Betsy Gidwitx Reports







Report of a Visit


September 7-24, 2008



The writer visited Russia in September 2008, spending 12 days in Moscow and five in St. Petersburg.  The visit occurred as financial markets encountered major crises throughout the world.  Notwithstanding its massive oil and gas revenues, economic conditions in Russia were beginning to deteriorate as well.


Moscow cityTo a seasoned visitor, contemporary Russia appears to be a study in contrasts.  The streets of its major cities are clogged with vehicles, many of them large and of foreign lineage.[1]  Traffic conditions are horrendous.  New construction, although subsequently tempered due to the economic crisis, appeared to be ubiquitous.  Real estate prices are exorbitant, and a large number of luxury shops cater to a small, but highly visible group of indigenous wealthy families.  Moscow is the most expensive city in the world for expatriates, according to a re-spected study.[2]


Traffic gridlock is common in downtown Moscow.  Some sources estimate that four million cars attempt to traverse its streets daily.



Retrieved  October 3, 2008.

Although different observers have different estimates, it is likely that about 40 percent of the population of Moscow and perhaps one-third of the St. Petersburg population could be considered middle-class in mid-2008.  Consumer credit was available for the purchase of automobiles and housing, and use of computers and cell phones is widespread in major urban areas.  Whereas good restaurants, especially for casual meals, were difficult to find as recently as five or six years ago, respectable cafés and bistros are commonplace in downtown Moscow and St. Petersburg.  Well-stocked shopping malls exist in many cities, perhaps in as many as 100 locales across Russia.  Travel abroad is broadly accessible and inexpensive; tourism along a major stretch of Turkish beachfront caters almost exclusively to Russian-speaking vacationers.


Nonetheless, the economic outlook in Russia was not entirely bright.  Its foreign trade overly dependent on international sales of energy and commodities, Russia is vulnerable to the volatility of world markets.   Export earnings were beginning to decline, and capital flight was accelerating.  Liquidity problems were causing major problems in the construction industry and for small businesses. International investors were becoming skittish about the lack of economic and legal reforms.  Pressure for devaluation was beginning to build. 


Inflation probably was about 15 percent at the time of the writer’s visit and has risen since then.  Corruption is “staggering,” according to one well-qualified foreign observer, whose views are supported by articles in the Russian press.[3]  Few areas of the economy are left unsullied.  Graft is commonplace in construction and in small businesses, where officials must be bribed for a multiplicity of permits.  The court system is notoriously corrupt, and higher education is now considered the “fastest growing area of bribery.”[4]  Hospital personnel must be paid under the table for services routinely provided to patients in the West.  Port and customs officials must be rewarded with private commissions to assure delivery of goods.


Russian infrastructure is poorly developed.  Outside major cities, the transport system is exceedingly deficient and distribution of common products (for example, office supplies) often is inadequate, even in Moscow.   The public health infrastructure remains decrepit and is a major factor in the low life expectancy of Russian citizens.


However, inadequacy in public health infrastructure and corruption in the delivery of health services are but two causes of Russian low life expectancy, which stands at 59.19 years for males and 73.1 years for females.  The Russian population, estimated at 140,702,096 in July 2008, continues to decline, with a negative growth rate estimated at –0.47 percent expected in 2008.  (The birth rate is estimated at 11.03 per 1,000, and the death rate at 16.06 per 1,000 in 2008.)[5]   HIV/AIDS, tuberculosis, alcoholism, cancer, cardiovascular and circulatory diseases, suicides, smoking, and traffic accidents all are cited by a leading international scholar as leading causes of the “appalling deterioration in the health of the Russian population.”[6]

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