Pandemic Decentralization: COVID-19 and Principal–Agent Relations in Russia

ABSTRACT

In authoritarian Russia, during the COVID-19 crisis the federal center unilaterally shifted the costs of unpopular anti-pandemic measures onto the regions. By applying the principal–agent theory to the Russian case, we show that, faced with the delegated task of combating the pandemic, agents (regional governors) shirked: using informational asymmetry, they started manipulating information about their activity to the principal (federal center). As a result, both sides got stuck in a “manipulation trap”—a situation, in which a rapid policy change, even if needed, does not occur, as it is neither justifiable for the principal nor required by him.

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Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. Literally: the fight against Moscow.

2. The main focus in the May decrees was placed on raising the salaries of state employees that are paid from regional budgets.

3. There is no evidence to suggest unequivocally that Moscow directly instructs the regional governors to manipulate medical statistics or election results. For Moscow, the only important thing is the desired result, and the center is indifferent to the means of achieving it. In addition, the current principal–agent model forces the governors to grasp even implicit signals from Moscow, since their political survival depends on it. On the other hand, the focus on results and indifference to the ways of achieving them removes (at least partially) the problem of monitoring and controlling the agents.

4. All regional scores are presented in the Table A1 in the appendix.

5. Nenets Autonomous Okrug (NAO) did not report any COVID-19 deaths in 2020, while it counted 60 excess deaths (17 percent excess mortality). Therefore, the undercount ratio for this region cannot be investigated.

6. With his ad hoc blame-shifting decentralization, Putin made regional governors in Russia personally accountable for the COVID-19 performance of their territories. Considering their central position in regional power networks, we assume that any official information about COVID-19 provided to the federal authorities was subject to governors’ control and approval. Likewise, the “preemptive loyalty” of regional officials toward their principal—the governor—could set up an incentive to enhance the statistics through falsifications.

Additional information

Funding

This work was supported by the German Research Foundation (DFG) for the research project “Variations of Governance in Hybrid Regimes: State, Business, and Civil Society in Contemporary Russia,” under Grant No. 388732203.