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Friday, February 29, 2008

Exposing Potemkin Russia

Vladimir Putin's Russia is now officially under massive assault, at long last, from America's major media. First the New York Times came out with a huge front-page article exposing the Russian dictatorship, complete with a translation into Russian, and now the Chicago Tribune reports on Potemkin Russia's total failure to deliver an improved quality of live outside Moscow:

Behind a scrim of billionaires and petrodollars, Russian cities like this one are dying a slow, quiet death deep in the frigid, remote Far East. Many Russians here haven't worked for more than a decade. They survive on whatever they can lug on their scrap carts—radiators and washing machines, bricks and bathtubs scavenged from a cityscape of boarded-up buildings. Scalpels at the hospital here are brown with rust. Every month, a local heating utility sends collectors to families who haven't paid a bill in nine years. Factories that churned out everything from Soviet-era mortar shells and mines to linoleum and cardboard wasted away years ago, leaving a city of 47,000 without work, or any sense of purpose.

The cold, dark second-floor household of the Chursin family sums up life in Amursk. Natalya Chursina and her husband feed and clothe their teenage son, Zhenya, on welfare payments that amount to $5 a day. At 14, Zhenya has decided that school is optional. When he skips class in winter, he and his friends hop onto ice floes and ride them like skiffs through the roiled waters of the Amur River. It's a place and a life Chursina and her husband, Vladimir, desperately want their son to escape. "People die like flies here," says Chursina, 41. "Everything here is on the decline."

The energy wealth that wrested much of Russia from the brink of an economic abyss and gave the Kremlin its newfound swagger has yet to revive cities like Amursk. On Sunday, Russians are expected to elect as their new president Dmitry Medvedev, Vladimir Putin's longtime protege and a loyal adherent to his blueprint for prosperity. But eight years after Putin began implementing that blueprint, a hidden Russia still languishes, masked by Moscow's moneyed extravagance and conspicuous consumption. Most of Russia's 119,000 millionaires live in greater Moscow, the world's most expensive city, amid a burgeoning middle class that has discovered mortgages and jams the aisles of the capital's two Ikea stores. Move beyond the capital's showy facade and you find a vulnerable Russia—a national population evaporating at a rate of 720,000 people each year and an aging, neglected infrastructure.

Russia's economic resurgence has been both real and remarkable. It now has the world's third-largest collection of billionaires and a gross domestic product growing by nearly 7 percent every year. The ruble is getting stronger. Overall, poverty and unemployment are down. Yet that resurgence has its limits. In Siberia and the Russian Far East, a population of 30.6 million withers at a rate of 103,000 people each year, victims of wayward Soviet planning that put whole cities in one of the planet's coldest expanses.

Dilapidated Soviet-era infrastructure from roads and electrical grids to housing and telephone lines saps Russia's productivity. In much of the country, factories saddled with aging, outdated machinery lag far behind their counterparts in the U.S., China and Southeast Asia. The Russian Academy of Sciences says more than half of Russia's industrial machinery is over 20 years old, compared to just 15 percent in 1990.

In the waning years of his presidency, Putin has begun trumpeting the need to shore up debilitated infrastructure, revamp health care and solve the country's worrisome population plunge. But analysts believe he could have acted much sooner. His decision to serve as prime minister alongside Medvedev could give him the chance to make up for lost time. "These problems have worsened over the course of many years. Now when they're very serious, they're getting noticed," said Nikolay Petrov, a former Kremlin adviser and an analyst with the Carnegie Moscow Center, a Moscow think tank affiliated with the Carnegie Endowment for International Peace. "The price for not doing anything about this for years will be huge."

A weak Russia—one that cannot sustain a labor force, restore its social safety net or rebuild decaying infrastructure—risks becoming an unstable Russia. And instability in a country with the world's second-largest nuclear arsenal and a permanent seat on the United Nations Security Council poses a danger the U.S. and Western Europe can ill afford. "Their infrastructure will be hard to maintain—they've had a significant loss of population; they're shrinking at a time when their oil reserves are growing," said Sen. Joseph Biden (D-Del.), chairman of the Senate Foreign Relations Committee. "It's very important that [Russia remains] stable. It affects America greatly."

To make the giant leap from emerging economy to global powerhouse, analysts say, Russia must transform itself from a wellspring of energy, wood and metals to a country that produces as well as exports—and makes human capital its most valuable resource. Nowhere in Russia is that task more urgent than in Siberia, an expanse of rugged beauty and economic ruin. Siberia's southern neighbor, China, ravenously consumes Russian oil and timber, sending some of it back to Russia as finished goods. That lopsided conduit benefits China far more than Russia, experts say, and only deepens Siberia's plight. "Without a sustainable economy in the country's eastern half," says Dmitri Trenin, an analyst with the Carnegie Endowment for International Peace, "I see Russia becoming a junior partner to China."

While Putin has done little to remedy eastern Russia's economic woes in his eight years in office, he didn't create them. Nor did his predecessor, Boris Yeltsin, though his chaotic stewardship made life measurably worse in this region. Today's eastern Russia hobbles because of decisions made decades ago, by Soviet planners who built cities in places where no one would choose to live. Siberia's winters are the world's harshest. More than 2,600 miles from Moscow, Irkutsk's population of 593,000 shivers through Januaries that average 11 degrees below zero at night. Remoteness also made Siberia a poor choice for city-building. Everything in Russia—power, money, commerce—loops back to Moscow. But Khabarovsk is an eight-hour flight from Moscow, or an eight-day train ride on the Trans-Siberian Railway. A flight from Moscow to Vladivostok, Russia's largest Pacific port, takes nine hours. But neither climate nor distance weighed heavily in Josef Stalin's vision. Tapping Siberia's bonanza of gold, oil, nickel and timber required cities, Stalin's planners believed, and so Soviet leaders forcibly settled workers there.

Like other Siberian cities, Amursk was made to order. Soviet leaders wanted a cluster of defense-industry factories built by a bend in the Amur River, and in 1958 they dispatched laborers and bulldozers to build Amursk's plants, beige-brick apartment buildings and tree-lined boulevards. As a cog in the Soviet Union's centralized economy, Amursk flourished. Its pulp-processing plant made more cardboard than any other Soviet factory. Its timber mill sent particleboard to Japan, Australia and the U.S. Amursk's birthrate exceeded the Soviet average, as did its per capita weddings. Then, in the late 1980s, a plunge in oil prices broadsided the Soviet economy. With the end of the Cold War, orders for Amursk's munitions factories ceased. Moscow told the plants to convert for civilian use but did nothing to make that happen.

Much of the town's youth fled. Everyone else found themselves trapped in a city without work. Today many survive on government aid or the pensions of parents and grandparents.

'We get only words'

Leonard Bolotnikov, a retired pulp factory worker with a round, ruddy face and snow-white hair, says that after he pays rent and utilities, his monthly pension leaves him $19.53. Steeling himself against a bracing wind on an icy winter morning, he jabs his finger at the abandoned, ransacked buildings that line Mir Avenue. "We get only words and more words from our leaders," says Bolotnikov, 66, his face flushed with anger. "Look at these buildings. Everything is destroyed. Young people are leaving. My heart bleeds when I look at this."

The Soviet collapse ravaged all of Russia, but the toll was especially harsh on what Russians call grado-obrazuyushy, cities built around a single factory. In Biryusinsk in east Siberia, a solvents manufacturer buoyed the lives of 12,000 Russians during the Soviet era. The plant in turn was tethered to a cluster of sawmills that processed larch and pine and supplied the plant with sawdust, its primary raw material. "We could buy fur coats back then," says Olga Loginova, 47, a fermentation room worker.

In the post-Soviet chaos of the 1990s, hundreds of sawmills went bankrupt, including the Biryusinsk plant's suppliers. The factory had to pay more for sawdust from mills farther away. By 2005, at a time when Moscow wealth was pushing up downtown real estate prices to nearly $1,000 per square foot, Biryusinsk plant workers were jamming into the factory's grocery to receive management's substitute for a paycheck: loaves of bread. "It was like during World War II, when people stood in line for hours to get a little bread," Loginova said. "We lived on this bread and on our vegetable gardens." In December 2005, the plant stopped production. Much of the town's youth has fled; older Russians here scrape by on $125 monthly pensions. Their adult children live off those same pensions. "We are no longer wanted here," says Anatoly Chubukov, a former truck driver who helped build railroads in east Siberia. Now he nets fish for food and thaws snow for drinking water. "We built the village and the road, the trains run—so now we are throwaways."

Eager for a turnaround

Russian leaders are scrambling for ways to lure money and people back to Siberia, to make it a land of promise rather than a land of exile. In Irkutsk, bureaucrats have convinced themselves that building a "super city" will turn the tide. They believe that the provincial capital and two smaller satellite cities, Angarsk and Shelekhov, can be linked to form a megalopolis with a million people and a magnet for jobs, people and investors.

Sergei Voronov, Irkutsk's deputy provincial governor, lays out the blueprints: two new highways, 24 hotels, three ski resorts, a new airport and the timeworn cure-all of urban planners around the world, a monorail. "It's impossible to utilize our natural resources without a labor force," Voronov says. "Our purpose is to create a prestigious place to live in so that this notion of Siberia being a place of exile is not the perception people have. The idea behind this supercity is to use whatever economic leverage we have to improve the image of this place."

Russian leaders also have dusted off a century-old pipe dream to build a $65 billion, 68-mile highway and rail tunnel underneath the Bering Strait between Russia's Chukotka Peninsula and Alaska. Neither the Kremlin nor Washington has given any hint of backing the idea, but Viktor Razbegin, an official at the Russian Economic Development and Trade Ministry, has called the tunnel "one of the few projects that can dramatically change the development of the Far East." That kind of reliance on forced, oversize answers to Siberia's economic and demographic woes mirrors the Soviet policymaking that led to eastern Russia's plight in the first place. The cure lies not in building more glass and steel, experts say, but in investing in Siberia's human capital—improving health care, tackling rampant alcoholism, seeding the growth of small businesses.

"I've got a secret for the Kremlin: In the modern world, the wealth of nations isn't in the ground, but in the people walking the ground," says Nicholas Eberstadt, an expert in demography and economics at the American Enterprise Institute. "The strategy of abandoning human resources for the sake of natural resources is one that will, in the long run, end in tears."


Anonymous said...

"Russia must transform itself from a wellspring of energy, wood and metals to a country that produces as well as exports—and makes human capital its most valuable resource"
I've been saying this for I don't know how if only MORE people will say this, maybe the Kremlin might just hear it...and try it.

Anonymous said...

This is Tower Bolshevik,

I'd have to agree with this article. It is an accurate depiction of the capitalist system in Russia. This is not merely the work of one capitalist gangster (Putin), but the work of the entire capitalist system in Russia.