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Moscow’s glitter belies deep Russian ills

AMURSK, Russia – Behind a scrim of billionaires and petrodollars, Russian cities like this one are dying a slow, quiet death deep in the frigid, remote Far East. Many Russians here haven’t worked for more than a decade. They survive on whatever they can lug on their scrap carts – radiators and washing machines, bricks and bathtubs scavenged from a cityscape of boarded-up buildings.

Scalpels at the hospital here are brown with rust. Every month, a local heating utility sends collectors to families who haven’t paid a bill in nine years. Factories that churned out Soviet-era mortar shells and mines, linoleum and cardboard wasted away years ago, leaving a city of 47,000 without work or any sense of purpose.

The energy wealth that wrested much of Russia from the brink of an economic abyss and gave the Kremlin its newfound swagger has yet to revive cities like Amursk.

Most of Russia’s 119,000 millionaires live in greater Moscow, the world’s most expensive city, amid a burgeoning middle class that has discovered mortgages and jams the aisles of the capital’s two IKEA stores. Move beyond the capital’s showy facade, and you find a vulnerable Russia – a national population evaporating at a rate of 720,000 people each year and an aging, neglected infrastructure.

Russia’s economic resurgence has been both real and remarkable. It now has the world’s third largest collection of billionaires and a gross domestic product growing by nearly 7 percent every year. The ruble is getting stronger. Overall, poverty and unemployment are down.

Yet that resurgence has its limits. In Siberia and the Russian Far East, a population of 30.6 million withers at a rate of 103,000 people each year, victims of Soviet planning that put whole cities in one of the planet’s coldest expanses.

Dilapidated Soviet-era infrastructure from roads and electrical grids to housing and telephone lines saps Russia’s productivity. In much of the country, factories saddled with aging, outdated machinery lag far behind their counterparts in the U.S., China and Southeast Asia. The Russian Academy of Sciences says more than half of Russia’s industrial machinery is more than 20 years old, compared to just 15 percent in 1990.

In the waning years of his presidency, Vladimir Putin has begun trumpeting the need to shore up debilitated infrastructure, revamp health care and solve the country’s worrisome population plunge. But analysts believe he could have acted much sooner.

“These problems have worsened over the course of many years. Now, when they’re very serious, they’re getting noticed,” said Nikolai Petrov, a former Kremlin adviser and an analyst with the Carnegie Moscow Center, a Moscow think tank affiliated with the Carnegie Endowment for International Peace. “The price for not doing anything about this for years will be huge.”

To make the giant leap from emerging economy to global powerhouse, analysts say Russia must transform itself from a wellspring for energy, wood and metals to a country that produces as well as exports – and makes human capital its most valuable resource.

Nowhere in Russia is that task more urgent than in Siberia, an expanse of rugged beauty and economic ruin.

Siberia’s southern neighbor, China, ravenously consumes Russian oil and timber, sending some of it back to Russia as finished goods. That lopsided conduit benefits China far more than Russia, experts say, and only serves to deepen Siberia’s plight.

“Without a sustainable economy in the country’s eastern half,” says Dmitri Trenin, an analyst with the Carnegie Endowment for International Peace, “I see Russia becoming a junior partner to China.”

Today’s eastern Russia hobbles because of decisions made decades ago by Soviet planners who built cities in places where no one would choose to live. Siberia’s winters are the world’s harshest.

More than 2,600 miles from Moscow, Irkutsk’s population of 593,000 shivers through Januarys that average 11 degrees below zero at night.

Remoteness also made Siberia a poor choice for city-building. Everything in Russia – power, money, commerce – loops back to Moscow. But Khabarovsk is an eight-hour flight from Moscow or an eight-day train ride on the Trans-Siberian Railway. A flight from Moscow to Vladivostok, Russia’s largest Pacific port, takes nine hours.

The Soviet collapse ravaged all of Russia, but the toll was especially harsh on what Russians call grado-obrazuyushy, cities built around a single factory.

In Biryusinsk in east Siberia, a solvents manufacturer buoyed the lives of 12,000 Russians during the Soviet era. The plant in turn was tethered to a cluster of sawmills that processed east Siberian larch and pine and supplied the plant with sawdust, its primary raw material. “We could buy fur coats back then,” says Olga Loginova, 47, a fermentation room worker.

In the post-Soviet chaos of the 1990s, hundreds of sawmills went bankrupt, including the Biryusinsk plant’s suppliers.

The factory had to pay more for sawdust from mills farther away. By 2005, at a time when Moscow wealth was pushing up downtown real estate prices to $10,400 a square meter, Biryusinsk plant workers were jamming into the factory’s grocery to receive management’s substitute for a paycheck: loaves of bread. In December 2005, the plant stopped production.

Much of the town’s youth has already fled; older Russians here scrape by on $125 monthly pensions. Their adult children live off those same pensions.

“We are no longer wanted here,” says Anatoly Chubukov, a former truck driver who helped build railroads in east Siberia. Now he nets fish for food and thaws snow for drinking water.

“We built the village and the road, the trains run – so now we are throwaways.”