Rising Costs of Expanding BAM and Trans-Siberian Latest Obstacle to Putin’s Turn to the East, Russian Experts Say

Paul Goble

            Staunton, Mar. 28 -- The estimated cost of developing BAM and the Trans-Siberian to handle the expansion of trade between Russia and China has just risen by another trillion rubles (10 billion US dollars), of which the Russian government will have to bear almost half or even more of the total 3.7 trillion rubles (37 billion US dollars) the project is now projected to cost.

            These rising costs – and Russian experts say they will only go up – mean Moscow will have to scramble to find the money, something that will be difficult if not impossible at a time of budgetary stringency because of the war in Ukraine and won’t complete these projects in the next decade (kommersant.ru/doc/6596689 and vgudok.com/lenta/vostochnyy-poligon-rzhd-poluchil-troyku-ne-v-dnevnik-tretiy-etap-modernizacii-bama-i-transsiba).

            The Russian government had hoped to pay for all this by increasing tariffs, but the new estimated price tags means that isn’t an option and that Moscow will have to dip into its reserve funds or face the prospect that China and other Asian customers will conclude that they are better off to rely on routes that bypass Russia rather than going through it.

            And such decisions in turn will mean that what the Kremlin had expected to be the foundation of its “turn to the East” policy won’t be in place anytime soon to support other and larger forms of cooperation. Beijing could pay for these improvements, but it would likely demand concessions Moscow or at least Russians east of the Urals would be unwilling to meet.