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. Last Updated: 07/27/2016

INSIDE RUSSIA: When a Rich Land Has No Heat or Light




Last week I found myself in Kamchatka, a territory where, thanks to the specifics of geography, the paradoxes of the Russian economy are pushed to the limit. In this region there is one automobile for every five residents f the highest per capita car ownership in Russia. The earnings of a simple fisherman in one season range from $20,000 to $40,000. A dollar invested in the fishing industry gives back $12 in profit, and experts estimate that poachers make off each year with catches worth up to $4 billion.


There is money in Kamchatka. But there is no light and no heat. This winter in the territorial capital of Petropavlovsk, locals burned all of the fences. In Ust-Kamchatka, a town six kilometers to the north, electricity and heating were completely cut off. People moved to the top floors of five-story buildings, and used the first floor as a public toilet. Around June, all of that began to melt and to run off in the direction of the lone local fish cannery.


While Kamchatka has sat without light, the local administration has reportedly been buying heating oil from a Korean company for 2,800 rubles a ton. Russian heating oil costs 1,500 rubles. Asked for the exact name of the Korean firm in question, officials in the administration spread their hands in a gesture of helplessness. "It's not us doing the buying, it's Kamchatenergo," they say. At Kamchatenergo they also gesture helplessly. "It's not us doing the buying, it's Slavneft." At Slavneft they also don't know anything f after all, they say, the contracts were signed by the administration.


Poaching in Kamchatka is consciously and broadly encouraged by the authorities. After all it is the local administration that has given catch quotas on fish and other seafood to 594 (!) different companies. Everyone knows that each company receiving a quota for, say, 50 tons of crab is obviously a poacher: Crab are caught at a rate of 4 tons a day, and there's not much profit in working just 12 days a year. A quota of 50 tons is simply a front for unregulated fishing.


At the same time, this stolen money nurtures nothing in Russia, thanks to the insatiable minute-by-minute greed of local bureaucrats. The ports are empty because any Russian ship that pulls in is fallen upon by a pack of hungry regulators. The shipyards are empty because Russian taxes make it cheaper to do repairs in Korea.


The fish processing factories are idle because the cost of electricity makes fish processing in Kamchatka unprofitable. And electricity is expensive because taxes and bureaucrats have destroyed all of the other tax payers f that is to say, the ports and shipyards.


If Russian factories could swim, then all of Russia would be like Kamchatka, and the factories could sail off to be repaired in Korea. On Kamchatka, however, the laws of economics are as refined as fine sugar. The more bureaucrats rage out of control, the more ships are serviced abroad. The more that added value slips over the border, the more tireless the bureaucrats. As a result, the governor's office buys heating oil for twice its price, fishermen buy their own personal generators, and that remainder of the population that has no relationship to the sea goes hungry, and on winter nights throws rocks to break the windows of apartments where the lights are on.