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. Last Updated: 07/27/2016

'Economics' Is Too Easy an Excuse

The fire at the Ostankino television tower "shows the shape of our vital installations" and underscores the need for "bold economic reform." — Vladimir Putin speaking Monday at a Cabinet meeting.

President Putin says he sees economic forces behind the tragic television tower fire, and also behind the sinking of the Kursk submarine.

But what’s most interesting about the economics underpinning both of these catastrophes is that both the tower and the submarine were victims of a many-year drought of public investment into public goods. Would President Putin, then, advocate a national program of public investments — à la Franklin D. Roosevelt? (Or, if you prefer, à la Yury Luzhkov?) If so, he would have to look beyond the so-called German Gref program, which offers no such thing.

Many would shrug at such talk (and bridle at anything smacking of praise for the mayor of a truly corrupt City Hall) and counter there is no money for public investment.

True enough, there isn’t.

After all, look at St. Petersburg — where the Sobchak-Putin administration decided, in its final days in power, to take out massive short-term loans from commercial banks to help fund Mayor Anatoly Sobchak’s failed bid for re-election (Putin was his campaign chief).

By election day, June 1996, St. Petersburg had debts of 3.5 trillion rubles (then about $580 million) — including 1.5 trillion in high-interest 90-day loans.

"In June, July, August, September and October, if you had taken all of the city’s income and spent it on nothing but paying off these due debts — not on health, not on schools, just on the debts — then it still would not have been enough," said Igor Artyemev, Yabloko’s top man in St. Petersburg, in an interview this winter.

As financial chief of the post-Sobchak administration, Artyemev had to clean up the mess. He remembers cornering key figures in the Sobchak City Hall (he did not say who) to vent his indignation:

"I asked them: ‘What were you thinking?!’ They said, ‘We’d have prolonged the credit.’ ‘But at what cost?’ I asked."

Nationally, the Boris Yeltsin election was simply the St. Petersburg practice writ large. There were enormous German commercial loans brokered by "friend Helmut," there were strange Xerox paper boxes filled with dollars floating about the grounds of the Russian White House … and through it all, Ostankino and the Kursk and a million other key objects of infrastructure aged in neglect. So if the Yeltsin-Putin crowd wants to see the "economic forces" behind these tragedies, it has only to look into a mirror. Click here to read our Special Report on the Kursk Tragedy.