NEWS

Anna Arutunyan

The government is scrambling to come up with a massive bailout plan for Russia's 400 single-industry towns, or monogorods, while officials do not rule out the forced uprooting of whole towns to other parts of the country.

Experts say relocation, one scenario presented by officials at the Regional Development Ministry at a seminar last month, will be costly but inevitable for some towns.

A participant at the seminar, Sergei Veber, the mayor of the troubled town of Pikalyovo, confirmed the scenario.

The plan discussed at the seminar would split single-industry towns into two categories - "depressed" and "progressive". The "depressed" towns, paralysed by unemployment, would be relocated, while the "progressive" ones would be diversified, according to Vedomosti, which broke the story late last month.

Seventeen towns in a critical condition would be specifically monitored by the ministry. Under the plan, four kinds of monogorods have good chances of surviving: satellites of major cities, towns that have unique potential in their industry, towns situated near a national highway, and towns that can diversify into agriculture.

The ministry will dole out a total of 10 billion roubles ($340 million) in aid to monogorods on the list based on the towns' stabilisation and diversification plans, Vedomosti reported.

A ministry said the paper's report was flawed, but said it had raised a stir and that ministry officials were carefully trying to set the record straight.

"It is not an issue about the facts, but a political one" fraught with controversy because relocation could be involved, the source said. "It was a topic that was discussed during a seminar - that was all."

Because of the sensitivity of the issue, officials authorised to talk about it would take a long time to formulate and approve answers, the source said.

Veber said the scenario at the seminar targeted specific factories.

"In Pikalyovo's case, if the industry is working, then the town will thrive," he said.

The town gets money by leasing land to three mineral processing plants that produce cement, alumina and potash. When production stopped at two of the plants, wage arrears and unemployment paralysed the town, and Prime Minister Vladimir Putin personally intervened in June. With production limited and the plants plagued by debt, the city suffers, too, Veber said.

"The sums we get from leasing the land are very small, we cannot solve our problems on our own," Veber said. "We're taking part in various programmes to get funds from the government budget, funds that we can spend on infrastructure."

Veber confirmed that Pikalyovo was one of the 17 towns on the ministry's watch list, but said relocation was not an option for Pikalyovo.

"It is costly, and would make sense if the town was in a remote area. That's not the case with Pikalyovo," he said.

Instead, the focus should be on uniting the three plants under a single owner so that they could work more efficiently, Veber said. "If alumina isn't in demand, the enterprise can focus more on cement if it is under one owner.

Many monogorods' problems stem from Soviet-era bureaucratic planning, which focused the economy towards military production.

Mark Urnov, a professor at the Higher School of Economics, said the monogorod model was incompatible with a free-market economy, and therefore many towns would have to be relocated.

"The Soviet Union deliberately established an autarchic economy, one that didn't depend on outside market forces," Urnov said. "Towns were built not based on economic logic, but on the logic of war. That's why they're situated God-knows-where."

The government will eventually have to consider relocation - either through giving people money to allow them to buy a new home elsewhere, or by building homes and telling people where exactly to move to, Urnov said. Though more repressive, the latter variant is cheaper and therefore more likely, he added.

Another possibility - the complete overhaul of some industries to produce economically viable goods - is also debatable.

"What is in demand during an economic crisis?" said Boris Kravchenko, chairman of All-Russian Confederation of Labour, an independent trade union federation. "And where are you going to get the money to reshape these factories and get them to produce something else? These are all good measures, but they should have been implemented decades ago."

Chronic infrastructure problems also handicap many plants.

A case in point is the Baikalsk pulp mill in the Irkutsk region, where production stopped last year.

"There was talk in May that we start producing wallpaper and toilet paper, but that isn‘t happening," said Valentina Nesvetova, the plant's local union leader.

A visit from Prime Minister Vladimir Putin this summer prompted management to pay wage arrears, and fliers appeared that the plant would resume production. That hasn't happened yet, and until it does, there's no point in discussing new product lines, Nesvetova said.

Altrack, a tractor plant at Rubtsovsk in the Altai region, isn't really equipped for anything but tractors, said the plant's local union leader, Lyubov Maslova.

"Since the 1990s, the plant has become smaller," Maslova said. "And nothing new has been introduced in 30 years. We should focus on creating new models of fire trucks and tractors - they are in demand."

In July, Altrack management began to pay off back wages after talk that Putin would visit the plant, but the arrears have begun to pile up again, she said.

Nationwide, the problem is so acute, said Urnov, that it will require a systemic overhaul, which will be expensive, painful and inevitable.

"People shouldn't worry about being relocated anytime soon, though. The discussion alone will take at least two years, by that time, it may be put on hold as we edge out of the crisis," Urnov said. "Without major government programmes, it can't be done."

Kravchenko said that his union federation is drawing up ideas for reforming monogorods - but so far, they are only brainstorming.

"We need to calmly focus on long-term programmes," ideally ones that will involve all levels of government, said Kravchenko. "But there are more questions than answers. The industries in these towns shape everything."