there was a competitive environment, and a certain level of freedoms was maintained. However, this also depended on the general environment of a particular region, where political regimes varied in their degree of competitiveness until the early to mid-2000s. Such examples, however, did not guarantee the survival, let alone the development of local politics on a national scale.

Three years after Putin came to power, a new law «On General Principles of Organization of Local Self-Governance in the Russian Federation» was adopted. The law abolished the diversity of forms of local government, unifying them, and introduced a two-tier LSG system. In the 2000s, direct elections of mayors and district heads were abolished, and the local authorities’ own tax revenues remained negligible.

In 2022, after the start of the war, the federal law «On General Principles of Organization of Local Self-Government in the Unified System of Public Power» was adopted in the first reading to replace the law of 2003. The draft law envisages the abolition of power at the level of rural settlements, the creation of municipal districts and regions (which implies a sharp reduction in the number of municipal deputies), and the possibility for governors to dismiss local heads. However, the promotion of the new law was suspended for an indefinite period in order not to create a new destabilizing factor in the political system.

It is important to realize that devolution works only in a system, so building federal relations in post-Putin Russia is impossible without democracy at the grassroots level and its real autonomy. National, regional and local levels are closely linked, it is impossible to build neither a democratic nor a federative system starting from the regions and upwards.

It is important that in case of power crises at the regional level, it is the local level that prevents political chaos and allows the political system to maintain its capacity. In addition, as mentioned above, the local level is, in fact, a permanent reserve for rotation of regional power and a place where politicians gain political experience and reputation.

In order for such a system to be built and work, we assume the following conditions must be present:

It should be emphasized that devolution of power from the regional to the local level is not to take away powers from the regions in favor of the local level and thereby weaken the regions, but to create effective restrictions for the regions, just as the regions limit the central power. At the same time, the federation acts as a guarantor that these restrictions are observed.

In discussing concrete steps to reform Russia, we propose to proceed from the premise that for successful democratization and devolution of state power in the country it is necessary to create and maintain at least two conditions: guaranteeing fair and free elections and ensuring that broad coalitions supporting democracy and devolution win fair elections at all levels.

The first condition, ensuring the integrity and freedom of elections, will be possible in post-Putin Russia only with external control by the international community and international non-governmental organizations. The consent of the Russian leadership to international control over the election procedure should be one of the key conditions for starting a dialog on lifting sanctions and ending international isolation after the end of the war. Until the country has new influential political parties, free media and a politically independent parliament (both chambers), the elections should be held under international control, not just in the presence of observers. Moreover, a positive assessment of the elections by international organizations and non-governmental organization observers should be a condition for the elections to be recognized as valid. Such control over elections was exercised in post-war Germany, as well as in a number of modern post-conflict countries (e.g., Bosnia). Such a measure may not meet serious resistance inside Russia — if it is presented as «now we have nothing to hide, from now on our elections will always be fair and honest.”

The second key condition for successful democratization and devolution in Russia lies in structural measures to ensure that broad coalitions supporting democratic transit and decentralization of state power win fair and free elections at all levels — we will list these measures at the end of the chapter. Advocating for democratic transit and decentralization of power must be politically advantageous. To prevent fragmentation and weakening of state power during the transition period, electoral coalitions of reform supporters should be as broad as possible and unite supporters’ efforts both vertically (to support federalism) and horizontally (to promote parliamentarism).

Participation in elections as a member of a broad political coalition (party) that wins elections under the existing general rules should be a key condition for politicians’ success in fair elections. On the other hand, such coalitions in support of free elections and devolution should strive to attract all popular national and regional politicians.

At the beginning of reforms in the Russian context, the creation of such broad coalitions will be complicated by the absence of political parties capable of acting as organizers. Existing Duma parties that supported aggression against Ukraine should be dissolved and legislatively banned. Existing parties outside the parliament, including Yabloko, are unlikely to be ready to become the basis for new parliamentarism and decentralization. Thus, new parties will need to be formed that will initially be unpopular with the population. This will lead to fragmentation, as new leaders may not be willing to compromise with other groups. However, a critical task for reformers will be to create conditions that incentivize these fragmented parties and their leaders to form the basis of broad electoral coalitions. (Numerous «new Yavlinskys» will have to agree to compromises as they negotiate new coalitions.)

The first priority measure for the formation of new parties and coalitions in support of reforms is self-dissolution of the current parties in the Duma and voluntary political lustration of all its deputies. Most likely, the measures to lustrate the current Duma parties and their members will be resisted by certain political forces and will be challenged in the Constitutional Court and international courts. Therefore, Duma party leaders and Duma deputies may be incentivized to agree to self-dissolution and voluntary political lustration (say, for 10 years) in exchange for not being prosecuted as Putin’s accomplices in the criminal war against Ukraine and the Russian people.

In essence, it is necessary to freeze the Duma’s activity until the new elections. A temporary ban on incumbent deputies to engage in politics will open career opportunities for young politicians, will promote the emergence of new parties and coalitions in support of reforms. New politicians will realize that their prospects are linked to the success of reforms and not to a return to the previous model.

Let us formulate several practical recommendations for reforming the electoral system in Russia, and these reforms should work for devolution. These first-priority measures should not meet much resistance, as they can be presented as «technical» changes.

1. Legislative measures for political party coalitions. Legislative changes should be introduced to allow political parties to freely join electoral coalitions. This will give parties and their leaders the opportunity to maintain their independence, but at the same time act as a single bloc in elections to overcome the electoral barrier.

2. Lowering the electoral barrier to 2% for all parties and coalitions running in the elections. This will allow small parties and coalitions to gain representation in the parliament.

3. Creation of regional and local parties (coalitions). It is important to ensure the legislative possibility of creating such parties — this will contribute to the decentralization of political power and the representation of regions in the Duma.

4 Abolition of single-mandate districts. Elections in single-mandate districts for the State Duma and regional parliaments should be abandoned, while restrictions on the formation of political parties and blocs should be removed. This will force popular local politicians to participate in the formation of parties and will help to increase voter confidence in them. Elections should become as «party-oriented» as possible at all levels.

5. Proportional elections with one national district (450 mandates in one district). Introduction of a proportional election system with the easiest possible conditions for registration of parties and electoral blocs (coalitions). In a few election cycles it will be possible to start discussing the division of a single national district (450 mandates) into several districts uniting groups of regions, so that each district would have up to 50 mandates, allowing a party with 2 percent of votes to get one seat in the Duma.

6. Refusal of a single day of voting: it is difficult for parties to field candidates in different regions and to participate in election campaigns in the context of a huge and diverse country.

7. Limiting the participation of independent candidates. Only parties and their associations can nominate candidates for elections at all levels; there should be no more «effective managers» outside politics and parties.

These and similar measures should stimulate the creation of numerous new parties — the basis of electoral coalitions in elections at all levels. The multi-level nature of such coalitions will guarantee that they will be interested in fair elections and decentralization of state power.

It may happen that some regional leaders will stand in opposition to the federal leadership and demand special status for their regions. Such populist demands will resonate with local voters, and new versions of the famous slogan «stop feeding Moscow» will emerge. However, in the conditions of strong national political parties and blocs, regional populism will lose its appeal, as politicians acting within the framework of universally recognized rules in the interests not only of their region, but also of the whole country, will receive additional support and recognition from national parties and blocs. But until political parties gain strength, the threat of regional populism will remain significant.

To prevent excessive fragmentation of the political space, new political parties should be given incentives to form their branches in the regions. This implies the need for close interaction with current and future regional leaders and the creation of conditions that will stimulate their interest in the activity of political parties at the local level.

The key to the successful promotion of reforms in Russia is the interest of key regional players, including regional leaders, city mayors and representatives of local businesses, in participating in these processes. They should see concrete benefits from the changes being introduced, at least in the medium term. This will give them an incentive to join broad coalitions supporting democracy and decentralization.

Declaring a «political amnesty» for all regional politicians and business leaders would allow them to enter the new political arena without fear of reprisals for past actions during the Putin regime. At the same time, it is important to lustrate (perhaps voluntarily) pro-Putin parties, national politicians and the federal bureaucracy. This is necessary not only to cleanse the political system of elements of authoritarianism, but also to create social elevators that will allow regional representatives to take more influential positions in the new political structure. A strategy that combines the stimulation of regional and local leaders and simultaneous reform of the federal level of government can increase the chances for the success of democratization and devolution of power in Russia.

As long as new political parties are not established and successful electoral coalitions uniting regional and local politicians vertically (regions, large cities, municipalities) are not formed, changes in the principles of federalism and local governance organization should be avoided and measures that could provoke regional leaders to oppose reformers in favor of politicians promising to «restore order» should be generally avoided.

In Russian conditions, the development of democracy in the regions can be carried out from below only with the active support of the national government, international organizations and NGOs. In this sense, it is extremely important not to repeat the mistakes of the reformers of the 1990s, who dreamed that «the market will fix everything itself» and hoped for «initiative from below.” The removal of barriers to political activity in the regions and local self-government is a necessary condition, but clearly insufficient. Democracy in the regions requires support from the center. This means that Moscow must be motivated to continue reforms.