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The Russian Economy in a Bowl of Borscht

A new study on regional price differences highlights Russia’s “two-track” system
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Welcome to Bilibino, the most expensive place in Russia to get fed.

The 5,453 hardy residents of this outpost in the country’s far east (much closer to Alaska than Red Square) might think they’ve enough to put up with, what with winter temperatures plunging to minus 35 Fahrenheit and there being few roads out of town that go anywhere.

But on top of that, they have to fork out the most of any in Russia for a dish that’s considered pretty much a national necessity and a comfort food all over eastern Europe: borscht.

According to a new study by the Moscow-based Center for Economic and Political Reform, which conducted research on the cost of basic foodstuffs in 17 cities across the country, the beets, beef, potatoes and other vegetables needed to cook a pot of borscht will set a Bilibino resident back about 628 rubles ($10). 

borscht-cost

That’s more than four times the cost of the same ingredients in the capital and fully ten times the amount in the cheapest city surveyed, Nizhny Novgorod, a seven-hour drive east of Moscow.

This polarization in the cost of living is throwing a spotlight on the country’s “two-track economy,” which works for some but not for others. Whereas unemployment is nationally at just 5 percent, in some regions the jobless level balloons to 30 percent or more.

The disparities in prices can be so drastic that Russia’s central bank has started a project analyzing local price trends in an effort to find a bellwether region that could better indicate changes in inflation nationwide.

And that matters for Russia now, as the longest recession of Russian President Vladimir Putin’s reign drags on without much sign of growth-boosting reform on the horizon.

Bilibino, and the administrative region that it’s in, Chukotka, provide a case in point. Even though the region was governed until 2008 by Roman Abramovich, the billionaire who owns Chelsea soccer club, goods delivery to Bilibino mainly depends on aircraft and there’s not a single chain supermarket.

The town’s situation is obviously an extreme, though according to Nikolay Mironov, head of the CEPR, it stands as a symbol of conditions for many of the 6 million people in Russia’s Far East. 

“The further away you go the worse it gets from the point of view of variety and prices,” he said by phone. “Borscht in Bilibino has too many ingredients that need to be delivered. In Bilibino they need to eat berries and venison.”

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