Streetwise Professor

August 22, 2009

Adding Insult to Mortal Injury

Filed under: Economics,Energy,Politics,Russia — The Professor @ 9:28 pm

The tragedy at the  Sayano-Shushenskaya power plant has caused Vladimir Putin to leap into action:

Prime Minister Vladimir Putin called for a sweeping probe of Russia’s creaking Soviet-era infrastructure on Thursday after a disaster at its largest hydroelectric power station.

. . . .

“The tragic events at the Sayano-Shushenskaya power station showed with full clarity how much we need to do to improve the reliability of our engineering structures in general,” Putin told a meeting of the government.

“A serious review of all strategic and vital infrastructure is required,” said Putin, who was to travel to the site of the disaster on Friday.

Few of Russia’s roads, bridges or railways have been upgraded since Soviet times; the turbines at the plant were designed to last no more than 25-30 years, but were still in place 31 years after the colossal dam opened.

Analysts say Moscow has fallen behind its emerging market rivals in infrastructure investment — Russia’s roads alone claimed 30,000 lives last year.

“What happens on our roads is like a report from a war zone — and the same is true of work at sophisticated technical facilities,” Putin told the cabinet.

Excuse me? This is news?  The decrepitude of Soviet, sorry, Russian infrastructure has been well known for a very long time.  From the roads to the rails to air transport to gas pipelines to whatever, Russian infrastructure has been a safety and maintenance nightmare.

And remind me, how long has Putin been president or prime minister?   Ten years, almost to the day, right?  And he’s just figured out all of a sudden that this is a major problem?  Only now is he seeing problems with “full clarity”?  Only now he understands that a full review is needed?

Just what has he done to address these matters during this period during which he has exercised almost absolute power?  How has he encouraged the development of institutions and financial markets that would facilitate the direction of capital to the rehabilitation of “engineering structures”?

He has done very little, in fact. He has spent inordinate amounts of time on playing CEO of Gazprom, and blowing inordinate sums on “prestige” projects like the Sochi Olympics ($6 billion and climbing) and the billion dollar bridge to an island of a few thousand people to show off for a few days for the 2012 APEC Summit.  These paragraphs from an NYT article on the bridge to Russki Island (AKA the Bridge to Nowhereski) speak volumes:

The spending looms large because the government has sharply cut the rest of the infrastructure budget in response to the financial crisis. As a result, the work  in Vladivostok and Sochi is drawing criticism that the Kremlin is focusing on trophy projects that might burnish national pride, but will not yield long-term economic benefits.

. . . .

Before the financial crisis, Prime Minister  Vladimir V. Putin proposed a $1 trillion program to modernize infrastructure, but those plans have been largely shelved, officials said, in favor of spending on social and employment programs, which are aimed at helping to soothe tensions in distressed parts of the country.

Financial analysts estimated that Russia spent roughly $42 billion for infrastructure in 2008, about 13 percent of government spending. This year and next, however, that figure is expected to drop to 5 to 7 percent, they said, and that includes the outlays for Vladivostok and Sochi.

Even before the crisis, Russia massively underinvested in its infrastructure.  It is galling in the extreme for Putin to respond to the Siberian power plant disaster by attempting to appear that he is concerned and proactive, when he is more responsible than anyone for Russia’s failures to address seriously its chronic structural problems–more responsible, because he has more power than anyone.

Now, to be sure, Russia’s problems were so daunting that even the most focused and effective efforts over 10 years would have left much still to do.  But despite a lot of talk, this was not one of Putin’s priorities.  More concerned with redirecting rents and restoring Russia’s international and military power, he has largely neglected the hard and less glamorous task of creating a physical and institutional infrastructure befitting a modern country.  So what has he created in his ten years?  A wannabe superpower with feet of clay.

Due to his warped priorities, he has squandered seven fat years, and faces many lean years.  With foreign investors deserting the country (in large part due to Putin’s flagrant disregard for the security of their property), the banking system teetering and requiring huge sums due to cascading non-performance on loans, and the government budget dangerously overextended, to name just a few pressing issues, it is unlikely that the resources needed to strengthen Russia’s infrastructure will be forthcoming any time soon.  Russia has long lived off Soviet capital, and that capital is about depreciated with few prospects to replace it.

So the only real question is where the next big accident will occur.

Putin has been more than willing to take credit for Russia’s supposed resurrection.  He is far less willing to take blame for its problems.  And it takes a special kind of chutzpah to pose as the serious, sober leader acting to tackle Russia’s infrastructure problems after squandering the last ten years doing very little about it.

The only thing more pathetic than that is that he is likely to get away with it.

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7 Comments »

  1. My take – Perils of Water

    Comment by Sublime Oblivion — August 23, 2009 @ 12:15 am

  2. S/O–

    Interesting that we took very parallel takes, down to the link to the same bridge to nowhere article. LOL.

    Bouncing around your site I saw a comment where you mentioned that two things you like about this country are the ease of doing business and guns. I guess I’m a little surprised at the latter, but maybe not. If you’re not kidding, maybe we have more in common than one might think. LOL again.

    The ProfessorComment by The Professor — August 23, 2009 @ 8:30 am

  3. So the only real question is where the next big accident will occur.

    Sochi?

    It’s all of the little accidents, the degradation of the environment, the spoiled food sold after expiration dates have passed, the 30,000 highway deaths annually on deporable roads, the building inspectors that get bribed, the alcoholism, etc that collectively are doing in Russians by a thousand paper cuts.

    The only thing more pathetic than that is that he is likely to get away with it.

    I think he will. The Babushkas and Ivan Sixpack aren’t that angry at him. They are unwitting or not collaborators in deflecting failure away from him.

    Comment by penny — August 23, 2009 @ 11:42 am

  4. The main difference is that though its really good in many respects, the American way of life is not universally applicable, including to Russia (especially to Russia, because it needs a strong government just to keep intact, let alone to develop economically).

    That said I certainly think some things like gun rights, better ease of (small!) business and a decimation of the bureaucracy will have highly positive effects for Russia. I don’t see why you should be surprised at my support for guns. They foster martial values, personal responsibility, and patriotism, and are really cool in general.

    Comment by Sublime Oblivion — August 24, 2009 @ 1:20 am

  5. “Russia . . . needs a strong government just to keep intact, let alone to develop economically”

    What outrageous Russophobic racism! Are Russians really such a barbaric race that they can’t exist except under the jackboot of totalitarian oppression? Must they be relegated to second-class status among the civilized nations of the world? Are they, in the view of this commenter, genetically inferior to us? Is Russia really only a nation to extent of gunpoint?

    As for me, I’m a Russophile. I believe Russians are every bit as capable of building a progressive, civilized democratic state as any other people on the planet, and we ought to demand that they try rather than patronizing them and justifying their failure. I can’t help wondering what Russians ever did to an individual like SUBLIME DURAK to make him hate them so much and view them with such unbridled contempted and condescension.

    Meanwhile, will SUBLIME DURAK agree with SWP that it was obviously a mistake for Vladimir Putin to plough billions into the Sochi Olympiad when the nation’s dams were crumbling (or, in the alternative, that Putin’s policy in Chechnya is a total failure, costing billions of dollars and tens of thousands of lives for no purpose, meaning Putin must resign)?

    Comment by La Russophobe — August 25, 2009 @ 4:34 am

  6. If Russia can’t be ruled well, then maybe Russian citizens would be better of if Russia was divided into more manageable pieces. Just a thought.

    Comment by Aslak — August 25, 2009 @ 3:23 pm

  7. * No, I think plowing billions into the Sochi Olympics is an excellent idea because it is a big showcase to the rest of the world, while the bridge to nowhere will only be seen by a few foreign dignitaries.

    * Strong government need not imply totalitarianism.

    * “Breaking Russia up into small pieces” or in other words decentralization was tried in the 1990’s with disastrous results (authoritarian structures just reasserted themselves at the local instead of the central level), so that is obviously not a solution.

    Comment by Sublime Oblivion — August 25, 2009 @ 8:18 pm

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