The crisis has affected almost all Russian cities and districts, and in half of municipalities the situation has already seriously worsened, said Regional Development Minister Viktor Basargin. The hardest hit were single industry towns and industrial centers, where falling orders quickly turn into production decline, and local budgets lose significant revenues and transfers. Experts dispute the official estimate of the crisis scale and believe tensions in cities will rise, though mass protests are unlikely.

The crisis has affected nine out of every ten cities in Russia, said Minister of Regional Development Viktor Basargin; half of the municipalities have been seriously hit. Experts believe that the number of affected areas is much higher, but there will be no social protests there for now.
Half of Russian cities and districts have been seriously affected by the economic crisis. The situation remains stable in only 10% of municipalities, Minister of Regional Development Viktor Basargin said on Tuesday during a speech in the State Duma at a meeting of the council on local self-government under State Duma Speaker Boris Gryzlov.
Since this year, the Ministry of Regional Development has been monitoring the regions by a consolidated index of social and economic development at the instruction of Deputy Prime Ministers Dmitry Kozak and Igor Shuvalov.
According to Basargin, in only 10% of regions the situation “remains more or less.” In about 40% of municipalities, “the crisis has affected the real sector of the economy and the social sphere, but its impact is not capable of causing irreversible consequences.” “The third group is cities and districts that have already been significantly affected by the crisis; there are at least 50% of them,” the minister said, presenting the classification.
The main victims are single-industry towns and single-sector industrial centers. Basargin named metallurgical and metallurgical-coal centers — Magnitogorsk and Novokuznetsk. In almost all places, the processes are developing according to the same pattern, Basargin noted: “First comes a reduction in the order portfolio, and then production declines.”
Expert Natalia Zubarevich of the independent Institute of Social Policy questioned the data cited by the minister. According to her, real data on cities can only be collected with a two-year delay. In a period of one and a half to two months, it is only possible to obtain information on municipal budget spending and industrial production.
The cities that showed a significant decline in industrial production are large and medium-large cities, home to more than half of Russia’s population, so the minister’s figure of 50% of cities affected by the crisis is an underestimation of the depth of the crisis’s impact, Zubarevich believes.
“Without a doubt, the crisis has primarily affected large cities,” said Vyacheslav Timchenko, head of the All-Russian Council for Local Self-Government and a State Duma deputy. According to him, in 2009 municipal budgets may fall short by 140 billion rubles, compared with a loss of 11 billion in 2008.
Basargin also noted a decline in the volume of funding for municipalities through interbudgetary transfers. “This trend is observed in 59 constituent entities of the federation; on average, subsidies have fallen by 34%, and grants by 20%,” he said. Interbudgetary transfers have fallen by 90% in the Volgograd region and by 71% in the Nenets Autonomous Area. “The situation is difficult, but we will stop attempts by the regions to solve their problems at the expense of municipalities,” the minister warned.
The problems in municipalities have already affected the social and political mood of citizens.
Thus, in the elections held on March 1, it was at the municipal level that the ruling party suffered a significant defeat. The Communist Party won the Tver City Council elections, the party’s candidates were defeated in the mayoral elections in Smolensk and Murmansk, and United Russia failed to reach 50% in the city council elections in Ulan-Ude and Tolyatti.
According to Zubarevich, social tension will increase because of the crisis and distrust of the authorities will grow, but this will not lead to mass riots or a sharp change in the political situation. “Terrible irritation and distrust in cities will be caused by officials with a demonstrative habit of consumption and by authorities that deceive people about social guarantees,” the sociologist predicts. “However, this irritation will not spill out into the streets — more likely, onto relatives.”
Most people will simply tighten their belts in consumption and take on side jobs. The rest will become marginalized, triggering growth in theft, drunkenness, crime, and mortality, Zubarevich believes. There will be no need to expect a reaction in the form of strong protest voting.
The overcoming of the social and economic consequences of the crisis at the municipal level was discussed yesterday by the council on local self-government under Federation Council Speaker Sergei Mironov, and today by the council under State Duma Speaker Boris Gryzlov. Presumably, on April 15, Prime Minister Vladimir Putin will take up the problems of municipalities at a meeting with the All-Russian Council for Local Self-Government.