In his September 30 remarks at an investment forum in the Russian Black Sea resort of Sochi, Kadyrov did not explain what he was basing his assessment of Chechnya’s economic fortunes on. But according to official Russian government statistics last updated in May, Chechnya in 2014 finished last among all Russian regions in terms of gross regional product per capita, with an average of 104,019.2 rubles ($1,666 according to the current exchange rate). (Only Crimea and Sevastopol, administrative entities that Russia annexed from Ukraine and have little international recognition as Moscow’s subjects, finished lower).
Other economic indicators also place Chechnya at or near the bottom compared to other regions. According to an analysis of official data for 2012-14 by the Russian newspaper RBK, Chechnya for that period had the highest rate of registered unemployment among working-age people. As of January 1, 2016, Chechnya had the fourth-highest rate of unemployment in that category, according to another RBK analysis. (Of note: some experts have cast doubt on the accuracy of economic data from Chechnya.)
Not all economic analyses paint such a grim picture of Chechnya. It ranked No. 56 in an analysis of economic well-being for families in 2015, according to a study by state-owned RIA Rating. And real wages in the region have risen in recent years, a trend that regional expert Varvara Pakhomenko has attributed to the region’s gray market and remittances from residents to travel to other regions to work. Kadyrov’s government said in December that Chechnya’s gross regional product rose 5.2 percent in 2015.
The key driver of Chechnya’s economy, however, are massive subsidies from Moscow. In his effort to bring order to the region following two brutal wars in Chechnya fueled by separatism and Islamic extremism, Putin has granted Kadyrov virtually unchecked power in the region and flooded its coffers with billions of dollars. From 2007 through 2015, Chechnya received 539 billion rubles ($15.6 billion, per the average exchange rate for that period) in subsidies from the federal budget, RBK reported. According to Finance Ministry data, 81.6 percent of Chechnya’s regional budget came from the federal budget in 2014, the highest of any region other than neighboring Ingushetia, RBK said. This money has indeed been used to rebuild the region and fund social expenditures, though critics accuse Kadyrov and his allies of siphoning off considerable sums it to bankroll lavish lifestyles.
Prefacing his statement about the state of the region’s economy at the Sochi forum, Kadyrov commented on a Finance Ministry proposal to take a small percentage of federal money earmarked for richer Russian regions and redirect it to poorer ones: “It’s a good proposal. We have to help the poor. It’s always been like that here: The rich help the poor.”