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#14 - JRL 7247
From: Richard Thomas <Thomas@aton.ru>
Subject: 7246 - The Hinterlands
Date: Mon, 14 Jul 2003

A comment on the Newsweek article "The Two Russias". As oil money and reform turn Moscow into a normal European capital, the hinterlands are stuck in post-Soviet dysfunction"

First, the authors are right on the mark generally in the article and specifically, when they write: "Moscow is becoming a pretty typical European capital, while the rest of the nation [except perhaps for St. Petersburg, to some extent] waits in vain for real change". I moved to Moscow last summer after 10 years in the provinces and can attest - the gulf that separates the capital from everything outside its limits is truly astonishing. As a friend of mine likes to put it: "Our Moscow is part of civilization; the rest of Russia is not." You can find pockets of prosperity in cities all across the country, but in Moscow prosperity is largely the rule.

Is Moscow willing to share? I think not, certainly not much. Moscow indulges itself, makes a bit of noise about "the plight beyond" - crumbling infrastructure, schools and hospitals and "all of that - quite sad, really" - then indulges itself further. Russia cannot "detach itself and speed away", but it surely will continue to spin high above "the subjects". And why not? Who or what could cause it to do otherwise? There is a widely held view that if you wish to succeed in the country, you must come to Moscow; Moscow will certainly not come to you.

"Moscow has always been a parasite at the center of the empire, sucking all that's good from the fringes to itself," says American banker Bernard Sucher. Precisely! (Though it has had willing help from the Northern Capital at times in the past.) "Middle-class Muscovites are coming to expect foreign vacations, Chinese takeout, and a Toyota or a Ford in the garage." This too is unquestionably the case, with my 200 Russian colleagues here at the investment bank (Russian) as clear examples - average age about 30, with average disposable incomes not far below those of their Western counterparts. Someone doing similar work in Khabarovsk, Vladivostok or Irkutsk (not that there's much of it to be found "out there") would feel quite fortunate indeed to be taking home $1000 a month.

As for the optimists who say "Moscow's wealth will begin to trickle down soon". This idea, though easy to state and lovely to contemplate and applaud, is far more difficult to argue for convincingly. It is one thing to be "prepared to push into the provinces", quite another to stay there and put down strong, long-term roots. While it is certainly true that even in the provinces resourceful, able-bodied people between the ages of, say, 20-60 - and they are many - have substantial real incomes that make a mockery of official statistics, markets of any real size - 300,000 or more - are quite literally few and far between. To argue that "some of Russia's other big cities, including St. Petersburg and Yekaterinburg or Rostov on the Don, are poised to challenge Moscow's predominance" is simply absurd. Challenge Moscow's predominance? Think for a moment about what that means. It won't happen, at least not in our lifetime.

Yes, growth rates in much of the rest of the country are "just as high as Moscow's", but that's rather midleading and disingenuous, isn't it, when you consider that the numerical absolutes being compared are worlds apart. Given the profound inequality at the starting point, "similar rates" means only that, in absolute terms, the gap is widening.

Even this article, for all merits, originates in, of all places, Moscow. Not in Saratov, Ekaterinburg, Novoribirsk or Ulan-Ude. To sit in Moscow and write about "the rich getting richer" has a certain rather tangy irony about it, and underscores the essential point: if you are doing much of anything in this country, you will usually find yourself dong it in Moscow, even if what you are doing is lamenting the widening gap between Moscow and all the rest.

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