International Trade and Investment Relations Under the Federation Treaty
W. Gary Vause
During the early 1990s, the world witnessed the largest bankruptcy proceeding in history as remnants of the former Soviet Union attempted to save the pieces of the empire through drastic restructuring. While "external creditors" already had staked their claims, the citizenry of the former Soviet Union (the "internal creditors") attempted to work out an agreement for the continued administration of the government enterprise. 1
In the context of this internal turmoil, President Boris N. Yeltsin faced a critical Congress of People's Deputies during the second week of April 1992. To his credit, he was able to address the Congress armed with a major political accomplishment: a new federal treaty designed to form the basis for the new post-Soviet Russian state. 2 This essay analyzes events through early spring 1992, and discusses the effect of those events on the Russian Federation's competitive position in international economic relations. The principal focus is on the division of powers under the Federation Treaty between the central government and local governments within the federation. 3
On March 31, 1992, 18 of the 20 republics of the Russian Federation signed the Federation Treaty. 4 The two exceptions were Tarstan (Tatar Republic) and Checheno-Ingushetia (Chechnia). More than 80 government leaders participated in the signing ceremony, representing various levels of administration throughout the federation, including autonomous republics, regions, districts, and the cities of Moscow and St. Petersburg.
The treaty not only clarified the relationship between Moscow's central government and Russia's local authorities, it also granted those local authorities more political and economic autonomy, including shared power over natural