Window on Eurasia: Company Town Problem in Russia Reemerges in More Explosive Form

Paul Goble

Vienna, February 16 – The problems of the economic decline in single-industry cities, the so-called “monogorods,” have reemerged with new force as officials face up to the reality that the attention Vladimir Putin gave to Pikalevo and Moscow’s program to deal with the problem have done very little to solve the problems.

Indeed, Pikalevo residents are warning that a new period of economic decline, despite all of the center’s promises, will force them to demonstrate once again, and Sergey Darkin, governor of Primorsky kray, is warning that further layoffs at one “city-forming plant” as the company town’s economic centers are called could lead to an explosion.

What makes the situation more problematic is that earlier many Russian workers were prepared to believe that Moscow or at least the country’s most senior leaders could and would solve their problems, but now, in the wake of a meeting President Dmitry Medvedev held earlier this week, they can see that the center has in effect left them to their unhappy fate.

As in the past, officials in the central Russian government blame local officials for what is taking place, saying that the worsening situation in at least 70 of these cities – the total number of which are estimated to be nearly 500 – is not because Moscow has failed to act but because local officials have failed to show initiative.

In a Politcom.ru commentary, Anatoly Medvedev notes that after Putin’s visit to Pikalevo in 2009, the central government adopted a two-pronged program to address the company town problem, calling for both shifts in populations to places with more jobs and diversification of the economies of these cities (www.politcom.ru/11448.html).

Vice Prime Minister Shuvalov told President Medvedev that the basic problem in this sector is that “positive government initiatives” from Moscow after 2009 have failed because “the municipal authorities cannot even adequately prepare an investment program for a small administrative division” of the country.

From the very beginning, the Politcom.ru commentator says, there were doubts that Moscow’s proposals would work if for no other reason than “the obligation laid on the municipal authorities for the formation of basic proposals for restructuring that would make their cities attractive for investment could not be fulfilled a priori.”

Municipal officials in Russia “are not accustomed to showing initiative” regarding such questions and “do not have the necessary level of expert support for the formulation of ideas interesting to investors,” he continues. And he notes that already in March of last year, Moscow experts had concluded that only the most enterprising regional heads would be helped.

The others, scholars at the Moscow Institute for the Analysis of Enterprises and Markets at the Higher School of Economics argued, would be left to their own devices. In short, “those who did not show initiative … would not receive the necessary help.” Given the pattern of leadership in these company towns, many resemble the latter rather than the former.

According to Anatoly Medvedev, “the problem of the realization of the programs for company towns is very instructive and a clear example of the fact that municipal and local powers cannot be allies of the federal authorities in positive undertakings,” adding that “to a certain extent, this is the fault of federal officials” who won’t delegate or support.

At the meeting with Shuvalov, President Medvedev displayed his anger about the situation, but despite that and despite his calls for expanded efforts to help the millions of people who live but in many cases no longer work in company towns, the situation in at least some of them appears to be headed toward an explosion.

The Novy region agency reports today that Pikalevo, whose demonstrations first attracted broad attention to the company town issue and even caused Putin to visit their depressed area, is headed into another period of protests given that “2000 workers of the city forming enterprise may [soon] be without work” (www.nr2.ru/moskow/320678.html).

And yesterday, “Nezavisimaya gazeta” reported that Primorsky Kray Governor Darkin has been told that the managers of one company town industry are going to be laying off 1300 more workers, possibly prompting some of them to strike and others fearful about the future to join them in sympathy (www.nr2.ru/fareast/320453.html).

Moscow’s strategy is clear: it will seek to blame local officials for all the problems and pose as a defender of the workers. But the center’s failure to live up to its promises over the last year means that ever fewer workers are going to believe it and ever more may decide that protest strikes and other actions are the only weapons they have to advance their cause.

And that is even more likely given that this long-simmering problem is once again heating up as Russia heads into another electoral cycle, during which it is likely any number of candidates from various parties will attempt to win support by taking the side of the displaced workers and putting the blame on Moscow for not living up to its promises.