Transporting: Russia’s Rent Addiction and Far East Infrastructure

Far East development is an evergreen concern for Russia’s strategic outlook. In a piece for Bloomberg ahead of the APEC forum, President Vladimir Putin touted the development of Eastern Siberia and the Far East as a national priority for Russia in the 21st century. The “Pivot to Asia” is a serious matter of Russian policy, despite the lackluster results thus far. Moscow needs the Far East to be self-sufficient economically in order to reduce the considerable budget expenditures spent subsidizing and supporting the region.

Lack of physical access within and to the Far East is a substantial problem for economic growth. Russia’s targeted investment program for the region from 2017-2020 calls for 542.2 billion rubles ($9.1 billion), 215.6 billion of which are to come from the federal budget. But budgets are tight and figures for federal investments into infrastructure in the region don’t add up. A lack of budget resources and exorbitant construction costs threaten Moscow’s infrastructure projects as it becomes less clear that they’re fit to drive economic growth. Rhetoric is increasingly divorced from reality.

Roads to Perdition

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At the end of November, the Ministry of Transport (MinTrans) issued a statement that planned funding for 40 airport projects from 2014-2017 had fallen 66.3 percent short, reaching 24.8 billion rubles. Only 17 of the 40 projects were to be completed by the end of 2017 as a result of reduced financing from the Ministry of Far East Development to the Federal Air Transport Agency. Yuri Trutnev, deputy prime minister and presidential envoy to the Far Eastern Federal District, clarified that as of 2013, 106.1 billion rubles in state support for regional airport construction were set aside. Sixty-four billion rubles “fell through” because too many projects were poorly prepared and funds were shifted elsewhere. The TASS press release added that 70 percent of the Far East – a little less than a quarter of Russian territory – lacks access to an airport.

According to the Ministry of Far East Development, more than 800 kilometers of federal and regional roads are to be built or reconstructed by the end of 2020. Ignoring the fact that the total distance is inconsequential given the region’s size, the road program is likely overselling what’s possible given costs. A 27-kilometer bypass around Khabarovsk is expected to cost 42.8 billion…

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