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Russia's one-factory towns are in trouble

October 11, 2009|Karina Ioffee | Ioffee writes for the Associated Press

Many people who moved to Siberia and the Far East during the Soviet era, when they were paid premium wages, found themselves unable to return west to what is sometimes called "mainland" Russia after the Soviet collapse.

"Just selling your apartment in a town that is economically depressed is impossible. And even if you do manage to sell it, the money you receive is not enough to buy housing in a larger city where there might be work," Petrov said.

Economists say some monocities would be in better shape if Russia had made the massive investment needed to phase out antiquated industries and create a modern capitalist economy. Too much of Russian industry, some say, is still state-owned and -managed.

Yevgeny Yasin, a former economics minister and director of the New Economic School in Moscow, said Russia's government uses protectionist and other measures to keep a strong grip on the country's privately owned industries. Company managers, he said, haven't learned how to survive in the open market. "The social mechanism must change," he said.

Management at the Yasnogorsk Machine-Building Factory, which took over from previous owners just three years ago, said it is trying to attract new business, taking orders it would have rejected in the past.

"The crisis dictates its own rules," Nikolai Dupak, general director of the factory, said in a written statement. "We had big plans to diversify our production, but we didn't have time to realize them. . . . But we have a commitment to our workers and it's our goal to make sure they get paid all they are due."

Besides the drop in orders, the factory was slapped with a fine of almost $2 million from the regional government (for what Dupak called a "bookkeeping error"), which Yasnogorsk Machine-Building has not been able to pay. Officials from the region did not answer requests for comment.

The federal government has helped industries limp along, with subsidies and tariffs. But many workers want Moscow to do more.

Several in Yasnogorsk said they hoped Prime Minister Vladimir Putin would drop in on them, like he did on another economically depressed town near St. Petersburg in June. There, Putin reprimanded the owner of one shuttered factory for poor management and ordered him to sign an agreement to pay back wages.

In the meantime, patience is wearing out.

"I pay my taxes and do everything I'm supposed to," said an exasperated Ovsyanikov. "But I don't feel like life is getting any better. In fact, it's getting much worse."

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