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. Last Updated: 07/27/2016

Flawed Recipe For Civilizing St. Petersburg

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I heard some very encouraging words from St. Petersburg Governor Valentina Matviyenko this week: She wants to make St. Petersburg a civilized place.

"My general policy is to turn St. Petersburg into a city with a European standard of living," she said in an interview published in Profil.

And how?

Matviyenko wants to create a good investment climate, stop bribery, relocate half a million St. Petersburg residents from communal apartments and increase the city budget. It should be in the region of 170 billion rubles ($5.8 billion), she said. As I understood it, her goal is to get local taxpayers to cough up more instead of paying bribes.

"We have set up a working group to increase the revenue of the city budget," Matviyenko said. "We will invite managers of certain companies, [we] will talk [to them], explain, examine. We have all the necessary resources to do that, including administrative ones."

That's quite true, she is quite good at employing "administrative resources," as the recent gubernatorial election demonstrated. For this reason, I advise the managers of "certain" companies to be prepared for the worst. There's nothing bad, of course, in encouraging businesses to declare all their income to the city authorities, but it seems very unlikely that bribery will end as soon as they start paying their taxes in full. It is more likely that businesses will have to pay higher taxes and still bribe the authorities to keep their operations running.

Matviyenko admitted bribery was quite a serious problem for the city government. "It is no secret to anyone that the system of allocating city orders and contracts was built on kickbacks. This means contractors have been automatically building 20 percent into their price to compensate for spending on bribes. We've been introducing much-needed tenders for the allocation of contracts," Matviyenko said.

This sounds very promising, but from my recent conversations with businessmen dealing with city contracts, I understand nothing has changed.

The figures cited by Matviyenko suggest that up to $400 million was paid out in kickbacks last year. This is a simple calculation, based on the fact that the city's $2.2 billion 2002 budget was mainly spent on financing city orders and contracts. The city budget for 2003 is $2.6 billion, and for next year it is about $3 billion.

As an example of her fight against corruption, Matviyenko pointed to the arrest last month of Vladimir Yarmin, the head of the Kirov district administration who has been charged with extorting more than $100,000 from a local trading company. Her example makes her look very effective, of course, but why is it that local politicians say the arrest was the result of an insider fight between Yarmin and Vyacheslav Krylov, the former head of the Kirov district? If that is the case, I wish City Hall was drowning in such conflicts, because it looks as if it is the only way to stop hundreds of millions of dollars from disappearing into officials' pockets.

Reading Matviyenko's interview, I was very glad that she has finally released figures about the widespread corruption in City Hall. However, it looks as if she has a long way to go to make St. Petersburg a city with a European standard of living, if one-fifth of its more than $2 billion budget is quite literally being stolen each year. If it were 5 percent, I bet Europe would have understood that, but 20 percent is really over the top. It just makes me wonder what the figure is for Moscow.

Vladimir Kovalyev is a staff reporter with The St. Petersburg Times.