This chapter explains the patterns of noncompliance and eroding central state infrastructural capacity in the provinces through the 1990s that were established in Chapters 3 and 4 and to which President Putin so strongly reacted by the end of 2004 (described in detail in Chapter 7). In presenting this explanation, I build empirically on the theoretical argument presented in Chapter 2 regarding the negative effect on central state capacity of the collusive relationship between regional government actors and enterprise directors.

I begin, though, by discussing contending arguments regarding how the central state exercised its authority in the provinces in the past, including a discussion of the strengths and weaknesses of mechanisms of Russian fiscal federalism and strategies on the part of the federal government to deal with regions bilaterally in an effort to “divide and conquer” them politically.

I argue that none of these responses to regional resistance actually struck at the core of the problem – the business–regional government nexus. The persistence of regional compliance documented in Chapter 3 and the responses from policy actors that are presented in Chapter 4 indicate that instruments like withholding transfer payments or subsidies and subventions to errant provinces or signing bilateral treaties with some regions but not others turned out to be blunt weapons in the battle to gain better implementation of federal policy more generally.