Russia on the Way to a Housing Market: A Case Study of St Petersburg

Abstract

The Russian government has launched a privatization program with the aim of creating a housing market in place of administrative allocation. Very few, including reformers at the top level of government, realize the economic, social, and political value of housing reforms. At this stage, their goals are very narrow: to free the state of its construction and maintenance burden, and to collect revenues from real-estate owners to support the activities of local governments. These reforms yield little, if anything, given cumbersome and contradictory private-ownership laws, power squabbles between interest groups at different levels of the local and federal governments, and resistance at the grass roots. For the above reasons any market-oriented policies although effective in the countries of the ex-socialist block, may be impossible in Russia. Thus, in St Petersburg, the second largest Russian city, a short-lived privatization program collapsed in early 1993. In this urban community, as in a microcosm, the interaction of political, economic, and social factors is reflected, which sheds light upon urban affairs in a broader context of a postsocialist Russia. A number of questions are asked in this paper. What is behind the all-Russian privatization program? What forces are pushing for reforms and who opposes them? Will privatization relieve the housing crisis, and is it a workable alternative to the centrally administered housing-allocation system?