Source: The Moscow Times
Pikalyovo 2009The big story in the little town of Pikalyovo nearly eclipsed the St. Petersburg International Economic Forum.
Why all the fuss over Pikalyovo? The cast in this drama includes five owners, including oligarch Oleg Deripaska, and three companies producing alumina, cement and soda. A break in that production chain resulted when the crisis caused a sharp drop in the price of aluminum and cement, and the factories were shut down after producing large losses.
Prime Minister Vladimir Putin became personally involved in the affair after it became known to all of Russia and most of the world that the workers, after not receiving their salaries for months, blocked a federal highway to St. Petersburg.
Putin traveled to Pikalyovo and accused BaselCement of irresponsibility, the Russian Railways of price gouging and the local authorities of inactivity. Under Putin's forceful command and with national television cameras catching every dramatic scene, the factory owners signed an agreement to deliver the raw materials at lower prices and the railway agreed to cut its rates. Management announced plans to pay wage arrears.
The only remaining problem is the cement. During a crisis, nobody is buying it. In order to carry out all of Putin's orders made on the spot, a crisis center was established to resolve the Pikalyovo problem. It is headed by the industry and trade minister and includes representatives of the business community, the prosecutor's office and the Interior Ministry. The crisis center works around the clock, but many problems remain unresolved.
In one little Pikalyovo, we saw a number of Russia's most serious problems come to head. First, it showed that the only communication channel between the people and the authorities is by illegally occupying the administration building and blockading a federal highway. Second, it showed that the only way to resolve a crisis is through Putin's direct "manual control."
Pikalyovo is a disturbing wake-up call, and it sets a very important precedent.
Six months ago, sociologist Yevgeny Gontmakher wrote a comment in Vedomosti titled "Novocherkassk 2009" that caused a sensation when it warned of unrest if factories in one-industry towns shut down as a result of the crisis. At the time, the government accused both Gontmakher and Vedomosti of inciting social unrest. But government leaders did nothing to prevent such a scenario from playing out or to at least develop an effective contingency plan in case it did.
There is a real danger that Pikalyovo will set off a chain reaction in other depressed, one-industry towns -- for example, in Nizhny Tagil with its ailing Uralvagonzavod, in Baikalsk with its paper and pulp mill closing its doors, in Zlatoust with its bankrupt metals plant. By failing to provide an overall solution and opting to extinguish fires on an ad hoc basis, Putin is effectively provoking many other cities to repeat the scenario playing out in Pikalyovo.
Putin scored big political points with his drama -- presumably staged -- in Pikalyovo. In response, many governors, including Alexander Khloponin of Krasnoyarsk and Pyotr Sumin of Chelyabinsk, have joined in, calling for their businessmen to "resolve the problem" without waiting for a visit from Putin.
Putin's star performance in Pikalyovo was a slick move to raise his popularity rating a couple of more points higher, but it does little to prevent a "Novocherkassk 2009" scenario from breaking out in hundreds of towns across the country.