Russian Cities Outside Capitals have Changed Little Since 1991 for Four Reasons, Inozemtsev Says

Paul Goble

Staunton, June 2 -- Villages across the Russian Federation have disappeared over the last two decades, cities outside of the capitals haven’t significantly changed their faces since soviet times, and only Moscow and to a lesser extent St. Petersburg have modernized in a serious way, Vladislav Inozemtsev says.

There are 23,000 fewer villages in Russia now than in 1990, the economist says; but what is especially striking given all the money that came into Russia during the “fat” years of the oil boom is how little an impact it has had on most Russian cities. They look much as they did at the end of Soviet times (gazeta.ru/column/vladislav_inozemcev/12373495.shtml).

This prompts more questions than answers, Inozemtsev says. “Why in China over the last 20 years have there been constructed 1900 skyscrapers (buildings taller than 150 meters) in 88 cities, but in Russia over the same period, there have been only 38 built and those only in Moscow, St. Petersburg, and Yekaterinburg?”

“Why in the country has there been taking place not only a reduction in the rural population but also a reduction in the number of residents of many oblasts and republics? Or in other words, why in the country have the appearance of the cities and the quality of life in them changed only in a few places but most regions look like they had simply ‘survived’?”

Inozemtsev suggests there are four main reasons why this has happened.  First of all, he says, incomes in most regions which aren’t involved in extracting petroleum rents are low, and even those which do make money that way have to send almost all of it directly to Moscow rather than to use it for their own development.

Poverty among the population is “the main cause of the underdevelopment of a region,” he continues. Even in ordinary countries, the rate of development of public spaces depends almost exclusively on the level of incomes people in the region have. “No investments from the center can change” this pattern. In many Russian regions, poverty is staggeringly high.

Second, it must be recognized that “regions in Russia long ago ceased to be ‘subjects of the federation.’”  Their heads are responsible to Moscow rather than to the population, “and therefore they cannot arrange independent relationships with business” or act on the demand sof the population for economic development.

Third, Inozemtsev argues, “the logic of the present-day Russian powers that be long ago became the logic of ‘projects’ and not of process.  Projects presuppose simplicity of control” while “processes require constant involvement, the delegation of responsibility, the participation of business and of civil society.” 

Where Moscow decides to engage in projects such as Sochi for the Olympics or Vladivostok for a Pacific summit, money goes in and the city changes, but only for the duration of the projects. After that, in most cases, the regions fall back into the lethargy they had been in before the launch of “the project.”

And fourth – and this may be the most significant of all, the economist suggests – anyone with money can construct a residence “worthy of a British aristocrat or an American investment banker even in Arkhangelsk or in Penza. But he will never be able to sell it for a price analogous to that of property in London or in Manhattan.”

Because that is so, Inozemtsev continues, “the appearance in the provinces of something set apart from the masses cannot become the rule.” So new and more modern housing and public buildings aren’t built because those who might do so know that they can’t possibly recover the money they will invest in them.

In Russia, wealth has come to be concentrated only in the capitals and in raw materials producing regions. And that is related to another development in which Russia is set apart from other countries. Since 2008, “no country whose growth has been effectively zero has given birth to such a quantity of super-rich and cosmopolitan citizens as Russia.”

Only China and India have seen a greater increase in the number of billionaires since 2008 than Russia but they have had much greater economic growth, 2.4 and 3.1 times respectively.  And as far as purchasing property in Europe, they compete with Arab sheiks and Indians.

“Our ‘cosmonauts,’” Inozemtsev says, “fly ever higher, but below at the cosmodrome practically nothing is changing.” It should be that way, of course; and that way may not be sustainable for long.