The closed cities of Russia are usually depicted in terms of their location, production, and consequences for international security. However, because these cities are financed directly out of the federal budget, they also provide a window into Russia’s “nuclear fiscal federalism.” The system of closed cities constitutes a fiscal archipelago that weakens the economic coherence of the Russian Federation, much like the former Gulag archipelago marred the Soviet Union’s credentials as a legitimate modern and democratic society. New data available allow for a closer analysis than was previously possible of how the closed cities suffered and recovered from Russia’s 1998 macroeconomic shock, illuminating trends in revenues and expenditures over the entire 1996-2000 period.