Russian Mine Strike

Jesse Hirsh (
Tue, 3 Sep 1996 09:49:36 -0500

Title: RUSSIA: Miners Ready For All-Out Indefinite Strike Aug. 25

By Sergei Strokan

MOSCOW, Aug 22 (IPS) - Even as the Kremlin wrestles with the
Chechen fiasco, a new political crisis brews that could prove to
be just as disruptive -- a nationwide miners' strike threatened to
start on Sunday, Aug. 25, Russia's traditional Miners' Day.

Thousands of miners are already on strike demanding payment of
millions of roubles worth of unpaid wages; all 975,000 of them
nationwide say they will walk out en masse on Aug. 25 unless the
arrears, some 332 million dollars worth, are paid in full.

For the government of prime minister Victor Chernomyrdin,
wresting with Chechnya and under pressure from the International
Monetary Fund (IMF) to cut back state subsidies and public debt,
the strike may now be unavoidable.

Officially at least the problem is due to a chain of debtors.
Russia's stricken industries cannot pay their power bills, the
distribution network cannot pay the generators, the generators
cannot pay the mines and the mines cannot pay the miners.

The government has also been slow to pay mine management, its
reserves drained by the extra costs of the Chechen conflict,
president Boris Yeltsin's careless pre-election spending pledges
and a slump in tax income.

A mine company official in Tula, 200 kilometres from Moscow, said
they were unable to pay wages because they were owed 68 billion
roubles by its clients and the state (13.2 million dollars)

Nevertheless the government has put pressure on the regional mine
and power utility management to get their houses in order,
starting in the country's far eastern Maritime Territory, where
the arrears are greatest and power rationing is already in place.

Vitaly Budko, chairman of the Russian Independent Union of Coal
Industry workers says the situation in the industry had reached a
''catastrophic limit''. He warns that unless the state pays off
the 1.7 trillion roubles it owes the miners in back pay then his
780,000 members -- 90 percent of the industry's work force -- will
lay down their picks indefinitely from Aug. 25.

The day is traditionally marked as 'Miners Day' in Russia.

''It is clear that the situation has now reached the point where
a social explosion is possible,'' Budko says. The union has sent
an open letter to Yeltsin calling on him to take personal control
over the industry, ''without delay in the name of justice and

The union also called on the government to ensure that the debts
of consumers, which it estimates at six trillion roubles, are paid
in full. The generating plants ''stopped paying us three months
ago,'' Budko said, while acknowledging that the country's power
plants also ''had it tough''.

''The malaise of the coal industry today is not unique,'' says
senior union official Ruben Badalov. ''It is common to the economy
as a whole. Therefore, only the government can cure it, and it
must do it through a complex approach.''

The Union wants the government to form a financial oversight
commission for the coal industry that includes representatives of
the unions and parliament to look into social problems in Russia's
mining regions.

The state prosecutor is also investigating allegations of
fraudulent misuse of emergency funds sent by Moscow to part pay

Some 11,000 miners in the Maritime Territory have temporarily
lifted a strike called in mid-July and 30,000 miners in the Rostov
region of south Russia, held a week-long strike earlier this
month. All, including miners in Vorkuta in the Russian arctic
region have voted to strike Aug. 25.

Dealing with the worst problems first, Yuri Malyshev, head of the
national coal concern Rosugol and energy minister Yuri Shafranik
have offered 38.5 billion roubles to ease the problem in the
Maritime Territory, where miners were owed five months' back pay,
over 230 billion roubles, when they struck.

The 10,000 strikers in the Maritime Territory lifted their strike
but will strike again Aug. 25 without more payments to reduce the
debt, now standing at about 140 billion roubles.

The danger of violence is ever present as angry, hungry miners
confront mine managers and political authorities. In Chernogorsk
in the semi-autonomous Russian republic of Khakassia, miners
unpaid since November 1995 cornered city mayor Vladimir Sorokin
earlier this month. He had to be rescued by militia forces.

The government maintains that it is not to blame and that the
problem lies with the consumers' failure to pay. But most of the
consumers are state controlled enterprises, notably the huge
military-industrial complex and the railway networks.

Fraud is another possibility. Maritime Territory administrator
Yevgeny Nazdratenko and Valter Kozlov, general director of the
Primorskaya power plant near Vladivostok, are both under

Regional chief prosecutor Sergei Dzhavadov alleges that Kozlov
last year spent 895 million roubles of the plant's money, then
equivalent to about 200,000 dollars, to buy shares in another
company for himself and his deputies.

But others point to another cause. ''Contrary to common belief,''
says Sergei Zharkov, a economic expert with the daily Capital,
''these long arrears are not only the result of a combination of
economic problems and the criminal blunders of senior officials.

''The real problem lies in the unprofessionalism and greed of
plant directors, who have been freed of state control, but who are
not yet answerable to shareholders.''

''Trading in debt is a lucrative business in Russia,'' says
Georgy Tal, deputy head of the Federal Insolvency Administration,
''and can bring 330 to 1000 percent annual returns.'' There is
often little incentive among debtors or creditors to clear them.

''To settle the arrears issue, we need not cash but appropriate
legislation to prevent machinations with federal money at the
grassroots level,'' he says.

But other experts warn against making local authorities the
scapegoats for the crisis. ''The federal authorities should
acknowledge their share of the fault and acknowledge the lack of
proper mechanism to prevent manipulations,'' said Elena Bragina, a
research fellow with the Moscow Institute of World Economy.