Moscow, Russia

Evgeny Roshkov, Executive Partner at Kesarev, recently shared his thoughts on current dynamics within the Russian government relations environment with Legal Insight magazine, the leading news and analysis outlet for the legal community in Russia. For the original version of the article in Russian, please click here.

In 2021, several important macro factors of the political environment will affect the regulatory framework of businesses in Russia:

1. Elections to the State Duma in September 2021. Despite the results being fairly easy to forecast, Federal authorities attach particular importance to these elections, viewing them as a rehearsal for the 2024 Presidential Election and as a general stability test for the political system;
2. Governor elections will be held in 12 regions concurrently with the Duma election. The popularity and ratings of a region's Governor impacts the attitude of the public in that region towards Federal authorities in general and thus will impact the election results of the pro-government party United Russia. The replacement of a Governor is an important and powerful tool for Federal authorities and should be watched closely by enterprises developing investment projects or already working in those regions;
3. Uncertainty over power transition and the change of political generations. The broader electoral cycle between the 2021 State Duma election and the 2024 Presidential election opens up the opportunity for power transition and a change in generations within the country's leadership. Accordingly, we might face a potentially extensive renewal of personalities in the top government echelons, which may lead to structural reorganisation of government bodies and institutions. The rotation may happen in an accelerated or slowed down way, depending on the election outcome, on the format of power transition, the stability of political system and on the economic situation.

We already observe how these political factors are impacting regulatory trends.

Trend 1. Domination of the political agenda on the regulatory development and the falling importance of legal arguments, while decision-making in government bodies is guided by legalism. In 2021, political criteria are beginning to dominate regulation development (as evidenced by recent examples of the regulation of social networks and educational activities), which results in legal arguments losing weight. 2021 will see the following major political goals:

• victory of the party of power in the State Duma elections by a landslide;
• successful rotation of the governor corps by authorities;
• avoidance of protests and victories by candidates not loyal to the authorities.

Trend 2. The impossibility of identifying regulatory priorities apart from the development of national projects and combating the COVID-19 pandemic. Regulatory prioritising will mostly take account of political expediency rather than solutions to problems in a particular area. This will increase the weight of political stakeholders capable of influencing regulators in a particular economic sector when there is a risk of the political regime becoming instable (national security issues).

Trend 3. Power transition uncertainty and the electoral cycle prompt government bodies to compete for resources and influence in order to retain their positions in the post-transition period. For instance, this indirectly affects the work of government bodies on various investment instruments, such as Special Investment Contracts (SPIC) and Investment Protection and Promotion Agreements (IPPA), as well as their revision and re-launch (SPIC 2.0 or the renewed IPPA), and competition between the patrons of these instruments - Russia's Ministry of Industry and Trade promoting SPIC and Russia's Ministry of Economic Development promoting IPPA.

Under these conditions it is important to bolster the government relations function and Kesarev decided to support the "Effective Interaction with Public Authorities in Russia" nomination of the "Best Legal Department of Russia" contest conducted by Legal Insight, a leading magazine for the legal community in Russia, and contribute to developing GR practices.