In the preface to this report, it is asserted that, 'history hovers... over any discussion of fiscal federalism in Russia.' This report not only reviews that history, but also follows it to the present situation with respect to the difficult policy choices facing the new Putin-led government, and neatly links Russia's choices with the broader issues facing any country undergoing intergovernmental reform. Thus, the authors weave into the discussion the dynamics of Russia's options with respect to deciding who delivers what services and how to finance these services with the question of the fiscal politics of change, or the intergovernmental and inter-regional balancing and counterbalancing of power. Furthermore the authors tie these questions together with those of how to implement good governance: should it be piecemeal or unified, asymmetric or uniform, and centrally driven or locally controlled? This book is the third in a series of World Bank books on fiscal decentralization in Russia and the transition economies. This volume is a companion volume to the previous two books, 'Russia and the Challenge of Fiscal Federalism' (1994) and 'The Decentralization of the Socialist State' (1995). It explores many of the same themes in a wider country and comparative context, with a richer empirical base than was possible in those early works.