Over the course of the twentieth century, Russia has diverged from world trends. In the majority of countries, population and industry are concentrated in places with the best climates, while in Russia both have moved into cold regions such as Siberia and the Far East.

Alexander Koksharov

Every year, dozens of books are published in the West about Russian politics and the Russian economy. Only a few of them get away from a stereotypical glance at our country. Last year, the biggest stir was caused by the book The Siberian Curse: How Communist Planners Left Russia Out in the Cold, written by Fiona Hill and Clifford Gaddy of the influential Brookings Institution. The authors took an unusual approach to Russia’s economic geography, estimating the price the Russian economy pays for the cold climate, particularly in Siberia and the Far East. 
The regular index of GDP per capita does not cut it according to Hill and Gaddy. For this reason, they created a new index of temperature per capita (TPC) based on average January temperatures and weighted according to population distribution. By TPC, Russia is the world’s coldest country (-12.6 C), even beating out Canada (-8.9 C). In the last hundred years, the TPC of Russia and Canada have been moving in opposite directions. Canada has gotten warmer, as the percentage of the population in warmer, southern regions increased, while Russia has gotten colder, as millions of people were forced to migrate or went voluntarily to Siberia and other cold regions. The planning system, which aimed for the equal distribution of production capacity throughout the USSR, brought this about, even in regions with extreme climates. The question of the “cost of cold” for the economy, whether due to heating or equipment wearing out more quickly, was never raised. 
One of the authors, Fiona Hill, spoke with Expert and talked in depth about the “Siberian curse.” Currently Senior Researcher in the Brookings Institution’s International Politics Program in Washington and Research Associate at Harvard University, Hill received an MA in Russian History from the University of St. Andrews (Scotland) and a Ph.D. in History from Harvard University.
- What do you think, has development of Siberia, in particular the intense economic development characteristic of the twentieth century, of the period of active industrialization in the 1930s-50s, served to encourage or retard the Russian economy? 
- We chose the book’s title very carefully, rephrasing the English expression “resource curse.” This is when a country possesses too many resources, for example Russian oil and gas. This title does not imply that Siberia is a curse for Russia, but we wanted to emphasize that it was not developed in the best of all possible ways. Siberia could be a great blessing for Russia, if it were developed according to market principles instead of a planned economy. The mistake was not industrialization or urbanization in and of itself. The mistake was the overemphasis on heavy industry requiring a large workforce.
As a result, a large amount of the country’s resources, both capital and people, were used irrationally. We have to keep in mind that there are huge distances between cities and an unfavorable climate in Siberia and the Russian Far East. For this reason, the movement east (and I mean precisely east and not north, as to the east the climate becomes increasingly harsh) and developing Siberia to an extent unnatural by market economy standards led to a unique migration, impossible anywhere else in the world. Millions of people went to Siberia, many against their will. As a result, Russia is now a colder country than it was in the beginning of the twentieth century, when the population mostly lived in warmer Russian regions. 
The planned economy created huge cities with huge industrial bases in regions unfavorable for development, as Soviet planners proceeded from the notion that it was absolutely necessary for geographically “equal development.” As a result, the over-industrialization and over-urbanization of Siberia turned into a burden on the Russian economy, as they required huge subsidies. Costs in Siberia are four times higher than in European Russia, which affects the competitiveness of companies now operating in a market economy. 
If we get away from the geopolitical and security issues that guided Gosplan and base our conclusion on market principles, then Siberia turns out to be not underpopulated as some Russian politicians claim, but overpopulated. According to our estimates, there are about 10-15 million excess people in Siberia and the Far East in terms of climate. Under market conditions, these people would live in European Russia in areas with milder climates and shorter distances. 
- Yes, the Siberia climate with its bitter cold winters and hot summers is far from ideal. However, the majority of Russia’s natural resources - oil, gas, coal, ore, timber, and so on - lie east of the Urals. What would the options for Siberian development have been that did not involve such extensive industrialization and urbanization?
- I am not trying to say that Russia should not industrialize Siberia or develop its natural resources. But in some cases, the cost of exploiting these resources was greater than the value of the resources themselves. Russia could not have become a country with developed industry without using the natural resources in those regions. This was particularly true for the Soviet period, when the USSR was cut off from the world economy. The problem is that Gosplan overestimated one of the most important resources, human resources.
Soviet planning proceeded from the demographic trends of the early twentieth century, and for this reason planners believed there would always be cheap labor available and focused on labor-intensive industries. It turned out to be a huge mistake to send millions of people to Siberia to exploit its natural resources and then support them in an unfavorable climate using the entire country’s resources. This approach was not the only one possible.
There are examples of more rational uses of human resources even in countries without market economies, as well as in Russia itself, for example in the western Siberian oil and natural gas industry. There, technology is not labor-intensive, but capital-intensive, which is why there are no big cities around the oil and gas fields. Workers work in shifts and their families live in small, densely built towns further to the south. A similar approach could be used in many other natural resource-related industries in Russia. This would have saved Russia from having to build Siberian cities with millions of inhabitants.
Today, with the low birth rate and high mortality in Russia, human resources have become incredibly valuable. If the population is shrinking, the issue of whether the millions of Russians working at noncompetitive companies in Siberia should be supported becomes a major question.
-What should Russia do now? Should we try to move the population from colder to warmer regions?
- Unfortunately, this is a very complicated process. It is not possible to simply shut down companies and cities in Siberia and reestablish them in warmer areas. What the Russian government can do at the smallest cost is to refuse to finance any large-scale industrial development projects in Siberia. Though many Siberian governors are demanding federal programs to revive manufacturing enterprises, many of these companies are bankrupt and can only survive due to low wages. The only workers who will agree to work at these wages are gastarbeiter from Central Asia.
The government could help those who want to move elsewhere. If Russia had a budget surplus, it could set up a special fund to assist resettlement. This sort of thing is a widespread phenomenon. In the US, there are special funds to help people leave areas where industry is declining.
Keeping Siberia afloat is proving very expensive for Russia. If we add up the energy resources, health care, and other factors, Siberia costs Russia 1.5-2 percentage points of economic growth. In the next fifty years, this means losing 75% in GDP growth. For this reason, acting against the market forces that would fix the imbalance in population and industrialization patterns is slowing down Russia’s economic growth. 
- Many people in Russia are concerned that if the population shrinks in Siberia and especially in the Far East, it could lead to large-scale migration of the excess Chinese population. What do you think? Is this realistic?
- Russian and Western researchers have conducted several studies in the Far East that concluded that the key reason the Chinese come to the region is because of the Russian population. True, there are a small number of Chinese farmers that have started working abandoned land in the Amur River area, but their numbers are insignificant. Because the economic efficiency of agriculture in that region is very low. The majority of Chinese are involved in trade, which they will only be interested in so long as there is a market, or in other words, Russians. 
Of course, when we talk about the Far East, we should not forget strategic issues. The southern part of the region was Chinese territory until 1860, and in the 1960s the USSR and the PRC had a border war. Although I do think that the future of the Far East lies in increasing its integration into East and Southeast Asia. Russia will of course retain its sovereignty over the region, but to a large extent it will not be tied to European Russia economically, but to its Asian neighbors. Even if an economic boom occurs, growth in this region will come not in manufacturing, but in natural resource-related industries such as oil, natural gas, fishing, and timber, which are capital-, not labor-intensive. Thus, a smaller population in this region does not mean prolonged economic depression.

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