RUSSIA MONITOR

Date: 12 August 2017

“Soft power” budget cuts

At the end of July, Russian and foreign media informed about cuts to state funding for organizations and foundations which promote Russian foreign policy and support the Russian diaspora in the world. Contrary to some comments, such a move will not limit Moscow’s activity in this area. First, reducing state subsidies does not apply to all entities. Secondly, cuts are not significant. Thirdly, there are some off-budget grants and it seems that the main responsibility for “soft power” financing will fall on state and private companies.


© BAGUS INDAHONO PAP/EPA

Cuts will predominantly touch the Russian International Affairs Council (RIAC) and the Gorchakov Fund. The amount of funding is specified by the Ministry of Foreign Affairs. Budget expenditures for both the Gorchakov Fund and the RIAC are expected to be reduced by 8 percent in total, compared to the years 2014–2016. In 2017–2019, 6.7 million dollars was earmarked for this purpose. In 2014–2016, it was about 7.2 million dollars. Reducing state subisidies will affect the RIAC much more, since in 2016, about 84% of its expenditure were covered from budgetary resources (in contrast, it was only 47% in the case of the Gorchakov Fund). However, cuts in state subsidies does not necessarily have to mean a reduction in funding because their supervisory boards include oligarchs and heads of big state corporations.

Both organizations, founded in 2010 on the instruction of the President of the Russian Federation Dmitry Medvedev, depend to some extent on the Russian Ministry of Foreign Affairs. The RIAC carries out expert activity in the domain of international affairs. One of the Fund’s tasks is to promote Russian social programs outside the country as well as to support Russian-speaking media in other countries. Nevertheless, grant amounts provided by individuals along with names of entities and donors are not open to the public. They can be only guessed at on the basis of the composition of foundations’ supervisory boards.

In the case of the Gorchakov Fund, one can distinguish for example Vagit Alekperov (Lukoil), Alexey Kuzmichev (Alfa Group), Sergey Chemezov (Rostec) and former President of Russian Railways Vladimir Yakunin. There are also such oligarchs like Alisher Usmanov and Mikhail Prokhorov. The Fund’s supervisory board is headed by Sergei Lavrov. As for the RIAC, its supervisory board composes of representatives of Alfa Group, Lukoil, Rostec, Severstal and Transneft. Among its members are also: the CEO of Sberbank of Russia (the biggest bank in the country) Herman Gref, former Foreign Minister of Russia Igor Ivanov and the presidential spokesman Dmitry Peskov.

The Gorchakov Fund, the RIAC, as well as other governmental and non-governmental organizations, consitute a part of Russian “soft power”. An essential role in its implementation is played by the Russian diaspora, whose members remain an object of an organized policy led by the Kremlin. According to it, in accordance with adopted law, there is a special status of “compatriot”, that is a resident of another country who does not necessarily have to be a citizen of the Russian Federation, but who, from some historical reasons, is considered by the state as their own citizen. It needs to be added that Moscow uses its “compatriots” only with the aim of increasing its influence on other states’ decisions. Traditionally, it is the Russian Ministry of Foreign Affairs that has a lot to say on policy regarding Russians living abroad.

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