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Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

Spending, but misfiring

Image of Kremlin and Saint Basil's
There may be billions of dollars to invest in shipbuilding and space, but it's not just rockets that are misfiring.

Two news events this week ­ the Phobos space launch and the allocation of $9 billion to Russia's shipbuilding industry ­ illustrate the dilemmas facing the government that will take office in 2012. Russia's space program is in trouble ­ with a string of highprofile failures this year exposing how far Russia is behind its rivals. It's one thing to simulate a trip to Mars from the safety of a Moscow research institute, but the real thing takes more than a hankering for the Soviet glory days.

Then there's the announcement by Prime Minister Vladimir Putin on Wednesday that Russia's shipbuilding industry will get a massive refit. The devil is in the details. The order books of Russia's shipbuilders are in far from rosy shape, and only part of the investment will come in the next five years ­ the horizon that really matters. The fear is that it's a vote-winning, pre-election pledge rather than a realistic commitment.

Away from the glare of the TV cameras, this week Russia's foremost international think tank, the Valdai Discussion Club, was getting to grips with Russia's post-election future. Discussing scenarios for the next five to eight years, the group ­ which comprises leading Russia and foreign policy experts, academics, politicians and journalists ­ was leaning toward the idea that the country would stagnate.

The most likely scenario was not authoritarian modernization, thought to be a favorite among some Kremlin strategists (or democratic revolution, predictably espoused by liberal opposition politicians at the Valdai meetings), but inertia.

Inertia, in the context of a gathering global economic storm and a worsening investment climate, probably means more misfiring projects ­ not just rockets.

Top priorities appear to still be the prestige projects, not bread-and-butter investment in transportation, education, health care and housing that the country desperately needs.

However innovative Skolkovo is, even when put together with space, the Olympics and the World Cup, it does not add up to genuine modernization. Especially when the country's ever-present, bureaucratic inertia is taken into account.


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