Russia’s Company Town Problem Returns with a Vengeance – and Even Putin Can’t Go to Them All

Paul Goble

            Staunton, July 24 – Prime Minister Dmitry Medvedev’s acknowledgement that there isn’t enough money to handle even those company towns (“monogorody”) which Moscow rates as in “crisis categories” calls attention to the reemergence of this problem, one that Russian politician say is now beyond Vladimir Putin’s capacity to handle by personal visits as he did in Pikalevo.

            This week, the editors of “Argumenty nedeli” asked four prominent Russian political figures to react to Medvedev’s statement and to suggest whether and how Moscow will be able to cope with the crisis now growing in more than 200 of the company towns that had already been hard hit by earlier economic problems (argumenti.ru/live/2015/07/408460).

            Oksana Dmitriyeva, an economist who is first deputy chairman of the Duma budget and taxation committee, says that if the factories around which company towns are built are producing something in demand, things are fine as long as the workers are paid and the owners do not loot the firms for their own enrichment as has often happened.

            But if there is no demand for the output of these firms, then the government has to come up with a plan and with the money to make it work, she says. “But up to now” every talks as if Russia’s company towns “function around completely profitable enterprise[s].”  That  was the case in Pikalevo, but it is hardly the case elsewhere.

            And she suggests that even Putin will not be able “to travel to every company town as he did to Pikalevo. You won’t be able to introduce such hands’ on administration in every company town.” Instead, Moscow needs a policy, and so far, it doesn’t have one.

            Anatoly Sitnov, the deputy head of the defense industries of the Russian Association of Businessmen and Entrepreneurs, agrees. What is necessary to solve the company town problem is to give them work. “That is all, and if, let us say, the production is not in demand that this means it is necessary to build productive capacity that is.”

            What makes a good and thriving company down? “Narrow specialization with highly effective labor!” If that worked in Soviet times, he asks, “why doesn’t it work now?  “And if Medvedev says that the government has no money for the support of all company towns, that means that Medvedev must be fired.”

            The problem is not that of the company towns but rather in the goals which the government has set itself, Sitnov says. Everyone talks about the market and its rules, but in fact what Russia has now is not a market but “a bazaar.” And consequently, people talk about how they can take money out of the economy for themselves rather than develop the country.

            That leads to dangerously short-sighted approaches as when some in the capital say “let’s destroy the [company] towns and have everyone move to the megalopolises.”  That leads to the conclusion that the country doesn’t need to build roads and not having that infrastructure only makes the current problem worse.

            Vladimir Rubanov, a member of the leadership of the Council on Foreign and Defense Policy and the former head of the KGB’s analytic department, also suggests that Moscow must consider the problems of company towns in the context of the country’s larger political and economic plans.

            “The problem of company towns is not unique,” he argues.  They rise and fall depending on economic cycles and production changes. Saving them as such must not become an end in itself. Rather, in cases where there are problems, the government needs to consider changing the output of the firms involved, moving the population, or attracting investment.

            Neither the first or second is cheap, and in the current environment, the third is almost impossible. Consequently, none of the company towns now in crisis is going to get out of it quickly and easily.  And Russians need to recognize that the problems of the company towns reflect the decision 15 years ago to “life on oil and gas” rather than industrial production.

            Finally, Gavriil Popov, president of Moscow’s International University and the former mayor of the Russian capital, urges a selective approach. “The majority of such company towns,” he says, “is connected with the military-industrial complex or with raw material sources.” The latter is seldom a problem; the former often is as demands change.

            “If the city-forming enterprise does not have any prospects,” Popov says, “then it is necessary either to resettle people elsewhere or build new factories, using the facilities already in place.”  Such tasks should have been resolved already and “above all” by the deputies who represent them in the Duma.