October 26, 2007 (LPAC)--"Speaking bluntly, Russia needs a new rail boom, comparable with the rapid development of Russian railroads at the turn of the 19th to the 20th century," Russian President Vladimir Putin told the First Congress of Russian Railways, which met on Oct. 24-25, at the Kremlin in Moscow. With over 4,000 delegates, the Railways Congress focussed on the Russian rail sector's strategic plan for the period till 2030.
This was one of two major conferences held in Russia this past week, which took up key areas of the country's industrial and infrastructure growth for the coming years.
The second was a regional conference, held in the West Siberian city of Tyumen, on the megaproject called Industrial Urals-Arctic Urals, which aims to develop 30 resource deposits at the northern end of the Ural mountain range, and to create processing plants in the region, as well as rail links to allow shipment of these raw materials primarily to Russian industry, but with an export outlet via a revitalized Northern Sea Route.
Both conference-topics involve a major focus of attention for President Vladimir Putin, as well as the recently reshuffled Russian government: investment in Russia's regions, both to retain and increase the population, and to shift the economy from raw-materials-export to manufacturing. On October 11, Putin took part in a session of the State Council on attracting investment into regional development, in view of what he called "the shortage of major, long-term investment projects," especially in the regions. In the September government shakeup, Putin's close associate Dmitri Kozak was named Minister of Regional Development, while former Presidential Representative in the Far East Federal District Kamil Iskhakov, an advocate of infrastructure-centered projects to revitalize Eastern Siberia and the Far East, became his deputy.
At the 4th International Investment Forum in Sochi in early October, Putin took part in a signing ceremony to officially launch the Industrial Urals-Arctic Urals program, or UP-UP - the Russian acronym by which it is known.
- Tyumen: the UP-UP megaproject -
A major speaker at the October 24 Tyumen meeting was Academician Alexander Granberg, Russia's leading expert on regional development and the head of the Council for the Study of Productive Forces (SOPS), which has designed the UP-UP megaproject. He presented estimates of its benefit to the Russian economy, expressed in ruble terms as net 700 billion (currently $2.8 billion) within ten years, or 1.5 trillion rubles ($6 billion) counting ripple effects. Granberg compared UP-UP with Russia's space exploration and nuclear power programs, saying that it would promote the development and diversification of the entire Russian economy. Speaker of the State Duma Boris Gryzlov, who chaired the meeting, said that the Academy of Sciences would continue to be active on the project.
Gryzlov said, however, that the government had not yet made a final decision on directing resources from the state Investment Fund into UP-UP. In Sochi, Putin had startled people by exclaiming, in connection with this project, "Why aren't we building anything? We need to build!" Gryzlov asserted that the project was being slowed by "middle-level government officials," which he linked to the fact that "this project is disadvantageous to international middlemen and companies that supply ore to Russia from abroad." The general director of the UGMK steel company reported to the meeting the astonishing fact that the Ural industrial region receives 60 million tons of raw materials--two-thirds of its iron ore, 90 percent of its coal, 100 percent of its manganese--from abroad, including CIS countries, but also Turkey, Australia, and South America, even though the resource-rich Ural Mountains are right at hand. Gryzlov said that the UP-UP scheme would supply these needs for tens, if not hundreds of years to come. Construction of the planned rail corridor along the eastern slope of the Urals will reduce the costs of these now-imported resources by up to 75%, Granberg said.
Sverdlovsk Region Governor Eduard Rossel, advocating construction of the rail line, invoked the words of Count Sergei Witte about the Trans-Siberian Railroad, over a hundred years ago: "There are roads that begin a new phase in a nation's development."
- The Railways Congress: Planning for 2030 -
The Kremlin Railways Congress was addressed by Putin, with Deputy Premiers Sergei Ivanov and Alexander Zhukov, and other top government officials, taking part. Representatives of all 17 of the regional subsidiaries of the state-owned Russian Railways company discussed all regional aspects of the 2030 strategy, which includes a first stage of upgrading existing railroads, including by construction of high-speed lines, and then a second, "strategic" stage (2016-2030) of great projects like the railroad to the Bering Strait.
Putin told the meeting, "Speaking bluntly, Russia needs a new rail boom, comparable with the rapid development of Russian railroads at the turn of the 19th to the 20th century, and, of course, on a fundamentally new level, on the most advanced technological basis." He said that implementation of the Russian Railways plan would improve Russia's "competitiveness and its geopolitical position," while acting as a stimulus to the rest of the economy.
At the rail conference, too, there was evident tension around the question of sources of investment--as there inevitably must be, as long as Russia has not shifted to an "American System" or "national economy" model of credit-creation. Russian Railways CEO Vladimir Yakunin, who closely protects the state-owned status of his company, agreed to a "capitalization competition" with United Energy Systems, the national electric power company. UES CEO Anatoli Chubais challenged Yakunin to a contest, which Putin approved, for which company can attract more private investment for its development plans. Yakunin agreed, but he emphasized that Russian Railways will remain majority government-owned. He suggested that Russian Railways might carry out an IPO for some portion of its stock shares, on the Russian market, not abroad.
