Despondency Prevails In Russian Heartland

Siberians cling to communist past, as Moscow's economic reforms plunge region into depression

FOR most of its brief history this city has known only explosive growth.

Spread along the banks of the Ob River, a 2,700-mile-long waterway that winds through western Siberia, Novosibirsk was founded in 1893 and has seen its population climb from 107,000 in 1917, the year of the Bolshevik Revolution, to almost 2 million today. It is sometimes referred to as the "Chicago of Siberia" because it has become the Russian heartland's largest industrial center, as well as its transportation hub, with rail links to Europe, Central Asia, and the Far East.

But after nearly a century of growth, Novosibirsk is in a deep depression. Radical economic reforms introduced by acting Prime Minister Yegor Gaidar in January have caused industrial production to plummet.

The despondency of many plant managers, such as Anatoly Semchenko, head of the Production Department at the Novosibirsk Vacuum Tube Factory, is plainly visible as they explain the situation. The desire to cling to the old Communist ways - cradle-to-grave security and full employment - remains strong here. But most realize they cannot resist the market forces much longer.

The tube factory, for example, has cut back to one shift from two in its defense-related units, but so far has avoided widescale layoffs through attrition. "We're doing all we can not to throw people out through the factory gates," he says. "But if it goes on like this we won't be able to hold on."

The tube factory, like many plants in Novosibirsk, filled Defense Ministry orders almost exclusively until a few years ago, making communications components for the Soviet military machine. Conversion to civilian production has been difficult, Mr. Semchenko adds, mainly because skyrocketing prices make parts unaffordable, causing repeated disruptions. "We have difficulties because everyone now demands payment in advance, and it's hard to raise the capital," he says.

Keeping the plant's 7,000 workers content has become a challenge. Layoffs are only part of the problem. A shortage of cash has sometimes delayed wage payments for months, he says. And when the workers do receive their pay, he adds, the average monthly salary of 3,000 rubles (about $20) is barely enough to live on.

"The people of Novosibirsk have been sold out," Semchenko says. "Our country is big and has plenty of resources and a population that likes to work. But we weren't prepared for this `shock therapy'," he continues. "We could have avoided this. We should have had leaders who respected the people more."

The economic chaos makes long-term planning impossible, Semchenko says, adding; "Conversion is a good thing, but it must have a well defined plan." Semchenko and others also worry about government privatization efforts that are scheduled to begin soon. Since the work force cannot afford to buy the plant, there is concern an outsider will come in and make wholesale changes, Semchenko says.

Semchenko's sentiments echo throughout business and government circles here, and there are many calls for Gaidar's resignation. "The central government's approach is too theoretical," says Nikolai Rybakov, the deputy chairman of the Novosibirsk regional legislature. "We know what's needed because we're closer to the people."

Solving the problems, most say, depends largely on the local government's ability to gain greater economic sovereignty from Moscow authorities. Officials in Novosibirsk, including Vitaly Mukha, the region's chief executive, say their biggest problem currently is the division of power between federal and local governments in Russia.

"I think Moscow understands that if it tries to control everything it will lead to failure," he says. "But at the same time, it's natural for Moscow to have difficulty in conceding power."

Legislators in Novosibirsk say they've become impatient with Moscow and have launched unilateral efforts to gain more economic authority, citing provisions in the Russian Federation Treaty, which was signed this spring. "The federation treaty gives us a legal basis for our efforts," Rybakov says.

If Novosibirsk gains greater economic control, especially in such areas as taxes, it could significantly affect the central government. Rybakov says the Novosibirsk region now sends 80 percent of its collected tax revenue to Moscow, adding local officials want to reduce the amount to 40 percent. But even if the local government wins increased economic powers, the task of rebuilding the shattered economy remains formidable.

The largest obstacle to economic revival and the attraction of foreign investment is location. Western Siberia is thousands of miles from the markets of both Europe and Asia. And soaring transport and energy costs are hindering trade growth, both in the region's abundant natural resources and in finished products.

While foreign products are appearing in European Russian cities, particularly Moscow and St. Petersburg, store shelves in Novosibirsk mostly offer Russian-made goods. Hardly any foreign cars can be seen on Novosibirsk's streets, whereas Moscow is brimming with Mercedes, BMWs, and Fords. What little foreign trade there is in the Siberian city is mainly aimed at Asia.

Siberia's remoteness also has insulated its inhabitants from the new ideas necessary for any transition to a market economy. "The farther one moves away from Moscow, the harder it gets for the market," says Sergei Gosakov, an entrepreneur. "All that happens in Moscow takes a long time to reach here."

If economic stabilization doesn't occur soon, many officials say, the people's innate skepticism in a market economy may overwhelm the effort to implement change.

"Siberians are patient," says Mr. Mukha, "but they still would like to know when things will begin to improve and, at the present time, we can't tell them when."

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