How Business Really Works in the North Caucasus
The image of the North Caucasus as a subsidized region must be changed, because the North Caucasus really can feed Russia- says the Minister for North Caucasus Affairs, Lev Kuznetsov, who was appointed so by Russian President Vladimir Putin on an executive order.
Kuznetsov argues that from 2017, the NCFD (North Caucasian Federal District) development program will move from development of social infrastructure to that of industrial projects.
The real picture shows that it does not matter how many subsidies are transferred to the Caucasus, the real growth of production will not happen while there is no freedom for business in the region and while federal funds are allocated to corrupt schemes.
It seems to me that the main problem of the North Caucasus is not image, nor is it allocation of finances to the North Caucasus region in the framework of the development program NCFD (North Caucasian Federal District). The main problem is the extremely high costs and risks of doing business.
Businesses in the North Caucasus tend to prefer to keep their heads down for risk of "dispossession". When civilians were asked how corrupt local businesses were, the numbers varied from 30% to 50%.
As regards subsidization, it should be understood that in most countries of the North Caucasus, the vast majority of money coming from Moscow ends up in the pockets of the local elite and never reaches the general population or the real manufacturers- subsidies distributed on the basis of corrupt schemes, fake figures and documentation (all researchers know the problem of the North Caucasus "air sheep"- the grant of subsidies to support agriculture).
If all investment barriers remain in place, we can hardly expect real output growth in the region. Regardless of how much money the federal budget injects.
Perhaps it would be better to think about this problem rather than changing the image and putting out catchy slogans, which pointlessly proclaim such messages as "Stop Feeding the Caucasus" or "The Caucasus Can Feed Russia."
Dimitri Dolaberidze