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Russia: Nemtsov Fights Realities Of Economy--An Analysis

  • John Helmer



Moscow, 18 April 1997 (RFE/RL) - Russia's new First Deputy Prime Minister Boris Nemtsov went to battle this week with the Railways Ministry. Reality won.

In a speech to more than 70 railway bosses from across Russia, Nemtsov lectured on the need for the rail monopoly to protect the Government by managing itself better. What Nemtsov meant by that, he said, was "two tasks. The first is to decrease freight tariffs. The second is to pay salaries and taxes."

This is as obvious as it is contradictory, which the railwaymen proceeded to explain. If Russia's railways are already in deep debt to workers, federal and regional budgets, how will cutting tariffs on freight allow them to pay more? Not by generating greater demand for rail service, they believe. At least, not so long as the economy continues to contract, and both passenger and cargo volumes shrink.

Nemtsov replied that he does not intend to cut up the federal system, or sell off the losing lines. Instead, he ordered the railwaymen to get rid of as many of their workers as possible; slash their operating and maintenance costs; and eliminate all of the welfare charges which the rail divisions, especially in Siberia and the Far East, have inherited from the Soviet period.

Rather than speak plainly about unemployment, hospital closures, and apartment evictions, Nemtsov chose instead to speak of labor efficiency, competition, reform. Nemstov is suggesting the federal railways pass the buck to regional budgets, like the one he, so recently governor of Nizhny Novgorod, was unable and unwilling to pay.

The facts of regional life had to be explained to Nemtsov by Anatoly Vasiliev, the head of the railwaymen's trade union. "In the eastern regions of the country especially," Vasiliev said, "we are carrying most of the burden that should be carried by the state." He cited the example of the Chita region of southeastern Siberia, close to the Chinese border. "Sixty percent of the budget comes from the railway. There are also ten or more towns that are totally dependent on the railway, and 35-million square meters of housing. We subsidize schools, health care, police, and trade."

Nemtsov said the Government aims to transfer the welfare responsibilities of the rail system to regional budgets in the 1998 budget cycle. Vasiliev of the trade union said this could not be done. "There is no one with money to transfer these (costs) to."

Ivan Paristi, chief of one of only two rail lines in Russia (the other is Kaliningrad) to be operating in the black, told Nemtsov what the trick is. He claimed he has cut more than 17,000 from the payroll, eliminated night and weekend cargo loading operations, reduced maintenance of rails and rolling-stock. "This is dangerous," Paristi acknowledged aloud. In private conversation, Paristi admitted something else. The economic crisis allows the railways an opportunity to solve problems, he said, before demand picks up again. What he means is that, operating under monopoly conditions and under pressure to cut state funding costs, the railways can profit by doing less - much less.

That's the management approach of the most prosperous rail line in Russia.

Nemtsov conceded that "while reforming the system, we have to take into account differences between the regions. I'd like to stress our objectives, but I understand that life is more difficult than issuing instructions."

(John Helmer is a Moscow-based journalist who routinely contributes to RFE/RL.)
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