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. Last Updated: 07/27/2016

Trucking Faces a Bumpy Future

VedomostiFifty-three percent of the country's roads need repairs. The poor state of highways could act as a brake on economic growth.
When U.S. President Dwight D. Eisenhower showed off America's interstate highway system to Nikita Khrushchev in 1959, the visiting Soviet leader retorted that he saw nothing but wasted effort.

Today the chronic neglect of the Russian highway system could cripple economic development if it fails to keep up with expanding car ownership and the demands of a boom economy.

"It's clear that the existing road system in Russia is not enough for achieving the economic goals set by [President Vladimir Putin]. What we have just isn't sufficient," said Dmitry Larionov, a senior officer at the Moscow office of the International Road Transport Union.

Russia can boast a little more than half a million kilometers of highway, while Japan, a country 1/45th the size, has twice as much.

Even worse, the Transportation and Communications Ministry estimates that 53 percent of the country's highway system is in need of repair.

If the problem isn't dealt with effectively, the most heavily traveled routes will start seeing traffic jams lasting from a few hours to two days in the coming years, the ministry estimates.

Transport authorities say they're aware of the situation and are on track to fix it. A new transportation strategy published last year calls for rapid expansion of the road network combined with repairs on existing routes.

Gleb Zinovyev, operations officer in the World Bank's Moscow office, says the plan looks good -- as long as the authorities stick with it.

"It should be on the top of the agenda, and it is," he said. "We're confident this course will be followed through."

Zinovyev said that fixing Russia's road system is a win-win proposition for the economy, since investment in roads will lead to increased productivity through job generation, increased trade turnover, taxes and opportunity costs.

"All together, it's a huge economic effect," Zinovyev said. "With Russia's huge distances, an efficiently working road system is just crucial for maintaining a cohesive economic space."

Thanks to Soviet central planning, Russian highways tend to radiate from major cities and production centers rather than act as links between them. It is literally impossible to drive between certain points via paved roads.

"Three years ago, I tried to drive from the Yaroslavl region to the Kostroma region, but I couldn't do it," Larionov said. "In general, there are not bad roads in Yaroslavl and Kostroma. But there's no road between them. From the point of view of some regional leaders, one federal road through their region is enough."

Despite the attention devoted to revamping the highway system, overall financing has been falling over the last four years, mostly because of changes to the Tax Code.

Before 2000, funds came directly from taxes on items used by drivers, such as gasoline.

Putin's tax reforms put highway funding back into the general budget, where it must compete with other government programs. As a result, funding has fallen from 321 billion rubles ($11.26 billion) in 2000 to 165 billion in 2003.

Help might be on the way. Zinovyev said that Russia and the World Bank are discussing a loan to help finance road maintenance, leaving the government to focus on expanding the network. He declined to give details.

The European Bank for Reconstruction and Development has already been lending heavily, providing a $229 million loan to complete the Trans-Siberian Highway, a route begun in the mid-'60s.

While the road -- opened officially by Putin last month -- is unquestionably the longest in the world, the ribbon cutting also served as a reminder that until now it was impossible to drive by road from Moscow to Vladivostok. Even so, the highway is not due to be completely paved before 2008.

In many ways, Russia's preferred mode of transport remains the railroad. In tsarist and Soviet times, railroads were considered a military priority, while roads were an expense that didn't seem worthwhile, according to independent defense analyst Pavel Felgenhauer.

"Russia never developed any platforms for the transportation of heavy military equipment by road," Felgenhauer said.

"But the railroad system connects all strategic regions."