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Russian Infrastructure, Disaster Waiting To Happen?

MOSCOW, Aug 28, 2000 -- (Reuters) Russia is paying a heavy price for a decade of failed reforms and financial neglect that has left much of the infrastructure in the world's biggest country a disaster waiting to happen.

Just two weeks after the Kursk submarine disaster in the Barents Sea killed 118 and exposed the shortcomings of Russia's rescue capabilities, Moscow fire fighters struggled for 24 hours to control a blaze that devastated the city's Ostankino TV tower.

President Vladimir Putin blamed the catastrophe, apparently caused by a short circuit, on the dismal state of the economy and the country as a whole.

"We should not fail to see major problems in the country behind this accident, and we should not forget the economy," he told senior cabinet ministers.

"Whether or not such accidents happen again in the future will depend on how we work in this vital direction."

Analysts agreed, saying the economy was still woefully inefficient and starved of badly needed investment despite a recent recovery driven largely by higher world oil prices and the 1998 devaluation of the ruble currency.

"Reforms have been carried out in such a way that there has been no significant investment in the economy for 10 years," said Mikhail Delyagin, director of the Institute for Globalization.

The decay has been felt by everyone from ordinary motorists driving their rickety cars over potholed roads to cosmonauts struggling to patch up the orbiting Mir space station.

Leaky pipelines spill tons of oil every day and electricity transmission facilities need billions of dollars for upgrading.

Fighter pilots are grounded by lack of fuel, naval vessels cannot afford to sail and millions of people go without hot water for weeks in summer as antiquated boilers undergo maintenance work.

Roland Nash, an economist at Renaissance Capital investment house, said there had been massive underinvestment since the collapse of the Soviet Union in 1991. "The results of that are everywhere to be seen," he said.

CHAOTIC REFORMS NEGLECT INVESTMENT

As Russia struggled desperately to pull its economy out of a tailspin, investment in long-term infrastructure projects was clearly not the highest priority in the budget.

The government was always struggling with debt inherited from the Soviet era, and its plight was worsened by flawed reforms, low tax collection, crime, corruption and capital flight.

"There was not enough money to go around in the budget and therefore investment tended to be left until last," Nash said, adding this affected all levels of government and companies.

He said gross domestic product fell by about 40 percent between 1992 and 1999 and investment by 80 percent in the same period. "The whole of Russian infrastructure suffered."

Lack of foreign direct investment has contributed to the neglect. There are myriad reasons for why foreigners are still reluctant to plough money into Russia - crime, corruption, bureaucracy, corporate governance problems, poor management, inadequate property rights.

"A host of economic and political factors come into why there has not been enough investment in Russia in the last 10 years," Nash said.

RECOVERY CAN'T COME SOON ENOUGH

Putin's recognition of the underlying problems might bode well for the future, and might save lives, but the government still has to cope with a worrisome foreign debt burden and implement structural reforms that at least look good on paper.

Nash said there had already been a pickup in economic activity and investment this year. However, Delyagin was more skeptical about the liberal economic policies drafted by Trade and Economic Development Minister German Gref.

He said investment in industry rose almost 40 percent in the first half of this year.

"We have an investment boom, but this investment boom does not touch sectors where it takes a long time to turn a profit," he said, adding that investment in electricity had fallen 10 percent both last year and in the first half of this year.

"That is because very big sums are needed over a very long period," he said.

"The only way out of this situation is for the state to designate a limited amount of necessary vital projects, no more than 10 or 15, and give them guarantees from political risks," he said.

"Without such guarantees, no Russian or foreign investors will come."

(C)2000 Copyright Reuters Limited

http://www.russiatoday.com/news.php3?id=193497

-- Martin Thompson (mthom1927@aol.com), August 29, 2000

Answers

Sunday's (08/27/00) "60 Minutes" had a feature on the Russian military called "Coming Apart At The Seams" by Christiane Amanpour. It was horrific.

Russian officers now moonlight as cab drivers. Common soldiers earning as low as $4 per month beg in the streets. Some recruits actually have starved to death because the more experienced soldiers take away what little food they have. Suicides are rampant. Russia's military is being dangerously impacted by the country's weak economy and leadership.

-- K (infosurf@yahoo.com), August 29, 2000.

USA helped tear down the wall and convinced Russia capitalism was the way to democracy. Sadly, we never invested in Russia since 1989, but instead, this administration has courted Red China. Maybe, it's just me, but I feel responsible. Not for the government, for the Russian people.

-- Ruth Angell (bar@bpsinet.com), August 29, 2000.

[not sure where this comes from - got via email, and take it with a big grain of salt]

Secret torpedo test 'blew sub apart'

Nicholas Rufford and Stephen Grey

TWO civilian experts from a Russian military plant were conducting secret munitions tests aboard the Kursk submarine, which sank after the hull was ripped apart in an accident, it emerged last night. The final moments of the doomed craft have been pieced together by Western military experts, who believe a test firing went disastrously wrong, igniting highly inflammable propellant and detonating missile and torpedo warheads.

The resulting explosions blew a huge hole in the right-hand side of the Kursk's nose, where the torpedo room is located. Water flooded in, causing the pride of the Russian submarine fleet to sink in seconds.

Any members of the crew who may have survived had no time to close watertight doors, or to send distress signals. Self-sealing emergency hatches failed because the submarine's control systems were knocked out.

Military experts said they believed the crew of the Kursk were testing one of two weapons systems: an anti-submarine missile that fired from a torpedo tube out of the sea, then re-entered it to attack submarines; or an upgraded version of a fast and silent torpedo called the Squall.

Accidental ignition of the propulsion system of either weapon before they launched would have had devastating consequences for the Kursk.

Rustam Usmanov, head of the Dagdizel military plant on the Caspian Sea, told The Sunday Times that his chief engineer had been on the Kursk to monitor weapons tests. Mamed Gadzhiyev, a veteran weapons designer with Dagdizel, and Arnold Borisov, another employee of the plant, were among the 118 men who died.

Usmanov denied, however, that the two men were working on a "secret weapon" for the Russian navy. "Mamed Gadzhiyev and Arnold Borisov were supervising a regular test launch of torpedoes on the Kursk," he said. "The task of our men was to supervise and check if the torpedo was working as it should. Our specialists were not dealing with any new or modernised torpedoes."

Western experts say they believe the Russian navy was upgrading the Squall, a torpedo that can reach speeds of 200 knots. It is unique because it travels in a gas capsule, which reduces friction with the surrounding water.

"The weapon is very clever; it uses propellers to boost it out of the sub, then a rocket kicks in at a safe distance, burning liquid propellant," said one British expert. "The danger is if the second stage fires inside the submarine. Then you can say goodnight."

Russian military strategists describe the Squall as a rocket rather than a torpedo, and insist there were no rockets on the Kursk. However, a letter written by a crew member to his mother, which arrived the day the vessel went down, said: "We are sitting in port, loading up rockets."

Further support for the "secret weapon" theory came last week from Alexander Rutskoi, governor of the region from which many of the submarine crew were recruited. Rutskoi, a former Russian vice-president, said he had been told by two high-ranking military officers that civilian experts were aboard the Kursk to test new torpedoes, but declined to give any further details.

American experts believe that one of the Kursk's rocket- propelled anti-submarine weapons - an SSN15 or an SSN16 - could have become stuck in its launch tube and exploded.

According to the Russians, the last contact with the vessel was on August 11. Gennady Lyachin, the Kursk's commander, had successfully test- fired a missile during a military exercise. He asked permission to fire again on Saturday morning. Admiral Vyacheslav Popov gave the go-ahead from his nuclear-powered flagship, Peter the Great. There was no further contact.

"The submarine's objective was to launch a cruise missile, and then, in a certain area, to identify missiles and hit the main target with a torpedo salvo," said Igor Sergeyev, the Russian defence minister. "The commander reported having fulfilled the first task and, by 1800 (1400 GMT on August 12), he was expected to report the fulfilment of the second task. The submarine failed to establish a communication link."

What had happened in the meantime remains a matter of dispute between Russian and Western military experts. Sergeyev was still insisting yesterday that the most likely cause of the disaster was a collision with a foreign submarine. The Russians have produced no evidence to back this claim, however, and Sergeyev also admitted it was difficult to say what time the accident occurred, because the exercise involved maintaining radio silence for extended periods.

Western experts have almost unanimously rejected the Russian version. A collision certainly could not account for the explosions detected by a Norwegian seismic institute at 11.28am and 11.39am Russian time (0728 and 0739 GMT) on August 12, the second of which registered 3.5 on the Richter scale. "This was the single most powerful explosion we have ever registered in this area," said Frode Ringdair, a scientific adviser to the institute.

Neither would a collision have caused such devastating damage so quickly. Underwater footage gathered by Russian rescue teams days the accident indicated that a massive force had ripped open the Kursk's entire front section, including the control room. Lyachin, 45, and his closest aides probably died immediately.

Anthony Watts, editor of Jane's Underwater Warfare Systems, said Russian claims of a collision were disinformation. "There are 10 watertight compartments in that class of submarine. It can withstand flooding of two or three compartments and remain afloat." Further reason to pin the blame on exploding munitions was the fact that the Kursk's periscope was extended, indicating that it was at periscope depth when the accident happened - the correct depth for launching a torpedo. It now also seems certain that nobody on the submarine survived longer than 60 hours, because no watertight compartments remained intact. The Russians backtracked on early claims that tapping on the hull had continued for four days after the accident. They now admit the last sign of life was two days earlier, on August 14. The messages were "SOS. Water." Even that claim has not been confirmed. Without doubt, the Russians are hiding a terrible secret. Norwegian officials said last week that their divers had been refused permission to go anywhere near the front of the boat and were given firm instructions to keep away from the damaged area. Perhaps even more surprising, though, is how little American authorities have said about the tragedy. An American submarine was close enough to the naval exercises to detect the underwater explosions. Also patrolling nearby was the Loyal, a spy ship that tows a sensitive sonar array. Both should have been able to piece together the events that sunk the Kursk. If they did, they are keeping quiet about it. The cold war lives on. Additional reporting: Mark Franchetti, Moscow, and Tom Rhodes Washington

-- (perry@ofuzzy1.com), August 29, 2000.

I agree with Ruth. Is this anyway to reward a country for taking your advice. Other countries (like China) are taking notice of this I am sure. Why should they adopt the democratic form of government if the U. S. will stop the help it gives them if they remain Communist?

BTW, the Russians have take democracy one ste futher. They have a "none of the above" option on their ballot which can force another election if they do not like any of the candidates. That is something we need here!

-- K (infosurf@yahoo.com), August 29, 2000.

Update:

U.S. sonar tapes support Kursk torpedo theory-paper

http://www.cnn.com/2000/US/08/29/russia.submarine.reut/index.html

-- K (infosurf@yahoo.com), August 29, 2000.