Question: You recently submitted the 2018 budget to the Moscow City Duma. It includes over 2 trillion roubles in revenue. The city’s revenue has more than doubled since 2010, when you were elected mayor, whereas the federal budget seems to be having a hard time.
Sergei Sobyanin: The federal budget largely depends on oil, and hence it has been seriously affected by the falling price of oil. The federal parliament adopted a law to ease Moscow’s dependence on oil price fluctuation. Revenues from the oil and gas sector account for some 5 or 6 percent of the city budget. I’m not referring to export duties or the mineral tax. I’m talking about the profit tax, which companies distribute depending on the number of personnel working in a given region. The Moscow budget is stable because the city’s economy is stable and diversified: when some segments go down, other segments make up for it. One of the main factors in economic growth and hence tax revenue is the stability of investment in the social, transport and engineering infrastructure. Private businesses invest three times as much in Moscow as the city government. This investment inflow is supporting our economy. If we reduce investment in infrastructure, investment in other sectors will slump as well, the growth rate in the economy will slow, and income will decrease. The funds we invest in the city – some say we should use them on other, nobler causes – ensure economic stability, dynamic growth and a confidence in Moscow’s sustainable development no matter what challenges it faces.
Question: How has the crisis affected industry?
Sergei Sobyanin: Industry has not slumped despite the crisis and has actually grown by 1.7 percent. Thanks to our system of incentives and preferences, building a new company in Moscow costs as much as in other Russian regions, even though labour and land are more expensive and prices are higher in Moscow. However, we only subsidise those companies that produce high-tech products with high added value and who pay good wages to their personnel. We want companies to create jobs for Muscovites rather than for guest workers.
Question: How do you plan to further develop former industrial areas?
Sergei Sobyanin: Our master plan provides for rezoning industrial areas, which have been turned into storage areas at best and scrapyards at worst. We are recreating them as districts with technology parks and office buildings. The choice between the ratio of jobs and housing depends on location. The closer the industrial area is located to the centre, the fewer jobs we stipulate, and vice versa. We want to create more jobs as close as possible to residential neighbourhoods to reduce commuting.
Question: Building an office centre does not automatically create jobs.
Sergei Sobyanin: In recent years we have built more commercial space than ever before in Moscow. No other major city has seen such growth.
We build nearly 9 million square metres of real estate annually, of which 3 million is residential and the rest is commercial. The commercial includes industrial facilities, multifunctional centres, office buildings, technology parks, and shopping centres.
As to whether the offices are occupied or not, forgive me, but no one is foolish enough to build a building for no reason. The commercial property occupancy rate has almost reached the pre-crisis level. This is despite the fact that millions of square metres of new office space have been built.
The greatest advantage for business is the opportunity to rent space in a shopping mall, office centre or technology park at a discounted rate. I am less concerned about the developers’ profits. The priority for me is to create a competitive environment for business development. If office space was twice as expensive as now, businesses would have fled to the regions by now.
In fact, the opposite is happening, those who left are now returning. What is the point of establishing an offica hundred kilometers away from the city, if you can rent space at an affordable rate within the Moscow Ring Road?
Question: There is an opinion that the significant capital investment in the city is made to avoid sharing revenue with the federal government considering that the latter can make such claims. Last year you had to contribute an additional 30 billion roubles to the federal budget, and this year that figure will reach 40 billion.
Sergei Sobyanin: This explanation is arguable. We invest money to develop the city, alleviate transport problems, and build new outpatient clinics and parks. We are not trying to hide anything.
Question: We are not talking about hiding anything, rather spending resources to avoid sharing them with the federal authorities.
Sergei Sobyanin: No, there is a different logic, which I am trying to explain to our colleagues at the federal agencies. Moscow contributes about one trillion roubles to the federal budget. In recent years our contribution has increased by about 50 to 60 percent.
This covers two thirds of federal allocations to other regions, which total about 1.5 trillion roubles. I tell them that if they leave us alone and don’t take the money that is used for the city’s development, in three to four years, we would be able to contribute 1.5 trillion roubles.
In other words, Moscow’s contribution alone would cover all allocations to the regions. If you cut our budget, it would have a negative effect not only on Moscow, but also on the development of the country as a whole. Today, 10 percent of all pensions in the country, not counting those of Muscovites, are paid for by Moscow’s tax contributions.
Ten percent of all medical bills in the country are paid for with Muscovites’ taxes. The allegations that we have all the country’s money in Moscow have nothing to do with reality. In fact, it is the opposite − Moscow, like all major cities, drives the economy.
We have the highest labor productivity, which is five to ten times higher than in other regions. We pay pofit tax in accordance with federal law. Sberbank, for example, pays this tax in Moscow, which is calculated based on the number of Sberbank employees in the city. The bank serves about 12 million people here.
In other regions, Sberbank pays the same tax based on the number of staff working in these regions, so we do not take anything from anyone.
Question: You hold an urban forum every year to discuss international experience. How does Moscow rank among other megacities, and what are its competitive advantages?
Sergei Sobyanin: We are among the international leaders in terms of development speed. Only Beijing is developing faster, but experts say that we surged ahead of Beijing overall last year as well in many areas. Of course, we lag behind the established global leaders in some aspects, such as London or New York. The reasons for this are not just the developed infrastructure, but also their standing as the recognised global financial centres. We are close to the majority of global leaders in terms of social services, education and healthcare.
Question: In which aspects does Moscow lag behind them?
Sergei Sobyanin: In the provision of housing, which is the world’s lowest.
Question: This is because everyone wants to live in Moscow.
Sergei Sobyanin: Not so many people are moving to Moscow. Actually, the figure has dropped to zero over the past few years. Muscovites buy between 85 and 90 percent of housing in the city. But we aren’t building enough, only 3 million square metres in a city with a population of 12 million.
Question: That figure is even lower in London: between 300,000 and 400,000 square metres of new housing per year.
Sergei Sobyanin: Possibly, but this may mean that housing construction proceeded on a large scale there in the past. They now have 25−27 square metres per person, whereas we only have 18−19 metres. This is even less than in Beijing or Tokyo. So, our relocation programme is designed not just to relocate people from dilapidated five-story buildings, but also to allow people to improve their living conditions. Polls have shown that up to 70 percent of those who live near the buildings that are slated for relocation are considering buying flats in the new residential blocks. We will place some 50 percent of flats in these new buildings on the market to cover our expenses, at least the construction costs. We don’t want Muscovites to pay the full price of the relocation programme.
Question: How much will these new flats cost?
Sergei Sobyanin: We’ll sell them at market prices.
Question: Why? The land is free, you won’t have problems with coordinating construction plans, and there are also tax deferrals. Why not sell these flats 30 or 40 percent cheaper?
Sergei Sobyanin: This would kill the market and the construction industry. Nobody would benefit from price dumping. Besides, if we sell cheaper, we won’t be able to cover the construction coasts.
Question: Some say the relocation programme is being used to help the construction industry during the crisis. Is this true?
Sergei Sobyanin: I’m sorry, but I don’t care if the construction industry has this work. It is a matter of market demand; growth depends entirely on demand. We won’t do anything special to help the industry. We continue to build between 8 and 9 million square metres of real estate a year. The situation [in the construction industry] is not dramatic, and we see no need to help it. This relocation programme is purely a social project launched in response to the requirements of those who live in dilapidated housing.
Question: The relocation programme has provoked a lot of debate and emotion. We have seen federal and municipal activity to amend laws and specify the procedure. How would you describe the results of these efforts since the announcement of the programme?
Sergei Sobyanin: I believe that we have considered as many public requirements as we could. We have entered the next stage now, the active stage when we need to prepare layouts for entire districts and start building new housing on a large scale. We have earmarked record amounts of funding for this in the 2017−2020 budget: about 400 billion roubles, which should be enough to implement the programme.
Question: When will people start moving into new flats?
Sergei Sobyanin: Late this year or, more probably, early next year. We need to change the interiors in some blocks, which were built for other purposes. We will start relocating people as soon as we finish this additional work.
Question: When the idea of expanding Moscow with the new territories was made public, one of the main reasons given was to relocate the federal authorities outside the Moscow Ring Road. Is this concept dead?
Sergei Sobyanin: In terms of relocating federal authorities – yes, looks like it is closed. But we have no reason to be concerned about this. New Moscow was not built for the federal officials, but for Muscovites themselves. We are creating new jobs, building housing and creating parks. There is also a new project for the development of entertainment infrastructure.
Question: But you are developing New Moscow as you would any other Moscow district, while the original plan was to take the load off the city centre. Have you thought about relocating city authorities, since you failed to relocate the federal ones?
Sergei Sobyanin: Why would we do that? So that people are forced to go to Kommunarka every time they need something? We are working with a great number of people. Who would benefit from my office being relocated from 13 Tverskaya Street to somewhere in the middle of the Troitsky Administrative Area? Imagine travelling such a distance to see me today…
Question: And we would have done just fine. The Constitutional Court was relocated to St Petersburg, and that is fine; people travel that distance whenever they need to.
Sergei Sobyanin: The Constitutional Court does not have to handle peoples’ everyday issues. Just in case, let me remind you that between 600,000 and 700,000 people are working under our direct supervision. It is a huge corporation – thousands of institutions that demand interaction every day: schools, hospitals, cultural institutions… How could we just give this up and leave for some place far away? That would be one questionable decision.
Question: When you started your term as the Mayor of Moscow, you said that solving the traffic issue was a priority. Do you believe that you have resolved this issue successfully?
Sergei Sobyanin: In 2010 there were about 3 million cars in Moscow, today there are about 4 million. If the number of cars in the streets had increased like this while the transport infrastructure had remained the same, we surely would have had gridlock on our hands, and Moscow would have ranked first on the list of cities with the most traffic jams. Today, however, Moscow is ranked 13th. Despite an increase of one quarter in the number of cars, the average traffic speeds have increased by 12−13 percent. Of course, there are different situations. Moscow is the capital of our motherland, and all kinds of delegations come here; sometimes large events take place that require road closures, and it can be quite inconvenient. Had we not done anything at all, the situation would have been significantly worse.
Question: So people have been using public transit more often?
Sergei Sobyanin: There are three things here. First, our road system was expanded by 12 percent. The number of engineering projects has almost doubled. Second, public transport was developed. Third, we introduced parking fees that give people economic motivation to use public transport. Now people have to think not just about travel time, but also about the cost of driving. That was the idea behind paid parking. We didn’t invent this; paid parking has been used in the world’s largest cities for some time. No other fees were introduced, unless you believe some extreme stories about restricted access or paid access [to the city centre]. Public transit ridership has increased significantly. In 2010, a total of 63 percent of commuters used public transit during peak hours compared to 70 percent today. We are not comparing the best with the best; instead, we are comparing what we would have had, had these unpopular measures not been implemented.
Question: You said that the number of Muscovites has increased by less than a million, and the number of cars by a million. There is a catch here…
Sergei Sobyanin: These numbers are not exactly interconnected. The number of cars is increasing; today it’s 370 cars per 1,000 residents. We have reached the level of European cities and are getting close to the American number. However, the number of cars all over the world is starting to decrease, but we are hurrying, like a torpedo, trying to increase the total even more. For decades we had limits, and having a car was a dream. Now this dream has come true and everyone is trying to deal with it. This is a psychological story. However, there is also a practical side: most Moscow families have dachas, or houses outside the city. A trip to the dacha without a car is almost impossible. Our courtyards are full of cars on weekdays, but empty out on weekends.
Question: If paid parking is needed to combat traffic congestion, why do we still have to pay on Saturday and at night? There are no traffic jams at night. It looks more like an indirect tax than the fight against heavy traffic.
Sergei Sobyanin: On Saturdays the traffic is not less, but more than on weekdays in Moscow. That’s why free parking on Saturday would almost destroy the city. We’ve kept parking free on Sunday, and what good has come out of it? Most complaints I receive say that it’s impossible to park. Various people ask me: why did you do that?
Question: But you keep decreasing the number of car parks; that’s why there is no parking!
Sergei Sobyanin: That’s a different story. Moscow cannot make room for more than 3 million cars. In order to decrease the number of cars, we have decreased the number of car parks. If we increase them, the number of cars will rise, too. This limit has been introduced everywhere in the world. This measure was created for drivers most of all, or we would all remain stuck in traffic jams. I hope the situation will improve when the Central Ring Road is completed, as well as the expressways, the capability of which can be compared to that of the MKAD. The North-West Expressway will be completed in 2018, and the North-East Expressway by 2020−2021.
Question: Will the North-Eastern Expressway be a toll road? Will we have to pay to use it?
Sergei Sobyanin: Yes, maybe, we are working on that, but it will not be like the service route on Kutuzovsky Prospekt, when it’s the investor who is building the road. The expressway will be built by the city, and the investor will pay for it partly after that.
Question: Why will it be an expressway? This is not big money for the city.
Sergei Sobyanin: In order to use this money for other projects. The budget needs to be handled rationally. Otherwise, it’s 50 million here, 60 or 100 million there – and there is nothing left, and all the construction and development will come to a stop. The expenses of our colleagues in other regions have grown by 30–40 percent during these years. And our growth has only been 5−7 percent. If we were doing business like our colleagues, we wouldn’t have been able to build a single kilometre of road or metro line.
Question: City hall spends a lot of money, about 15 billion roubles, on all kinds of fairs and festivals. How much of these expenses are justified?
Sergei Sobyanin: Well, 15 billion sounds hugely overestimated. But even if this is so, street fairs in 2016 brought back 37 billion roubles. So it’s not charity; these fairs, and improvement projects, pay back generously. People vote with their feet: last year, 59 million people visited these fairs. And I mean those who actually stayed for the activities, not just those who bought candy or a gift on the run.
Question: Early last summer, you asked the public to be patient with the inconveniences until the end of August, when the My Street programme in the center was to be completed. But now it is clear that various projects will continue through the winter. Why was the programme extended? Also, they are working in the same locations they did all summer, for example on Zubovsky Boulevard. Why?
Sergei Sobyanin: All the main streets were opened before September 1. In some places, they are still planting trees, installing street lamps, and doing other things that cause motorists far less inconvenience. Nothing is being carried out on the main streets. They may be working on Prechistenka, which we only started after the veneration of the relics of St Nicholas at the Christ the Saviour Cathedral ended. This still affects only a few streets, not a big hardship for traffic. As for redoing the same things, all the new facilities now have a three-year warranty. In the past, they had to relay 300,000−400,000 square metres of surfacing under the warranty. Today, this figure is down 90 percent. Contractors now have to pay for warranty repairs, and there are far fewer contractors willing to do this.
Question: Will spending on landscaping and other improvements be lower now?
Sergei Sobyanin: Yes. This year, the city allocated about 50 billion roubles to My Street, all additional costs included. In 2018, we will spend half that. The released money will go to social policy.
Question: Is this because of the presidential election year?
Sergei Sobyanin: It's not about elections. Each project phase has its own logic. It’s not about spending just for the sake of spending. We have significantly improved the city center. Now we are back to a normal mode of operation. As for social policy, recently we have seen a decline in people’s real incomes, especially in vulnerable groups. So there is a need to increase benefits and minimum pensions.
Question: How much will pensions increase?
Sergei Sobyanin: We are discussing 3,000 roubles, but there is no final decision yet.
Question: Why has Moscow taken a conservative approach to raising social benefits before?
Sergei Sobyanin: I would not say it was a conservative approach. Our social spending has nearly doubled to an impressive 374 billion roubles since 2010.
Question: Your term expires in 2018. Do you plan to run for re-election?
Sergei Sobyanin: Yes, this is likely, but we need to wait for the beginning of the election campaign. I feel it’s my duty to follow through on the ongoing reforms. Take healthcare, where we have changed the structure but we still need to do many more things for the new system to become really good and convenient. We have accomplished a great deal in expanding the metro and creating new transport communication system. Some would say that this process will continue without outside prodding, but you know that this does not happen in our country. As soon as you slack off and lose control of the funding, you’ll find yourself in the same situation as others – I won’t name names – who complain that they have no money and that the Finance Ministry has refused to help them. Everything will stop. That would be very painful for me. I want to complete what I have begun.
Question: Some experts view you as a possible candidate for prime minister. What would you do if you were offered this post?
Sergei Sobyanin: First, I never discuss rumours, and second, you know that such rumours mean that there is an almost 100 percent probability that it won’t happen.
Question: But still, would you be interested, considering that you worked in the federal government?
Sergei Sobyanin: Yes, I’ve been there, and I know what it’s like. I have no desire to go around again.
Question: What do you think about the municipal elections that took place in September? The city has been accused of providing inadequate information about the election. At the same time, many opposition candidates have been elected, although United Russia won enough votes to negotiate the election barrier and to have the right to nominate its candidate for the post of mayor.
Sergei Sobyanin: United Russia has no problems, and the number of deputies representing it has not decreased but has increased. But other parties do have problems, including Liberal Democrats, A Just Russia and the Communist Party, all of which have ceded some ground. I think they underestimated the influence of the new election technologies, including the internet. It’s not a bad thing that other [opposition] deputies have been elected, provided they honestly address the problems of the districts they represent.
Question: But the city clearly didn’t do enough to increase voter turnout, unlike the efforts taken at the federal level, for example at the presidential election in the spring. Why is that?
Sergei Sobyanin: The municipal elections are local elections. We provided sufficient information; polls have shown that over 80 percent of Muscovites knew about the elections. Moreover, people complained that their mail boxes were crammed with election leaflets.
Question: Why was the turnout so low then?
Sergei Sobyanin: And when has it been high? It was barely 30 percent even in the mayoral elections. Turnout is a gauge of public interest in an election. Did you vote this time?
Question: Yes, we did.
Sergei Sobyanin: I did too. In the past, a large turnout was created artificially. We never did this and never will. We won’t use any administrative leverage or, worse still, machinations. We don’t need it.
Question: Is it that people think they cannot change anything, for example, because municipal deputies have very little real authority? Or is it that people are satisfied with everything?
Sergei Sobyanin: Both, probably. A little of this, a little of that.