Ivanov: Russia Must Spend 4% of GDP on Infrastructure

June 9 (EIRNS)—Russia must raise spending on infrastructure development from the current level of 2.5% of GDP to 4%, Deputy Prime Minister Sergei Ivanov said on June 8 at the International Economic Forum in St. Petersburg. The statement, excerpted by the Novosti and Interfax agencies, echoed Prime Minister Vladimir Putin's recent exclamation that, "Without infrastructure, we have no future," but the question of how to finance the needed projects is a topic of hot debate in Russia.

The country's shortages of transportation connections, especially roads, cannot be overcome in a short period of time. "In a country with such a large territory, these problems cannot be solved in five or ten years. They can only be solved over several decades," Ivanov said. In most Russian regions, roads are not improving, but there are some substantial improvements in and around cities, he added. "Certain roads are appearing. In St. Petersburg, a ring road has already been created, to the standard of European roads." The deputy minister cited a poll of participants at the Petersburg forum, which found that around 75% of businessmen believed the government should prioritize spending on transport infrastructure.

Ivanov is the deputy prime minister in charge of the defense industries and infrastructure. Indicating resistance to government spending in these areas, he reportedly introduced Putin at the recent Sochi transportation conference by asking those who disagreed with the policy that was about to be presented, to leave the room.

In St. Petersburg, Ivanov also said that Russia currently has a severe shortage of small businesses engaged in science-intensive areas, and that the country needs to set up venture capital funds to develop science. "There are virtually no small businesses engaged in science-intensive spheres. The creation of technology parks contributes to the development of this area, edging out enterprises engaged in primitive trade. Also various funds, in particular, the Russian Venture Capital Company and the Russian Fund of Technological Development, contribute to developing this area," Ivanov said.

Ivanov told the forum that Russia would never be able to solve its main economic problems or raise its competitiveness without developing innovation. Comprehensive and balanced approaches to innovations, science and business partnerships, and the stimulation of business to develop innovations are Russia's top priorities in this area, Ivanov said. Personnel training, in particular youth training, was important for developing innovation: "This is because innovation is investment in people, in their education."

Moscow Mayor Revives Siberian River Diversion Scheme

June 7 (EIRNS)—Addressing a St. Petersburg International Economic Forum panel on fresh water today, Mayor Yuri Luzhkov called for reviving the great project to divert water from the Ob basin (the westernmost of Siberia's three great river systems) into southern Russia and Central Asia. Luzhkov said that the 5-7% of the Ob system's flow, planned for utilization under the project 20 years ago, could irrigate 1.5 million hectares of semiarid land in Russia itself. Additional quantities could be sold to the Central Asian countries.

There has been a buzz in leading Russian circles lately about water sales as a future bonanza, if an international water market takes shape. Russia has 20% of the world's fresh water, although 70% of it is badly polluted.

U.S. Senate Holds Russia-Bashing Session on Oil

June 13 (EIRNS)—Sen. Joe Biden's (D-Del.) Senate Foreign Relations Committee turned the floor over to Zbigniew Brzezinski and Leon Furth (Al Gore's national security advisor) to rail against Russia's supposed intentions to use its oil and its oil wealth to control Europe. Brzezinski, who has been functioning as a foreign policy advisor to Democratic Presidential candidate Barack Obama, spoke on the "Great Game in the Caspian," warning against the "resurgence" of Russia. Biden warned against Russia's $127 billion sovereign fund, which it is using to buy power. The government "threatened to expand their holding considerably," he added. The witnesses called for new pipelines from Central Asia which can cut out Russian dominance, and a "shared European effort that can confront Russian dominance."