[Russia Profile Discussion Group] Re: post-Putin era - St. Petersburg and the future of Russia

[Peter Morley (Russia Profile Discussion Group)]

Here are some of my thoughts on Russia's post-Putin future (apologies for the delay on following up the two earlier missives). They are based purely on personal impressions and are on a more local level than the national political concerns expressed by Mac and Rich, so I'd welcome anyone who has more concrete statistics, etc., to back up or refute what follows.

I have recently been commuting weekly to Moscow for work purposes, and the contrasts that I see with Petersburg have given me a lot of food for thought, much of it unfortunately negative. This has been compounded by the recent high-profile murder of Lamzer Samba. So, for what it's worth, here goes.

St. Petersburg is Russia's second-largest city by population and the fourth largest in Europe. It was founded, as we hear so often, as a "Window on the West," specifically as the nation's capital but also as a trading centre on historical trade routes "from the Varangians to the Greeks". It is Russia's cultural capital, former imperial capital, architectural capital, and so on and so on in a tour-guide style.

It is also dying on its feet, and offers a depressing version of the future of Russia as a whole.

To take a highly unscientific sample of three indicators:

First, the state of the city's airport(s) is a disgrace. Compare Pulkovo 2 to even Tallinn or Riga - never mind Prague or Warsaw - and the results (in terms of appearance, customer service, availability of cheap flights - the things that make a difference for most passengers) are fairly shocking. This may improve now that Pulkovo the air company has been divorced from Pulkovo the airport (for example, Germanwings is now operating budget flights to three German airports) - but why has it taken so long?

Second, trivial though it sounds, food delivery services. The arrival of a new (I think American-run) pizza-delivery company at the end of last year was only the second (I think) such service in the city. A city - I say again - of 4.5 million that prides itself on being Russia's cultural and civilized capital (unlike "backwards" Moscow, which by comparison is virtually stuffed with delivered pizzas). It's only a small thing, but I think it's quite indicative (I'd be interested to hear from any economists on this one). I can't think of a single Chinese delivery, although there used to be a Mexican one.

Third, and more substantially, public transport. While not as bad as its airport, the city's public transport system is far from satisfactory. The metro has far from enough stations, and trains run with decreasing frequency. The system also appears overworked, and little seems to be being done to either improve current services or expand coverage (one new line is being built at the moment; compare this with the rate at which the Moscow network has expanded in the post-Soviet era). There are some new buses, which is commendable, but trolleybuses and trams are generally in a dreadful state. (I could go on about this for hours - I have a theory as to how to improve the system of overground transport, at least, but I'm not an urban planner - but I think I'll stop at that.) In short, the transport infrastructure is a long way from meeting the needs of the city's inhabitants.

Then there's the race problem. First of all, we must be careful with crime figures, and also with labelling all attacks on non-whites as racially motivated. Whites are attacked in St. Petersburg and across Russia in circumstances similar to those reported in some cases of attacks on non-whites. That said, I do think St. Petersburg has a very serious race problem, and that it is sadly only getting worse. The situation is not helped by apparent official tendencies to label everything as "hooliganism" either.

My impression is that the root cause of the problem is actually largely economic. Young and talented Petersburgers have few options for success that don't involve moving to Moscow or abroad. Even if they decide to stay put and set up their own business, for example, there is no guarantee it will be a success, as St Petersburg officialdom is not known for being business-friendly (unless it involves their own pockets, of course) - witness decisions by many major Western companies to set up shop in the more amenable Leningrad or Novgorod Oblasts, for example. The problem of a lack of prospects becomes even more acute the further down the social scale you go. Moreover, salaries in St Petersburg are often much lower relative to living costs than those in Moscow. (The one item of expenditure for most people that is much higher in Moscow is accommodation.)

Maybe things will change with the advent of the North European Gas Pipeline, and the Sibneft and Gazprom offices in the city. We will have to see. But for the moment it is my contention that St. Petersburg is actually becoming what it has always said it is - a "museum city".

I'm sorry if this sounds all rather Radishchev- or Chaadaev-esque. I do love St. Petersburg, and Russia. (To stave off possible allegations of "Russophobia", I should point out that I've lived here for over four years, I work for a Kremlin-run organisation, pay taxes to the federal budget, and this summer will be getting married to a Russian.) But at present I don't see much to inspire great optimism for the future of the city and its people. And by extension, if things are that bad in Petersburg, I fear for the future of the country.

[Mac Broderick]

As a fellow Peterburger, I would like to add a few things to Peter's
comments. I have lived in this city for less than a year, so I
qualify my comments with a certain lack of experience in the city.

St. Petersburg is a city on stark contrasts right now. Business-wise,
the city's trajectory remains very promising. As investors and
multi-nationals begin to move beyond Moscow, St. Petersburg is gaining
increasing attention and investment. For the first time in the city's
history it attracted over a billion dollars in FDI (which totaled $1.5
billion, up from $900 million in 2004). As Russia's retail boom
continues, many companies have invested substantially in St.
Petersburg. The city is littered with new commercial developments
anchored by large scale retailers, with more on the way.

One can shortsightedly point to Vladimir Putin and his Petersburg
cadre's influence as the reason for the city's economic growth. Much
of the money flooding into the city's tax coffers is certainly a
result of state-owned companies moving from the capital northward.
However, Matviyenko and co. have at least seized the opportunity thus
far, aggressively courting potential investors and smartly managing
their finances. The city's positive bond ratings certainly support
this.
The increased investment in the city--as opposed to Leningrad Oblast,
which garnered many of the St. Petersburg area's first large-scale
investments--presents a ringing endorsement for the city: Deustche
Bank has just recently created a $500 million investment fund for
developments here, while Nissan has also recently decided to open an
assembly facility here. Many tech companies have discussed utilizing
the city's tech-savvy labor base. There is definitely no lack of
money interested in the city.

However, the city still has a long way to go, as Peter pointed out.
The city fails to function on many basic levels. Just the other day a
substantial portion of Moskovsky Prospect, one of the main
thoroughfares through the city, had no working traffic lights and no
policeman guiding traffic. Examples abound of a basic lack of city
services, as Peter thoroughly detailed. The apathy towards racial
violence and ignorance shown by many of the city's inhabitants on
matters of race is appalling. As any one who periodically visits
knows, the city faces many problems which need urgent attention. Since
Peter has already very thoroughly explained them, I won't dwell on the
subject.

There are glimmers of hope that the city knows what it's up to: one
promising sign is the focus on infrastructure. City government
officials are actively looking for foreign partners for such projects
as the Western Highspeed Diameter and the St. Petersburg-Moscow toll
road. They have repeatedly emphasized the importance of these
projects. The city's plan for 2015 is ambitious. For a glimpse, take
a look at www.investinfo.spb.ru. While unrealistic the focus is at
least in the right place.

What the city now has to show is its ability to follow through. Having
the right idea ad saying the right things will only get you so far.
Thus far, with projects such as the City's Ring Road, the local
adminstration has gone 2/3 of the way, but failed to follow through.
This is not what investors want to see, and if it continues, will give
the city a reputation that will be difficult to shake. If the city
believes that Gazprom and pipelines will be its salvation, then it is
mistaken. Corruption is still a massive problem, as is the lack of
efficiency that comes with it. They have the possibility to severely
stunt the city's growth and the city needs to demonstrate that they
can be overcome. If so, the possibilities are there for substantial
growth, if the city's is just smart enough to utilize this window of
opportunity. The investors and their money will not last forever.

On 4/18/06, Peter Morley (Russia Profile Discussion Group)