The Battle for Moscow's Billions: Power and Money in the Russian Capital Under Mayor Sergei Sobyanin

In examining the office of the mayor of Moscow, it is possible to understand "not only who governs Moscow, but how Moscow is ruled—and, by implication … how Russia is ruled," observed Donald N. Jensen, Senior Fellow Center for Transatlantic Relations, Nitze School of Advanced International Studies, Johns Hopkins University. At a 4 February 2011 Kennan Institute event, Jensen proceeded to examine the centrality of Moscow in Russia. "Above all [else]," Jensen argued, "Moscow is an economic powerhouse"—the wealthiest area in the Russian Federation—that often acts as a "semiautonomous, political-economic entity."

"Luzhkov's Moscow is not something that sprang out of nowhere," Jensen emphasized; in order to understand the significance of Moscow's mayoral office under Luzhkov, the speaker discussed the role of Moscow city in the overarching framework of the Russian national government. As the capital of the country, Moscow maintains "complex, largely positive interaction with the federal government," according to Jensen. Although the city maintains some autonomy from the federal government, the two work together to provide resources and services for one another; while the federal government provides Moscow with funding, the city "provides services for the [central government]," Jensen noted, "…and in turn, is a huge contributor to the national budget."

In order to gain control over Moscow, particularly its wealth and resources, Yuri Luzhkov created a political machine constructed around his own personality. As Jensen described, the former mayor owed his success to several key factors: his control over Soviet-era assets during the post-communist transition; his charisma and personality; his ability to nurture strong private sector connections, and a political alliance with the federal presidency.

Additionally, certain elements of Moscow's infrastructure lent themselves to Luzhkov's continued success. For example, the city's largesse was partly due to what Jensen described as "supermayoralism"—a local government possessing both a weak city council and network of neighborhood leaders, which are subordinate to "a very powerful mayoral apparatus [run by] a very unified Luzhkov team." This lopsided distribution of power, in conjunction with Moscow's political autonomy, provided Luzhkov with the necessary means to bolster his status, as well as his personal wealth. Luzhkov's "Moscow, Inc."—which Jensen described as "almost as much a corporation as it is a political entity"—was noteworthy for the city's involvement in commercial business, private business participation in civic projects, and City Hall's "opaque budget process," which relied extensively on off-budget funds.

Further, the presence of law enforcement in Moscow was "a key to keeping Luzhkov in power and to governing the city," Jensen emphasized. While many law enforcement agencies are subordinate to the federal government, the city of Moscow helped to support those agencies' local employees with food, shelter, and financial supplements. By undermining the central government's authority, Jensen explained, the Moscow government "creates problems of loyalty" among law enforcement officials that work to the mayor's advantage.

At the heart of this system was an all-pervasive corruption that was not only tolerated, but was seemingly incorporated into every layer of city life. Government officials, criminal bosses, and gangs were all co-opted by the system. They were often bribed or offered secret deals in real estate and investments. Speaking specifically on organized crime, Jensen said: "it's a profound factor in the way the city is run … it's not a threat to the system, it is the system… [Luzhkov] did not fight organized crime, he managed it." Crime groups were a lobby as much as pensioners or teachers.

But why did Yuri Luzhkov, a man of immense power, fall out of favor? There are various theories, said Jensen. Luzhkov may have been "removed" because the current president, Dmitri Medvedev, "lost trust" in him (the official reason). Alternative explanations focused on how Kremlin insiders viewed Luzhkov as a nuisance and liability, as well as their desire to gain control over Moscow's resources and wealth. All of the above hypotheses, argued Jensen, probably played a role. There is no doubt, however, that Prime Minister Putin agreed with Luzhkov's removal.

The speaker next focused his discussion on the current mayor, Sergei Sobyanin and the challenges that he faces in administrating Moscow. Sobyanin is fortunate, argued Jensen, to have ties to both Putin and the gas industry. Sobyanin's political and financial connections, however, will not change the reality of governing a large, complicated urban center like Moscow. The new mayor will need to address health care, education, road infrastructure, and transportation, as well as manage the struggle that occurs daily in Moscow over wealth and resources. Above all, Sobyanin is expected to redirect Moscow's gigantic money flows to the federal government and be loyal to the Kremlin. This remains a daunting task even for the most capable administrator. So far, Jensen felt that Sobyanin is "neither soaring nor stumbling… [but] very much a work in progress." The mayor already has faced several key challenges, including ethnic riots, political protests, and a terrorist bombing at Domodedovo Airport. How Sobyanin responds to these challenges and addresses the needs of both the city and the Kremlin, Jensen concluded, will determine his success as mayor.

By Ross Oermann
Blair Ruble, Director, Kennan Institute