Proceedings of the Standing Senate Committee on
Foreign Affairs

Issue 10 - Evidence

The Standing Senate Committee on Foreign Affairs met this day at 3:45 p.m. to examine and report on emerging political, social, economic and security developments in Russia and Ukraine; Canada's policy and interests in the region; and other related matters.

Senator Peter A. Stollery (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, we have Professor John Young, from the University of Northern British Columbia. If you would like to start off Mr. Young, we would be grateful to receive your testimony.

Mr. John Young, Professor, University of Northern British Columbia: Mr. Chairman, I consider myself a child of the cold war. That is, I came of age watching James Bond movies with the evil Russians trying to thwart the hero. I was lured by the enigma of Russia and the Soviet Union and wanted to find out about them for myself. One of the lasting impressions from my first trip to the Soviet Union was the huge distinction between Moscow and the regions. That is the distinction in terms of standard of living and way of life and in terms of political culture.

My research since then has focussed almost exclusively on the regions in Russia, particularly local and municipal governments. The research was rather timely. As the Soviet Union collapsed, the opportunities for research outside Moscow increased. I thought of my research as a litmus test. The old saying "When the wind blows in the forest, the trees sway at the top but the bottom is always still," is an apt metaphor for political change and reform in Russia. I wanted to see what had happen with municipal and local governments outside of Moscow.

My task is to talk about the regional and local dimensions of contemporary Russia. The main point I want to make is the overwhelming legacy of autocracy, or the unitary system of power, that pervades Russian history. The legacy of autocracy is time honoured and well known. I will discuss the consequences of that autocracy as seen in today's Russia.

The alternative to this unitary system or the autocracy is that of smuta, the breakdown of centralized power and the chaos that follows. If you are familiar with Akira Kurosawa's movies in Japan, or if you are a sinologist and know Chinese history, the concept of "ran" or "luan," the breakdown of central authority and the chaos that follows, finds a parallel in Russia with the concept of "smuta." This breakdown has always been followed by a recentralization, a "monisty" - that is, a single system of power. This cycle has repeated itself like a comet with an irregular orbit. We cannot predict when it will happen, but it seems to happen over and over again. In the last decade we have witnessed the fourth cycle in the Russian context.

The question for discussion today is whether President Putin is now recentralizing Russia in the aftermath of this fourth breakdown of centralized power. I am not a huge fan of the notion that history repeats itself. Mark Twain said: If history does not repeat itself, it certainly rhymes. I would like to focus on that rhyming through history.

I would like to offer a brief overview of the centre-periphery relationship over the past ten years.However, in the interests of time, rather than review centre-periphery relations under Yeltsin and the breakdown, I am going to get to what has happened in the last year under Mr. Putin. A year ago he launched an ambitious plan to strengthen the state and at least five reforms have followed dealing with Russian federalism in the regions.

The first reform that Mr. Putin put in place was the creation of seven federal districts. Each district is led by someone appointed by the president and accountable to the president's chief of staff. From the original 89 regions, there are now seven districts with about a dozen regions. The president supervises what is going on in the various regions of Russia.

A second development is the law allowing the Russian president to dismiss governors and regional legislatures if they are breaking the law. Mr. Putin may also dismiss those who do not conform to federal law. That law was passed by an overwhelming majority in the Russian Duma a year ago.

A third shift has been in terms of the budget process in the Russian federation. According to the budget law of two years ago, regions are guaranteed at least 50 per cent of total revenues in the consolidated budget of the Russian federation. Mr. Putin's administration has worked that down to well below 40 per cent, in violation of his own law. I do not think he is going to dismiss himself. He is reconcentrating revenues to the federal government.

A fourth shift is the change in the Council of the Federation which is the Russian senate. Governors of the 89 regions and the speakers of the 89 legislatures have had ex-officio status as senators on the Council of the Federation. As of last summer this situation has changed. The governors no longer get to sit as members of Council of the Federation. Instead someone else is appointed in their place.

The fifth reform is the formation of the State Council, which in some ways replaces the executive federalism that existed with the Council of the Federation. The State Council meets at least quarterly. Eighty-eight governors meet to discuss the affairs of the Russian federation. Eighty-eight meet because the Chechen leader is not included.

How is Mr. Putin able to bring about such changes? Some of the changes are changes that perhaps, Mr. Yeltsin, his predecessor, would have wanted to accomplish.The big difference here is that Mr. Putin has phenomenal support in the Russia Duma. Yeltsin never had that support. Mr. Putin also enjoys a fair measure of popular support, something that Yeltsin was only able to manage at election time.

There are different ways of looking at these changes. Let me first offer a pessimistic perspective: Russia is returning to a strong vertical executive system. It is returning to a unitary system of power. The state council, for example, is very much under presidential control. The president has control over the agenda and has control over its presidium. He chooses the seven governors who sit as the presidium of the 89 members. These 89 members include Mr. Putin and make up the leadership of the state council.

When you combine some of these changes with Mr. Putin's war on the media, the Kursk scenario and the imbroglio of spies with the United States, there is a fair amount of discussion as to whether or not President Putin is reforging an autocratic system and Russia is headed backwards.

In this sense, the legacy of autocracy works two ways. Russians look for institutional continuity in Russia. It is the political culture; it is what Russians expect to see. Therefore, this approach would point out that autocracy has existed in Russia for centuries and will continue to exist. That notion is also very much a Western notion. The second perception of the legacy of autocracy is that we in the West are looking to find those autocratic tendencies that are re-establishing themselves in Russia.

I am more optimistic. me shift to an optimistic perspective. The details, particularly in terms of the centre-periphery relations, are noteworthy. The law that allows President Putin to dismiss governors also prevents him from doing so on mere whimsy. The courts have to find a legal violation. They then have to challenge the governor to change an existing law and give him a time frame in which to do so. If he does not do so, then President Putin can warn the governor he is in violation of federal law, and, again, a time period clicks in. The whole process can carry on for over a year. It is just our notion of autocracy that leads us to believe that the whimsy of the president could effect such a change.

Second, with respect to the Council of the Federation, the governors are no longer ex-officio members of the Russian Senate. The regional governors can appoint their full-time replacements. This gives a fair amount of clout to the regional governors. These changes are good insofar as they keep the provincial executives out of the legislative body of the national Parliament. In many ways this encourages a professionalization of the Council of the Federation which used to meet just once a month. Now it can meet more frequently. In many ways this is a common sense move.

Mr. Putin has also allowed governors to run for a third term of office. In most cases, the law only allowed two consecutive terms, but Mr. Putin has now passed legislation and given approval that many of these governors can sit for a third and sometimes a fourth term. If there is a suggestion that he is trying to wage war against the governors in the Russian regions, that development goes against such an interpretation.

We can also take a neutral perspective. A neutral perspective would bring forth the notion of local government. The third level of government and whether or not local government reforms will help establish stronger municipal governments is also an issue. Over the past decade, there has been a tremendous amount of talk. There has been a protracted process of legislative development both in terms of the laws governing municipal government and also the laws governing municipal budgets, the election of municipal officers, et cetera. However, the sum total of this legislative development has been minuscule in practice.

President Putin has recently talked forcefully about strengthening local government. However, I am not sure he understands local government in the way that the legislation over the past ten years has tried to push local government as self- governing institutions. That is to say the legislation that has pushed for local governments that separate from the state apparatus. Putin's approach seems to be along the lines of local governments as agents of federal and provincial governments. Philosophically, we can be worried that he is not encouraging a third level of self-governing institutions. Nonetheless, he is realistic, particularly when, we notice that local governments in Russia do not just deliver what in Canada we call hard services, roads, sewage, et cetera. Local governments and municipal governments in Russia also deliver education, health, housing and many social services.

While philosophically we can hope the local governments become the schools of democracy that we like to think they are in the West, a realistic perspective has to recognize that municipal governments in Russia deliver state services. Therefore, there has to be some kind of connection with federal and provincial governments.

I tend to see Mr. Putin as a realist rather than as a restorationist. He is interested in strengthening the state. He wants to strengthen the state in order to strengthen the federation. One may want to question his commitment to federalism, but many of the reforms he has been going about over the last year are designed not as an attack on federalism but as a way of making the state work from a realistic perspective. In this sense, I would view it with cautious optimism and suggest that the rhyming of history in this regard should not be perceived as mere repetition.

My own work looks at municipal governments across Russia. I have been involved in various places in Siberia and in north Russia, and I am happy to answer questions on those areas specifically. I am also willing to entertain questions on regional issues generally, particularly what this tells us about Mr. Putin.

The Chairman: Thank you very much.

Senator Austin: This topic is of importance when we focus on projecting the possibility of political change in Russia. I caught one word that certainly interested me. It is the word courts. You referred to the role of the courts as being able to determine what the law is, and, I presume, being able to enforce their concept of constitutional law. We have also seen other comments about the evolution of the courts and their independence in Russia.

In your optimism for political pragmatism, could you give us a sense of how you see the courts evolving? Where are they today in adjudicating constitutional law? Where do you think they may be going? Is your view optimistic that there may be a more independent judiciary instead of the courts being servants of the executive?

Mr. Young: A good question. One of the strategies Mr. Yeltsin used during his tenure as president was to try to use the courts as a way of strengthening compliance to federal legislation in the regions. He was largely unsuccessfully in this strategy. That connects directly to the notion of the challenges of strengthening an independent judiciary in Russia. An independent judiciary is probably a generation away yet. About 1998-1999, there were at least 3,500 regional laws that were in flagrant violation of federal legislation. Right there is the suggestion that the courts were not very effective in that regard.

Since the development of these federal districts, and I do not know how accurate the numbers are, some of the inspectors of these seven federal districts appointed by Putin have claimed 80 per cent success rate in getting rid of the laws in violation. The political hammer is more effective than the legal process. One would expect that over time these two things will begin to merge, perhaps, without negatively affecting an independent judiciary. In the future, cases will be pushed by the federal government; the courts will be used to enforce legislation, and then will come the hammer to ensure that once a court decides on something, the local or regional executive will have to comply.

One of the more interesting cases in my own research involved the Republic of Udmertia, which a number years ago passed legislation in flagrant violation of the federal law on local self-government. Udmertia wanted to have direct appointment of mayors rather than directly elected mayors. The federal government went through the appeal process to the constitutional court, which decided that the Udmert law was both in violation and not in violation of the federal law. That is, according to the federal law, a mayor should be directly elected by the people. On the other hand there is nothing in the federal law on self-government which suggests that republics and regions could not set up other forms of local government which involve directly appointed people. When I first read that I thought it was a bizarre situation. However, when one looks at the Canadian experience where in many provinces we have directly elected mayors but regionally appointed health boards, and elected school boards with limited autonomy, particularly over revenues, one realizes there has to be room for interpretation. When the constitutional court ruled that way as a middle ground between the republic's interest and the federal government's interest in Russia, my first response was that it had ruled badly. Then I began to understand it was quite a sophisticated interpretation. To answer that question, I am optimistic that in time courts will play a more dominant role. They are not yet.

The Chairman: I wanted to pursue the suggestion that democracy will be difficult to develop at the local level when municipalities are charged with delivering the central services in their areas. The counter-argument is that as they are charged with delivering those services it brings them closer to the needs of the people in their communities. Therefore, as their communities are horizontal in nature, in terms of delivering services, a more pragmatic and democratic process could evolve.

Mr. Young: As a theorist I agree with you. We do not do that here in Canada. There is a fair amount of provincial control over the delivery of education in the Province of British Columbia. That control is seen most particularly in the areas of the financing of public education. We see that as a good thing in most cases. Otherwise, one corner of the province would have a very well funded and very effective public education system, and the other corner of the province would be impoverished in terms of delivering education. We try to equalise these things.

The challenge in Russia is this legacy of a unitary system. The local governments used to function more as agents of state power. While they have tried to establish federal relations, what has happened is local governments are still stuck with delivering state services. However, they do not have to revenues to aid them in delivering these services. It is one reason the popular sentiments towards local governments are low. Local governments are supposed to deliver housing, education, health, social services, transportation, et cetera. They have no money to do so, and everyone thinks they are useless. The federal and regional governments have no vested interest in reallocating funds to balance this fiscal problem. The local governments are delivering almost everything and all the money lies with the higher two levels of government.

I am very much in favour of municipal self-government. I am in favour of municipalities doing things at the local level and being governed by the local population. The only problem is that there are certain policy issues that are better taken away from municipal government. I point to particularly, health and education and believe that the Russians should follow the Canadian model concerning these departments.

Senator Andreychuk: Under the old system, at the local level, all of these decentralized services were there because they were top heavy. However, the command in control at the time, was the communist party and it's officials. From my limited understanding of the municipal level of government I gather that not much has changed. Many of the same people are still there; they just have different labels. Whatever money comes into the municipal coffers still goes into the same pockets as it did in the past. The money is not getting to the people. The people are disillusioned and feel that the democratic system does not work any differently than the communist system of government. The municipalities are not receiving the services they require. Under the old system if you wanted your child to go to hockey or ballet school they would have to be selected to do so. You were very much beholden to the officials. It seems that nothing has changed in that regard.

Mr. Young: I will make a comparison. The Communist Party and the local elite were synonymous prior to 1991. This group had a fair amount of control over the allocation of resources. You are right. Municipal governments were told from above where to delivered things.

Since 1991 Russia has tried to develop local self-government. That is, municipal governments are supposed to be able to decide for themselves, free of federal and regional interference. In some ways, they have that capacity on paper. Mayors are directly elected. City councillors are directly elected. The biggest challenge facing most municipal administrators, and I say most because it varies from region to region, is that of money. They do not have the resources to allocate. They are running at 30 per cent to 40 per cent of what is required to deliver education, health, and social services as mandated by federal and regional legislation. They do not have the money.

In some regions, such as the Republic of Komi, mayors are not directly elected. The president of the Komi republic comes to the city council and he says, here is my nominee for mayor, and the city councillors ratify the mayor's choice. I know of two cases where city councillors said they didn't agree. In response the president of the republic strong-armed the men and withheld revenues until they complied. In some cases, there is still this local elite connected to this apparatus within the republic. In those cases, it is not just a question of money.

Generally, across Russia, aside from those circumstances where mayors are not directly elected according to federal law, the primary challenge is that of revenue. Municipal governments have insufficient money.

Senator Andreychuk: Are they still the same group of people?

Mr. Young: Yes and no. I am not troubled by that because I have met some of these people. Some of them used to be Communist Party officials and they are good administrators. They are trying to do the best they can with limited resources. My major concern would be trying to encourage a reallocation of revenue sources.

Senator Bolduc: In other words, fiscal reform beforegeographical reform.

Senator Grafstein: In the absence of a theoretical basis for a systemic view of government, there seems to be a reaction to fix here and fix there. It is as though they are trying to put their fingers in a dike to solve a problem. Their methods are reactive as opposed to proactive. Putin takes a larger view and says, money follows power. Let us see how much money I can aggregate to the centre. This is a situation not unlike the situation here in Canada in the early generations of our British tradition. Do the Russians have a greater understanding of the nature of government? Do they understand the role of government, its checks and balances, the separation of executive and legislative and judicial power? In the literature I have read there seems to be a separation of power in the courts. However, I have not read of any separation on the executive side. Is there a theoretical reawakening about the nature of government? Are the Russians going to experience the system of checks and balances that Canada, England and the United States have?

In addition, can you give us an example of a regional government or a local government that is working. Is there a government that has solved it's problems?

Finally, I am curious about municipal power as it relates to investment. If you take a look at the partnership between McDonald's and the municipal government of Moscow, I understand there was a 50-50 partnership between the two. I understand that recently McDonald's International bought out some of Moscow's interest and now has 88 per cent of the business. To what extent are the municipalities exercising their investment powers to establish businesses relating to their communities?

Mr. Young: With respect to separation of powers, it is difficult to tell on this one. Are you referring to the local level or just generally?

Senator Grafstein: Generally and both.

Mr. Young: It is difficult to tell because Mr. Putin has had the advantage of working with a Parliament that is overwhelmingly compliant. Mr. Yeltsin was at the disadvantage of working with a Parliament that was an opposition-based Parliament. We saw a difficult relationship between Yeltsin and the legislature, and we see a comfortable relationship between President Putin and the Duma. Until we have more of a balance of power between the two, we cannot test how well things are going.

At the regional level, in most cases, the executive dominates. Despite efforts by legislatures to be very active, they are often squeezed out. One way this is accomplished is by regional governors who often control the local media. Regional legislatures are often at a disadvantage in that situation. We have to wait and see. Certainly, the events of the past decade suggest they are moving in the right direction, that is, there have been efforts made. They have the laws on the books. It is now the practice that needs to follow.

In terms of where a local government works well, I can name the city of the Novgorod Velikii, which used to be known as Gorky. The city is halfway between Moscow and St. Petersburg.

Novgorod Velikii is an interesting case. Historically, it was always an alternative to the autocratic tradition that emerged out of Moscow. Ivan the Terrible, back in the 16th century, waged war against Novgorod Veliky because it had a vibrant town council along the lines of a "hansestadt." The historical tradition of this town is different from the rest of Russia, and many counter factual historians like to say what would have happened if that conflict had turned out differently.

Novgorod Veliky has a functional local self-government. It does not fully match up with the theoretical notions of what political scientists from UNBC would like to see in local government, but the demarcation of power and authority between the centre and the municipalities is clearer than you would find in most regions throughout Russia.

With respect to the third question, here is an example where investment follows that kind of clarity and stability. A fair amount of foreign investment flowed into Novgorod Veliky, particularly through 1994 and 1997. A Cadbury chocolate plant was built by the municipal government in partnership with Cadbury and with the regional backing of the "oblast" government.

When I first read their legislation on local government, I thought it was not that great. Municipal governments do not have as much power as they should have. The most important thing is that it is more clearly defined. As a result, there is more stability and more investment coming in, and relatively speaking, the population is fairly happy with it.

Senator Grafstein: Perhaps the witness can present to us in writing, two or three other examples that we could study. If we have one or two regions that are working well, they might provide us with a useful case study.

Senator Di Nino: I am interested in the opinions of Russians. I am also interested in a breakdown on the differences between the younger Russians and those who were there under the influence of the previous regime. I wonder if you could share with us your experiences.

Secondly, you talked about delivery, as in they were told to deliver. I wonder if there is a component of Mr. Putin's actions that may be influenced by special interest groups to whom he may be indebted.

Mr. Young: I have two anecdotes. One refers to the city of Omsk. I did research there, and one of people who helped me was a professor of law at the University of Omsk He was very much enamoured with the idea local self-government as a theoretical notion. He saw self-government as a foundation for a new Russia. When I visited him three and a half years later, he had completely moved on to a different subject. I asked him why he was no longer as passionate about local government. He said: It simply does not work. We have other things we need to deal with first, such as the money situation. Until federalism is established and the delineation of revenue sources is clearly defined between federal and provincial governments, self-government will not happen at the local level.

As a corollary to that, legislation on land, perhaps in the future in Russia, will depend very much on property taxes, et cetera. Until you have property legislation in place, which is a federal and regional issue, municipal revenues have little opportunity to increase. He just purged his whole research agenda and moved on.

The second anecdote involves a professor of political science from Moscow State University. While I was sitting in a "bania" with him, which is an intimate atmosphere, he showed me a gold watch that the mayor, Mr. Lushkov, had given him. He had received this watch after the 1996 election which Mr. Lushkov won. The mayor had won with 93 per cent support from the population. André was telling me how he had worked hard on Mayor Lushkov's campaign. André was a democrat. He had read Robert Dahl. I asked, how a democratic theorist and a proponent of local government could support a crooked mayor in league with business elites and who was lining his own pockets, et cetera. He responded that, in Russia all politicians line their pockets. At minimum, he responded, we want to have someone who will also do a good job. In that sense, the perception exists that politicians and administrators will look after themselves and line their pockets. The success-failure dichotomy determines what they will also do on top of that. Sometimes it flies in the face of what we would consider to be acceptable behaviour.

Senator Di Nino: The first part of the question was the difference between the generations.

Mr. Young: Most young people I have met have no interest in following local politics. That is probably the case in Canada as well. It maybe less so in large urban centres. Most people know the mayor by name but they do not understand what municipal governments do.

If we look at local government among generations, it is usually the older generations that are more in tune with what is going on. That is because that is where they get their pensions, transportation services and housing services. In the same vein, Canadians do not care about interest rates until they have a mortgage and have property.

Senator Di Nino: Or deposits.

Mr. Young: Exactly. My perception is that you find that general breakdown in Canada. Even at the national level voter turnout from our youth is lower than from middle-aged people.

The Chairman: I can understand that politicians are corrupt in a system that has no money because that is the way it works elsewhere. If you go to Mexico, South America, all kinds of places that I know very well, there is an enormous amount of corruption because these countries do not have any money. If they can get themselves in a situation where they can skim money off something, it does not surprise me. That happened, if you read Pepys' diaries, in the 1660s in England. What I find interesting and challenging is the committee has heard that 65 per cent of the population of Russia-Ukraine lives on agriculture. It is between 60 and 75 per cent depending on what statistics you read. Let us take an average figure of 65 per cent. Sixty-five per cent of the population is essentially abandoned by the national government. They do not even leave these 30,000 acre farms because at least they can feed themselves. In the towns, they cannot always feed themselves because of terrible distribution system.

Your speciality is municipal government. What kinds of attempts are being made to deal with this 65 per cent of the population that lives close to small towns and cities? Are they trying to develop a municipal system? Does that municipal system include a distribution system that will get food to these municipalities?

Mr. Young: I am not sure where this number of 65 per cent comes from. When you are talking about a small town, in Russia it could easily be 100,000 people or under 200,000 people.

The Chairman: Sixty-five per cent is the percentage of people in Russia who live on agriculture.

Mr. Young: I think we all live on agriculture. I am not sure what that number means.

The Chairman: That live on farms.

Mr. Young: The percentage is probably closer to 30 per cent or 35 per cent maximum. The rural-urban split in Russia is about 70 per cent to 30 per cent. Many of the people in urban environments live off their own gardens. Maybe that is where the number is coming from.

The question is pointed, nonetheless, in terms of the distribution of agricultural goods. Where municipalities have limited revenues, whether they are communist or not, the administrative experience and capacity of these people is critical because they have to somehow trade grapple grommets for bread to get the resources for their communities.

The Chairman: The expert evidence we had was that there are 35 million cows in Ukraine and Russia, and there are 700,000 in Canada, yet our milk production is double that of Russia-Ukraine. One of the reasons is that milk goes sour in four hours. There is a disconnection between producing areas and the towns. It is evident to me that one of the most important aspects of local reform is to deal with the breakdown in the agricultural distribution system. Would this be a priority of the local governments?

Mr. Young: I would say they would be preoccupied with advocating to regional and federal government to invest in more infrastructure development. Especially for roads and railways, which are in desperate need of attention throughout Russia. In these terms, we see some of the rationale of Mr. Putin's excuse to strengthen the capacity of the state. If we leave it to municipalities to deal with such broad issues as infrastructure development, then we are looking at very isolated communities with great roads but nothing connecting them. In that sense it probably plays into the rationale that Mr. Putin is using the capacity of the federal government to embark upon such endeavours.

Senator Graham: One of most fascinating statistics that came from the witness we had last week had to do with milk production. He told us that a Holstein cow in Canada produces on average 75 to 80 pounds of milk a day. The average cow in Russia produces four, five, or six pounds a day. This is quite a telling statistic with respect to the nature and condition of agriculture in the country.

The biggest problem is money. The biggest challenge is money, and someone might ask how many billions would it take to get Russia on the right road today.

We are talking about the local government. What specific and municipal services are most in need of reform? Can you prioritize those services? Could you prioritize them and tell us if there are any specific projects supported by Canada or other donor countries that have been useful in creating effective improvements at the local level?

Finally, is Canadian government assistance getting to the people or to the institutions or to the levels of government for which it is intended? I can use the example of transfer payments. Here in Canada, there were years when we never knew when we made a transfer from the national government to a provincial government whether that money was going to be used for the purpose for which it was intended. I am wondering whether or not you can give us evidence that resources of the programs in which Canada is participating are going for the specific purpose for which they are intended?

Mr. Young: First in terms of money, $20 billion U.S. flees Russia every year precisely because of concerns over the stability and investment opportunities.

There is money in Russia. I do not know how much it would take to improve things but a tremendous amount of money is leaving Russia through Russian hands. Trying to create a more attractive environment for investment, a more stable environment, would be an effective approach.

There is this question of development projects and aid projects, particularly with local governments. I have seen some projects at work, American, Canadian, German, Swedish projects, and I think in some cases, predominantly the American projects tend to be business oriented. The Americans have helped to set up business development centres to help Russians write business plans and to give them connections with American corporations. Out in the middle of Siberia in the Arctic Circle there is an American business centre. It seems strange to me.

The most effective programs I have seen are ones that are either focussed on training and sharing the Canadian experience or any Western experience.

For example, I suggest that training is vital: training of municipal officers; the training of personnel in accounting procedures; training officials in the working of administrative, municipal and provincial affairs. Canada has very high standards in terms of how they collect data and what they do with data. Canadian municipalities and the provinces compare their fiscal regimes. Regional governments in Russia are reluctant to transfer money because they do not know what happens to it. Strengthening the understanding that tabs must be kept on how the money is used would be effective.

One of the general problems I noticed across the board is that all Western development projects tend to work with either the regional or the federal government on local government issues. This would be like working with Ottawa to help Prince George. It does not seem to be the most effective approach to take.

In this case the Canadian government has tried to work on developing local government while at the same time working with the regional government. In this particular case the Canadian government worked with the Komi Republic.

The administration of the Komi Republic has no interest in developing a local government. Their laws are probably the worst laws of all 89 regions in Russia. They directly appoint their mayors. They don't want directly elected mayors. Here we have Canadian institutions that are trying to develop local government through the regional administration.That seems to me, to be working against itself.

I would encourage working directly with civic organizations at the municipal level. I would also encourage working with charitable organizations and social planning councils in Canada and their equivalents in Russia. These organizations are at a formative stage in Russia. My recommendation is that it is better to work with the community rather than with the administrators, who, in some cases, are friends of the administration that are just on a trip abroad.

The Chairman: I am trying to find the Komi Republic.

Mr. Young: If you go northwest of Moscow, about1,200 kilometres.

The Chairman: On the east or west?

Mr. Young: Northeast of Moscow.

Senator Graham: If you looked as specific municipal services, whether it is education -

Mr. Young: Municipal officials throughout Russia will tell you immediately the biggest issue is housing, and the huge problem is with utilities, energy, oil, gas electricity, heating. We saw some images this past winter of people wearing parkas inside their homes because the heating has been turned off. In some cases, that is a political ploy used by the region against the mayor when there is political conflict, but in many cases it is because of not having enough money.

The Chairman: We could be here quite a bit longer, and, Professor Young, it is very interesting, and we thank you very much for coming.

The committee continued in camera.