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

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Sergei Strokan

MOSCOW, Aug 22 1996 (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 stability”.

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 arrears.

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 investigation.

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.