Plato Is Invincible, or, The Fix Is In for RTITS

trans-siberian highway0

Russian Government Could Pay for Protests Against Plato Road Tolls System
Olga Adamchuk
Vedomosti
January 8, 2019

“No to Rotenberg’s extortion” read stickers on long-haul trucks in early 2017, when highways were blocked [sic] in protest against the introduction of the Plato road tolls system. An agreement that would establish an automated weight-and-size monitoring system on federal highways, fining overweight trucks, would protect its likely operator,  RT Invest Transport Systems (RTITS) from problems associated with such manifestations of dissent.

Currently, RTITS is 23.5% owned by Igor Rotenberg [son of Putin crony Arkady Rotenberg], 50% by RT Invest,  19% by Andrei Shipelov, and 7.5% by Anton Zamkov.

If there are rallies, demonstrations, meetings, and marches near the automated weight-and-size monitoring points, even if these events were authorized, and they hindered the construction or operation of the Plato system, incurring extra costs to the operator, the Russian government would be obliged to compensate the operator for these expenses, according to a draft concessionary agreement, published December 28 on the official Russian government bidding information website torgi.gov.ru. The operator would be able to bill the government not only for actually incurred losses but also for expected losses.

The government will wait for other bids until February 12. If other bids are submitted, there will be a tender for the contract. If there are no bids, the agreement will be signed on the current terms.

However, downtime in the operation of the scales will have no effect on the operator’s revenues, which will be supplied not by Russian truckers, but by the Russian government. For installing and maintaining the system, the operator will be paid 8.64 billion rubles annually [approx. $129 million] (VAT not included) over eleven and a half years. The government will shell out a total of 118.45 billion rubles [approx. $1.7 billion] (VAT included) to the system’s operator. The concessionaire would pay fines for the glitches for which it was responsible. An appendix to the agreement stipulates the system must identify three quarters of violators.

The agreement features a long list of special circumstances in which the operator can demand additional payments from the government, including when inflation is twice as high as was expected, and if the project goes over budget by ten percent or more.

The government would also permit the system’s operator to use the property it builds and installs, which remains state property, for any purpose, including commercial ends.

A concession deals insider notes this stipulation has usually not been part of projects in which the grantor made payments to the concessionaire, since, if there were an opportunity to earn money, it should reduce the fee paid by the grantor. The agreement also lacks the routine stipulation that key subcontractors must be approved by the grantor. Our source wondered why the government was thus willing to forfeit oversight of the project. If the concessionaire had managed to obtain cheap financing, the government could reduce its fee: the state and investors would usually share benefits equally, but there is nothing of the sort in the proposed agreement.

Currently, there are 28 weight-and-size monitoring points operating on Russian federal highways. After the new system has been completely installed, in 2024, there will be 387 automated weigh stations. Under the terms of the project application, eighty-eight of these weigh stations will be built by way of improving the current Plato road toll system, the Russian Transport Ministry has reported.

Investors are also protected in case the agreement is terminated. The Russian government shoulders a greater payout to the concessionaire than it would in similar agreements, said Sergei Luzan, director of PricewaterhouseCoopers Russia (PwC Russia). Even if the project never gets off the ground, the concessionaire can incur two billion rubles in expenses and have them repaid by the Russian government. Such conditions are possible in concessions, but the government usually only pays costs that have been itemized and authorized in advance, and at a discounted rate, Luzan said.

In 2017, protesters demanded the government terminate the concession agreement for the Plato road toll payment system. Andrei Bazhutin, [chair of the Association of Russian Carriers or OPR], said truckers were planning to protest the launch of the weight-and-size monitoring system as early as February. According to Bazhutin, Russia’s independent truckers had been engaged in serious discussions.

Alexander Kotov, chair of the Truck Drivers Trade Union, also confirmed discussions were underway, but he refused to say when protests could begin. He said carriers would like to see shippers bear the cost for overloaded vehicles.

Having to pay for an overloaded vehicle that travels through several weigh stations could simply ruin a small trucking company, but it would also go bust if it refused to dispatch the overweight vehicle, explained the head of a major logistics company, because the shipper would hire another carrier.

As cited by the Transport Ministry, the RADOR Association (a national organization of local road authorities) has claimed that overloaded trucks cause 2.6 trillion rubles in damage to highways annually. According to statistics, there are no longer any problems with federal highways, since they are in between scheduled overhauls. But the president has ordered an overhaul of regional roads, which are still in a state of chaos.

The truckers and spokespeople of truckers associations surveyed by Vedomosti were unhappy with the current weigh stations. Bazhutin said that, compared with the Plato system, the weight-and-size monitoring system still had numerous shortcomings, for example, the fact that weather conditions had a huge impact on the accuracy of scales. He also noted that drivers do not see whether they are running overweight when they drive over the scales, and so when they receive a fine of between 100,000 rubles and 500,000 rubles [$1,500 to $7,500] in the mail, it is a complete surprise to them. If a trucker fails to pay the fine, his or her account is blocked.

“It’s just like with Plato. It doesn’t matter whether you were running empty or loaded. You have to pay whether you were overweight or not, since the system registered a violation. It’s impossible to dispute a fine. Since this whole business puts pressure on self-employed carriers, there will likely be protest rallies and marches,” said Bazhutin. “But we’re unlikely to set up a protest camp next to a weight station in Yaroslavl Region, say, when it is the federal authorities who are making the decision.”

Kotov argued that, since the bulk of cargo in Russia is shipped by trucks, this new financial burden would ultimately be passed on to consumers.

Political scientist Abbas Gallyamov argued the state of public opinion is currently such that things could kick off anywhere whatsoever. Any action by the authorities that is deemed unjust is capable of setting off a wave of protests. Gallyamov notes that Russian truckers have demonstrated their willingness to fight back and their capacity for coordination; moreover, they did so in circumstances in which public opinion was generally much more inclined to side with the regime. Given this past history, the chances of Russian truckers rising in protest again were great, he concluded.

Spokespeople for the Transport Ministry and RTITS told that the terms of the agreement were standard.

Translated by the Russian Reader. Photo courtesy of dangerousroads

Why Most Russians Will Stay Home for New Year’s

Why Most Russians Will Stay Home for New Year’s
As Incomes Crumble, Even Celebrating with Friends Is Too Expensive for Them
Vladimir Ruvinsky
Vedomosti
December 27, 2018

New Year’s, apparently, has become a truly stay-at-home holiday. The number of Russians who plan to spend the long New Year’s holiday at home has jumped from 41% in late 2015 to 70% in late 2018, according to a survey by Romir, a Russian research company. The main reason is the rapid return to the conservative tradition of growing poverty and uncertainty in the future, combined with the desire to maintain previous levels of consumption of the most vital goods and services, which no longer include a winter holiday away from home.

fullscreen-m4

“How do you plan to spend the upcoming New Year’s holidays?” Overall: at home, 70%; at dacha, visiting relatives, 19%; traveling in Russia, 2%; working, 6%; traveling abroad, 2%; other, 1%. Average monthly income per family member of 10,000 rubles: at home, 73%; at dacha, visiting relatives, 18%; traveling in Russia, 2%; working, 6%. Average monthly income per family member of 10,000 rubles–25,000 rubles: at home, 74%; at dacha, visiting relatives, 17%; traveling in Russia, 1%; working, 5%; traveling abroad, 1%; other, 1%. Average monthly income per family member of 25,000 rubles or greater: at home, 56%; at dacha, visiting relatives, 25%; traveling in Russia, 4%; working, 8%; traveling abroad, 5%; other, 2%. Source: Romir, December 2018. Courtesy of Vedomosti

Surveys of the same representative selection of respondents have shown a drop-off in all other ways of spending the New Year’s holidays, which have basically become yet another period of time off work for Russians. The number of Russians planning to spend the holidays at the dacha or visiting friends or relatives has decreased from 34% to 19% in three years. Trips within Russia have dropped from 8% to 2%, while trips abroad have fallen from 4% to 2%.  Nearly everyone has been scrimping, including Russians with above-median incomes. Fifty-six percent of Russian with monthly incomes of 25,000 rubles [approx. $364] per family memberwill stay home, as will 74% of Russians with monthly incomes between 10,000 rubles and 25,000 rubles per family member. As Tatyana Maleva, an economist from RANEPA, notes, the Russian urban middle class, which has grown accustomed to traveling, cannot afford it.

The picture emerging from the survey reflects the mood of many Russians. Since 2014, real incomes have fallen four years in a row, and all indications are they will be shown to have fallen in 2018 as well. According to Rosstat, the monthly modal income in in 2017 was 13,274 rubles [approx. $233], while the monthly median income was 23,500 rubles [approx. $412]. Given these circumstances, the ruble’s devaluation, which has made trips abroad more expensive, is not such an important factor. In December 2015, one dollar cost as much as it does currently, 67 rubles, and its value was rising.

Holidays at home are not cheap, either. In November 2018, the percentage of Russians who had noticed a rise in prices had grown in comparison with October 2018, according to the Russian Central Bank. Forty percent of Russians noticed upticks in prices for meat and poultry; 32%, rises in the price of petrol; 28%, rising prices for cheese and sausage; while 26% had noticed that milk and dairy products were more expensive. All of these goods are part of the home holiday menu.

In comparison with 2014, consumption levels have fallen. They have not returned to their previous levels. Attempting to wriggle their way out of poverty or maintain their previous income levels, Russians have taken out an ever-growing number of consumer loans, which have proven difficult to pay back. Every fourth Russian who had outstanding loans in 2015–2017 spent 30% of their incomes paying them off, note Olga Kuzina and Nikita Krupensky, economists at the Higher School of Economics, in an article entitled “The High Debt of Russians: Myth or Reality?” published in the November 2018 issue of the journal Voprosy ekonomiki.

Generally, the Russian populace has transitioned to a minimalist model of consumerism, notes Maleva. Scrimping begins literally with the New Year. As Romir’s survey indicates, this transition has become a trend that will, apparently, shape the strategies and tactics of Russian consumers in the future, too. The only thing that has not changed over the years is the president’s televised New Year’s greeting: it costs nothing.

Translated by the Russian Reader

Russian Trucking News

DSCN0034“Delivery for a favorite client.” A short-haul freight truck in downtown Petersburg, August 8, 2018. Photo by the Russian Reader

Officials Want to Equip New Trucks with Special Sensors as of 2024
Carriers Are Worried Tightening Monitoring Weight and Size of Trucks Will Increase Load on Business
Elizaveta Bazanova and Vladimir Shtanov
Vedomosti
December 24, 2018

Officials have concocted a new way to monitor business. They want to equip trucks with axial-load sensors in order to combat trucks hauling loads in excess of legal weights. Legislation requiring such loads be transported by trucks weighing over 3.5 tons will be drafted by 2024. The plan is contained in the outline of the Russian government’s national Safe and High-Quality Highways project, two federal officials told Vedomosti. A spokesperson for Deputy Prime Minister Maxim Akimov said the project’s outline would be approved by the cabinet on Monday.

The Industry and Trade Ministry and the Transportation Ministry would have until 2022 to draft amendments to the technical regulations of the Eurasian Customs Union (EACU), forbidding the import to Russia of trucks not equipped with the sensors. The amendments should also be inserted into Russian technical regulations before 2024, according to the national highway project’s outline. (Vedomosti has seen part of this document.) As of 2024, all new trucks will have to be equipped by manufacturers with the sensors, explained Akimov’s spokesperson. Owners of old trucks will not be forced to install them. They will have the option of installing them, says a source who has learned about the plans from a federal official.

Regulations on equipping all Russian trucks weighing more than 3.5 tons with axial-load sensors have not yet been drafted, according to spokespeople at the Transport Ministry and Rosavtodor (Russian Federal Road Agency).

Russian authorities set about establishing weight-and-size monitoring system for freight trucks in 2016. Their goal is to maintain the quality of roads and reduce the number of accidents. Automatic scales that measure the axial load of trucks have been installed on highways in test regions. If a truck is overweight, the carrier must pay a fine of up to 450,000 rubles [approx. 5,800 euros]. A total of twenty-seven checkpoints in eighteen Russian regions have been set up on federal highways. By 2024, the number of checkpoints should rise to 387, covering federal and regional highways in seventy-five regions.

The pilot program in Vologda Region has shown the average overload is thirty percent, the Transport Ministry reported. During their first year of operation, the checkpoints reduced the number of violators from forty percent to four percent.  On the federal level, the weight-and-size monitoring system will be a public-private partnership. RT Invest Transport Systems, owned by Igor Rotenberg, son of Arkady Rotenberg, and RT Invest, jointly owned by Rostec and Andrei Shipelov, has shown interest in acquiring an operating license. In June 2018, the company proposed a public-private partnership with the government.

The regions will establish their own public-private partnerships. Truck owners will be able to purchase the sensors from any manufacturer. No directives will be issued on this score, a federal official assured us.

3.74 million trucks were registered in Russia as of July 1, reports Autostat. Under the European classification, trucks weighing between 3.5 tons to 12 tons are categorized as N2. Such trucks are manufactured by KAMAZ, Iveco, Mercedes-Benz, and Renault (Midlum), among other companies. They are usually employed for short hauls, for example, from a distribution center to retail outlets, a logistics manager from a company in the consumer sector told us.

Currently, truck owners rarely install the sensors, said Boris Rybak, director general of Infomost, because equipping a truck costs owners between several tens of thousands to several hundreds of thousands of rubles. Trucks manufactured in the west that carry goods in Russia usually have the sensors pre-installed.

Alexander Lashkevich, director for relations with industrial and infrastructure organizations at the Business Lines Group, said they did not install additional sensors, since they are a standard feature on most imported vehicles, but this applies to trucks with a capacity of more than 12 tons. The new K5 line of trucks from KAMAZ features axial-load sensors as a standard feature, said a company spokesperson.  Lashkevich said Business Lines used special calculators that facilitate loading semitrailers so as to avoid overloading.

Introducing weight and size monitoring will help maintain roads, but it is not clear why small-tonnage vehicles need to be equipped with axial-load sensors. Problems with overloaded axles happen to heavy haul vehicles. Ultimately, the load on the shipping business will grow, while the expediency of the planned measures is difficult to assess, warned Lashkevich.

The sensors are not needed on low-tonnage trucks. Problems with excess weight “occur extremely rarely due to the specifics of moving people’s things to new residences,” explained Arkady Usachov, director general of Gentle Move, a moving company.

The damage to roads caused by trucks weighing under 12 tons is considerably less, said Rybak, but equipping even light trucks with the sensors is a worldwide trend: you can load even a 3.5 ton truck with up to ten tons of freight. Such systems are in operation on roads in many countries, agreed Mikhail Blinkin, director of the Institute of Transport Economics and Transport Policy Studies at the Higher School of Economics.

The cost of buying and operating trucks could increase, warned Usachov.

“Freight haulage should be getting cheaper, but this approach will only make it more expensive,” argued Alexander Prokofiev, head of operations at the Moving Center. “Plato, ERA-GLONASS, and other systems will not provide real security, and they will not improve road quality. The amount of freight hauled on the roads will not decrease. Roads have to be built well from the get-go.”

Translated by the Russian Reader

Out of Sight, Out of Mind

DSCN1726Goodbye to all that. Exchange rates for the US dollar and the euro, as displayed electronically on the door of Zauber Bank, Ligovsky Prospect, September 19, 2018. Photo by the Russian Reader

Putin Signs Law Banning Outdoor Currency Exchange Rate Electronic Display Boards
Delovoi Peterburg
December 18, 2018

President Putin has signed a law banning outdoor foreign currency exchange rate electronic display boards. The document was published on the Legal Information Website on Tuesday, December 18.

The document amends the law on foreign currency regulation. The Russian Central Bank now has the right to regulate how commercial banks post information about foreign currency exchange rates.

In Febrary 2018, the Central Bank proposed banning foreign currency exchange rate electronic display boards outside the premises of banks. The regulator explained the idea was prompted by the need to combat illegal exchange offices.

“As practice shows, information about foreign currency exchange rates is most often displayed outdoors by so-called illegal currency exchange points, which are camouflaged as limited service branches of authorized banks,” the Central Bank’s press service explained.

In December, a law bill that would grant the regulator the right to establish requirements for display of such information was adopted by the State Duma and approved by the Federation Council.

The Central Bank’s draft instructions explain that information about foreign currecy exchange rates can be placed only within the premises of an authorized bank and in such a way that the information is visible only inside the facility itself.

Translated by the Russian Reader

Are Russians Eating Well?

DSCN1832A fruits and vegetables stall at the famous Hay Market (Sennoy rynok) in downtown Petersburg, September 29, 2018. Photo by the Russian Reader

Eating Their Fill: Russia’s Food Security in the Wake of Crimea
Have Russians Eaten Better After the Government Moved to Defend Them from Western Food? 
Yevgeny Karasyuk
Republic
December 6, 2018

Soon after the embargo that was imposed four years ago in response to the stance of western countries on Crimea, analysts warned Russia itself would primarily suffer from food anti-sanctions.

“We won’t heighten the Russian Federation’s food security at all. In fact, we will reduce it,” Natalya Volchkova, a professor at the New Economic School, said at the time.

Of course, the criticism of the experts was ignored. No one in government questioned the policy of forced import substitution. Most Russians even imagined it was a rare instance when the government made a good decision. Only a few years ago, 71% of the populace [sic] spoke in favor of limiting imports.*

Time has passed, and the experts to whom no one listened have compiled figures showing where the policy has taken the country. A recent report, authored by a group of researchers from RANEPA, provides an analysis of its consequences.

Import substitution in the food sector was an obsession and, at the same time, a source of pride for ex-agriculture minister Alexander Tkachov. His replacement, Dmitry Patrushev, son of the Russian Security Council’s secretary and a none-too-successful state banker, has changed little in the government’s take on the situation. The new minister is certain Russia has reached a level of self-sufficiency above 90% in terms of basic food staples. Thus, Alexei Gordeyev, deputy prime minister for agriculture and an ex-agriculture minister himself, is convinced Russia has successfully carried out import substitution.

Food imports actually did slump sharply—by 46%—from 2013 to 2016. Although an unbiased analysis if how Russian producers succeeded in turning the tables and quickly saturating the market with their own products would point to the ruble’s sudden devaluation, rendering foreign imports uncompetitive, as had already happened in recent history, rather than to the success of the anti-sanctions.

Whatever the cause of Russia’s newfound food independence, however, it has not lead to food security. Citing the international standard, the authors of RANEPA’s report define food security as “the physical and economic availability of safe nourishment, sufficient for an active, fulfilling life.” In other words, there really are more domestically grown and produced food items in Russia nowadays, but the bulk of the populace has less and less access to them.

“Caloric Value of the Russian Diet.” The blue line indicates caloric value, while the dotted line indicates the recommended daily caloric intake per family member in kilocalories. The light purple area indicates the number of Russians who suffer from obesity, in thousands of persons, while the shaded dark purple area indicates the number of Russia who suffer from anemia, also in thousands of peoples. Source: Rosstat and RANEPA. Courtesy of Republic

Last year, Russia was ranked forty-first in the Global Food Security Index, compiled by the Economist Intelligence Unit, meaning that it ranked lower than it had in 2013, when it ranked fortieth. This was due, among other things, to insufficient funding of research and a reduction in the variety of food products.

According to official statistics, food accounts for approximately 35% of expenses in Russian household budgets, which is a high proportion when compared with the OECD countries, among which even the highest percentages, achieved by Poland and Mexico, fall short of 25%. Independent evaluation of spending on food, however, claim that the proportion of Russian family budgets spent on food is actually over fifty percent. Given the almost continuous drop in the real incomes of Russians, the selection of products has declined in quality and abundance. On average, Russian households continue to skimp on everything they can do without, as confirmed by the compilers of the Coffee and Milk Index, as published by Romir, a Russian marketing research company. (The index tracks sales of chocolate, coffee, milk, and bottled water.) RANEPA’s researchers noted the discrepancy between the excess fat in the food and bread Russians eat and the low number of calories in their diets.

By closing the borders to imports and showering the domestic agro-industrial complex with generous state subsidies—1.2 trillion rubles [approx. 15.9 billion euros] in the past six years from the federal budget alone—the regime has persuaded itself it has been filling the nation’s bellies and improving its health. Its expectations were exaggerated, however. Oversaturated with cheap carbohydrates, the standard fare eaten by many Russians remains unbalanced and low on energy. “This is borne out by widespread anemia among the populace as a whole and children in particular,” RANEPA’s researchers write. The number of Russians who suffer from obesity has grown for the same reason.

Obviously, these problems cannot be written off as temporary glitches in demand in the domestic food market, whose revival has been unanimously trumpeted by former agriculture ministers and the current agriculture minister. Rather, they are the natural consequence of systemic problems with the natural resources economy that shoulders the burden of the Kremlin’s geopolitical capers. The average Russian family often simply cannot afford a plentiful variety of healthy, high-quality food.

The authors of RANEPA’s report have emphasized this.

“Neglecting this fact can lead to a distorted picture of the state of food security,” they write.

However, there is still very little chance the alarming conclusions of the experts will be heard this time around, forcing the government to make adjustments to its food policy.

* How did they do that? Was a nationwide referendum held? The author, of course, is referring to a so-called public opinion poll in which, at best, a thousand or two “ordinary” Russians were asked loaded questions, to which they gave the “right” answers. {TRR}

__________________________________

Russians Spend 30% of Their Budgets on Food
Georgy Tadtayev
RBC
December 17, 2018

Russians spend nearly a third of their household budgets on food. Russia lags behind Montenegro, Latvia, and Turkey in this sense. Russians spend less than seven percent of their budgets on culture and leisure.

According to RIA Rating, as reported by RIA Novosti, Russians spent 31.2% of their household budgets on food in 2017.

The estimate of the percentage of their household budgets people in forty European countries, Russia, Kazakhstan, and Turkey spend on food was based on information from the IMF and national statistics agencies. Russia ended up in the bottom ten of the ranking, ranking 31st. Its nearest neighbors were Montenegro (29.7%) and Latvia (31.7%).

Ukrainians spend the greatest portion of their household budgets on food: 50.9%. People in Kazakhstan (46%, 39th place) and Moldova (43.4%, 38th place) also spend more than 40% of their budgets on food.

Western European countries topped the rating. Luxembourg came in first place. Residents of the duchy spend a mere 8.7% of their money on food. Close behind Luxembourg were Great Britain (10%) and the Netherlands (10.6%).

The agency also ranked countries according to percentages of income spent on alcohol and cigarettes. Residents of three Balkan countries—Romania (8.2%), Bulgaria (5.1%), and Serbia (4.7%)—spend the most on bad habits. Luxembourg (1.3%), Moldova (1.5%), and Cyprus (1.6%) spend the least on alcohol and cigarettes. Russia ranked 24th: Russians spend 3% of their househould budgets on bad habits.

Sweden was the top-ranked country in terms of spending on culture and leisure: Swedes spend 18.7% of their budgets for these purposes. Moldovans spend the least on leisure and culture: 1.3%. Russia ranked 21st: Russians spend 6.9% of their money in this category.

Translated by the Russian Reader

Squandering Its Way to Superpowerdom

“Squandering”: Did the US Secretary of State Grasp the Russian Approach to Budget Spending?
The Kremlin Accused the State Department of Tactlessness and Unprofessionalism, Yet Pompeo’s Remarks Were on the Mark
Yevgeny Karasyuk
Republic
December 13, 2018

padrino.jpgVenezuelan Defence Minister Vladimir Padrino gives his thumb up as he sits on the cockpit of a Russian Tupolev Tu-160 strategic long-range heavy supersonic bomber after it landed at Maiquetia International Airport, north of Caracas, on December 10, 2018. Courtesy of Federico Parra/AFP/Getty Images

Russian’s decision to send strategic bombers on a junket to an airport near Caracas elicited a curious reaction from US Secretary of State Mike Pompeo, who publicly expressed his pity for Russian taxpapers, whose money the Kremlin, habitually disregarding the costs, has been spending on its geopolitical moves.

“The Russian and Venezuelan people should see this for what it is: two corrupt governments squandering public funds, and squelching liberty and freedom while their people suffer,” Pompeo wrote.

The Russian Foreign Ministry responded by calling Pompeo’s statement “utterly unprofessional” and even “villainous.” Pompeo’s remarks, which the Kremlin, in turn, dubbed “inappropriate” and “undiplomatic,” were apparently really lacking in nuance: the hardships of Russians, fortunately, cannot yet be compared with the suffering of Venezuelans. But, hand on heart, was Pompeo so wrong when he talked about the losses to the Russian federal budget and lack of oversight?

Russian society has an extremely vague notion about how much the Kremlin’s expansionism has ultimately cost the country. According to calculations made by IHS Jane’s at the outset of Russia’s operations in Syria in autumn 2015, Russia could have been spending as much as $4 million a day. Later, the Yabloko Democratic Party, which is not seated in the Russian parliament, estimated the Kremlin had spent a total of 108–140 billion rubles [between $1.6 and $2.1 billion] on Syria. A more accurate assessment would be difficult to make. Experts doubt that anyone, including the Finance Ministry, keeps tabs on such expenditures. Thus, nobody knows the real cost of Russia’s involvement in the Syrian conflict, argues the Gaidar Institute’s Military Economics Laboratory.

The budget’s fading transparency has been a trend in recent years. In 2016, secret and top-secret allocations accounted for 22% of total federal budget expenditures, a record for the entire post-Soviet period, and much higher than secret allocations in comparable countries, according to RANEPA’s March 2015 report on the Russian economy.

Quite naturally, this state of affairs has not improved the quality of the state’s financial decisions. In terms of effective state spending, Russia ranked nineteenth in a new rating of twenty-five countries, compiled by the Higher School of Economics using data from the World Bank and OECD. Since they are not priorities for the current regime, problems with child mortality and life expectancy were among the reasons Russia ranked so low in the survey: the government spends more on the army than on healthcare—4.3% of GDP versus 3.8% of GDP, respectively. In these circumstances, the chances the Kremlin’s strategic projects in the Middle East and Africa (e.g., the Central African Republic, Burkina Faso, the Democratic Republic of the Congo, and Mozambique) will be decently funded are always much greater than the national healthcare project, which stipulated increased government spending on cancer treatment. The government nixed the plan over summer.

Since it remains largely Soviet in spirit, Russia’s foreign policy has been categorically blind to history’s lessons. The Soviet Union’s exorbitant geopolitical ambitions and support for fringe regimes around the world left the country with a legacy of mostly toxic multi-billion-dollar debts. The process of writing them off has been disguised as a form of international charity or, speaking diplomatically, official development assistance (ODA). According to RANEPA, writing off the debts of developing countries accounted for 35% of all such “international aid” last year or $425 million. It has been the Russian government’s usual way of doing business. Previously, the Russian government wrote off the debts of Nicaragua ($6.3 billion), Iraq ($21.5 billion), North Korea ($10.9 billion), Syria ($9.8 billion), Afghanistan ($11 billion), and Cuba ($29 billion), among other countries. Venezuela risks joining this sad list. Over the past twelve years, Russia has invested a total of $17 billion in the country.

Russia’s Expenditures on Official Development Assistance (Excluding Humanitarian Aid), 2005–2017, in Millions of Dollars. Sources: OECD, Russian Finance Ministry. Courtesy of Republic

Since it was paid for by the Russian federal budget, which has been running a deficit for the last seven years, Russian officials probably did not see the transatlantic flight of its strategic bombers as too expensive. On the contrary, they saw it as a flashy display of Russia’s military prowess and proof of its influence in the region. However, the government of Nicolás Maduro signed off on the stunt. Subject to growing pressure from creditors and an angry, desperate population, it lives day by day. In all likelihood, it will soon collapse, leaving behind a mountain of unpaid bills and unfulfilled obligations to its allies. If this is the case, can we evaluate the Russian government’s action better than the tactless Mike Pompeo did? Probably not.

Translated by the Russian Reader

Making Life Easier for Vegans in Petersburg

Анастасия Емельянова, основатель VegCode
Anastasia Yemelyanova, VegCode founder. Photo courtesy of Sergei Yermokhin and Delovoi Peterburg

A Barcode for Vegans: Petersburgers Develop App for Identifying Vegan Products Through Barcode
Inna Reikhard
Delovoi Peterburg
December 12, 2018

App Interests a Thousand Users in Single Woeek
Petersburgers Anastasia Yemelyanova, Alyona Kabardinova, and Nikolai Dubrovsky have developed the mobile VegCode app (Vegan IT LLC). Made available to users in early December, the app is designed for vegans. It lets shoppers use barcodes to figure out whether or not items in stores contain animal products and have been animal tested. The app currently has a database of 26,000 items marked “vegan” and “non-vegan.” Most of the items are edibles and cosmetics. Household cleaning products will soon be added to the list.

A Growing Segment
As the designers explained, there is a demand for the app, since the number of vegans in Russia has been growing at a rate of fifty percent annually. There are now approximately 150,000 vegans in Russia.

The team has been preparing to expand the app’s functionality by adding a map of vegan shops, cafes, and producers. The app, which operates in Russia and the CIS, will earn money by advertising the services of these businesses.

Attracting Investors
“Unlike Western Europe and the US, the problem of identifying vegan goods is much gnarlier in Russia, because there is not a well-defined system for labeling goods and far fewer speciality magazines,” Yemelyanova explains.

For example, you might find a retail item labeled “Lenten,” but it might not be appropriate for vegans. On the other hand, producers sometimes have no clue their product lines include ethical products.

The startuppers commenced work on the app in early 2018. They raised money on the crowdfunding website Planeta. They also made it to the finals of Philtech Accelerator, winning a 100,000-ruble prize from the Higher School of Economics. The team got another 300,000 rubles from venture investor Alexander Rumyantsev.

Yemelyanova says the hardest thing was compiling the database of retail items marked “vegan.”

“We get information about the content of products from open sources. Our users can also add items via the app. After they are moderated, the new items are listed in the database,” a spokesperson for the company said.

In a week’s time, the nearly thousand users who downloaded the app have suggested 4,000 more items for inclusion in the database.

Prospects
The market for vegan products in Petersburg has been growing rapidly. In 2015, sales were estimated at 80 million rubles [approx. 1 million euros]. In 2017, this figure climbed to 400 million rubles [approx. 5.3 million euros].

Petersburg has several dozen fast food outlets and shops catering to vegans, including Bunker and B12 Vegan Shop.

Petersburg is also home to a small number of vegan producers. Businessman Ivan Ivanov, for example, makes lactose-free dairy products, wheat steaks, and other edibles under the Primal Soymilk brand. Verde produces cheese and curd. Veganov makes soy and vegetable sausages, while Soymik produces soy-based products.

“Petersburg has the most thriving vegan movement in Russia. The city also has a growing number of vegan producers. Mainly, however, these are small businesses in which not a lot of money has been invested. Their products are usually not sold in retail chains, but I think the day when they’ll be sold there is not far off,” says Ivanov.

Ivanov says he had thought himself about making an app for identifying vegan products.

Translated by the Russian Reader