20 years under Putin: a timeline

Russian financial policy expert Irina Suvorova analyzes the situation with small and mid-sized cities in Russia today, criticizing the position voiced by the Minister of Economic Development Elvira Nabiullina at the 2011 Moscow Urban Forum.


The steps of the Voskresensky Monastery in Torzhok, Tver' region, in 1976 and in 2011. They have been in a state of total despair for many decades now.

© Vladimir Paperny


Since the fall of the Soviet Union, many of the 800 or so small towns in the Russian Federation have found themselves in a state of crisis. Across the country, cultural and historical landmarks are in terrible disrepair, infrastructure is crumbling, and social tensions are running high, chiefly as a result of the federal government no longer providing adequate subsidies. In light of this, the speech delivered by the Minister of Economic Development of the Russian Federation, Elvira Nabiullina, at the 2011 Moscow Urban Forum, sparked great controversy. Considering the complex socioeconomic situation that small towns have found themselves in, the public expected the government to voice constructive proposals for overcoming the crisis. The proposals presented by Nabiullina were not only less than constructive, but her speech was deemed “outrageous” by the Union of Small Cities and Towns of the Russian Federation (USC). The minister unequivocally stated that maintaining the vitality of small towns in the coming decades would be problematic.

According to Minister Nabiullina, between 15-20 million people will migrate to big cities within next twenty years (a migration that corresponds with worldwide trends). She believes that now is the time to focus on rapid modernization in the twelve cities across Russia that have a population of over 1 million. The state has apparently decided to take the radical step to phase small cities out.

Upon careful consideration,  one may not find anything new in the minister’s address. Nabiuillina simply stated that  federal support for numerous small (< 50,000 people), and mid-sized (< 100,000 people) cities has been inefficient.  However, it is unclear how such support can be efficient, when in the past two years, no more than 4% of such towns received targeted federal appropriations, including far from generous budgetary credits from VneshTorg Bank (VTB).

This is shocking, considering the fact that VTB was the chief sponsor of a huge, unrealizable project presented during the 2010 Venice Architecture Biennale, when the bank supported the creation of a plan for the “reconstruction” of Vyshnyi Volochek (51,400 people). This project would entail turning four buildings in the city’s industrial zone into a convention center with hotel complex, a site for marine tourism, and a theatre complex with a grass-covered roof. According to eminent cultural commentator Grigory Revzin, this purely aesthetic undertaking would be heedless of any local economic interests and does not have the support of the Ministry of Regional Development.


Russian Pavilion for the Venice Biennale of Architecture


At the same time, the government claims to be sacrificing national economic growth for the sake of supporting small cities. According to Nabiullina’s speech, “Preserving small, economically inefficient cities at any cost and creating barriers to the migration of the labor force into big cities may cost Russia a potential of 2-3% of our economic growth annually.” This conclusion is nothing more but a restatement of the long-instituted federal policy of “rationalizing” regional economic development, or, in other words, giving up on reforming the regional development policies that could lead to a decent standard of living in small and medium-sized Russian cities.

In 2000, the federal program for the development of small and mid-sized cities was terminated after being in effect for only four years. The amount of funding that ended up actually being appropriated as part of this program amounted to less than one-third  of what had been planned. The government did not respond to Union of Small Cities and Towns of the Russian Federation’s 2003 proposal for a targeted program that would have had a tremendous effect on the economic conditions throughout the country. In 2005, the Ministry of Regional Development submitted another proposal for social and economic development, which was approved by the federal government. On the basis of this document, the Ministry began to propose smaller, targeted strategies, in addition to encouraging the State Duma to review the law on the relationship between the federal government and regional development. Unfortunately, none of the resultant legislation was ever enacted. When the USC submitted another proposal to the federal government in 2008, it was simply ignored.

It appears that instead of thought-out policy that addresses the spatial disproportions of the country, the federal government will continue to deal with the issues with an assortment of sporadic measures aimed only at emergent crises. Meanwhile, the Russian academic community has been working out strategies for establishing networks of populated locales. These are systems for developing infrastructure (transportation, utilities) among adjacent urban and rural settlements that would integrate them and thereby increase the regional standards of living. Essentially, such networks would provide for the institution of the  social, economic, and cultural conditions usually found in big cities to coexist with the ecology and geography of rural space.

Preferential treatment for large metropolises and the failure to address the unique geographical characteristics of Russia may lead to grave consequences. According to Arkady Tishkov, the deputy director of the Institute of Geography of the Russian Academy of Sciences, the wealth of physical space is Russia’s greatest asset. With its indifferent acceptance of the prognosticated migration of 20 million people, the Russian government is signing the death warrant for up to 800 small cities, with a total population of 16.5 million.

It goes without saying that this manner of migration would be hard on families. Former residents of small towns have limited opportunities in big city real estate markets, and yet they are practically pushed out of their native settlements in search of wages and better futures for their children. If we wipe small cities off the Russian map, we would see that in 44 out of 83 constituent entities of the Russian Federation, there would be no more than one or two cities left. The basic structural integrity of the country is at stake.

By and large, population distribution is the determining factor in economic development. As a matter of fact, the basic elements of the Russian economy are not even the small and mid-sized cities, but the rural settlements, of which there are over 130 thousand.The viability of these settlements is in large part dependent on the very existence (and  economic potential) of small and medium-sized cities. This kind of relationship between smaller and greater can be observed among localities of every size, from the village to the  metropolis. Thus we can see that the end of small and mid-sized cities will inevitably lead to the degradation of regional centers as well.

In many areas, small towns (e.g. Torzhok, Valdai, Medyn', Kostomuksha, Staritsa, etc.) and medium-sized cities (e.g. BorisoglebskKimry, Alexandrov, Kungur, etc.) are centers of social, economic, and cultural life. They house agricultural processing plants, small mining facilities, recreation and cultural centers, and stadiums. Quite often, small cities functionally compliment administrative capitals as transportation hubs; branches of large companies may be found in them. Most small cities serve surrounding areas with total populations of an average of 10 million people.  According to Vladimir Kumanyaev, who is the chief administator of the Radishchev District of the Ulyanovsk region, "Small cities are the carriers of our national idently. It is there that our historical and cultural traditions are preserved. It’s no coincidence that more than half of Russian small cities are officially recognized as historical landmarks. Destroying the structure of small and mid-sized towns is destroying Russia.”

The Russian government seems to be relying entirely on the prospects of global growth trends and technological advances to solve its problems. Meanwhile, the country has not been fully covered by a national telephone service, which is being replaced by mobile phone providers, against the government’s will. There is no Russian-made passenger vehicle that compares to ones of foreign make. In a country that ranks first in the world in natural gas production, a significant proportion of the population, mainly in rural areas and small and mid-sized cities, does not enjoy the benefits of the cheap fuel. The government seems to think that these problems are just going to solve themselves.

Just as the authorities seem to believe that the problems in small cities will solve themselves. And yet, there are reasonable solutions. For example, economist Dmitry Lvov posits that the creation and maintenance of a municipal sector that is based off of an industry with a slow growth rate could promote more organic regional population shifts. The activities of such a sector would not be centered around economic gains; by its nature, it could never be organized on a commercial basis, but it would perform functions that, in the long run, would ensure economic stability. The talk of sacrificing 2-3% of overall growth belittles the important cause of improving the quality of life for a sizeable segment of the national population. If the country does not provide for them, then what is the point of economic growth?

Moreover, authorities overestimate the big cities’ capabilities to support the lion’s share of the national population. According to the Russian Ministry of Economic Development, the twenty largest cities in Russia generate half of the total GDP; however, the service sector, which is contingent on population size, plays a crucial role in the gross value added for the national economy. Thus, if small and medium-sized cities were not so neglected, they would contribute a lot more to the GDP. In addition to this, the existing method of registering the volume of industrial production at the headquarters of mining and processing enterprises is conducive to their artificial reallocation in favor of large cities. For this reason, on the books, Moscow accounts for over 50% of exports of Russian fuel and energy resources, while the main oil-producing region in the country, the Khanty-Mansi Autonomous Region, exports no more than 7.5%. Factors such as these contribute to an exaggeration of the pre-eminence of the big cities over small.

The report of the Economic Development Minister rightly draws attention to the issue of under-funded municipalities. What Russia needs is a program for economic development that takes into account the enormity and diversity of the nation and provides for a more complex system of urban centers.  The government  ought to take efforts to decentralize the power structure and cede more authority on the municipal level. Such policies should come as part of  a well-planned approach to promoting regional economic development, one of the cornerstones of internal politics.