Thursday, April 14, 2016

Hyper-Centralization, the Basis of Russian Identity, Blocks Growth in Country’s Borderlands, Inozemtsev Says

Paul Goble

            Staunton, April 14 – Throughout its history, Russia has been a country whose population has “exceptionally highly valued centralization and the power of the state,” a reflection of its “’frontier’ culture,” and thus for Russians, it has been “more important to ‘defend the country’ rather than to develop its territory,” according to Vladislav Inozemtsev.

            The flip side of this longstanding pattern has been “the polarity of the center and – as it is usually said – the regions, although it would be historically more correct to use the term ‘borderlands,’” the Moscow economist writes in a commentary for this week (

            The example of Russia’s borderlands in comparison with the regions of other major continental countries like the United States and China shows “the egregious backwardness of the Russian state” which although it has grown to an enormous size has “not learned to deal with its territory in an adequate manner.”

            To make his case, Inozemtsev compares several regions which are now part of other countries with analogous ones that are inside the Russian Federation. He begins with Alaska, once part of Russia but now part of the United States, and Magadan, which remains part of the Russian Federation.

            In both these places, the main economic activity involves extractive industries, but in Alaska, this is primarily for the American domestic market, while in Magadan it is for export. One product of this: per capita GDP in Alaska is more than 76,000 US dollars, while the same measure for Magadan is just over 10,000.

            This difference and others related to it reflect the very different principles of development in the two places: “The eastern borderlands of Russia have always been subordinate to the logic of megaprojects while the distant territories of America were lands of opportunities and private initiative.”

            One measure of this is the very different number of airports in the two places. In Russia’s Far Eastern Federal District, there are now only 91 airports, while in Alaska, there are 256 run by the government, about 300 private ones, and “almost 3,000” fields where private planes can land and take off.

                That in turn reflects both the very different numbers of people who visit these regions from the outside and also differences in demography.  “Over the past 25 years,” Inozemtsev points out, the number of residents of Magadan has fallen from 152,000 to 96,000 while in Anchorage alone, it has grown from 226,000 to 298,000.

            The underlying reason for this decline in Russia’s borderlands is “the insane regulation of everything” by the center, he continues, something that can be seen even more clearly in the case of Kaliningrad at the other end of the Russian Federation which not only is developing less rapidly than the rest of the country but is in worse shape than it was before 1940.

            The reasons for this are the same as elsewhere, Inozemtsev says.  “On the one hand, the Moscow authorities categorically do not accept that special status which the oblast should have by virtue of its geographic location … and on the other, the development of the region since the 1990s has gone along the path of import substitution” which makes no sense.

            “Traditionally, free economic zones are created to promote exports,” Inozemtsev says, “but in Russia, a different decision was taken, one that involves having  Kaliningrad reoriented toward the partial processing of foreign production and its dispatch into the interior of the country.”

            Economically, that makes no sense; but for Russians in Moscow, “what is more important is not to develop territory but ‘to defend t country’ and therefore in Kaliningrad oblast almost 40 percent of the land is controlled by the defense ministry,” leaving little room for economic growth.

            This same pattern can be seen on territories Moscow took from Finland in the 1940s and for exactly the same reason: Moscow’s control and its obsession with defense with than development.  The standard of living in these places is today “on average six times lower than on the Finnish side of the border.”ite

            Today, Inozemtsev concludes, Russia has a new object of attention: Crimea, a territory it occupied in 2014 and thus expanded the area of the country by 0.14 percent.  That was enough to “restore the price of the Great Russians” especially as this was “the only territory in the last century” that Moscow occupied and boosted the standard of living.

            But both Russians and others need to remember this: Moscow took Crimea at the height of its economic development, and “therefore, it is quite likely that this ‘manna from heaven’ already is close to exhaustion” and that Moscow will have the same negative impact there that it has had on other borderlands, unless of course, Russians change course.

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