Tamara Golubeva has heard about the petrodollars flooding Russia's economy, but she is quite certain that she has not seen any of them. Golubeva lives in Ostashkov, a town that symbolises the challenge President Vladimir Putin faces if he is to turn Russia's huge oil windfall into a better life for the millions living in poverty across the vast country.
In Moscow, luxury car dealers do a roaring trade and shimmering office buildings rise skyward in a boom fuelled by the receipts from oil exports that have also swelled the government's windfall fund to $34 billion at the last count.
In Ostashkov, 320 km (200 miles) north-west of Moscow - a tiny distance by Russian standards - people drive around in battered Lada saloons, buildings are boarded up and the big employer, a leather tanning plant, is laying off staff.
"People in Moscow live all right," said 54-year-old Golubeva at the fruit and vegetable stall she runs with her sister.
"But what good does it do us? (The money) goes somewhere and we don't know where. If we did, we'd live like rich people."
On national television last month, Putin pointed to his economic achievements: 7 percent economic growth annually for the last few years and rising living standards.
"That's much better than in a lot of developed countries," he said.
But in Russia, the world's second largest oil producer, that wealth is being distributed unevenly.
While the big cities and energy-producing regions thrive, places like Ostashkov - with no oil fields or steel factories - lag behind.
In fact, the overall economic growth makes things worse, said John Litwack, the World Bank's chief economist in Moscow.
As the rouble strengthens, industries like Ostashkov's leather factory, which were competitive when the currency was weak, can no longer compete with imports.
"The gap between the poorest regions and the richest regions is growing," said Litwack.
"This ... is going to become a bigger and bigger problem in the future."
The richest fifth of Russia's population earned nearly 46.4 percent of the wealth in 2004, and the poorest fifth only took 5.5 percent, according to official figures.
In the Tver region that includes Ostashkov - a flourishing trading centre in Tsarist days - the statistics for last year showed 27.6 percent of people living under the poverty line, an improvement on previous years but still worse than the 17.8 percent nation-wide rate.
Oxfam, the British charity that works in the world's poorest countries, is backing a project to offer small loans and training to market traders in Ostashkov, mostly laid-off factory workers who went into business to feed their families.
"We chose Tver region because of the high poverty rates here," said Oxfam programme co-ordinator Yara Abdul-Hamid. "There are quite a few regions that have similar issues."
The government has already jacked up budget spending by around $20 billion this year, and the windfall fund will skim off a smaller share of oil revenues from next year, leaving more cash for social programmes and a planned state investment fund.
If the money is not drip-fed meticulously into the economy, the overheated rouble that would result - a phenomenon known to economists as Dutch disease - could cause economic meltdown.
Avoiding this requires sophisticated skills and Russia, with its system of public administration inherited from the Soviet Union, does not have them, said Litwack.
"Really this is the first time that Russia has been in a situation where it has something to spend," said Litwack.
"So their basic budgetary institutions, institutions that support effectiveness of government spending, of investment programmes, all of these ... are still very weak," he said.
Andrei Loshakov, the energetic deputy governor of Tver region, said money is on its way from the federal budget.
But it will be some time before Tamara Golubeva on her market stall in Ostashkov feels the full benefit.
Loshakov spends his days in meetings trying to draft a new investment strategy for the region. It is hard work.
"To start using the money locked in this fund, (people) ... need to come up with some kind of procedures for spending money, and it's not a quick thing to do," he said in the dilapidated regional administration building in Tver city.
"At this particular stage we have a shortage of investment projects and proposals rather than a shortage of money.
Comments
Comments are closed.