Tuesday, July 14, 2009

Window on Eurasia: Russia’s Failure to Build New Roads Threatens Country’s Modernization

Paul Goble

Vienna, July 14 – Over the last 14 years and despite massive hard currency earnings from the sale of gas and oil abroad, the Russian Federation has built only 5,000 kilometers of new roads and only 1,000 kilometers of new railways, a pattern that threatens the country’s ability to modernize, according to a leading Russian specialist on development.
In an article in today’s “Vedomosti,” Vladislav Inozemtsev, the director of the Moscow
Center for the Study of Post-Industrial Society, says that international experience shows that “one of the most important” preconditions for economic modernization is the development of transportation infrastructure (www.vedomosti.ru/newspaper/article.shtml?2009/07/14/204837).
But that is something that Russia has not done. According to official statistics, from 1995 to 2008, the country’s road and railway networks “almost did not increase,” with highways being extended only from 750,000 km to 755,000 km over this period and with Russia’s rail lines increasing from 86,000 km to 87,000 km.
Moreover, Inozemtsev reports, between 1989 and 2008, the amount of freight carried by sea fell 4.8 percent, the number of air passengers declined 2.1 times, and the introduction of new housing stock contracted by 34 percent, all figures that put Russia behind not only most developing economies but also its BRIC partners.
In Brazil, for example, the country increased the size of its road net by 65 percent between 1988 and 2005 and its shipping by sea by 90 percent, with the number of airline passengers its fleets carried more than doubling. And Brazil is a relative “laggard” compared with China.
Over the course of just the last five years, the Moscow specialist says, that country built 480,000 km of roadways, 19,000 km of new rail lines, and 19 new major airports. In addition, it constructed 3.1 billion square meters of new housing stock, and it saw six of its ports increase in volume to the point where they now are in the top 12 of the world.
Russia suffers by comparison, Inozemtsev says, “as a result of the incompetence and corruption of the state which does not set before itself complex goals of development.” And as a result, “the less the powers that be have interfered in the development of infrastructure, the better the results have turned out to be.”
Last year, he notes, Russia built only 2300 km of highways – about the amount China builds “every ten days” – and it spend vastly more than most of the other countries with which it is typically compared. China, for example, spends 2.9 million US dollars for every kilometer of four-lane highways, but Russia spends a minimum of 12.9 million for the same amount.
Equally different is the amount of resources Russia uses to build factories and commercial property. This figure exceeds that of France and Germany by a small amount, that of Brazil by 2.4 times, and that of China by 3.2 times. And by many measures, the quality of construction in Russia is much lower.
In Germany, 65 percent of roads have steel bars in the concrete. In China, 38 percent of roads do, but in Russia, none of them do. Because the presence of such bars eliminate the need for many repairs for up to 20 years and more, he notes, these countries can avoid spending their highway budgets on rebuilding what they already have.
But because Russia does not, Moscow is currently spending 5.5 times more money on repairing existing roads than on building new ones, a pattern that under Russian conditions is more profitable for those who work on the roads but much less profitable for the country’s economy as a whole.
And this is an area where corruption is rife. Between 2006 and 2008, Inozemtsev says, approximately 230 billion US dollars disappeared in this sector “without any visible material result. Given that, he continues, “it is not surprising that this market is completely closed to foreign companies and that the cost of work here grows 25 to 40 percent a year.”
For many, any talk about highways may seem unimportant, the Moscow specialist continues, but “modernization presupposes a harsh system of administration, a real vertical which can dictate conditions.” But the powers that be prefer to ignore this, and consequently, Russia is unlikely to get the infrastructure it needs to modernize the country.

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