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. Last Updated: 07/27/2016

General Enters Struggle Over The Economy

Not only has Security Council Secretary Alexander Lebed managed to take part in settling the country's most pressing problem, the Chechen conflict, he has actively engaged in the dispute over one of the most expensive economic projects that the government has undertaken -- the high-speed St. Petersburg-Moscow railway line.


Journalists have already begun to call the new Russian government the "high-speed government." And it is easy to see why. The former deputy mayor of St. Petersburg and head of the High-Speed Railways Stock Co., Alexei Bolshakov, has become the No. 2 man in government after Prime Minister Viktor Chernomyrdin.


This company intends to build a high-speed line between the two cities. The cost of the program is estimated at $8 billion to $15 billion. And it is highly doubtful that it will be economically viable. The project would probably not have been considered had it not been for its high-ranking official supporters. But the line also has its influential opponents.


Until recently, there was a certain unstable balance between the supporters and detractors of the project. The formation of the new cabinet, however, has shifted the balance of forces in favor of those who want to spend the billions of dollars required to build the railroad.


The new railways minister, Anatoly Zaitsev, strongly supports the project. Before he was appointed to the new ministerial post, he headed October Railways, the line that now connects Moscow to St. Petersburg. Moreover, he remains on the High-Speed Railways' board of directors and thus has a clear interest in seeing the line built.


Supporters of the high-speed line estimate that it will increase the number of railway passengers. Opponents point to the decline in railway travel between Moscow and St. Petersburg during the past few years -- almost halved to some 2.3 million passengers. The Railways Ministry estimates that it is unlikely the number of passengers will surpass 3 million by 2015. Moreover, there is no reason to believe most passengers will switch over to the new railroad, because a one-way ticket will cost no less than $100. Even more important is the fact that the country is in no condition to spend billions of dollars on the project, which, theoretically, would begin to pay for itself only within 20 years.


But someone among the project's opponents had the bright idea of including Lebed in the deal. And apparently this has worked. Lebed conducted inquiries among all the ministries involved in the railway line and appealed directly to President Boris Yeltsin to appoint a team of experts on the project. Lebed supports an alternative plan which would involve rebuilding the existing railroad between Moscow and St. Petersburg and raising the speed of trains to 200 kilometers per hour. The cost of this project would be 3 trillion rubles ($560 million), significantly less than the high-speed line.


If Lebed's involvement turns out to be decisive, he will be known not only as a peacekeeper but as a savior of the domestic budget from ill-conceived expenditures on the "project of the century." This could partly compensate for the lack of his own economic doctrine, which he will clearly need to develop in the struggle for the Russian presidency that, essentially, has already begun.





Mikhail Berger is economics editor for Izvestia.