Yulia Latynina on Russia’s Squandered Billions
On May 8, 2000, Vladimir Putin took office as president of the Russian Federation. Since that day, Russia has acquired $1.5 trillion in oil and natural gas revenues. As a country suffering from severely neglected infrastructure and in desperate need of development and modernization, Russia has been in an ideal position to benefit from such staggering windfall profits. At a talk earlier this month at the Brooklyn Public Library in New York City, award-winning Russian journalist Yulia Latynina spoke about how all of this money is actually being spent, and what condition Russia now finds itself in as a result.
“A modern transport infrastructure is the real road to Russia’s future,” said then-President Putin to a gathering of highway construction workers in the city of Krasnoyarsk in late 2007. And yet, not a single highway or expressway and only a smattering of smaller roads have been built in Russia over the past two decades. By comparison, China has laid more than 40,000 thousand miles of high-volume roadways over the same amount of time. “Naturally,” said Latynina, “this raises the question: Has anything been built in Russia with this money? And if yes, then what?”
It turns out that something was.
“For example, the presidential residence in the city of Yekaterinburg, which cost 1.2 billion rubles [about $40 million] to construct, and which President Medvedev has stayed in once,” said the journalist. A similar example was Konstantinovsky Palace in St. Petersburg, a crumbling historic landmark that Putin ordered be renovated in 2001 for use as a presidential residence. The official cost of renovation: $250 million.
There were more. One new presidential residence was constructed just two years ago. Another called Lunnaya Polyana is now in the works, blocked off from public view. An Olympic residence in Sochi is also planned for construction. All in all, said Latynina, Russia has built thirteen official residences for its president. Compare this, she proposed, to the number of official presidential residences in America: there are but two. And neither the White House nor Camp David is anything to rival the grandeur of Konstantinovsky Palace. “My point is that if you consider the number of residences, then Russia is a superpower and the United States just gets these two little things,” the journalist said.
On the topic of superpowers, Latynina questioned Putin’s declaration that Russia is a superpower in the raw materials market. “It’s very interesting to compare Russia with the production of natural gas in the United States,” she said, and followed to rattle off a list of figures: In 2008, Russia extracted 640 billion cubic meters of gas, 550 billion of which were from the state-owned company Gazprom – the latter figure being the more telling, as that’s what gets sold abroad. American production of gas totaled 582 billion cubic meters during the same year – less than Russia, but more than Gazprom. Then there’s the revenue: American gas sales totaled $185 billion in 2008, while Russian sales to Europe, its primary source of export, totaled only $47 billion. In addition, Russian production fell in 2009 to 575 billion cubic meters of gas, with 460 from Gazprom. America’s grew to 620 billion. “So why is Russia called a raw materials superpower?”
Russia, Latynina explained, has virtually no chemical industry. The United States, on the other hand, has the world’s most highly developed chemical industry. Thanks to its more energy-efficient facilities, she explained, the States are able to sell gas at a much higher price than Russia with its long, cold, ineffective pipelines. Meanwhile, instead of building more effective facilities, Gazprom built an exact replica of Konstantinovsky Palace for its CEO, Aleksei Miller. “I invite you to think about the philosophy of the matter,” said Latynina. “Bill Gates could not allow himself to build a Konstantinovsky Palace, because it’s a different philosophy of life… But Aleksei Miller could.”
Frivolous spending on the part of the Russian elite brought about the question of why the Russian government tells its citizens that “the West doesn’t love us.” If that were true, asks Latynina, then why would Deputy Prime Minister Igor Sechin, Putin’s right-hand man, keep his plane in Helsinki and buy three different villas in Sardinia? Why are oligarch Roman Abromovich’s yachts registered in the West, including the $50 million one he gifted to Vladimir Putin? Why do all of the people who tell Russia’s citizens that the West doesn’t love them send their children to study in England? “Why don’t they keep their money in the banks of Iraq, North Korea, Venezuela, or the other wonderful countries that are friendly to Russia and love us a great deal?” asked Latynina.
In some cases, they do. On October 17, 2009, Prime Minister Putin announced the government’s decision to make a $500 million purchase of microprocessors with 90 nanometer process technology from the primarily government-supported French-Italian firm STMicroelectronics. Two weeks before this happened, Intel had announced that they were going to begin producing microprocessors with 32 nanometer technology. What was the point of buying something so expensive that was already out of date? According to Latynina, it was simply a way of transferring money abroad.
“In fact, for me it turns out to be a very sad story,” she went on. “It’s the story of the technical degradation of the foundation that we had from the Soviet Union.” While the STMicroelectronics purchase was sure to hinder the pace and efficiency of Russian industry and development, other instances of such degradation represented more direct threats to the safety of ordinary Russians. Poor construction and shoddy upkeep lead to the deaths of 75 people on August 17, 2009, when an old turbine in the Sayano-Shushenskaya hydroelectric dam spun out of control, breaking open the ceiling and flooding the facility. On the night of December 4, 2009, more than 150 people died in the Lame Horse club in the city of Perm when, having violated “every single possible fire safety regulation,” it shot up in flames. But most of the dead bodies dragged out of the club, Latynina pointed out, had no burn marks: the victims died almost instantly from smoke inhalation and carbon monoxide poisoning that resulted from burning foam polystyrene insulation. A commission set up to investigate the fire released its findings on March 9, concluding that the club’s own management was to blame. “But the scariest part is that it said in this report, verbatim, that ‘we cannot establish how harmful the foam polystyrene insulation was, how chemically harmful it was for people, for the reason that there was a lack of men on whom we would have liked to conduct experiments.'”
Really? “After the fire in the Lame Horse,” Latynina went on, “the government made quite a big fuss, especially President Medvedev. He loves to stomp his feet, crying ‘I’m going to deal with it,’ he always yells in future tense. ‘We must put an end to terrorism; we must put an end to corruption.’ I still haven’t heard that we’ve put an end to it, so it’s always in future tense.” It was clear, Latynina said, that the government wanted the situation to go away, and suppliers of construction materials had paid off the commission to keep silent about the foam. “So it turns out that they don’t have any men,” she said. “The president stomps his feet.”
Thus, in a nutshell, was Latynina’s dour prognosis of Russia’s current state of affairs.
During the questions that followed, Latynina was asked who would make a worthy Russian president. Her response: “Khodorkovsky,” the former oil tycoon currently sitting in prison. And what is to become of him? “He’ll sit in prison as long as Putin is in power.”
Latynina played down the audience’s fears that her safety was at stake for criticizing the Russian government. Arguing that Russia lacks internet censorship (as opposed to China) and allows Ekho Moskvy radio to broadcast whatever it wants, Latynina linked fears that free speech was being suppressed to the legacy left over from Soviet times. Back then, she said, people were arrested or murdered for speaking out against the government. “The maximum now is that they turn off the broadcast.” When numerous members of the audience objected that Russia figures as the third most lethal country in the world for journalists, Latynina countered that Russia was a lethal country for everyone. “It’s more dangerous to be a citizen of Russia than to be a journalist,” she said. “If you drive down Leninsky Prospekt and meet Lukoil Vice President Barkov, he’s not going to ask if you’re a journalist or not.”
That said, Latynina was skeptical of the effectiveness of initiatives by the Russian opposition, including a petition calling for Putin to resign that has so far gathered more than 18,000 signatures.
Asked for her opinion on Moscow’s plan to put up posters of Josef Stalin for Victory Day celebrations in May, Latynina replied: “Every person who wants to has a right to march for Stalin, because unlike Hitler, Stalin was never sentenced for having committed any crime – there are no laws saying that he was a criminal. But when it’s state-sponsored… You know, when dealing with these situations, I always think: What would Stalin do with Putin? He would put him up against the wall!”
It became apparent during the question and answer session that Latynina’s cynicism had frightened at least some members of her audience into considering the prospect that democracy in Russia was simply not possible, leaving Putin’s regime as the only viable choice. She was quick to dispel this notion, and delivered a more hopeful version of events then one might otherwise have come to expect. “First of all, I maintain that democracy in Russia is of course possible,” the journalist said in response. “But, you know, democracy is like a refrigerator. You can’t say that a certain refrigerator doesn’t work in Russia; it’s just that in Russia the electricity flows different. No – the refrigerator works in Russia if it has the particular electrical wiring for the place where you want it to work. If it doesn’t have the wiring, then it isn’t going to work.”