VZCZCXRO8857
RR RUEHDBU RUEHLN RUEHPOD RUEHSK RUEHVK RUEHYG
DE RUEHMO #1670/01 1761354
ZNR UUUUU ZZH
R 251354Z JUN 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 3973
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 MOSCOW 001670 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON PHUM SOCI PINR KDEM RS
SUBJECT: VORKUTA: ARCTIC MINING TOWN WEATHERS CRISIS AMID 
DEPOPULATION, INFLATION, DRUGS 
 
REF: MOSCOW 1562 
 
¶1. (SBU) Summary: A June 13-15 visit to Vorkuta, a former 
gulag mining town north of the Arctic Circle, revealed a 
company town (or so-called "monogorod") struggling to define 
itself amid "optimization" that has hemorrhaged jobs and 
residents over the past decade.  A May 24 rally that 
attracted 1,000 residents protesting rising utility and 
services costs indicated a growing unrest about pocketbook 
issues, but low unemployment and a lack of wage arrears 
suggest Vorkuta will not be the next Pikalevo.  However, 
consequences of burgeoning drug and depopulation problems 
point to a broader array of social ills will test the city's 
political and business leaders.  End Summary. 
 
Vorkuta: Tragic Past and Diminishing Prospects 
--------------------------------------------- - 
 
¶2. (SBU) Vorkuta, a remote tundra city in the extreme 
northeast of European Russia in the Komi Republic, lies 100 
km north of the Arctic Circle and 160 km south of the Barents 
Sea.  No roads connect Vorkuta to the rest of Russia, making 
the train (48 hours from Moscow) or intermittent flights the 
only routes south.  Founded in the early 1930s as a coal 
mining town, Vorkuta eventually grew into one of the largest 
and most notorious prison labor camps in the Soviet Union. 
According to Vitaliy Troshin, former head of the Vorkuta 
branch of Memorial, up to 2 million people perished in 
Vorkuta's camps and environs through the 1950s. 
Privatization in the 1990s led to massive restructuring and 
the closing of seven of the city's thirteen mines, leaving 
dilapidated buildings to molder where prison camps and 
offices once stood.  We found soldiers using one derelict 
building as a staging ground for practicing maneuvers.  From 
the city center, a ring road loops into the barren tundra to 
connect the original thirteen mining villages, passing by a 
series of cemeteries and memorials that testify to the human 
scale of Vorkuta's gulag past.  The city's population, which 
topped 200,000 just twenty years ago, has dwindled to 117,000 
as the mines closed and the federal government began three 
years ago to pay for residents to move south. 
 
Rally Shows Pocketbook Issues Dominate Political Scene 
--------------------------------------------- --------- 
 
¶3. (SBU) A June 13-15 visit to Vorkuta revealed a company 
town (or so-called "monogorod") struggling to define itself 
amid "optimization" that has hemorrhaged jobs and residents 
over the past decade.  A May 24 rally in Vorkuta's city 
center, which attracted 1,000 protesters, indicated that 
political and economic stability in Vorkuta may not be as 
strong as the city's political and business leaders described 
to us.  Deputy Mayor Andrey Golubin claimed the crisis had 
not affected the city because "there will always be demand 
for coal, even if it decreases in cycles."  Citing an 
official unemployment rate of 2.9 percent, Golubin noted that 
VorkutaUgol - the Severstal subsidiary operating Vorkuta's 
mines - had no wage arrears.  Russian press reported in May 
that VorkutaUgol, one of the largest producers of coking coal 
in Russia, had announced plans to cut 3 percent of its jobs 
and re-train an additional 7 percent for jobs with company 
sub-contractors.  Vasily Kozulin, an executive at 
VorkutaUgol, downplayed the significance of the cuts, noting 
that the company was "optimizing" its operations and had 
decided against the announced firings.  Vorkuta's isolation 
does complicate its business prospects, however, as manager 
Oleg Babichenko told us during a visit down a mineshaft that 
coal exports have remained marginal due to cost and distance; 
nonetheless, he boasted, VorkutaUgol does export some coal to 
Finland and Poland. 
 
¶4. (SBU) The May 24 rally did highlight how pocketbook issues 
dominate the city's politics, leaving the door open for 
increased discontent.  The 1,000 protesters rallied against 
rising utility and services costs, such as the increase of 
bus fare from 32 to 53 rubles.  Aleksandr Araslanov, a member 
of the Opora business organization and owner of a small 
hotel, told us that "entrepreneurs are few in Vorkuta" and 
"citizens' salaries are almost all paid by the government or 
the mines."  (Note: Proving that entrepreneurship is not 
completely dead, on our 23-hour train ride from Vorkuta to 
the regional capital of Syktyvkar we encountered Dima - a 
passenger smuggling 15 liters of homemade cognac for sale in 
Syktyvkar.  "During the crisis we still need to find a 
salary, and if we can't work then we make work for 
ourselves," he explained as he gestured to several plastic 
containers of contraband.)  As a company town without 
compelling wage competition, Araslanov lamented that salaries 
have calcified and cannot adjust to market forces that 
increase costs of food and other goods that must be shipped 
 
MOSCOW 00001670  002 OF 002 
 
 
into the city.  Deputy Mayor Golubin downplayed the 
significance of the May 24 rally, but the lessons of Pikalevo 
(reftel) may  entice discontented residents to rally again. 
 
¶5. (SBU) The Communist Party's (KPRF) Yaroslav Lepichev 
disagreed, however, brusquely observing that "people in 
Vorkuta are not stupid, they see what is happening, they want 
to know what will happen."  Through flyers and word of mouth, 
Lepichev explained, KPRF is wooing the city's voters to 
return the Communists to power in the city.  However, all of 
our contacts (including Lepichev) predicted that United 
Russia would not lose its hold on power in the city given the 
party's ties to VorkutaUgol and KPRF's proposals to 
nationalize natural resources including mines.  Lepichev 
reserved particular scorn for the restrictions on mass media 
in Vorkuta and Russia in general.  In a region of far-flung 
towns, television and radio remain the key conduits of 
information.  KPRF lacks access to these stations. 
Billboards hailing United Russia drape the sides of crumbling 
apartment buildings throughout Vorkuta, while the Communists 
can rely only on placing print ads in small local newspapers. 
 
Drugs Thrive, Investment and Youth Languish 
------------------------------------------- 
 
¶6. (SBU) Fighting a perceived descent into political and 
economic obscurity as its population dwindles, Vorkuta's 
administration has struggled with expanding the city's tax 
base beyond the monolithic coal industry.  The city 
administration described to us plans to bolster adventure and 
gulag tourism, but Golubin disavowed the gulag hotel and 
legalized prostitution proposed in 2005 by former mayor Igor 
Shpektor.  Deputy Mayor Golubin outlined investment proposals 
to entice internal Russian development, while also admitting 
that Vorkuta's extreme isolation will make it extremely 
difficult to attract investment. 
 
¶7. (SBU) Further burdening the city's finances, social ills 
such as drug and alcohol abuse have proliferated in recent 
years as education and work opportunities for youth have 
vanished.  The city has expended considerable resources on 
drug rehabilitation facilities and youth sports programs to 
counter the effects, but even Deputy Mayor Golubin 
acknowledged that "as a city, we must give a reason to our 
children to stay here."  Students seeking higher education 
have to leave Vorkuta, and they rarely return unless to work 
for VorkutaUgol.  Nonetheless, Golubin remarked that he 
supported the federal subsidy to pay for residents to move 
from Vorkuta, since the overwhelming majority of 
beneficiaries have been pensioners and invalids whom the city 
otherwise would spend substantial sums on services to support. 
 
Comment 
------- 
 
¶8. (SBU) Lacking wage arrears or high unemployment, Vorkuta 
is unlikely to become the next Pikalevo.  Inflation and other 
pocketbook issues dominate residents' concerns, and a meeting 
with the Memorial human rights group uncovered no burgeoning 
discontent over political or press freedoms.  In any case, 
the isolation of such monogorods and the lack of independent 
broadcast media ensure that word of any discontent would 
resonate little outside the city itself.  The Communists 
appear unable to win over large numbers of residents, which 
likely will leave the one-company town's political and 
business elites firmly in control. 
BEYRLE