Rapporteurs
Mr Chevrot (France)
Mr Likhachev (Russian Federation)

EXPLANATORY MEMORANDUM

I. THE MOSCOW FORUM: OBJECTIVES AND PARTNERS

1. The Third Economic Forum of the Regions of Europe (Moscow, 24-26 November 1996), which formed part of the series of periodic meetings between regions aimed at fostering economic co-operation, proved most successful and once again was a most worthwhile experience for the representatives from both western Europe and central and eastern Europe (see final programme in appendix).

2. Two particular features marked the Moscow Forum:

- it was the first time that a Forum of the Regions organised by the Congress of Local and Regional Authorities of Europe had been held in an east European country,
- the themes and topics discussed were broadened: apart from economic issues, the Forum also dealt with the political aspects of administration, security and sustainable development.

3. The Forum was organised jointly by the Government and the Federal Assembly of the Russian Federation and the City of Moscow, with the respective assistance of the Economic Forum of Regions based in Moscow and the Foundation for the Economy and Sustainable Development of the Regions of Europe based in Geneva.

4. The partners who helped organise the Forum also decided the thematic framework. This meant that much of the programme was devoted to the relations between regions and central government. The issues concerned were of particular interest to the representatives of the Russian Federation, given that its 89 "Subjects"¹ constituent entities, which have various statutes, have taken many different initiatives in recent years which have not always been consistent with central government policies.

5. The European countries in transition are having to cope not only with the complex difficulties of reorganising their economic systems, ie reforming centrally planned economies to meet the demands of the free market, but also with the challenge of reorganising their state structures to bring them into line with the standards and values of democratic pluralism, which means that they are also having to consider what degree of decentralisation and regionalisation they wish to allow in future.

6. The holding of the Forum of the Regions in Moscow can be seen as a sign of the willingness of Russia's national authorities, as partners in the project, to step up dialogue with the regions and to recognise the role and functions of the regions in national economic development.

7. Although economic co-operation between regions can in no way replace the economic policies of central government, it should be regarded as a means of underpinning these policies and enabling the social and economic potential of a country and its regions to be mobilised to the full.

8. The Moscow Forum can thus also be seen as a reflection of the political momentum which exists at regional level and which should be increased in future so as to enable national governments to respond more effectively to the challenges resulting from the globalisation of the economy and the growth in international competition.

II. THE PROGRESS OF REGIONALISATION IN EUROPE

9. Decentralisation and regionalisation are two solutions for bringing state structures into line with the requirements of 21st-century society, based on human rights, the rule of law and measures to move all levels of government closer to the public.

10. It should be stressed here that regionalisation is not only an issue in the European countries in transition, but is also at the top of the political agenda in various west European countries. It is a subject closely linked to the changes in society, which demand ongoing adaptation of administrative structures to the real needs and requirements of citizens.

11. A number of west European countries are currently reviewing their traditional administrative structures and the degree of decentralisation and regionalisation they wish to adopt. The most recent example can be found in the programme of the new Labour government in the United Kingdom, which intends establishing a parliament in Scotland and an assembly in Wales, both of which would be granted significant powers of their own. In other countries, decentralisation and regionalisation have reached a more advanced stage. In Italy, they are being debated in connection with the constitutional reform of the state. In Portugal, which already has two autonomous island regions, the creation of regions for the entire country is also under discussion. Lastly, Sweden has recently established a number of model regions on a trial basis for a five-year period.

12. In central and east European countries, decentralisation and regionalisation are confronted with various obstacles, as they involve complex changes which are difficult to implement in the absence of a broad political consensus. The example of Poland has shown that reforms in this area are directly related to the drafting of new national constitutions. Each country is in fact looking for its own model and, to this end, needs to find an approach based on its own traditions, its history and the relevant structures of political authority.

13. It is therefore important for the Chamber of Regions to demonstrate the advantages of decentralising power and establishing strong and dynamic regions in all countries, both in western and in central and eastern Europe. At conceptual level, the Council of Europe and, in particular, its Congress of Local and Regional Authorities of Europe will soon be able to offer interested countries their view of regional structures as set out in the draft European Charter of Regional Self-Government, which can be seen as the projection onto the regional level of the guiding principles for the operation of democratic societies previously set out in the European Charter of Local Self-Government.

14. At political level, the Economic Forum of the Regions is an appropriate platform for demonstrating the importance to states of the existence of regions which have their own powers in the economic sphere. This enables them to develop industrial and job-creation policies at their own level with a view to achieving balanced regional development.

III. HIGH-LEVEL PARTICIPANTS

15. The Moscow Forum was a further step in the process started by the Congress of Local and Regional Authorities to promote the future social and economic development of the regions now united in the new Eurasian framework of Greater Europe in the Council of Europe. It brought together over 500 delegates from the regions of Russia and from 22 other Council of Europe member countries.

16. It is therefore only natural that high-ranking politicians and representatives froum the economic, commercial and banking sector spoke at the Moscow Forum:

17. Mr Chernomyrdin, Prime Minister of the Russian Federation, assured the representatives of the regions and the 89 "Subjects" - (constituent entities) of the Federation, as well as those of the private sector, that regional policy was a key element in the policies of his government, which were designed to ensure economic development and to involve the regions closely in the country's economic reforms, while also respecting regional traditions. He felt that mutual co-operation offered benefits for all of Europe's regions, and stressed the importance of Russian regions co-operating actively with one another and also with other regions in Europe. He called on the constituent entities of the Federation to play a more active role at international level, while stressing that the regions' actions should fit in with the policies of central government and its efforts to make Russia an integral part of Europe.

18. Moreover, he made clear that this call for increased co-operation at international level was not confined to relations with central and west European countries, but also applied to co-operation with neighbouring countries south and south-east of Russia, where regions could also act as bridges between European structures and those of the newly independent neighbouring states.

19. Along the same lines, Mr Ivanov, Deputy Minister for Foreign Affairs of the Russian Federation, stressed that regional co-operation was contributing to the process of building a Greater Europe, and structures for both economic co-operation and European security needed to be created at the same time. His government's policies were currently aimed at strengthening democracy, developing the operational framework for a modern federal system and laying the foundations for the economic reforms which should facilitate co-operation with Europe as a whole. At intergovernmental level, co-operation with the European Union had some degree of priority, as collaboration and partnership with the relevant structures were set to become the key to European co-operation and security.

20. It became clear from this statement that the term "regions" had various meanings. In some cases in Russia, "regions" refers to the 89 constituent entities, "Sujbects", of the Federation, this being true, for instance, in the discussions between central government and these entities. At economic or political level, however, "regions" are very often seen as geographical areas which share certain common features and structures, implying a narrow definition in some cases and a broad one in others. For instance, Mr Ivanov referred to the problems of the Balkan region, which demanded particular attention, while also mentioning Russia's co-operation in the Euro-Arctic Barents Sea region and in the Black Sea region.

21. Attention should also be drawn here to the comments by Mr Luzhkov, Mayor of Moscow, who spoke in his capacity as head of government of the city of Moscow, which is also one of the constituent entities of the Federation. Mr Luzhkov stressed that regional co-operation should be aimed at harmonising living standards in all regions, and highlighted the need for a balanced approach to regional development in his country. In the light of his own experience in regional government, he said that effective mechanisms did exist for promoting and directing investment at regional level, and for fostering interregional co-operation within the Federation and internationally. He attached great strategic priority to these aspects, which he felt could play a key part in overcoming the current economic crisis. It was essential to co-ordinate the activities of the federal authorities with those of the regions, which meant that there was a need to step up mutual aid and co-operation within the Federation. Judging by his experience in Moscow, he felt that the regions should make use of all the self-government machinery at their disposal, while co-operating in a spirit of federal solidarity with a view to achieving equality between the constituent entities of the Federation, especially in budgetary and fiscal terms. The country needed a new fiscal policy, which should be more transparent, simpler and based on three main criteria: the fiscal capacity of regions, their budgetary needs and central government grants. The aim of such a policy would be to redistribute the budgetary resources of the Federation to the regions so that they could enjoy similar levels of economic development. In this respect, the problems described indicate that the basic issues in eastern Europe are the same as in western Europe, although the scale of the problems varies from one country to the next depending on how the reforms have been organised and how far the transition process has advanced.

22. It should also be noted that Mr Kurt Beck, Minister-President of the Land of Rhineland-Palatinate, who was also representing the German Bundesrat, called for efforts to boost regionalisation in Europe, multicultural co-operation between European regions and the establishment of transfrontier regions. He felt that decentralisation responded to the real needs of citizens, and commented that the federal system in general and in Germany in particular was based on these principles. Germany's regions (Länder) were required to act in a spirit of solidarity at federal level, but, in a federation, it was all the more important for central government to take due account of the interests and needs of the constituent regions. Transposing his experiences into the European context, he hoped that federalism - as the ultimate form of decentralisation and regionalisation - would continue to provide the basis for the democratic and economic development of his country and for the process of European integration.

23. Mr Haegi, President of the Congress of Local and Regional Authorities and member of the government of the canton of Geneva, hoped that Russia would soon be fully integrated into the Council of Europe and stressed the role that the Congress could play in enabling the regions of the Russian Federation to take an active part in building Europe. As far as the economic and social problems in Russia were concerned, he felt that all the forces in the country should be mobilised and should act in conjunction with Europe so as to bring about development that would lead to higher standards of living. There were two essential preconditions in this respect: political stability on the one hand, and the safety and security of individuals and property on the other. Regionalisation had a crucial part to play in building democracy and economic prosperity. Moreover, it was essential for regionalisation to be carried out in a spirit of complete loyalty to the Federation and in a climate of trust in national unity.

Mr Haegi then said that, given the grave errors made in the past, the consequences of which had been disastrous, there was now a need to reconcile the environment with the economy, as environmental protection and the rational use of natural resources were preconditions for sustainable development. Indeed, the protection of the environment and of natural resources was crucial to economic development in all respects.

24. For his part, Mr Van Cauwenberghe, President of the Chamber of Regions and Minister of the Government of Wallonie, went over details of the Chamber's activities in the field of interregional co-operation. He stressed that regions had economic potential and powers of their own, which, if mobilised at pan-European level, could provide new impetus for intensifying co-operation and partnerships. In particular, interregional co-operation should play a key role in helping the former centrally planned economies to enter the system of global economic competition. As regional authorities usually had the clearest picture of the cultural, economic and social characteristics of their regions, they were best placed to take appropriate measures to adapt structures to new economic realities. Nevertheless, co-operation between regions should not be confined solely to the richest regions, leaving less well-off regions on the sidelines. Particular attention had to be paid to economic and social cohesion, which was an essential precondition for the construction of Greater Europe based on subsidiarity and solidarity.

IV. CONCLUSIONS

25. The contributions by the politicians and business leaders showed that the Moscow Forum did not only allow the pooling of experience and ideas concerning practical co-operation between regions and the establishment of partnerships and mutual aid programmes between the old and new member countries of the Council of Europe, but also offered a new political dimension that transcended the local and regional level. In addition, the meeting provided a platform for analysing the place occupied by regions in the overall political context, not only as participants in economic co-operation but also as factors in security and stability, in particular in the relations between the European countries which are faced to varying degrees with the complex problems of transition and the establishment of democratic states.

26. In conclusion, it can be said that the Moscow East-West Forum enabled the west European representatives to discover first-hand the problems currently facing national and regional government in central and eastern Europe, especially in the Russian Federation. They were able to exchange views on the operation of regional administrations and their relations with central government, and also to identify the obstacles which need to be overcome to enable the new democratic systems to operate more effectively. In addition, Russian business leaders from various sectors such as banking, energy, transport, environmental protection and the agrifood industry were able to give the participants from other countries details of the political priorities decided for their sectors and of the prospects for international involvement and, indeed, investment in these areas.

27. At the end of the discussions, the participants adopted the "Moscow Declaration of the Regions of Greater Europe", which sets out the political and economic objectives agreed at the Forum of the Regions and has served as the basis for the recommendations to be submitted to the Congress of Local and Regional Authorities of Europe and, in particular, the Chamber of Regions. The tone of the declaration shows that the Moscow Forum, like its predecessors, responded to a real need on the part of the regions to come together and agree on how to co-operate in the social and economic fields.

Other events are set to follow: the City of Vienna has agreed to organise the next Forum from 9 to 11 September 1997, thus demonstrating that the momentum has been maintained in this area and that the regions are going to continue their efforts to step up co-operation, partnerships and networking in the field of sustainable regional economic development. The Chamber of Regions invites all regions to join in this programme of meetings and thus contribute actively to the efforts of the Congress of Local and Regional Authorities of Europe to promote interregional co-operation in Europe together with the Foundation for the Economy and Sustainable Development of the Regions of Europe chaired by Mr Haegi, and the Economic Forum of Regionsn chaired by Mr Shokhin, First Vice-Minister of the State Douma of the Russian Federation.

PROGRAMME OF THE
ECONOMIC FORUM OF THE EUROPEAN REGIONS FOR ECONOMIC CO-OPERATION,
SECURITY AND SUSTAINABLE DEVELOPMENT
(Moscow, 25-26 November 1996)

Monday, November 25, 1996

09.00 - 10.00 Registration of participants
10.00 - 11.00 Opening Session

Chairman :
M. Y. M. Luzhkov, Mayor of Moscow

Speakers :
Mr V. S. Chernomyrdin, Chairman of the Government of the Russian Federation
Mr Y. M. Luzhkov, Mayor of Moscow
Mr G. N. Seleznev, Chairman of the State Duma of the Federal Assembly of the Russian Federation
Mr Claude Haegi, President of the Congress of Local and Regional Authorities of Europe (CLRAE) of the Council of Europe
Mr Kurt Beck, Minister-President of the Land Rhine-Palatinat (Germany)

11.00 - 11.15 Break

11.30 - 13.00 First Plenary Meeting : The contribution of Regional co-operation to international security and sustainable economic development

Co-Chairmen:
Mr V. N. Likhatchev, Deputy Chairman of the Federal Council of the Federal Assembly of the Russian Federation
Mr V. A. Mikhailov, Minister of Federal Affairs and Regional Policy of the Russian Federation

Speakers:
Mr V. N. Likhatchev, Deputy Chairman of the Federal Council of the Federal Assembly of the Russian Federation, Chairman of the State Council of Tatarstan
Mr I. S. Ivanov, First Deputy Minister of Foreign Affairs
Mr V. A. Mikhailov, Minister of Federal Affairs and Regional Policy of the Russian Federation
Mr N. D. Kovalev, Director of the Federal Security Service of the Russian Federation
Mr J.C. Van Cauwenberghe Chairman of the Chamber of Regions of the CLRAE
Mr J. Hofmann Chairman of the Chamber of Local Authorities of the CLRAE
Mr A. V. Iakovlev President of the Supreme Arbitration Court of the Russian Federation
Mr A. I. Kozakov Deputy Head of the Presidential Administration of the Russian Federation
Mr S. M. Shakhrai Chairman of the Commission on Separation of Federal and Regional Authorities, Deputy of the State Duma of the Federal Assembly of the Russian Federation
Mr V. M. Platonov Chairman of the Moscow State Duma, Chairman of the Committee of Constitutional Legislature and lawsuit questions of the Federal Assembly of the Russian Federation
Mr E. A. Pain Adviser to the President of the Russian Federation
Mr V. A. Ryzhkov Deputy Chairman of the State Duma Committee on federal affairs and regional policy, Deputy Head of Executive Committee All-Russia public-political movement "Our home is Russia"

Issues for discussion:
Federalism and regionalism: the European experience and the Russian model. Constitutional basis for relations between federal and regional governments. Federal Treaty - relations between the subjects of a federation - general provisions and specific rights and duties. Separation of federal and regional powers in economic and international relations: today and tomorrow Political dynamics in regions in the context of regional elections.

13.00 - 14.00 Lunch

14.30 - 17.30 Second Plenary Meeting: Financial and external economic support for sustained economic development in regions: the role of federal authorities and regional capacities

Co-Chairmen:
Mr A. N. Shokhin First Deputy Chairman of the State Duma of the Russian Federation
Mr V. M. Zubov Deputy Chairman of the Federal Council of the Federal Assembly of the Russian Federation

Speakers:
Mr Yves Berthelot Executive Secretary of the United Nations Economic Commission for Europe
Mr A. Y. Livshitz Deputy Chairman of the Government, Minister of Finance of the Russian Federation
Mr S. K. Dubinin Chairman of the Central Bank of the Russian Federation
Mr A. H. Zaveriukha Deputy Chairman of the Russian Federation
Mr Y. G. Yasin Minister of Economy of the Russian Federation
Mr D. V. Vasilyev Chairman of the Federal Commission on Securities
Mr J. A. Spiridinov Head of the Republic of the Komi

16.00 - 16.15 Break

16.15 - 17.45 Continuation of the Plenary Meeting

Mr R. Freeman First Vice-President of EBRD (London)
Mr V. M. Zubov Deputy Chairman of the Federal Council of the Federal Assembly of the Russian Federation

Mr M. M. Zadornov Chairman of the State Duma Committee on budget, taxes, banks and finance
Mr V. S. Medvedev Chairman of the Deputy group "Russian regions" of the State Duma of the Federal Assembly of the Russian Federation
Mr Safranov Deputy Minister of External Economic Relations
Mr A. I. Achkasov Chairman of the Board of the Russian State specialized in export - import bank (Roseximbank)
Mr Tsakunov General Director of the Russian centre of assistance for foreign investments of the Ministry of Economy of the Russian Federation
Mr V. N. Pankraschenko Deputy Director of the Russian Centre of privatization
Mr A. G. Grandberg Member of RAS (Russian Academy of Sciences)

Issues for discussion:
Federal budget and its prospects for 1997. Obstacles to the priority financing of the regions from the federal budget. The growing role of regional and municipal budgets in regional development. Budget revenues of local authorities. Distribution of proceeds from privatization and participation of the regions in investment bidding. Use of federal share package for paying debts to regions. Regional share package and problems of corporate management of business companies. Privatization of municipal and communal property. The use of local taxes to stimulate foreign investment. Licensing in the regions as a source of income for local budgets and a means of economic growth. Prospects for development of local financial markets. Non payment for goods and services in the regions, promissory notes and mutual cancellation of debts. Federal and regional finances and problems of ecology. Possibilities of regional authorities for encouraging investiments and attracting foreign credits. The State and foreign investiments. Financial credits. Project financing. Privatization and direct foreign investiment. Using international standards of audit and accounting to attract foreign investors. The role of retional authorities in pre-privatization restructuring of entreprises. Bank credits and investiment of international financing organisations: European Bank of Reconstruction and Development and World Bank. European Investment Bank. Possibilities of attracting investors through bilateral programs of export insurance and guarantees. Prospects for the regions to borrow on international financial markets, to issue regional and municipal Euro-bounds and other debt creating instruments. Federal and regional guarantees on external credits and investments. Local taxes and international agreements on the prevention of double taxation. Participation of regions in carrying out international ecological programs.

17.45 - 18.00 Stock taking of the first day of discussion
18.30 - 20.30 Folk-show performance

* * *

Tuesday, November 26, 1996

Parallel working sessions

10.00 - 12.00 Session n° 1
Effective energy sector - a key factor of sustainable regional development

Discussion leader:
Mr Y. K. Shafrannik Adviser to the Chairman of the Government of the Russian Federation
M. M. Foreign official

Speakers:
Mr R. I. Viakhirev President of Gasprom
Mr A. F. Diakov President of the Joint Energy System of Russia
Mr A. M. Mastepanov Directorate Chief of the Ministry for Fuel and Energy
Mr R. R. Gaizizullin First Vice-President of "KOMITEK"
Officials of foreign oil and energy companies

Issues for discussion:
Conversion of military industry. Regional co-operation in the area of industry and energy. Prospects for the development of the Russian energy complex. Attracting foreign investments. Production sharing agreements. Local sources of energy. Energy saving strategy. Possibilities of "small-scale energy" Co-operation with international organizations in the energy domain. Energy and ecology.

10.00 - 12.00 Session N° 2
Agribusiness and Ecology: new opportunities for the regions

Discussion leaders:
Mr A. K. Zaveriukha Deputy Chairman of the Government of the Russian Federation
Mr V. I. Danilov-Danilian Chairman of the State Committee of the Russian Federation for Environmental Protection
M. M Foreign official

Speakers:
Mr Pekka Haavisto Minister of the Environment, Government of Finland
Mr N. V. Komov Chairman of the State Committee on land resources and land developing of the Russian Federation
Mr V. A. Shoubin Chairman of the State Committee the Russian Federation on timber, pulp and paper and wood processing industry
Mr A. I. Bedritski Chairman of the Russian Federal Service on Hydrometeorology and Environmental Monitoring
Mr V. N. Scherbak First Deputy Minister for Agriculture and Food Production
Mr N. N. Mikheev First Deputy Minister for Natural Resources of the Russian Federation

Officials of Russian and foreign banks and companies

Issues for discussion:
Domestic production and imports of agricultural products: achieving a reasonable balance. An inter-regional programme to produce inexpensive high quality products for people with low incomes. Wholesale markets as a stable supply of agricultural products and of cut price foodstuffs. Land code. Effective use of natural resources. Ecological component of sustainable development.

12.30 - 14.00 Lunch

14.00 - 16.00 Session n° 3
Residential construction and urban management in regions - ideas and stimulus for development

Discussion leader:
Mr V. I. Resin First Deputy Chairman of the Government of Moscow

Speakers:
Mr A. S. Shamuzafarov Deputy Minister for construction of the Russian Federation
Mr U. V. Rosliak Deputy Premier of the Government of Moscow
Mr I. N. Ordjonikidze Minister of External Relations of the Government of Moscow
Mr E. V. Kuzmin Head of the Moscow Committee on Construction and Architecture
Mr K. N. Krasnianski Director for extra-budget planning of urban developing, Moscow Government
Mr Y.V. Topelson Head of the Development Department of the general planning Unit, Moscow Government
Mr S. P. Bezsmiertni Chairman of the Moscow Investment of the Corporation Board of the Government of Moscow
M.M Foreign representative
Officials of Russian and foreign banks and companies
Discussion

Issues for discussion:
Regional capacity to organize a large scale communal residential construction through deficit financing: the experience of Moscow. Mortgage loans as a means to finance construction. The development of inter-regional network of world class hotels. Preparing an inter-regional programme of residential construction using locally recycled materials.

14.00 - 16.00 Session n° 4
Prospects for reconstruction and development of regional transport and telecommunications networks

Discussion leaders
Mr N. P. Tsakh Minister of Transport of the Russian Federation
Mr A. E. Krupnov First Deputy Minister for Telecommunication

Speakers:
Mr Y. V. Guliaev Director of the Institute of radio technology and electronics. Member of the Russian Academy of Sciences.
M. M. Representatives of Rostelekom and Sviazinvest companies

Issues for discussion:
Reinforcing regional cooperation in developing transport and telecommunications infrastructure. Co-operation of regions with international organisations in reconstruction of transport and telecommunications. Participation of Russia in the process of European integration in the area of transport and telecommunications. Prospects fo creation of transport East-West corridors: Via Baltica, Moscow-Berlin. Fibre optic telecommunications super-highways: Trans-Siberian and Trans-Eurasian lines. Reconstruction and integration of Departmental systems of telecommunication to create new inter-regional systems: the experience of Murmansk. "Telephone for people" programm Mobile systems of telecommunication. Possibilities and conditions for attracting foreign investments for transport and telecommunications projects. Ecological aspects of communications systems.

16.00 - 16.30 Break
16.30 - 17.30 Closing plenary meeting

Chairmen:
Mr Y. M. Luzhkov Mayor of Moscow
Mr A. N. Shokhin First Deputy Chairman of the State Duma of the Russian Federation
Final reports of the discussion leaders of the Forum

Mr Y. M. Luzhkov Mayor of Moscow
Mr Claude Haegi President of the Congress of Local and Regional Authorities of Europe (CLRAE)

Adoption of the Final Declaration "Moscow Declaration of the Regions of the greater Europe"
18.00 Press Conference on the results of the Conference