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Russia: Analysis From Washington--Bottlenecks In Russian Economy

Washington, 22 August 1996 (RFE/RL) -- Three bottlenecks inherited from the past are likely to have a greater impact on Russia's immediate political and economic future than many of the more often discussed challenges to that country's transition to a market economy.

These old bottlenecks include the absence of transportation infrastructure, increasing sales of weaponry to foreign countries, and increasing reliance on energy exports for hard currency earnings.

Because of the country's enormous size, Russia has never been able to develop the kind of road and rail network that is the basis for economic integration and growth in most countries. And the lack of that infrastructure is placing ever more severe constraints on the country's economic development.

This inherited problem was unintentionally highlighted last week when Moscow announced that this fall it would export roughly five million tons of grain from the European regions of the country and import roughly the same amount into the Russian Far East. The reason: Russian railroads simply do not have the capacity to carry that much grain from one part of the country to another.

That fact -- not new but only newly acknowledged -- places severe economic burdens on Moscow and the regions. Moreover, given the unlikelihood that Moscow will be able to afford to correct the problem any time soon, it almost certainly means that the regions will become increasingly independent in political terms as well.

The second bottleneck likely to have political consequences concerns Russian sales of arms to Asian and African countries. In Soviet times, Moscow used such sales as a means to extend its influence. Now, it is doing so to earn money, with reports this week suggesting that Russia has passed the United States as the chief supplier of weaponry to these states.

But the results of such sales at home and abroad may be unfortunate. At home, they will slow the shift from military to civilian production that virtually all observers believe is needed for Russian economic growth to take off. Moreover, such sales and the income they provide will help the military-industrial complex to retain its grip on Russian decision making.

And abroad, the sales of this military equipment could entail equally unpleasant consequences. On the one hand, they could embroil Russia whether it wants this or not on one side or the other of regional military conflicts. On the other, they could lead to possibly serious conflicts with the West. And those conflicts in turn could affect the entire orientation of the Russian state.

And finally, Russia's increasing dependence on oil and gas exports to earn hard currency continued to have an enormous impact on Russian domestic and foreign policies.

In the first instance, it helps to explain Moscow's approach in Chechnya, its insistence that Chechnya remain part of and fully controlled by the Russian government. That is because an important oil pipeline passes through Chechnya, a pipeline Moscow needs to control in order to project its influence over Central Asia and the Transcaucasus.

It also helps to explain why Yevgeny Primakov, a Soviet representative with long experience in the Middle East oil states, is now foreign minister and why he and Moscow are pursuing efforts to reestablish close ties with those states on the basis of their common interests in seeing revenues from the sale of oil and gas rise.

And this dependence on the export of energy resources, combined with the involvement of Western countries in the exploitation of such resources in Russia itself, is among the most potent factors behind the rise of nationalism among Russians, of the sense that the West is exploiting Russia and reducing it to the status of some "Third World" country.

That, along with the brake that the lack of a transport network and the renewed importance of the Russian arms industry, may ultimately prove to be the real bottleneck to Russian reform -- just as these factors were bottlenecks to attempts at reform in the Soviet past.