October 15, 2007 Back In the States

Posted in Rodger's Russia Book | Posted by rodger |

They say it was different in the good old days.

Russia is ratty. Outside of boom towns like Moscow, everything needs paint. The apartment hallways are maintained by the city – and are NOT maintained. Most apartments have enclosed utilitarian balconies where clothes are dried and spare furniture kept. The balconies look decrepit with peeling paint and ill fitting windows. Yard spaces would have an American county inspector writing tickets right and left and the walkways are broken and often unswept.

They tell me that it was not always so.

During socialism, at least during part of socialism, it was better. The country was poorer, but cleaner.

According to western sources, the socialist economy was propped up by slave labor in the Gulags. Russians don’t like to talk about that, but prisoners mining gold, iron, and nickel and building dams and factories supplemented the poor output of the socialist state. The economy wasn’t great, but it struggled along and they managed do new construction and maintain the apartment buildings. With the death of Stalin, the Gulags started to shut down and over the years, the economy slowly ground down. There just wasn’t enough money to be a military superpower and still buy paint. By 1980 there wasn’t enough money left to do building maintenance in most of Russia.

Larisa and I visited a hospital that was brand new and nice about 20 years ago. In just 20 years, it has become almost decrepit from a total lack of maintenance. In the states, it would be a young building. In big cities like Tver and Nalchick, all of the apartment buildings started to crumble. Like most big cities, the neighbors were strangers and they didn’t work together to keep things cleaned up.

According to people here, it wasn’t that bad in Prochlodney as long as the socialist state continued. There wasn’t a lot of money, but there was tradition and donated labor from factories that didn’t need to make a profit.

A couple of times a year, they had cleanup campaigns. The biggest was for Lenin’s Birthday. To prepare for the holiday, everyone took a day off school or work and cleaned up the town. Walks were scrubbed, lawns trimmed, windows washed and walls painted. The local factory would send workers out on one or more Saturdays to handle the big jobs and do a lot of the repair – on factory time.

In small towns, people can work together and these people, and a lot of others in small towns, I am told, kept their city fixed up until socialism died in 1992. After that, the factories couldn’t provide free labor any more and with the deepening economic crisis hope withered, along with the traditions. This town and a lot of others ran downhill.

Now, it’s pretty ratty. Individuals own the apartments, but the exterior, hallways, and utility lines are still the responsibility of the city – and the city still doesn’t have much money – or at least not much money that hasn’t been stolen.

However, as with much of Russia these days, there’s a little light on the horizon. The apartment buildings are getting a little better as the owners are earning more money. The terrible balconies and poorly fitted windows are slowly beginning to disappear. One of the most popular businesses in Prochlodney is “Okna” (Windows). You see the signs everywhere. In our apartment building everyone now chips in 20 rubles a month to pay an old woman to keep the halls and entryway clean.

The change in business property is much faster. Business buildings are owned privately, inside and out, and the owners are learning that better outside means higher rents or more customers inside. The main street of Nalchick looks good enough to be a street in Germany or Norway. Even in little Prochlodney, there are a lot of new buildings going up and buildings being refurbished by private owners – and those are often nice buildings. Twenty more years and things might be nice all over, maybe.

Some things, however, are going to be hard to change. It may be awhile before the hospitals get rebuilt.

Russia has a lot of money in the bank these days. They have set aside an emergency fund about as big as the annual budget, and with more and more oil money coming in, the government gets richer every day. One of the major concerns of the central banks is keeping the ruble down. It’s getting to be a strong currency and that can cause inflation that Russia doesn’t want. Five years ago, 75% of the population said that they preferred to keep dollars rather than rubles because they trusted dollars more. These days, it’s about 15%. Dollars go down and rubles go up in spite of the best attempts the government can make to keep the ruble cheap.

So, why don’t they spend more? Almost every hospital in Russia is a filthy wreck. The highway system is a major impediment to progress and doctors and police are paid about $300 a month. If they didn’t take tips and bribes, they couldn’t feed their families.

There are a lot of reasons, such as fear of inflation, but the short answer is corruption. The central government can’t figure out how to get the money to the people who need it, and it is driving Putin crazy.

To understand how they steal, you have to realize that Russia is a cash economy. Checks are unknown and even deals involving millions of rubles are handled with real money.

Russia knew that they would have to rebuild Chechnya after the war if they were going to convince the Chechnyans to rejoin Russia willingly. They understand that people without homes and jobs make willing terrorists, so, they allocated 15 billion rubles to rebuilding the infrastructure, repairing the apartments, and funding factories to provide jobs. That was about $700 million dollars. They are still looking for most of it. The men who stole it were identified and charged by the FSB, but they are still employed in the Kremlin while they wait years for the trials to begin.

I have seen how it works more than once. The wife of a friend of mine worked in the finance department of the Tver Oblast (An oblast is the equivalent of a state). During her period of employment, the central government funded a new hospital in Tver. She had severe pangs of guilt as she watched a lot of the money stolen. After all, her daughter and her husband had been patients in the crappy hospitals that were supposed to be replaced. She said that the governor’s personal inspector would review the plans and sign off that they were completed. However, sometimes wings that had 10 rooms on the plan ended up with five rooms and sometimes entire wings disappeared – but were paid for according to plan. Tile floors become linoleum, oxygen piping disappeared, and the concrete got thinner. The governor, contractor and inspector each pocketed a fortune.

Down here, in our little village of Premalka, my mother in law has no water for about half of each year. The main water tower collapsed years ago and wasn’t replaced. Everybody farms their lots and in the summer, the water slows to a trickle when everyone is trying to irrigate. Two years ago, Moscow sent money for a new water tower. There is still no sign of the water tower, but the mayor has developed the habit of flying to France for soccer games.

The central government has tried to stop the corruption, but… Up until a few years ago, pensioners got a list of benefits in kind, such things as free bus rides and free prescriptions. Problem was that a lot of the money disappeared on the way down. So, Putin replaced the benefits in kind with a cash payment. He figured that it would be harder to steal cash from the pensioner’s pockets than to steal the money sent for medicine or street car repair. He was probably right, but the pensioners were enraged. He didn’t realize that free bus rides were a mark of pride for the workers, and it was one of the few things he did that pissed off everyone.

About a year ago, he replaced the elected governors of most states with a system in which he nominates a governor and the regional Duma (state congress) then confirms or denies the appointment. In part it was an attempt to get people in place who would steal less. It hasn’t worked yet, but they keep trying.

A few months ago, I heard Putin speak to a national convention of police officers. He was not shy about telling them “It is time for you to decide who you work for!” i.e. if you take bribes, you don’t work for us. The police officers appeared uncomfortable, but my driver still paid a 100 ruble bribe when he made an illegal turn a few days ago.

A few weeks ago, Putin appointed a new prime minister. There has been a lot of speculation as to why he did it, but he did pick someone impressive. The new man had just spent two years heading the department that searched for and punished money laundering. In America, we would call what he did “forensic accounting.” I listened to his first cabinet meeting on the English language Russian news channel.

One of the first items on the agenda was Sakhalin Island. It’s a huge and somewhat remote island off of Siberia. They had a major earthquake a few months ago and the Duma voted a substantial amount of money for relief efforts. The new Prime Minister started the meeting by asking the Health and Social Services minister why the money had not yet arrived in Sakhalin. When he didn’t get a clear answer, he asked for the name of the person specifically assigned to that project. When he got the name, he told the Social Services minister to get the man on a plane to Sakhalin. “He can come back when he delivers the money to the local relief agencies.” According to the newspapers, the man did get on a military flight to the remote island that night, and stayed there until the money showed up about a week later.

Later in the same meeting, the Prime Minister asked the Port Authority people why the cargo handling contracts at major ports were only for eleven months at a time. “We all know that the standard contract around the world is for 20 years. If you are making them re-negotiate every eleven months, it can only be because there is something shadowy going on. We have had enough in the shadows. Come to the next meeting with real contracts.”

I don’t know if the new guy will get anything done – or if he really wants to – but it was nice to hear someone in government who would publicly brand other government officials as thieves.

However, the Nalchick hospital will stay a slum for awhile because the central government can’t figure out how to spend money on the hospital without most of it disappearing

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