A Two-edged Sword: the Impact of Ecological Threats on Economic Reforms and the Impact of Economic Reforms on Ecological Issues

Murray Feshbach

There is a direct link between ecology and economy, says Murray Feshbach. The ecological problems left after the break-up of the Soviet Union have today reached acute proportions - bordering in some areas on the ecological destruction of the population. From the view of the governments of the former Soviet Union, virtually everything needs fixing - so the population's problem is where to start. The West's dilemma is where to start funding - as the cost of cleaning up only part of the region's environment will run into tens of billions of dollars.

Dr. Feshbach is Research Professor at the Department of Demography, Georgetown University, Washington DC.

The impact on potential economic activity due to the environmental legacy from the Soviet regime is devastatingly bad, or as I have called it elsewhere, Ecocide. That is, Ecological Genocide of their own population, and therefore of the economy. Recently, a Russian friend told me, "Everything is going wrong, everything needs repair, every problem is connected to some other problem. We don't know where to begin and we have no money". A senior AID official put the dilemma in similar terms after a State Department briefing I gave on the ecological and health problems facing the former Soviet Union: "Your data are compelling; my problem is how to do all the tasks needed with limited funds available." Indeed, statements like this highlight one of the potential dangers of the Western approach to this problem - policy paralysis.

"Green" issues became a rallying point in the late Soviet period. Today, in the post-Soviet period, "green" issues have once again brought people out into the streets. Today's green issues are not the same as those that were dominant during the perestroika years. The great concern over "green" ecological issues has now given way to great concern over "green" dollar issues. People are finding it difficult not to be overwhelmed by the disastrous economic environment in the former Soviet Union. And the preoccupation with "green" dollar issues has greatly detracted from any progress on "green" ecological issues.

The task becomes even more complicated because the two green issues are now competing for the same funds and this may well prove to be counterproductive. I would argue that the two issues - ecological reform and economic reform - should not and cannot be separated. To attack one without simultaneously attacking the other is meaningless or, perhaps more appropriately summarised as "Soviet". An effective strategy must account for both. The question today is to find the right mix of ecological and economic goals.

  • Priorities must be set among the overwhelming problems.
  • Short-term goals must be dealt with separately and long-term goals concurrently initiated as appropriate.

In my previous work I have highlighted the severe impact of the highly centralised, irrational and shortsighted economic planning of the former Soviet Union on its ecology. That is, the goal of producing military weapons and heavy industrial output regardless of cost - economic, human or ecological - and the major side effects on the health and environment of the population. Today the problem has taken on new dimensions or new scales not seen anywhere else in the Eastern or Western world. The former Soviet Union remains mired in ecological disasters and economic obstacles.

Each of these in turn negatively impacts the ecology of the former Soviet Union and simultaneously threatens productivity leading to economic growth and economic reforms. However, today wide-scale ecological disasters even threaten the very process of economic transformation. These disasters jeopardise economic reform because in financing clean-up projects, money, resources and manpower are diverted away from investment and other economic stimulation activities that are vital for a successful economic transition.

Funding ecological cleanups from internal sources is very limited and external funding is being questioned more and more. Moreover, multilateral, bilateral, and unilateral funding may still be insufficient for the total agenda and needs. For example, (from Ecological Disaster) one of the most serious ecological threats today, the continued operation of first-generation RBMK - and VVER-type reactors will take years and cost many billions of dollars to repair or to replace. Jonathan C. Brown, the World Bank's Division Chief for Infrastructure, Energy, and Environment, estimates a price tag of between $6 billion and $8 billion. Ivan Selin, Chairman of the United States Nuclear Regulatory Commission, has judged that the cost may eventually climb to $20 billion. Private estimates run even higher.

Another example (from Ecological Disaster): the Norwegian government set aside 20 million Norwegian kroner (about $2.6 million) for the modernisation of the Russian nuclear electric power station on the Kola Peninsula at Polyarnyye Zori. Separately, the Finns have allocated 9 million markkas (about $1.5 million) for modernisation of the Polyarnnye Zori and Sosnovy Bor (near St. Petersburg) stations. Finland authorised 6.4 million markkas the year before (1992) for inspection, planning and determination of priorities.

In addition (from Ecological Disaster), Baltic Eco Association experts estimate that more than 28 billion Swedish kroner (about $3.8 billion) over a period of 20 to 30 years would be required to restore the Baltic Sea to its 1950s state.

If the control centre for designing and implementing is Moscow city, and if the reports and interviews with a former chief of the Moscow City Directorate for Nuclear and Radiation Safety Oversight of Gosatomnadzor (their Nuclear Regulatory Commission) are correct, and if Vladimir Mikhaylovich Kuznetsov is not totally biased against his former employer, after being relieved of his position when he ordered 10 nuclear reactors to be closed after classifying them as dangerous to the inhabitants of the city, and if he is not exaggerating, then nuclear dangers may amount to a much more dangerous situation than considered heretofore.

Work reliability and safety at 80 percent of the 63 nuclear research reactors in Moscow city and the immediate region surrounding the city, according to his information and evaluation, is such that they should be shut down, since none fully meets modern safety requirements, and only one specific reactor of Kurchatov Institute's 28 nuclear research reactors is a potential killer of 100,000s of persons. (Kuranty, 25-26 March 1995, pp. 1,4.). How hyperbolic or correct is he? Hopefully the former, but...

Again, for example, the Norilsk Nickel Plant and its subsidiary in Nikel' on the Komi Peninsula, had been one of the most, if not the most, profitable enterprises in the Russian Federation. This tremendously "profitable" firm produces some of the most devastating environmental side effects which threaten not only life and limb within and without Russia, but the viability of economic reforms. The total fallout of all pollutants in Norilsk is 85 tons per capita, 35 in Nikel and "only" 0.6 in Moscow - those of us who are familiar with Moscow, have witnessed firsthand the terrible impact on environmental conditions produced by industry and automotive transport.

Moreover, until recently there were more than 600 radioactive toxic waste sites (mostly cleaned up, but 50-60 new are found each year). According to V.A. Rikunov, head of the Department of Management of Radiation Safety in the National Economy of Gosatomnadzor, there are 700,000 radioisotopic sources in operation in the Russian Federation. At Kurchatov Institute in Moscow, three nuclear reactors can be found, as can some 50-odd other reactors in the city. And if a major accident occurs? What will be the impact in a large city? Not a Chernobyl, but a clearly serious incident, to say the least. Hopefully funding will be sufficient for this nuclear regulatory commission to monitor and control safety and operations throughout all of Russia as well. So far this does not seem likely.

Returning to Nikel', in large part because of nickel production in Monchegorsk in Nikel', life expectancy at birth has declined to a shocking low level. In Nikel' life expectancy was only 34 years of age at birth, and 44 for the population of the city as a whole.

Since economic reform cannot be carried out from the grave, the impact of a declining life expectancy could be very serious for economic reform. Moreover, what is the incentive to work there and complete the task of reform in such a life-threatening environment? In fact, it is very premature to speak of successful democratisation, privatisation and marketisation in such cities as those which are very heavily polluted or environmentally threatened. For example, cities with heavy civilian and/or military chemical facilities are numerous and reforms are difficult to implement (See Murray Feshbach, Editor-in-Chief, Environmental and Health Atlas of Russia, Moscow, PAIMS, 1995, chapter IV. Available from Center for Post-Soviet Studies, Chevy Chase, MD. 20815, U.S.A.).

About the only positive aspect of the reform to date is that these polluting industries are now producing less because of the disarray in the market and in the supply system, and also because of the lack of money to pay wages. Furthermore, there has been a brain drain of the scientists and skilled workers at these facilities who might have been the individuals supporting economic reform. On the other hand, those leaving probably will live longer than if they stayed and "fought" for such reforms. And if reforms do take place, and productivity is increased, perhaps output will increase again to its former levels ... but will pollution abatement equipment be installed in the interim?

Will money be spent by the Russian government, by the local government, by the industry, by the enterprise, or will they hope that the Norwegians and Finns affected by dangerous trans-boundary pollution pay for these pollution-reducing installations in order to save themselves, and the Russians as a derivative benefit? Will they have enough money for this activity, that is the Norwegians and Finns? And then what about numerous decaying ships containing radioactive waste in the fjords of the Kola Peninsula? What if a major accident occurs draining further everyone's funds, not to mention the potential impact on health and the attendant costs to treat and cure those affected. What about the dozens of nuclear-related facilities on the Peninsula?

Environmental and economic security for countries in and around the FSU are uncertain. If another Chernobyl-type accident occurs say on Kola Peninsula and large numbers of people flee across the borders to Norway, it could be devastating to the economy of the country of refuge. How would Norway (and therefore NATO) react, if one million persons flee across the border and become some 1/4 of the population of the country? What does this mean not only in economic terms, but also in general population and health issues that impact on the potential for economic growth?

In another view, why did UNICEF conclude at the end of 1993 that if the figures they had at hand at that time were correct - and they were largely worse by the end of 1994 - the potential for social disintegration in Russia is high, and if social disintegration occurs, what does this mean for the organisation of production, the health of workers, and for economic growth? Essentially it means that economic reforms will not be successful, to say the least.

There are also some demographic trends that will negatively impact the future labour supply and that will demonstrate the current declining health of the workers. Overall the expectation is that we will see a major decline in the natural increase of the population of the Russian Federation. The number probably would decrease even further if there was not any forced migration, refugees, and illegal entrants (if counted), which have so far led to some migration of the decline in the population's size.

Population increases because of forced migration, refugees and illegal entrants also will come at a cost to house, treat and employ them. Reduction in the growth of the absolute size of the population in Russia is not the result of positive trends, but of negative trends. Infant mortality has increased, maternal mortality has increased, the health of the already severely declining number of new-borns has been worsening, a growth in infectious diseases has been spectacular and will shortly produce a major increase in the number of all deaths in Russia.

The overall level of deaths - especially from extraordinary increases in the rate of diphtheria and probably from tuberculosis, cholera, plague and other diseases which are all relatively low in the West are starting to indicate alarming trends. Looking at the transparencies showing birth and death rates and life expectancy at birth - now 58.9 for males, but may go down to low 50s on average, statistically comprehending, therefore, a range of life expectancies from the 40s to 60s for males - and even a major decrease for females.

Population projections made internally for the Russian government show a medium-term projection dropping from 148 million in 1995 to some 139 million persons by 2005, while many countries in the Western and in the Third World are attempting to slow population growth. The former Soviet Union already has such a pronatalist policy in place, but like the Western and Third World its official choices can be frustrated by human decisions and behaviour patterns. However, the consequence of years and decades of not linking decisions on military and industrial production has resulted in a population with serious health problems now and in the future, and again, problems for their potential productivity on the job.

From the point of view of economics, illness, as well as deaths in the prime working ages (increasing by 30 percent between 1992 and 1993) leads to drops in labour productivity, i.e., of output per person employed, and therefore to the reduction of potential economic growth and the economic reforms intended to allow growth to be facilitated in the future. In addition, due to corruption, money designated for environmental pollution abatement equipment and procedures is not being used as anticipated. And the enterprises do not have funds to spend on such equipment or procedures to guarantee current repair and maintenance of this equipment.

I will not go into too many details about the spread of problems, from widespread radioactivity - not only from the Chernobyl accident - chemical products such as dioxin, DDT and benzo(a)pyrene, and the spread of heavy metals at levels many multiples of the entire EEC, toxic waste of human, industrial, agricultural and military origin, and of air, land and water pollution. Perhaps one quote will suffice : the former Russian Minister of Health said "To live longer, breathe less!" Water pollution is virtually universal and at a serious level.

The principal issue, then, becomes establishing a set of priorities to deal with these problems created by internal causes through external funding agencies, governments, and international organisations. I have attempted to provide such a list of priorities based on an enormous amount of new and better information in my recent book, Ecological Disaster : Cleaning up the Hidden Legacy of the Soviet Regime (published by the Twentieth Century Fund (New York) in February of this year).

Long before the terrible event in Japan with use of sarin, I had been concerned about chemical weapons, and the book, for example, provides a list of the 53 cities that test, produce and/or store chemical weapons. If I lived in Udmurtiya's Kambarka why should I care about the reform unless the reform - political as well as economic - allows me to have an input into the decision-making process about what to do with these chemical weapons and their remainders?

What if DDT and PCBs wash into the Arctic Sea from coastal sources, and perhaps dumping reaches the United States and Canada? How will this affect health and environmental security in Alaska? Where will the money come from in the former Soviet Union to treat these problems, and do they want to know?

Legacies from the past affect the amount of resources available to implement economic reforms. It will cost billions of dollars to remediate the stock of chemical weapons, remove and properly store nuclear reactors and rods, as well as the liquid radioactive waste from submarines; the Aral Sea, which also affects weather and health in Russia; the Black Sea with revenue from fish catch declining dramatically - the annual catch dropped by two-thirds in a recent seven year period.

Thus in 1985, 1.5 million tons of fish were caught; in 1992, 500,000 tons; and since then, according to the Washington Post, only 100,000 tons in 1994. Reduction in the mackerel catch, the former backbone of the fishing industry, has occurred also in the Sea of Azov. Ukraine's interagency environmental commission found that environmental pollution and impact on health of the population caused by the Black Sea fleet operations amounts to 19.4 billion US$ (Kiev, Narodna Armiya 17 Feb. 95, pp. 1-2), and who is to pay for it? Russia? the West?

Oil and gas spillage including accidents and flaring of by-products from oil processing lead to a loss of 7 to 20 percent of all output of oil and gas, and therefore of enormous quantities of income foregone for domestic use, which leads to continued use of Chernobyl-type reactors; hard currency income lost is not helpful as well. Revenues are not available which could have been used to improve the economic as well as ecological, health and political situation. Transportation network - pipelines, railroad, intercity, transport, and so forth: What will be the costs to foreign investors? The EBRD and other foreign organisations have agreed to contribute funds for repairing the Usinsk pipeline, for example.

The injection of large sums of investment from abroad are deemed to be necessary for a successful reform of the Russian economy. The ecological threat involves variants for foreign investment in Russia. First of all, international companies may be discouraged by the current state of environmental decay in or around Russian industries, especially natural resource industries such as the diamond or oil industry. If a foreign oil company wants to invest in the Russian oil industry, it must consider the current state of disrepair of the Russian oil pipelines, the lack of adequate infrastructure, and the possibility of radioactive contamination of oil fields such as those in Kazakhstan. In any case there will be an environment of uncertainly for the investor.

Second, foreign investors may have difficulty finding personnel and employees who would be willing to relocate to a dangerous area because of the environmental situation.

Foreign investors need not only clear and consistent rules of the game, but also firm banking, contract, and tax laws, as well as a cleaner environment, as noted here. To return to the "radioactivity issue" for the moment, it is important to point out that there are incremental costs in developing oil and diamond fields suffused with radioactivity from underground "peaceful, national economic" atomic explosions. These were asserted to be perfectly safe. We now know from Minatom Minister Viktor Mikhaylov, plus others from Kazakhstan and from the Sakha Republic (Yakutiya), that 30 percent of the underground explosions vented some radioactivity, (according to Mikhaylev), as well as from medical research and evidence in Kazakhstan and Sakha, per VM.

Another sector which must develop to stimulate successful economic reform in Russia is agriculture. Currently, Russian agriculture lags behind other developed countries due to poor farming techniques, inadequate infrastructure and widespread environmental pollution and devastation. The result of all these factors has been a decrease in the productivity of land. In response farmers have resorted to cultivating more and more land to try to produce the same crop yields.

As a result there has been an extensive use of marginal land, which is not only less productive but also prevents it from being used for other economic activities. Increasing amounts of pesticides and fertilisers were used to stimulate bigger crop yields. This exacerbated the pollution problem and also jeopardised the healthiness and quality of the food produced. Agricultural reform - if it works, and leads to an improvement in the farm situation - will make farms more profitable, the farms or private farmers will be able to afford the purchase of pesticides and fertilisers as they had not been in the last few years and will pollute the land and the food grown in these lands as in the pre-reform period. Thus, a negative result may ensure from a positive development.

Some of Russia's most "profitable" industries i.e., timber, fishing, oil, gas, may be affected by new environmental regulations if they are truly enforced. There is a cost of enforcing environmental laws and a cost for training people in environmental laws. Environmental law was slow to develop and environmental lawyers and law schools teaching environmental law are, therefore, rare in Russia. (World Bank, Staff Appraisal Report Russian Federation Environmental Management Project, October 19, 1994, p. 19).

Early costs, however, may lead to positive results later. However, as a World Bank study indicates, "Responsibilities for environmental quality management are dispersed among many government agencies. They are poorly coordinated leading to conflicts between agencies and inefficient use of limited human and financial resources available" (p. 19, World Bank).

Moreover, "There is a danger that well-trained and experienced personnel in pollution abatement and nature protection will seek other occupations in order to survive the current economic crisis" (p. 19, World Bank).

Increased regional autonomy can have negative as well as positive features. Coordination of economic reform and environmental regulation in the regions is necessary. For example, how will one section of a river flowing through Chechnya affect those regions below them if war conditions lead to pollution of rivers? One Oblast may be willing to spend money to clean it up and regulate it and another may not.

In sum, a two-edged sword hangs over their heads at both the macro and micro levels. Hopefully, the recently concluded Congress on Ecology and Sustainable Development held in Moscow from 3-5 June, 1995, will lead to improvement in the ecology of the country and therefore enable economic reform to succeed. While it is advisable to remain sceptical, one also can be hopeful that it will succeed. If so, it will also lessen environmental security threats to our countries as well.

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