Putin's Costly Trip Down Memory Lane

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tags: Putin, Baikal-Amur Mainline

Russian President Vladimir Putin is preparing to spend billions of dollars on a bizarre trip into the Soviet past, restarting construction on the storied and ill-starred Baikal-Amur Mainline railroad. Sadly, Putin's nostalgia will come at great cost to the country's future.

In the late 1990s, the American writer Fen Montaigne traveled across Russia for his fly-fishing book, "Hooked." Among other adventures, he rode on the BAM, a major railroad through the wilderness of Eastern Siberia and the Far East that was meant to unlock the area's vast natural resources. BAM was conceived under Stalin in the 1930s but built in the 1970s and 1980s at a cost of $25 billion, paid for mainly by oil exports. By the time the BAM became fully functional in the late 1980s, "the party was over," Montaigne wrote. The Soviet Union's collapse meant there was no money to build mining towns and factories along the mainline.

"Someday, no doubt, capitalist Russia would make use of the BAM," wrote Montaigne. "But as my train chugged along, I saw only a derailed Communist dream."

Now, as Montaigne predicted, the project is being revived, albeit not by capitalists. The Russian government will finance construction with oil revenue that was supposed to be locked up in the $87.9 billionNational Wellbeing Fund, whose primary purpose was to make sure the pension system had enough money to support an aging population. The Russian Railroads monopoly will spend 150 billion rubles ($4.4 billion) from the fund on increasing the capacity of BAM and the Trans-Siberian Railroad.

Read entire article at Bloomberg

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