Crisis Management Models of Federal States in a Pandemic: A

Comparative Aspect

Tatyana N. Kozhina

and Alexander V. Petukhov

2 b

Chuvash State University, Russia

Cheboksary branch of the Russian Academy of National Economy and Public Administration Under the President of the

Russian Federation, Russia

Keywords: Budgetary federalism, administrative and legal regulation, legal regime during a crisis, budgetary

management.

Abstract: When carrying out anti-crisis measures, the optimal ratio between vertical and horizontal management as a

strategy for the development of the federation is of great importance. On the basis of a synchronous

comparative analysis of the mechanisms and institutions of state-territorial management of the federations in

the context of the global crisis, working anti-crisis management schemes have been identified. While, under

normal conditions, ensuring a high degree of vertical coordination includes constitutional, legal and

administrative aspects, in extreme circumstances the need for quick solutions and urgent measures exacerbates

problems and can lead to a deterioration in the quality of public services provided. For the Russian economy,

the task of increasing the role of regions in the budgetary policy of the state remains urgent, considering their

specifics and opportunities to stimulate economic growth. Centralized management methods prevail in the

Russian Federation today, with an obvious pronounced asymmetry in the economic development of the

subjects. The economic crisis has exacerbated the imbalance between donor and recipient regions. The

improvement of the alignment mechanisms, the search for effective institutions of administrative and

economic management based on the lessons of the crisis and the experience of foreign countries are today in

the center of attention of researchers from different countries.

1 INTRODUCTION

Today, the process of globalization is associated with

the search for answers to socio-economic and

technological challenges, epidemiological and

environmental threats. All these factors significantly

aggravate social and political problems and

necessitate their quick solution. At the present stage

of development, all states are concerned with

resolving the issues of overcoming the crisis

phenomena caused by the pandemic and the global

economic crisis. An important aspect of these

processes is the improvement of the institutional and

legal framework of the ongoing changes, since all this

entails short-term and long-term political, economic,

social, and cultural consequences, including negative

ones.

https://orcid.org/0000-0003-0898-3112

https://orcid.org/0000-0002-5849-0482

In Russia, within a noticeably short timeframe, it

was necessary to implement a national public health

reform project, given that the costs for it have been

inexorably reduced since 2012 both at the federal and

regional levels. Mobilizing resources to combat the

pandemic and organize vaccination of the population

required a significant strengthening of the

administrative component of the federal center.

Obviously, the problems cannot be solved only by

tactical adjustments in the use of macroeconomic

indicators but must include the interests of the regions

in the management process of strategic and tactical

planning.

The need to develop and create an updated

architecture of budgetary federalism in Russia has

been debated for a long time; in the new realities, the

task of scientific comprehension and development of

Kozhina, T. and Petukhov, A.

Crisis Management Models of Federal States in a Pandemic: A Comparative Aspect.

DOI: 10.5220/0010682600003169

In Proceedings of the International Scientiﬁc-Practical Conference "Ensuring the Stability and Security of Socio-Economic Systems: Overcoming the Threats of the Crisis Space" (SES 2021),

pages 54-59

ISBN: 978-989-758-546-3

recommendations considering domestic and foreign

experience has become even more urgent.

During the study, the following issues were

considered:

 What institutions of management of federations

appeared and were involved in the

implementation of anti-crisis measures?

 What models and mechanisms proved to be more

effective for overcoming the crisis?

 What institutions and mechanisms of foreign

federations are comparable to the Russian

experience and can be introduced for the short-

term and strategic development of the federation

and regions?

2 MATERIALS AND METHODS

Since the mid-2010s one of the topical issues of

scientific discussion is the conceptual content of the

terms “budgetary”, “fiscal”, “financial” federalism. As

noted by many authors, the central issue of the

discussion was the difference between the terms

“budgetary” and “fiscal” federalism, since it is

precisely in them that there is a different understanding

of state tasks for the allocation of resources and even

certain areas of policy in organizing the financial

system. E.V. Peshina and A.A. Strekalova, analyzing

the conceptual apparatus of scientific Russian and

foreign studies, note that “a ‘narrowed’ understanding

of fiscal (budgetary) federalism leads ... to the absence

of theoretical studies on a whole range of issues of

fiscal federalism and corresponding practical

recommendations for its effective functioning and

development, as well as the lack of commonality of

semantic concepts with world scientific thought in the

system of public finance”. (Peshina et al., 2016) When

thinking about changes in the budgetary process,

researchers today touch on several important aspects.

So, in the article by L.N. Lykova, attention is paid to

the specifics of the economic asymmetry of the

constituent entities of the Russian Federation and an

analysis of transfers from the federal budget in the first

half of the crisis 2020 is given. (Lykova, 2020) In the

study by N.V. Bondarenko, attention is paid to the

search for optimal methods of strategic planning of the

centralized system of the budgetary process in Russia,

the need to take into account the specifics of the

regional economies of the federation is emphasized.

(Bondarenko, 2021) Economists N.A. Burakov, E.M.

Bukhvald, A.V. Kolchugin developed a new toolkit for

ranking and typing the socio-economic situation of

regions, based on a critical analysis of the existing

system of inter-budgetary equalization in Russia.

(Burakov et al., 2019) Today we can talk about the

mechanism of centralized budget management based

on foreign experience, since it is more in demand in a

crisis.

Foreign researchers pay great attention to the

comparative analysis of anti-crisis measures

implemented by various governments. Indeed, despite

the global processes, in the difficult situation of 2020,

each state had to urgently develop its own mechanisms

for resolving problems, considering the specifics of

historical experience and through prompt decision-

making, even politically extremely unpopular ones. In

this regard, of interest is the collective study “COVID-

19 in Europe: Policy Measures in Germany, Austria

and Switzerland at the Early Stage of the 2020

Pandemic”, which identifies old and new mechanisms

of the budgetary process of German-speaking federal

states in the field of health and social policy. (Desson

et al., 2020) For the purposes of comparative analysis,

the work of D. Downey and W. Myers is also of

interest, where the authors analyze the anti-crisis

regulation of decentralized budgetary processes in

Australia and the United States. (Downey et al., 2020)

A large analytical study by S. Dougherty and P. de

Biase, carried out on the example of the reorganization

of the healthcare sector in a crisis, makes it possible to

assess the effectiveness of certain measures in both

federal and unitary states. (Dougherty et al., 2021)

Based on a synchronous comparative analysis, it is

possible to identify various models of crisis

management in federal states and assess their

effectiveness.

It is believed that problems that require rapid

political decisions and have significant short-term

consequences need to be addressed through a

centralized approach. The main advantages of

centralized regulation are uniformity and the ability

to coordinate regional processes. Additional benefits

include monitoring reporting, determining the level of

responsibility of governments for actions taken. The

main advantages of centralized regulation are

uniformity and the ability to coordinate regional

processes. Additional advantages can be considered

as control over accountability, determination of the

level of government responsibility for the actions

taken. In addition, centralized management can

facilitate the reallocation of resources, since the

procurement of the necessary equipment and

materials are carried out on a larger scale and in a

centralized system can be transferred to the regions

that need them most.

Crisis Management Models of Federal States in a Pandemic: A Comparative Aspect

3 RESULTS AND DISCUSSION

If we talk about the mechanisms for making crisis

decisions, we can distinguish three main scenarios

that were used with varying degrees of success in

foreign federations: the state of emergency, the

centralization of management using traditional

government institutions of the federation, the

introduction of new institutions and mechanisms of

anti-crisis regulation.

3.1 The Regime of Introduction of

Laws of State of Emergency and

Emergency Situations

Emergency laws centralize decision-making powers

in the hands of the executive branch of the central

government. The institutional framework for vertical

intergovernmental coordination in countries with

emergency laws is created by legislatures at all levels.

It is they who determine the key parameters of the

responsibility of various levels of government for

overcoming the crisis, the criteria for launching an

emergency regime, the powers of various levels of

government and branches of government.

Emergency regimes are quite effective in

preventing political risks at the level of regional

governments and local governments, but in the

absence of a well-functioning multi-level structure of

anti-crisis response, they can jeopardize the ability to

implement decisions of the central government at all

levels of government. So, for example, in Spain, a

complex unitary state, national measures in the

context of the introduction of a state of emergency led

to a noticeable imbalance in economic development,

this caused criticism of the government from more

developed regions. Five regional governments

refused to sign a joint declaration on restrictive

emergency measures in large cities in the regions,

which aggravated the crisis. The central government

of Spain was forced to urgently look for all possible

ways to coordinate actions with the help of existing

regulations and the conclusion of urgent bilateral

agreements.

The most successful, in our opinion, was the

experience of introducing a state of emergency in the

Federal Republic of Germany. In Germany, a package

of laws declaring a state of emergency was passed in

1968, causing a heated debate in society. So, during

the period of the state of emergency, Berlin has the

right to issue instructions to the federal states, which

redistributes powers between the federal government

and the state governments towards greater

centralization.

During the COVID-19 pandemic, the country's

parliament declared a nationwide epidemic

emergency, legally transferring power to the central

government to carry out anti-crisis measures at the

national level.

However, the German federal government used

this power only to coordinate actions at all levels of

state and local governments. Decisions on the nature

of administrative bans, such as, for example, the

timing of the reopening of schools and businesses,

were determined by the constituent entities of the

federation and local governments.

In the Russian Federation, the state of emergency

is regulated by the Federal Constitutional Law No. 3-

FKZ of 05/30/2001 (as amended on 03/07/2016) “On

the state of emergency”, the practice of its application

has not actually been worked out, since it was not

applied. In practice, the emergency regime in Russia

was introduced more often in connection with natural

disasters and man-made disasters. But the practice of

introducing an emergency regime has a local

character for the targeted management of overcoming

their consequences.

3.2 Centralization of Government

Using Traditional Institutions of

Government of The Federation

An analysis of traditional institutions of federal

government showed that centralized federalism, in

which inter-budgetary processes are strictly regulated

by the executive branch, can be highly effective for

coordinating anti-crisis measures at different levels of

government. Such a model requires political

compromise and the proper infrastructure for

communication and governance. The most

successful, in our opinion, as an anti-crisis form of

management, such a scenario is implemented in

Germany, Austria and Switzerland.

Although the German-speaking states differed

significantly in the content and timing of anti-crisis

measures, they often used relatively similar measures.

Even though Germany's policy was more

decentralized than that of its neighbors, the reform of

intergovernmental fiscal relations in the country

carried out in 2000 gave the federal government the

opportunity to consistently introduce the necessary

restrictive measures through the previously created

infrastructure of vertical and horizontal ties with the

regions.

In Austria and Switzerland, a single policy was

implemented from top to bottom, and the timing was

approximately the same for different entities. The

activities of gathering resources, collecting

SES 2021 - INTERNATIONAL SCIENTIFIC-PRACTICAL CONFERENCE "ENSURING THE STABILITY AND SECURITY OF

SOCIO - ECONOMIC SYSTEMS: OVERCOMING THE THREATS OF THE CRISIS SPACE"

information, verifying it, and tracking dynamics were

carried out at different levels of government and were

successfully coordinated by the center. Thus, various

models of centralized management can lead to a

successful anti-crisis management strategy in states

with a high degree of asymmetry in the development

of regions.

The Russian experience also showed a significant

increase in the role of federal regulation of the

budgetary process, which turned out to be productive

in procurement and distribution. As noted by Doctor

of Economics, Professor L.N. Lykova: “Some types

of inappropriate aid, in particular, subsidies, partly

acquired a targeted nature, since they were allocated

for specific measures necessary to combat the

pandemic. This allows us to say that the existing list

of instruments for inter-budgetary regulation turned

out to be insufficient in the context of the need to take

urgent measures”. (Lykova, 2020)

Many Russian researchers agree that building a

strategy for overcoming the crisis should be based on

the inclusion of regions in the process of developing

socio-economic planning and a mechanism for

delineating responsibility at different levels of

decision-making.

3.3 New Institutions and Mechanisms

of Anti-Crisis Management

The creation of coordinating institutions as centers for

coordinating actions in the context of a pandemic

took place both on the basis of already operating

organizations and institutions, and in the practice of

introducing new structures. The experience of anti-

crisis management has significantly diversified the

quantity and quality of such institutions and

mechanisms. For example, a tool such as the National

Infrastructure Pipeline, created in August 2020 under

the Indian federal government, demonstrates the

reallocation of investment online, centrally

redirecting investments at all levels of the federation.

In the context of the pandemic, this helped to open

monitoring centers to introduce new schemes for

managing the health system, in practice, it led to the

opening of several diagnostic and treatment centers in

states and districts and creates an opportunity to

reallocate the budget to overcome regional

imbalances.

Governments from different sectors and levels of

government in regions and local governments are

involved in the development of anti-crisis policy

responses. This model has been widely used for

vertical coordination in countries with decentralized

federalism.

The states with decentralized federalism

traditionally include the United States, Brazil,

Mexico, Australia. In the United States, the federal

government provides additional funds to states

through the Affordable Care Act (2010), the

Medicaid program, and the Federal Reserve Bank.

The state and local governments of the United States

have full autonomy in relation to the introduction of

the recommendations of the federal center: the timing

of their implementation and methods of prompt

implementation.

The differences in the introduction of anti-crisis

measures by groups of states is of interest from the

point of view of the possibilities of federalism,

“which can lead to the creation of ‘laboratories’ of

practices”, which, if successful, could be

implemented by other regions. (Dougherty et al.,

2021) For example, the northeastern states of the

United States (New York, New Jersey, Connecticut,

and Pennsylvania) have relatively strict restrictions.

States that depend on taxes on tourism and trade

(Texas and Florida), small rural states like South

Dakota and Nebraska have not implemented strict

measures and have implemented very minor

restrictions. It should be noted that such contrasts of

decentralization had noticeable political

consequences, destabilized the situation in some

states and caused several political crises both in the

states and in relations with the federal center.

(Mallinson, 2020)

More successful, in our opinion, is the experience

of Brazil - a federation with 26 states and a federal

district. The wide autonomy of the states has

developed here historically, and at the beginning of

the epidemiological crisis, there was significant

heterogeneity in the adoption of anti-crisis measures

within the country. But soon, state policies were

coordinated with the help of the Consorcio Nordeste,

an interregional group that was created back in 2019

to coordinate policy in the northeastern part of the

country. The role of this forum was significantly

expanded during the crisis. Several notable steps have

been taken by this focal point to overcome it. First, a

scientific committee was established to provide

technical advice to states; secondly, the procurement

process has been streamlined; third, an emergency

health brigade was established to redeploy staff

between states; fourth, an application was developed

to collect operational information related to COVID-

19 for modeling and policy scenario development.

The Brazilian experience is interesting for studying

how the institution of interregional cooperation can

be reoriented to fight the crisis, and in the future can

Crisis Management Models of Federal States in a Pandemic: A Comparative Aspect

become the basis for developing a country's

development strategy.

Australia's experience can also be noted as

successful in terms of using the extraordinary

institution of interregional cooperation. In Australia,

states are responsible for taking anti-crisis measures,

this procedure is enshrined in the country's

constitution. A special role in coordinating the efforts

of the states was played by the Council of Australian

Governments (COAG), which includes the prime

minister and prime ministers of the states, as well as

representatives of ministries responsible for sectoral

policy. The Council was formed back in the 1990s

during political reforms as an advisory body to

discuss intergovernmental cooperation. In the months

following the outbreak of the pandemic, the Council

of Australian Governments became a veritable

“national cabinet”. Meetings began to be held every

two weeks, the scope of discussion of issues was

expanded and covered the problems associated with

the crisis: health care, economics, education,

transport logistics, law and order and others. Under

the Council, special committees are created, in which

representatives of some sectors of the economy and

representatives of various levels of government

participate. These technical councils provide

guidance to state and local governments, and thus

minimize their political role in decision-making. The

Australian model of crisis management is an example

of reaching the necessary consensus in conducting

anti-crisis policy based on a legitimate institutional

mechanism to support interregional cooperation as a

tool in the context of significant territorial asymmetry

and autonomy of the states of this federation.

For the Russian Federation, the development of a

new concept for the development of federalism based

on centralized management of this process with the

involvement of regions is of relevance today. N.V.

Bondarenko notes that “the fundamental document

for the development of strategic decisions should be

the creation of a normative document adopted on a

legislative basis and determining the uniformity of

regional development strategies”, a revision of the

administrative-territorial administration towards the

consolidation of the subjects of the budget

mechanism. (Bondarenko, 2021) However, the

Spatial Development Strategy of the Russian

Federation adopted in 2019, although it declares a

differentiated approach as a principle of the state

policy of regional development, does not contain

sufficiently specific definitions even with respect to

the criteria of the subjects referred to in this

document. “The concept of ‘territory’ is not an

analogue of a specific type of public law formations

(a subject of the federation or a municipality),” and

this, according to researchers, leads to the fact that

“the practical statement in the regional policy of the

state of a targeted approach to the constituent entities

of the Federation based on such a methodology for

their typification seems to be very difficult”.

(Burakov et al., 2019) Perhaps the experience of

creating coordination councils based on the practice

of anti-crisis regulation of foreign federations will be

in demand in Russia today.

4 CONCLUSIONS

In the current conditions of the global crisis and

pandemic, it has become obvious that the form of

administrative-territorial administration of the state

does not play a significant role in the spread and

overcoming of the crisis. Much more important is the

institutional and legal interaction of all levels of

government, the possibility of implementing flexible

policies to address emerging health problems,

overcome social problems, and develop a strategy for

economic growth.

In Russia today the time has come to revise the

system of the budgetary process, since the crisis

showed an imbalance in relations not only along the

“federal center-regions” line, but also revealed

problems between donor regions and recipient

regions. The development of a management strategy

requires considering the specifics of the development

of regions, it is possible to create a new system of

administrative division for budgetary equalization.

The practical experience of the institutions and

mechanisms of foreign federations may well be

applied in Russian practice. Consideration of the

specifics of the economic Russian regions and the

involvement of regional representatives to develop

the strategy and tactics of budgetary federalism seem

to be of paramount importance.

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Crisis Management Models of Federal States in a Pandemic: A Comparative Aspect