Russia’s rust is showing

During the last decade of soaring Russian oil prices and stock market valuations, only a few brave souls bothered to complain about the lack of infrastructure spending. They were proved horribly right by last week's catastrophe at the Sayano-Shushenskaya hydroelectric plant.
Why the Kremlin held off this spending is understandable - particularly given the public's fear of national bankruptcy, which sprang from the August 1998 crash.
On Vladimir Putin's watch as president, serious steps began to be taken, from 2005 onwards. But as the global financial tsunami hit Russia last year, it became clear that a golden opportunity had been missed to modernise and diversify the economy.
The economic lopsidedness is something that everyone is well aware of, from Putin and President Dmitry Medvedev on down. But during the oil boom, no one seemed to be capable of changing the record.
As long as the megabucks were rolling in - fattening state coffers, swelling oligarchs' bank accounts and filling tree-shaking bureaucrats' pockets - everyone was happy. They merely paid lip service to the mantra of investing in infrastructure.
Now the chickens have come to roost with a vengeance.
As a result of last week's tragic explosion, electricity firms and industrial producers in Siberia will try to pass on the $1.2 billion repair bill to their customers in the form of higher tariffs. And workers in industry, already hit by the crisis, will face more job losses and wage cuts.
If the country's power plants are allowed to continue deteriorating, further such disasters will cripple not just electricity production, but also the ability of Russian industry (which relies heavily on cheap Siberian electricity for its competitive edge) to grow again after the crisis.
And after two decades of chronic underinvestment in the country's power sector, last year's privatisation of electricity firms failed to raise any significant investment capital.
Sadly, who will now pay for the modernisation of the power industry is not clear. In a crisis, private owners will seek to maximise their profits, while the federal budget is no longer the bottomless pit it was a year ago.
Lest we forget, the sell-offs were masterminded by 1990s privatisation guru Anatoly Chubais, and benefited mainly a handful of well-connected insiders.