With its vast expanses, its undeveloped areas, and its need to connect east and west, one might think that Russia would have ample incentive to develop a world-class rail system. But that has not happened, even after it agreed to work with China on an ambitious Moscow-Beijing rail project.
In a nutshell
- Little has come of a Russia-China railway partnership
- Bureaucracy and corruption are holding Russia’s railways back
- Russia is thus deprived of crucial infrastructure
A key ambition behind Russia’s “strategic partnership” with China has been to “catch Chinese wind” in the sails of its own economy – more specifically to profit from the rollout of Beijing’s huge Belt and Road Initiative. A litmus test for this strategy may be found in an ambitious plan to join hands in building a 770-kilometer high-speed rail link from Moscow to Kazan, capital of the oil-rich Republic of Tatarstan.
The idea goes back to a meeting in Shanghai in May 2014 between Russian President Vladimir Putin and Chinese President Xi Jinping. Significantly, the meeting took place as the conflict between Russia and the West over Crimea and Ukraine was heating up. The two leaders made every effort to showcase their friendship’s growing strength. A brand-new high-speed rail link to connect their capital cities would underline that message.
In October of that year, Chinese media reported that the two sides were considering building a 7,000-kilometer high-speed rail line from Moscow to Beijing. The new route would run parallel to the 9,000-kilometer Trans-Siberian Railway from Moscow to Vladivostok. Although the latter has achieved iconic status, it is a slow-speed operation that only runs two trains a week to Beijing, via a dedicated spur through Ulaanbaatar in Mongolia.
At an estimated cost of $230 billion, the new project would cut the travel time from six days to under two, and be three times the length of the current longest high-speed train line, from Beijing to the southern Chinese city of Guangzhou. It would be a powerful symbol of Sino-Russian friendship, and it was then thought that it could be completed in five years (at the earliest). During a visit to Moscow by Chinese Premier Li Keqiang, a memorandum of understanding was signed to build the first stretch from Moscow to Kazan.
Western sanctions made it even less likely that the project would move forward.
The first call to build this line had been floated in 2009, with President Putin himself mentioning the initiative at the Economic Forum in St. Petersburg in 2013. It would be the first true high-speed railway in Russia. With trains operating at speeds in excess of 400 kilometers per hour, the travel time would be reduced from 14 hours to 3.17 hours. Little progress was made, however. After the Ukraine crisis, Western sanctions made it even less likely that the project would move forward.
In April 2016, Beijing made a decisive move to begin. The China Railway International Group agreed to provide a loan of 400 billion rubles ($6.21 billion) over 20 years, provided that Chinese technology and equipment would be used. Realizing that its own capability was insufficient and that access to Western technology was being cut off, the Kremlin felt compelled to agree to the conditions. But the project still did not get off the ground.
The initial plan had been to complete the project by 2018, before the World Cup in Russia. By then, however, it was still only in its early planning stages. Projected costs had risen to nearly 1.7 trillion rubles (around $25 billion), from 1 trillion in 2013. The Russian government gave the green light to begin construction on the first section (to Yekaterinburg) only in January 2019. Current plans are to complete it in 2024, casting doubt on the fate of the stretch from Kazan to Beijing.
The example of the Moscow-Kazan railroad speaks volumes about how casually Moscow approaches vital matters of national infrastructure. The needs and potential are obvious. The sheer size of the landmass of the Russian Federation, covering 11 time zones, signifies that transport infrastructure is of critical importance to economic development. Geography and climate have combined to create a spatial dilemma of immense proportions. While the bulk of both the population and economic activity may be found in the south and the west, most natural resources are in the north and the east. Moreover, the need to connect the country’s European portions with its Pacific coast is imperative.
Facts & figures
Across Siberia: Current and proposed routes
If a genuine push for high-speed train lines had been made, Russia could have benefited significantly. The arrival of construction crews and complicated logistics operations could have provided a much-needed boost to depressed areas in Siberia. Technology transfer could have bolstered moribund Russian manufacturing industries. New rail lines would have been accompanied by agglomerations of housing, shopping facilities and service industries. Such benefits could be crucial for achieving Moscow’s much-vaunted “pivot to the east,” and for its promises to revitalize the country’s eastern regions. With Chinese participation, these dreams could have been realized.
China operates by far the largest network of high-speed railways in the world. It is projected to reach 45,000 kilometers by 2030, nearly equaling the total length of all rail lines in Canada, the fifth-longest in the world. Beginning from scratch, the system has been rolled out over roughly two decades, driven by a strategic priority on transport infrastructure. The initiative has entailed technology transfer and substantial learning, making the Middle Kingdom a world leader in high-speed rail. Its latest project is a magnetic levitation (“maglev”) train capable of speeds of up to 600 km/h.
Meanwhile, Russia has seen little reason to invest more than a pittance of its massive petrowealth (and substantial brainpower) into similar ventures. Considering that much of the country is flat and that building railways does not pose many major engineering challenges, the lack of commitment is even more remarkable.
The closest Russia has gotten to high-speed train service is the 650-kilometer line between Moscow and St. Petersburg. It began operating in 2009, with a variant of the Siemens Velaro trains, known in Russian as Sapsan (Peregrine Falcon). Although very popular with passengers as a viable alternative to air travel, the Sapsan’s top speed is no more than 250 km/h, and service is constrained by having to share existing rail lines with slow-speed trains.
Bureaucracy and corruption
A benchmark for what Russia could have achieved, given its economic and intellectual assets, may be found in Shanghai. Its Hongqiao transport hub integrates a modern international airport with an ultramodern airport-like train station. High-speed trains, capable of speeds of up to 350 km/h, depart from 28 fully automated boarding gates, where new trains may board every 15 minutes. Many passengers have their tickets loaded onto their personal ID cards, speeding up entry. The transport hub allows smooth transfers and is connected to the city center via its modern metro system.
Some firms remain close to the Kremlin and help enrich the ruling kleptocracy.
In contrast to this, passengers arriving in Moscow with (so-called) high-speed trains from St. Petersburg enter a station that is only moderately different from those of the Soviet-era and does not offer smooth transfers to other train stations or airports. Although the city’s three major airports have received new, modern terminals, their links to the city proceed via decrepit rails that offer very slow passage. Plans to connect airport rail links via a dedicated downtown terminal make a lot of sense but so far remain unrealized.
An important reason why Russia has neglected infrastructure development lies in the structure of the behemoth bureaucracies that would need to lead the way. During the Soviet era, all transport infrastructure was in the hands of the state. Much has since been privatized, but the nominally private entities remain close to the Kremlin and serve as vehicles to enrich the ruling kleptocracy.
Much has been written about the role of the national gas giant Gazprom and its monopoly gas distribution network, the most extensive in the world. While very large sums have been siphoned off to its patrons, it has neglected its core task of expanding gas production. The story of railway construction and management is very similar.
Russia operates one of the globe’s largest railroad networks. Its railways are the third in the world both by length and by volume of freight hauled, after those of the United States and China. The company in charge – Russian Railways – is a joint-stock company with all shares owned by the state. With a near-monopoly on long-distance rail transport, it is a “national champion” exhibiting many of the same features that have made Gazprom notorious, ranging from controversial management, alleged corruption and lavish spending on corporate headquarters to neglect of the core mission. Top executives have in both cases been recruited from circles close to the Kremlin.
Appointed president of Russian Railways in 2005, Vladimir Yakunin embarked on a program that gave his company a slick modern profile, featuring the Sapsan high-speed trains, real estate development around railway stations and professional television commercials. He also won important international appointments, building a solid network of friends. But in 2014, he was placed on the U.S. sanctions list. In 2015 he was ousted under a cloud of corruption and mounting financial losses.
The shortage of rolling stock became a serious bottleneck.
Mr. Yakunin’s tenure left a sordid track record. Between 1992 and 2004, the share of railroads in total freight haulage had increased from 34 percent to 43 percent, largely due to increasingly poor long-distance road conditions. In 2005, railroads carried 80 percent of Russia’s non-pipeline traffic. Yet, by 2010 there were reports of a growing share of railroad freight being diverted to highway trucks, partly due to a shortage of rolling stock.
Shortcomings in providing specialized rail transport such as refrigerated rail cars for perishable produce have long been a problem for the quality of food supply. With the bumper grain harvest in 2015, the shortage of rolling stock became a serious bottleneck. Although many formally condemned rail cars were returned to service, a parallel shortage of grain elevators meant a lot of grain that could not be transported was simply left to spoil on the ground.
Even the notorious practice of Gazprom to build pipelines to bypass Ukraine – like Nord Stream – has found a parallel with Russian Railways. As the war in Donbas escalated, it was decided to reroute a railroad stretch that links the Voronezh and Rostov regions, cutting across part of the Luhansk region in Ukraine. The new stretch provides a 137-kilometer direct link between the southern Russian cities of Zhuravka and Millerovo – without entering Ukrainian territory. Kiev called foul, claiming the new railroad was built to facilitate military transport, in support of the Russian war effort.
Corruption in public procurement not only provides an important explanation why so little is being achieved in infrastructure development. It has also tainted foreign partners. In 1996, the renowned Canadian transport company Bombardier established a joint venture with Russian Railways to provide signals and rail-control systems. The agreement gave 60 percent of the shares to Bombardier and 36 percent to Russian Railways, with the remaining 4 percent controlled by a quartet of influential railway industry executives, referred to by Bombardier in its internal memos simply as the “Russian Partners.”
The company’s relationship with the latter – associates of Mr. Yakunin – has resulted in considerable international legal trouble for Bombardier, including a criminal probe into allegations of “corruption during procurement of railway equipment.” The company also confirmed that it won an $8 million contract to install its rail-control systems along the route of the Luhansk bypass. That project has proven especially embarrassing, since construction was done by the Russian Army’s Railroad Forces, rather than by the usual civilian personnel.
The key point is that Russia likely will remain devoid of the infrastructure that is critically needed for national economic development beyond large cities like Moscow. The Russian railroad network is dense in the south and the west but largely absent in the north and the east. Given the notorious conditions of “roadlessness” (bezdorozhe) in spring and fall, when much of the country is transformed into mud, railroads remain the only reliable mode of transport.
China has provided ample illustration of what can be achieved. If the Kremlin had been serious about its “pivot to the east,” and about maintaining influence in Central Asia, it could have embarked on large-scale rail construction. The economic injection would have provided substantial multiplier effects, and Beijing would have been happy to provide technology. Instead, very little has happened. It is appropriate to conclude with a typically Russian sentiment from Viktor Chernomyrdin, the long-time CEO of Gazprom: “We wanted the best, but it turned out like always.”