The other day, a comrade on a leftist email discussion list to which I subscribe sent the list a link to this recent article, published on the website Russian Insider. Russian Insider is a pro-Putin propaganda website whose goal is to further thicken the already briar thicket-thick wool in the heads of many western leftists and any other fellow travelers in the website’s radius as to the realities of what is going in and around Russia and its current regime.
The argument made in the article is well summarized by its headline and subheading: “A Home for Every Russian: How Putin Delivers on the Russian Dream. Russia is in the throws [sic] of a housing boom that is transforming the country and hugely increasing its sense of well-being but which has gone completely unreported in the West.”
The bulk of the article consists of incoherent razzle-dazzle with numbers, whose only purpose is to show that the journalist has done his groundwork, seemingly.
(Another comrade on the email discussion list discovered that the journalist is quite a dicey character himself. This is in keeping with the utter cynicism and recklessness of the Putinist propaganda and “soft power” campaign of the past ten years, especially after the lid blew off a year ago. The Putinist spin-doctors will literally hire anyone without a conscience, especially if they are agile on the keyboard and unencumbered by the need to check in with “fact-based reality” from time to time.)
But all that actually incoherent number crunching is only meant to reinforce the nearly orgiastic joy that will be experienced by many western comrades (longing for the “good old days” they still have not made sense of, really) when they reach the article’s money shot, in its penultimate paragraph:
The fact that the emphasis on house building in Russia remains on cheap affordable homes incidentally confirms something else. This is that the Western image of “Putin’s Russia” as ruled by a “corrupt kleptocracy” selfishly focused on its own interests has to be wrong. The emphasis on cheap affordable housing for the wider population on the contrary shows that Russia, as its constitution says, is very much a “social state”.
This is such utter rubbish that I felt compelled to respond. What follows is an edited version of my original response to the mailing list.
The first thing you should know about the so-called housing boom in Russia is that it has been made possible largely by incredibly cheap, disempowered, heavily abused migrant labor from Central Asia. This labor has often verged on slave labor. It is almost totally non-unionized and dirt cheap and utterly expendable.
As in “If you don’t like the conditions, non-Slavic laborer [my euphemism: this isn’t the local ‘term of art’], fuck off, because we’ll find another ten ‘blacks’ [a term of extreme racial abuse in Russian, although there are much worse epithets] to take your place.”
And the local police and federal migration service have been taking a cut from the cutthroat developers and taking caring of things if the Tajiks or Uzbeks get uppity. Such as deporting them back to Central Asia lickety-split.
And the neo-Nazis and skinheads were also, until recently (maybe they are still doing it) coming in to bust heads and slice a few hundred or thousand throats just in case someone had missed the point.
And the laborers have lived in subhuman conditions, such as this shack I photographed four years ago at a site where yet another “elite” block of flats was under construction.
All this stuff has been documented and heavily reported, mind you, but not on fly-by-night Putinist sites like New Cold War (which, it almost goes without saying, picked up and reprinted Russia Insider’s “scoop” on the incredible socialist housing boom in neoliberal capitalist Russia) and Russian Insider, which have sprung up only yesterday just to muddy the waters, and nothing more.
The second thing you should know about the so-called housing boom in Russia is that it has been mostly fueled either by “funny money,” ill-gotten gains, mortgages that have usually come with stiff interest rates, even during the recent “good times,” when the economy was flush with easy (but extremely unequally distributed) oil-and-gas money. (According to an August 5, 2014, article published on the website Global Property Guide, “every fourth property (24.6%) was bought on a mortgage in 2013, according to the Federal Service for State Registrations.”) Sometimes, these were dollar- or euro-denominated loans, which people are now finding hard to pay back because the Russian economy has flatlined.
Or they have been financed by co-investor buy-in schemes, in which a large percentage of an apartment’s price or even the whole price is paid up front before the foundation pit has even been dug, and the construction and zoning permits secured from bribed public officials.
Many of these co-op schemes have gone south when the ruthless developers split with the money. The co-op members have been left holding empty bags and staring at unbuilt or partly built apartment blocks. There have been huge numbers of such sad stories over the past ten years, stories that been heavily documented in the Russian and even the western media. Not so strangely, the authorities have usually been very reluctant to help these people get their money back or their apartments built.
There is a special term for these people in Russian, obmanutye dol’shchiki, which can be translated as “hoodwinked investors.” It is a term that literally everyone in the world who speaks Russian knows, except maybe those Old Believer villagers in Oregon.
Do the “militants” at New Cold War and Russia Insider, so desperate to recreate the Comintern, even speak Russian?
At Friday’s May Day festivities in Petersburg, there were whole columns of “hoodwinked investors” and people now staring down the barrels of once-advantageous foreign currency-denominated home loans among the marchers on Nevsky Prospect.
The third thing you should know about the housing boom is that, especially in the big cities like Moscow and Petersburg (which are the only places where there have been real housing booms, for the most part), is that it has been realized at devastating expense to the existing built environment, for example, in the older, pre-Revolutionary districts of the cities, which should be heritage listed, and sometimes are, but that has not stopped rapacious developers and their allies in local governments from gutting them in the name of progress (i.e., quick profit).
This has especially been the case in Petersburg, ALL of whose central districts and large parts of its suburbs are a UNESCO World Heritage Site, but the current housing boom (i.e., the precipitate of easy money, criminal greed, and absence of rule of law and normal planning standards) has also impinged badly on the post-war Soviet new estates, which Soviet planners had the wisdom to equip with lots of green space, parks, leafy courtyards, and lots of other great amenities, like schools and kindergartens.
All this “empty space” has been a favorite target of the utterly ruthless developers in their quest to squeeze more and more real estate into less and less space. If you had been really interested in what has been going in Russia (and urban Ukraine, by the way) over the past ten years, you would know that one of the biggest grassroots social movements to have emerged was the movement against reckless infill construction both in the inner cities and the Soviet new estates.
You can probably say lots of bad things about radical leftist figurehead Sergei Udaltsov (now doing jail time for “planning a riot” on May 6, 2012) and his Left Front, but there are no doubt tons of ordinary Muscovites who were glad to have them and other partisan (including liberals and other leftists) and non-partisan activists on hand when they were fighting off the ruthless developers trying to destroy their eminently livable, superiorly planned Soviet or pre-Soviet neighborhoods.
The allegation made in the article about the superior quality of the new houses versus the bad old Soviet apartment blocks is also quite hilarious. A friend of mine lives next to a tower of such recently built “elite” flats in southern Petersburg. She told me there had been a rash of burglaries in this building, because the walls had been built so thin the crooks could literally punch their way through them from one flat to the next, and grab whatever loot they liked. And this was in, I repeat, an “elite” block of flats. (“Elite” has been the buzzword among the cutthroat developers over the past couple decades.)
In my own experience, substandard architectural and infrastructural quality has been the rule in the housing boom, because the point has been to throw up as many square meters as possible, as if Russia were still the old Soviet Union, where high figures like this were touted every years a sign of the progress toward communism. But that made some kind of sense back then, because those figures represented real people moving from crowded and often horribly squalid communal flats and barracks into individual flats with indoor plumbing and all the mod cons.
Providing every citizen with a decent home was a problem the Soviet Union never did solve right up to the day of its bitter collapse, but at least it made a much more honest attempt than the current regime, which has never even set itself this goal. Or, rather, it has at times pretended to have set itself this goal, but only as part of the array of populist tactics and NLP it uses to disguise what it has really been up to.
Nowadays, on the contrary, the point has been to do everything as cheaply as possible in terms of labor inputs and environmental impacts, while front-loading as much of the profit onto the preliminary financing stages, which is also when the high-percentage bribes and cutbacks get passed around to compliant and interested officials. This often means that buildings just do not get built at all, because the developers and financiers “go bust” (that money landed somewhere offshore, in Cyprus, for example) before they get built.
When has an out-of-control housing boom ever been a sign of good social or economic policy or, for that matter, of a “social state”? Remember that much of this housing, when it does get built (and lots has been built, especially in “the two capitals,” as Moscow and Petersburg are called nowadays), is not built for anyone to live in, but as investment vehicles for richer Russians with too much cash on their hands and not enough good ways to launder or invest it. Or, at best, it is built to be sold as rental properties, thus sending the rents sky high in Moscow long ago.
They have been going that way in Petersburg for a long time as well, because owners want to milk the rental market for as much as it can bear, and because the demand has been huge.
Petersburg and Moscow, after all, are basically the only cities in Russia where younger, ambitious, and heavily encashed Russians want to live or to move, because the rural areas have been left to rot, and many of the bigger “heartland” cities and towns have been de-industrialized beyond their breaking points.
In 1975, when my wife’s family moved into a three-room apartment in a newly built block of flats in one of Leningrad’s central districts, the apartment was FREE. As in my wife’s family didn’t have to pay a kopeck for it. Not a single kopeck. Similarly, my wife got a terrific free education at a specialized grammar and high school and, later, at Leningrad State University. Her family did not pay a kopeck for any of this, either. It was all FREE.
She also had plenty of free (state-subsidized) opportunities to pursue a career in sports (something she ultimately chose not to do) and explore her passion for biology at a very high level while still a teenager, including going on real scientific field expeditions to the Crimea.
Even more insanely, when my wife got ill as a child and young woman, the medical care she got was also free.
I could go on with this pinko drivel, but you get the picture.
This system was called, rightly or wrongly, socialism. I am not actually a fan of the Soviet Union for a large number of what I think are serious, almost damning reasons, which I will not go into here, but as western leftists, let us at least acknowledge that there are monumental differences between “actually existing socialism” in the Soviet Union and the Soviet bloc in terms of economic and social policy, and the freewheeling reign of pirates, highwaymen, extortionists, murderers, thugs, and Chicago School boys we have witnessed in the “post-Soviet space” over the last nearly quarter of a century.
After 1991, my wife’s family privatized their flat for free, as did millions of other Russians around the same time.
In 2000, they sold it for around 25,000 dollars. That was the going rate then. At today’s going rate, the same flat would probably sell for around 250,000 dollars.
There is a fairly substantial class of people, although they are a distinct minority, who could afford to buy my wife’s family’s old flat cash on the barrel head, but the vast majority of people living in Petersburg would not be able to do this, unless they had their own, similarly priced, privatized flats that they could sell to generate the cash necessary to trade up (or down, for that matter) to another flat. There are still quite a few people in the big cities who have this important asset, which is a legacy from the Soviet era. One could say that it made life livable to a great extent for many of these people in the lean years.
But it also generated, eventually, a real estate market, which did not exist (or at least exist in this way) in Soviet times. And this real estate market has been as cutthroat as they come. In the 1990s, when I worked for a Big Issue-style newspaper called Na Dne (The Depths), we did a special project where we advertised all over the city asking homeless people to come in and tell us their stories. (These stories were eventually published as an anthology in Russian and English.) What we discovered was that easily over half these people had been swindled out of their flats and their rooms in communal flats, to which they had been legally entitled, by so-called black realtors, many of whom were able to launder their ill-gotten gains and then resell them on the emerging “legal” estate market.
That was how they had become homeless.
As for the homes touted by Russian Insider as proof that “Putin delivers,” they are not handed out for free, as most of them would have been under socialism. (In the late Soviet period, there were also co-op houses paid and, to some extent, built by their future inhabitants, but that is another, quite interesting story.) No, they are sold for the going rate, just as in other capitalist countries.
In September 2014, the going rate in Petersburg per square meter in newly built residential buildings was about 94,000 rubles, while the average price per meter in the four historic central districts (Central, Petrograd, Vasilyevsky Island, and Admiralty) hovered between 120,000 and 160,000 rubles, according to real estate website bsn.ru.
At the then-current exchange rate, this translated into a price range between 2,600 and 4,500 dollars per square meter.
An acquaintance of mine who does IT work and has been trying to organize an independent IT workers union in Petersburg, wrote on his Facebook page the other day that, according to Headhunter.ru, the average (not the median) monthly wage in the city was now 35,000 rubles. At current exchange rates, this comes to around 680 dollars a month.
He also included a screenshot of the Yandex jobs site. It shows that the average monthly wage for the fifty-five thousand some vacancies the site was then currently listing as vacant, in Petersburg, is 33,000 rubles per month, or 640 dollars.
I should add that before the “crisis” set in, that is, during the “boom times,” the average wage in the city was somewhat better, but only marginally so.
So who could afford and can afford all the homes “delivered” by the international left’s new kewpie doll, Vladimir Putin?
A) The wildly and mostly illegally rich, including oligarchs, sub-oligarchs, and corrupt government officials, who need some place (lots of places, actually, if you think about the distorting effect they have had on the real estate markets in London and New York, for example) to park their loads of cash.
B) Honest, hardworking people with average or higher than average salaries who, of course, would have take out loans, sometimes very big loans, to afford these homes.
Except for the special occasions, as when, once a year, around the Victory Day holiday or the holiday commemorating the end of the Leningrad Siege, the government loudly hands out a few free flats, usually built in the middle of nowhere, to WWII veterans or Siege survivors, these homes are not “delivered” by Putin or his minions in any sense.
These homes are sold for big bucks, often to folks who cannot really afford them in terms of their actually meager salaries (see the screenshot, above). These homes are used to hide ill-gotten assets, money that could be used productively elsewhere, e.g., in the real economy, in increasing social benefits for the poor and disadvantaged, and in building the real infrastructure Russia and all other countries will need for a planet-friendly, twenty-first century economy.
These homes are built mostly cheap and poorly, and with no consideration as to their environmental impact and aesthetic effect on the existing built environment.
They are mostly built by disempowered migrant workers from Central Asia who are a) non-unionized, b) underpaid, c) often cheated out of their wages entirely), and d) constantly hassled and shaken down by police, immigration officials, and skinheads.
I think it might be useful to close these notes with a few recent reminders of what the Putin regime has really represented in terms of social, economic, housing, and urban planning policy:
- Ilya Matveev: A Word to the Wise (On Putin’s “Leftism” and Solidarity with Russians)
- Open Left: Moscow Doctors Talk about Their Work-to-Rule Strike
- Zorkin: The Road Back to Serfdom
- FIDH/ADC Memorial, From Tajikistan to Russia: Vulnerability and abuse of migrant workers and their families
- The Joseph Brodsky Law
- Ilya Matveev, “The ‘Welfare’ State Doesn’t Get Any Better than This”
- Ivan Ovsyannikov on Russia’s Welfare Chainsaw Massacre
- The Hipster’s Dream Debased (Portlandia)
- Ilyushinites: “Leningrad’s builders are being made homeless”
- Barbarians at the Gates: The Demise of Stroyburo House
- Mikhail Zolotonosov on Saint Shepetovka
P.S. A comrade recommended the book on the subject of housing policy in the new Russia, described below. Someone who has studied the subject in depth, apparently, rather than dishonestly fantasized in print on behalf of the Putin regime over the course of an hour, has written it. It seems like a good place to start an honest exploration of housing policy in today’s Russia.
But then again, as the last year has made painfully obvious to me, many leftists are responding to traumas and phantom pains, not to actual economic and political realities, so why would they bother with a book like this or the millions of column inches dealing with these issues printed in magazines and newspapers over the past fifteen years?
In Housing the New Russia, Jane R. Zavisca examines Russia’s attempts to transition from a socialist vision of housing, in which the government promised a separate, state-owned apartment for every family, to a market-based and mortgage-dependent model of home ownership. In 1992, the post-Soviet Russian government signed an agreement with the United States to create the Russian housing market. The vision of an American-style market guided housing policy over the next two decades. Privatization gave socialist housing to existing occupants, creating a nation of homeowners overnight. New financial institutions, modeled on the American mortgage system, laid the foundation for a market. Next the state tried to stimulate mortgages—and reverse the declining birth rate, another major concern—by subsidizing loans for young families.
Imported housing institutions, however, failed to resonate with local conceptions of ownership, property, and rights. Most Russians reject mortgages, which they call “debt bondage,” as an unjust “overpayment” for a good they consider to be a basic right. Instead of stimulating homeownership, privatization, combined with high prices and limited credit, created a system of “property without markets.” Frustrated aspirations and unjustified inequality led most Russians to call for a government-controlled housing market. Under the Soviet system, residents retained lifelong tenancy rights, perceiving the apartments they inhabited as their own. In the wake of privatization, young Russians can no longer count on the state to provide their house, nor can they afford to buy a home with wages, forcing many to live with extended family well into adulthood. Zavisca shows that the contradictions of housing policy are a significant factor in Russia’s falling birth rates and the apparent failure of its pronatalist policies. These consequences further stack the deck against the likelihood that an affordable housing market will take off in the near future.