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EAO: 2014 Results of the Year - EastRussia | News Jewish Autonomous Region






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EAO: results of the year

Poor orphan DFO?

EAO: results of the year

The Jewish Autonomous Region is traditionally considered to be one of the most economically weak and problematic regions of the FEFD. This year, for the first time after a long break, direct gubernatorial elections will be held there, and it is still not clear whether Alexander Vinnikov will retain his position or the president will appoint a new acting governor in February.

Weak base

It is worth recalling that the assessment of the effectiveness of regional authorities for 2013 year, conducted by the Russian government, put the Jewish Autonomous Region on the last place among all the subjects of the federation. First of all, the region is pulling down the social sphere; it is in its development that it has taken the last place, and in terms of its development - the last but one. As for economic indicators, the Jewish Autonomous Region was rather average in terms of economic development (47 -th place), but the development dynamics were again evaluated by the government extremely negatively (78 -th place). In 2014, the trends in the socio-economic development of the Jewish Autonomous Region looked extremely ambiguous. On the one hand, industrial growth was observed. In January-August 2014, the Jewish Autonomous Region ranked second after Chukotka, another lagging and unstable region of the FEFD, in terms of the growth of industrial production. On the other hand, in agriculture there were negative trends. In the first half of 2014, the region became the leader in the decline of agricultural production in the DFO (partly due to the flood of 2013).

Not surprisingly, such a small region has the smallest budget in the Far Eastern Federal District. And its incomes are about half that of Chukotka, and even more, the Jewish Autonomous Region lags behind the Magadan Region. Also, the Jewish Autonomous Region is included in the group of the most subsidized regions of the Far Eastern Federal District and is one of the most subsidized regions of the country. According to the results of January-October 2014, its own revenues amounted to 54,6% of budget revenues, the rest was "added" by the federal center. The weak development of the economy is evidenced by the low share of income tax in own revenues - only 20,4%. The most income from income tax (42,8%). At the same time, the importance of the income from corporate property tax (12,3%) and taxes on total income (6,8%) looks good. Nevertheless, the tax base of the Jewish Autonomous Region is clearly weak.

As for the financial dependence of the region on the federal center, it is, in fact, great. Subsidies for equalizing the budgetary provision are 24,3% of the budget revenues of the autonomous region. In addition, the center is well supported by its subsidies and subventions. In terms of the share of subsidies in budget revenues, the Jewish Autonomous District turned out to be the leader of the Far Eastern Federal District (8,5%), with respect to the share of subventions it is one of the leaders, together with the Amur Region (6,1%).

The dynamics of the budget - one of the achievements

Like some other regions of the Far Eastern Federal District, the Jewish Autonomous Region experienced a decline in budget revenues, mainly due to a decrease in federal aid (for the same period, ie, January-October, 2014). Especially sharp was the decline in subsidies (by 23,5%), which is due to a decrease in funding associated with the liquidation of the consequences of the flood of 2013. But the subsidies also decreased slightly (on the contrary, subventions increased significantly - by almost 20%).

Growth of own revenues of the regional budget was very good - at 8,3%, but this was not enough, and overall incomes fell by 5,5%, which adversely affected the financing of socially important areas. However, the dynamics of the budget situation in the Jewish Autonomous Region can be called one of its achievements. For example, for the tax on mining operations, the region demonstrated the best growth in revenues in the DFO (by 1.5 times). Equally impressive was the growth in revenues from corporate property tax (more than 40%). The revenues also increased from the most important taxes for the regional budget - income tax and profit.

However, the lack of own revenues and insufficient assistance from the federal budget make the financial situation of the Jewish Autonomous Region still very difficult. In particular, according to the results of 2013, it ranked third in the DFO by the level of debt load (58,7%). The budget deficit for October 1 2014 was an impressive 22,6%. Despite the decline in income, the Jewish Autonomous Region, like many other subjects of the federation, did not reduce expenses (they grew by 11,4%), incl. in order to fulfill the requirements of the same federal center, although they were not provided with finances. She became the leader in the DFO on the increase in health care costs (almost 6,8 times), and the share of these costs (13,9%) was among the best in the DFO. Moreover, the Jewish Autonomous Region has become the absolute leader of the FEFD in terms of the share of expenditures on social policy (the largest item is 33,1%), which grew by more than 85%. In many ways, this was due to the assistance that was provided to flood victims.

But the situation with other expenditure items looks, on the contrary, alarming. The Jewish Autonomous Region has increased spending on education, which accounted for 22,6% of budget expenditures. But these expenses are clearly not enough, and in their share the Jewish Autonomous Region is one of the outsiders of the Far Eastern Federal District. In addition, the region spends little on culture (2,4%), which is also one of the worst indicators in the federal district.

Where to go to be treated?

We have already noted above that, according to government estimates, the social sphere in the Jewish Autonomous Region is almost the worst in Russia. The region began to spend significantly more money on health, which is, of course, extremely important. For example, in terms of the availability of doctors, the Jewish Autonomous Region ranks last in the Far Eastern Federal District. At the same time, already in 2013 year in the Jewish Autonomous Region, the salary in the sphere of health care was almost brought to the average in the region. In 2014, the region became one of the leaders in the Far Eastern Federal District in terms of health expenditures per capita. A policy is being implemented to attract doctors preferential working conditions in the region. Nevertheless, the efforts of the authorities of the Jewish Autonomous District in this direction were not evaluated by the federal authorities. In particular, an on-site inspection of Roszdravnadzor was carried out, followed by criticism of regional authorities.

In the educational sphere of the Jewish Autonomous Region, however, the situation was also unfavorable, and at the same time there was obviously not enough money for it. In 2013, the region was one of the lowest in the DFO education salaries. At the same time, it is characterized by a low level of availability of teachers. At the same time, the authorities made efforts to improve this situation, despite the lack of funds. In 2014, salaries in the sphere of both education and healthcare have already exceeded the average for the region. In 2014, one of the successes of the regional authorities is the improvement of the situation with the provision of kindergartens.

Most of all, the actual refusal of the Jewish Autonomous District from the budgetary financing of housing and communal services (3,8% of budget spending) is evident. This contrasts sharply with others, especially in the northern regions of the Far Eastern Federal District. Increase the cost of utilities in 2014 year the region could not. In the region there are a few dilapidated and dilapidated housing, which is an absolute plus in conditions of shortage of funds. But at the same time, the Jewish Autonomous Region is the leader of the DFO in terms of the share of unprofitable organizations in the housing and utilities sector. A little money remains with the Jewish Autonomous Region for articles of the national economy (12,3% of expenditure). In particular, it is one of the outsiders of the Far Eastern Federal District in terms of the share of road maintenance expenditures (6,3%). Expenditures on the economy as a whole and roads in particular in 2014 had to be cut.

At the same time, the budget of the Jewish Autonomous Region spends an appreciable part of the funds (8,5%) on national issues. These indicators are higher than the average for the Far Eastern Federal District, but the leader of the Jewish Autonomous Region is not. However, the first place in the Far Eastern Federal District is taken by the share of expenditures for the maintenance of the head of the region and the heads of municipalities (1,1%). Like many small regions, the Jewish Autonomous Region is characterized by a high percentage of officials in the economically active population (third place in the Far Eastern Federal District). But with significant expenses for the first persons, the salaries of ordinary officials are not large. As for the share of media spending (0,23%), it looks rather average.

Thus, the socio-economic problems of the Jewish Autonomous Region do not resolve the noticeable improvement in the situation with the regional budget's own revenues. As a result, it is not possible to ensure a balance in the expenditure policy, when many articles remain clearly underfunded.

What slows down the breakthrough

To change the situation, the Jewish Autonomous Region is in great need of breakthrough investment projects. Recently, one such project has appeared in the region. It is associated with the development of the mining industry (the extraction of iron ore at the Kimkan and Sutarskoye deposits) and the construction of communications for the export of extracted products to China (the bridge over the Amur River and the railway). The implementation of this project could significantly improve the indices of industrial production and increase revenues to the regional budget. Along with this project, there are also prospects for the extraction of iron-manganese ores at the Yuzhno-Khangan deposit, it is possible to develop the Soyuznoye graphite deposit. The second most important for attracting investments is the agro-industrial complex, one of the traditional specializations of the Jewish Autonomous Region. In particular, the regional authorities intend to create a large agro-industrial park in Smidovichsky district.

At the same time, last year did not become successful in terms of attracting investment to the region. According to the data for the first half of 2014 of the year, the Jewish Autonomous Region experienced a decline in investment. The region has an extremely small amount of foreign direct investment (they reached a peak in 2011 and then declined again).

Under these conditions, regional authorities are trying to change the investment climate for the better. Last year, they created a council to improve the investment climate. The Legislative Assembly passed a law on preferential tax treatment for investors. As for international cooperation, the work of Chinese enterprises in the agro-industrial complex of the Jewish Autonomous Region is progressing well. Regional authorities were negotiating with the Israeli company LR Group for the construction of a dairy complex in Smidovichi district. Cooperation in agriculture was also discussed with representatives of the DPRK.

But it is possible that the implementation of investment projects at the moment was negatively affected by the uncertainty with the fate of the regional authorities in connection with the gubernatorial elections of 2015 of the year. The Jewish Autonomous Region, as well as other regions of the FEFD, was in the spotlight of the federal center. One of the major events of the past year was the visit of Dmitry Medvedev, which was a great sign of attention, given that the region was not at all spoiled by visits by top officials of the state. The most important role in relations with the federal center was played by the elimination of the consequences of the 2013 flood of the year. The authorities of the Jewish Autonomous Region, realizing their responsibility to the federal authorities (in particular, Yury Trutnev was in the region with inspection visits), actively tried to solve the problems of the floods, expanded their support measures. Governor Alexander Vinnikov introduced the responsibility of his deputies for certain issues related to flooding.

However, the influence of regional authorities in the center, despite her efforts, still did not look stable. The governor began to be constantly criticized by the ONF, which was clearly connected with the approach of the elections and the absence of an unambiguous decision to extend the authority of Alexander Vinnikov. So, the subject of criticism was the situation surrounding the provision of housing for drowned people, and high utility rates in the region. It should be added that local construction and utility companies poured "oil on fire", representatives of which went out to protest, accusing the regional authorities of failing to fulfill their obligations and calling for the resignation of the governor.

Meanwhile, the need for federal support remained very high for the Jewish Autonomous Region, and the authorities used the available opportunities to obtain it. The key investment project of the region - Kimkan and Sutarskoye iron ore deposits was included in the preliminary list of priority investment projects, considered by the Ministry of the Interior, but in the second group, where it was required to eliminate comments. The Jewish Autonomous Region is also interested in continuing federal support for the construction of the Nizhneleninskoye-Tongjiang bridge. Its own project of the territory of advanced development, she, as expected, proposed in the agro-industrial complex (on the basis of Volochaevka and Danilovka villages of Smidovichi district). However, this project is clearly not in the first positions from the point of view of the Minsk region. In addition, the regional authorities want to get federal support for the implementation of measures to protect against new floods: funds are needed for the construction of protective structures on the Amur.

Of the major economic entities, the main role in determining the economic prospects of the Jewish Autonomous Region is currently played by the Russian-British group Petropavlovsk Pavel Maslovsky and Peter Hembro. In the region, it is represented by IRC Ltd, whose 45,39% is owned by Petropavlovsk. This company is implementing the project of the Kimkano-Sutarsky GOK. However, the events of the past year show that we cannot count on a quick implementation of this project. The initial plans for the launch of the mine in Obluchensky district in 2014 were revised and moved to 2015 year. The formal reason is the backlog of work of Chinese partners. At the same time, the financial problems of the Petropavlovsk group, which was on the verge of bankruptcy, received great publicity. This also negatively affects the implementation of the project and may lead to its stopping (recall that the threat of shutting down an already operating iron ore mining and concentrating plant occurred last year in the Petropavlovsk group in the Amur Region).

Political uncertainty

The prospects for infrastructure projects into which the Russian state is investing look somewhat more favorable. First of all, the Russian Direct Investment Fund, which is a subsidiary of Vnesheconombank, established with the Chinese company CIC a Russian-Chinese investment fund, which is to finance the construction of a bridge across the Amur. Investments are expected from Russian Railways, which received funds from the federal budget and the National Welfare Fund for the modernization of the Trans-Siberian Railway. In particular, the reconstruction of the old Obluchensky tunnel begins.

The political background of the events taking place remained unfavorable. Closer to the expiration of Alexander Vinnikov's term in the public sphere, information began to spread that the Kremlin would nevertheless replace the leader of the Jewish Autonomous Region. As possible candidates for replacement, the speaker of the legislative assembly Anatoly Tikhomirov, the mayor of Birobidzhan, Andrey Parkhomenko, the first deputy prime minister of the Khabarovsk Krai government, Alexander Levintal, appeared. All this, of course, created a nervous situation in the regional elites.

The political situation in the region was negatively affected by contradictions in relations between the executive branch and the public. In particular, the formation of a public council in the management of housing and public utilities and energy sector, which included mainly officials and workers of the industry, caused criticism. Some local cultural figures protested when the head of the regional cultural department put their signatures on an appeal to the Russian president in support of his position on Ukraine, without receiving their consent. The negative image of the authorities was also created by corruption scandals, the first deputy governor Dmitry Prokhodtsev and vice-premier Sergey Krivosheev accused of bribery became the defendants.

Conflict situations arose at the municipal level, especially since in four districts of the region in September of the year 2014 there were elections of heads. In particular, the head of the Birobidzhan region, Yevgeny Sukharev, resigned, who was criticized by the local community and, it is believed, did not suit the governor. His 20-year rule ended with scandals and the release of Yevgeny Sukharev from United Russia. In the new elections, he did not take part. It is worth noting that the election of a new head of the "capital" district of the Jewish Autonomous Region was relatively calm, and they were won by Yevgeny Kochmar, Yevgeny Sukharev's deputy for agriculture, nominated by United Russia. Candidates of the "party of power" confidently won in the October and Smidovichi districts. However, in the Leninsky district, there was a split in the elite: the current head Sergei Lavruk won the election as a self-nominated candidate, ahead of his first deputy Viktor Knyazev, nominated by United Russia.

Later, however, the regional authorities decided to strengthen the power vertical, and the elections mentioned above were the last. Now a model of the city manager has been introduced in the districts and urban settlements. Direct elections remained for the future in the regional center of Birobidzhan.

Thus, political uncertainty left a big imprint on the situation in the Jewish Autonomous Region. But in the very near future there will be clarity on the issue of the governor of the region and, consequently, the main candidate for the forthcoming elections in September. Meanwhile, the region continues to desperately need breakthrough investment projects. From this point of view, it is very necessary for him to complete the project of the Kimkano-Sutarsky GOK, where, unfortunately, there began to be a hitch. A positive role can also be played by the implementation of investment projects in the agro-industrial complex, where the region has a chance to create its only territory of advanced development. If real progress is made on these projects, the region will be able to more confidently develop and solve its budget problems, which in their present form create the risks of growing social tension.

Earlier on the results of 2014 year Khabarovsk Territory, Chukotka, Yakutia, Kamchatka Territory, Primorye Territory, Sakhalin Oblast.