Evaluating Russia’s Railway Infrastructure—Geography, Demography and Kremlinology

Abstract

This paper unpacks the sustainability of Russia's railway infrastructure, whose development faces innumerable challenges including its geography, demographic density and specific political considerations. The monopoly of companies such as Russian Railways (RZhD) over railway infrastructure, many of its freight carriers, and construction tenders have reduced business competition in this sector, and have made the railways a restrictive environment for foreign investors. Russia's demographic challenges, which include a much denser population distribution in the western part of the country, have meant that many regions in the central and eastern parts of the country remain remote, under-populated and inaccessible, despite the wealth of natural resources located there. Government plans to improve rail access to these disconnected areas are often unfeasible and unsustainable, and few foreign investors are willing to offer their financial support to projects that likely have low yields and high risks. Poor diplomatic relations with the West have restricted Russia access to western capital markets and alternative sources of loan financing, particularly for large infrastructure projects such as rail, and many western funders have withdrawn from Russia's rail market. Without a significant injection of foreign investment from Asian partners such as China, Japan or South Korea, improvements to Russia's railway network are likely to remain relatively piecemeal. For Russia's railway system to be sustainable in the long term, RZhD's monopoly must be broken up, international partnerships with countries that have similar geographic considerations could be brokered, and Russia must re-evaluate its demographic priorities. Climate change and new geographical conditions are likely to pose an additional challenge for Russia in the coming years, but without accumulating proper engineering expertise to mitigate these issues, the country's rail transport network is likely to lag behind those of its international counterparts.