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Russia: Decline In Mining Reflects Broad European Trend

  • Tony Wesolowsky



Prague, 2 June 1998 (RFE/RL) -- In the annals of Soviet history, they will go down as the pallbearers of communism.

Coal miners in Russia and Ukraine launched massive strikes in 1989 and 1990 that were integral in the eventual collapse of the Soviet government of Mikhail Gorbachev and the rise of Boris Yeltsin as head of Russia, the largest remnant of the once vast empire.

Yeltsin was carried to power partly on the shoulders of the desperate coal miners, who saw in his promises of western-style capitalism the panacea for their ailing industry. They hoped access to western markets would finally guarantee a fair, i.e. higher, price for the coal they labored to extract from the earth. They were wrong.

Almost 10 years later, Russian miners are worse off than ever. The head of the country's Trade Union of Coal Industry Workers, Vitaliy Budko, said in late March that miners are owed 3.5 billion new rubles in back wages. Some Russian miners have gone up to two years without being paid, mainly because coal consumers are caught in their own cash-less spiral and have reneged on paying for coal deliveries.

Under pressure from the World Bank, the Russian government is liquidating Rosugol, the state-run coal enterprise, and is set this year to close 140 of the remaining 220 operating pits, according to Matt Salt of the Institute of Coal in London. The World Bank was miffed in 1996 when Rosugol used money from a $500 million loan to open and expand Russia's coal industry, contrary to the bank's urgings to close unprofitable mines.

According to the American journal Business Week, only about $6 million of the loan was actually for its intended purpose of retraining miners and funding a social support system. The rest disappeared down the corrupt hole that is Russia, with some of the money financing President Boris Yeltsin's 1996 re-election campaign, according to Business Week.

According to the Russian Segodnya newspaper, employment in the country's coal industry has already fallen by 18 percent in the past two years, to about 359,000 workers. The new cuts could cost Russian miners another 100,000 jobs.

Once pillars of support for Yeltsin, miners lead a growing chorus of disgruntled Russians calling for Yeltsin to step down. Their frustration culminated a few weeks ago when miners in the Siberian Kuzbass shut down key rail lines on the Trans-Siberian railway, cutting off rail traffic from Moscow to the east.

The plight of Russian miners underscores a general setback for the industry across the former East bloc. Nearly half a million jobs have already been lost and another 400,000 miners face sacking in Central and Eastern Europe, according to the United Nations' Economic Commission for Europe (UNECE).

Between 1990 and 1996, Bulgaria closed four mines, costing 2,000 jobs, 60,000 miners were sacked after 15 mines were shut in the Czech Republic, Hungary lost 20,000 jobs when 20 mines closed, and 60,000 Romanian miners were fired after 12 pits were shut down. Poland was the biggest loser, closing nine mines and liquidating another 13, leaving 150,000 miners looking for new work.

According to the UNECE, central and eastern Europe could experience a further 376,000 to 400,000 in job losses in the coal industry by 2000.

In western Europe, the trend is more of the same, according to the UNECE.

Three main coal-producing states, Germany, Spain and France, have decreased production levels and cut jobs with the aim of reducing their production costs. During 1991-1996, coal production declined by 35 percent and employment by 45 percent. In England, the industry has been privatized with about 8,000 currently employed in comparison to 50,000 eight years ago, according to the UNECE.

This is the example many observers are suggesting Russia follow. Russia hopes to expand exports of its black diamond to a world market that relies on coal for 27 percent of its energy needs.

Last year, Russian miners hauled out 240 million tons of coal after production fell sharply in 1996 in large part due to labor unrest and strikes, capped by a walkout by 200,000 miners in December 1996.

Now, Russia is building a huge coal terminal at Luzhskaya Bay on the Gulf of Finland. When it is completed in 1999, it will handle 8 million tons of coal, according to Salt. With exports estimated at between 21 and 25 million tons last year, Salt says Russia wants to boost exports to 35 million tons by 2000.

The exports will bring the higher earnings Russian coal miners dreamed about nearly 10 years ago. Unfortunately, most won't be around to take part in it.

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