Putin Vows To Finish Transport Upgrade

NOVOSIBIRSK -- The government will go ahead with its $6.4 trillion project to upgrade transportation infrastructure by 2030 despite its current financial woes, Prime Minister Vladimir Putin said Wednesday.

But he made clear that ongoing turmoil on financial markets could affect the actual spending on the ambitious project.

"We know about turbulent processes in the global economy, but judging by all the forecasts, they will last several months, perhaps until the end of next year," Putin told a meeting of government officials in Novosibirsk.

"But the transport strategy until 2030 was approved, and now we must focus on its unconditional implementation," he added.

Putin also said financial realities could influence the plan, however.

"I agree this is a living document, and we should base our actions on the realities," he said.

Insufficient and outdated transportation infrastructure is one of the most acute problems standing in the way of Russia's economic development.

"The lack of proper transport infrastructure deprives many territories of chances to develop," Putin said. "High transportation costs build on prices, driving them up."

Historically, Russia has based its infrastructure on railway and later on air transport, while automobile highways remained largely rudimentary.

Up to now, there has been no quality ground route linking European Russia with its Pacific coast, and there is no motorway linking Moscow and St. Petersburg.

But even rail and air routes have fallen short of meeting the growing flow of goods after nine years of strong economic growth.

Russia has proclaimed upgrading transport infrastructure as one of the priority projects open for Western investment.

Early this year, the government adopted a plan to invest 13 trillion rubles ($550 billion under the exchange rate at the time) until 2015 into building new roads, air hubs and other infrastructure necessities

The meeting in Novosibirsk approved a broader plan to spend 172.3 trillion rubles ($6.4 trillion) until 2030.

Under the plan, drafted before Russian markets went into free fall under the weight of the global financial crisis, the government had intended that 60 percent of the money would come from private investors.

But Transportation Minister Igor Levitin told reporters that ultimately the ratio between state and private investment could be 50-50.

The government has said the fundamentals of Russia's economy are healthy and that the country has accumulated enough resources to weather the storm. Several government officials have said they expect the domestic economy to emerge from the crisis healthier.

"Authorities are working on means to consolidate the sector, including the creation of managing companies, united air carriers and operators of railway, sea and river transport," Levitin told reporters.

"This is appropriate today given the situation on the financial markets," he added.