Siberia basking in the oil boom

By Tim Whewell BBC Newsnight, Siberia

Khanty-Mansiisk is full of new buildings thanks to oil revenues Tim undergoes -110C 'cryotherapy' treatment

It is a town of just 60,000 people surrounded by hundreds of square miles of frozen forest.

The temperature for much of the long winter drops to at least -20C, and sometimes -40C.

It used to serve principally as a place of exile for political dissidents.

But now, suddenly, Khanty-Mansiisk - 1,400 miles east of Moscow, in north-western Siberia - has become Vladimir Putin's model town, the place Russia most wants to show off to foreign visitors.

Wherever you look, there are shiny new buildings - recreation centres, a performing arts school, a university, and a hospital so clean and well-equipped it would put many of its British NHS counterparts to shame.

Social spending

Khanty-Mansiisk's already been the unlikely venue for many international cultural and sporting events - and next summer it's invited all Europe's leaders for the annual EU-Russia summit.

The source of its success can be summed up in one word - oil.

Khanty-Mansiisk is capital of a region - just one of Siberia's many provinces - that produces half of Russia's crude, a seventh of the whole world's supply.

The local authorities have been given the right to spend a considerable proportion of the tax revenue within their own borders - and 80% of their budget, they say, goes on social needs.

Governor Alexander Filipenko boasts of a local baby boom

The result: young people are flocking to Khanty-Mansiisk from all over Russia, and wages are well above the national average.

"This town's not middle class," says Valentin Shumanin, a stylish young manager at the region's state-of-the-art television studios. "It's a bit higher than that."

The downside, as far as the authorities are concerned, is a severe housing shortage. The upside is a baby boom.

And that's what makes the veteran governor of the region, Alexander Filipenko, particularly proud. "The birth rate is now double the death rate," he boasts.

That's a rare statistic in a country whose leader has warned of a "demographic catastrophe".

Newfound stability

But where Khanty-Mansiisk leads the way, there are signs that other regions are following. As average incomes rise right across Russia, maternity hospitals are getting busier.

And many provincial towns now have an identifiable middle class - poorer in many cases than their Western counterparts, but prosperous enough to take their families on an annual holiday to Turkey, Egypt, or Cyprus.

This kind of economy is like a bubble that can burst Yury Shagut, local opposition leader

It's that newfound sense of stability that will guarantee victory for President Putin's party United Russia in Sunday's parliamentary elections.

But everyone knows that the prosperity depends on the success of the oil and gas industries.

In Khanty-Mansiisk, Governor Filipenko sees no reason why the boom should end.

Existing fields still have at least 30 years of production ahead of them - and the authorities intend to use that time to diversify the economy, so that already by 2020 - according to official targets - energy will account for less than half of Russia's income.

Investment

His local opponents - admittedly few and far between - aren't so confident.

"This kind of economy is like a bubble that can burst," says Yury Shagut, local leader of the liberal opposition party Yabloko.

Oil wealth is dramatically improving life for many in Khanty-Mansiisk

He argues the Kremlin still invests too much of the state's income in foreign bonds, rather than in Russian industry or agriculture.

Shagut is leading a campaign against plans to construct a 60-storey tower designed by the British architect Sir Norman Foster on a hill in the middle of town - he says it's a "pompous" use of money that would be better spent elsewhere.

But for most people in Khanty-Mansiisk, enjoying the Siberian good life, that's just sour grapes.

We want to believe there's one good wizard who can improve our lives Alexei Dobrovolsky

Alexei Dobrovolsky, a young surgeon who's moved from a town further south, says Khanty-Mansiisk is a great develop professionally.

He's glad about all the changes Vladimir Putin has helped bring about in the last seven years - all that worries him is the total dominance of the president's party.

"I'm 35, my generation remembers Communism, and we're worried," he says. "We want to believe there's one good wizard who can improve our lives, but we'd like there to be more wizards competing to make our lives better.

"I think that would be better than having just one wizard who has no-one to compare himself to," he says.