Russian Reforms Spark Miners' Discontent

RUSSIAN coal miners, long considered among Boris Yeltsin's staunchest supporters, are threatening to turn on the Russian president following a government decision to free coal prices.

A presidential decree on June 21 called for halting large government subsidies to the coal industry and introducing free prices by July 1. Finance Minister Boris Fyodorov said such a move would ease intense pressure on the Russian budget.

But the decision appears to have caused the miners' patience with the reformist government to snap. Miners have been upset with the government for delays in salary payments and non-fulfillment of a February tariff agreement. Now, miners' union leaders warn that free prices could force the closure of up to half of Russia's coal mines, as well as cripple industrial production, because industries will not be able to afford higher prices.

"This decision could develop into an uncontrollable process that could totally collapse the economy," says Vladimir Katalnikov, a miners' union leader from the southern city of Rostov-on-Don.

"If we can't find a mutually satisfactory compromise with the government on this issue we will start making political demands - even [for] the resignation of Yeltsin himself," adds Mr. Katalnikov, speaking at a protest yesterday of 100 miners in front of the Council of Ministers in Moscow.

The miners say the relatively small protests of today could erupt into large-scale civil disobedience if the government does not change course. "We're not joking anymore," says Alexander Bezuglov, one of the protesting miners. "Either the government acts, or it goes."

Attempting to avert a confrontation, Premier Viktor Chernomyrdin has proposed establishing a coal-industry support fund, to be in place July 1. He also told miners that freeing prices would occur in stages to soften its effect, the Interfax news agency reported.

The highly subsidized energy sector has been one of the main impediments to market reform in Russia. Some government reformers say free coal prices are long overdue. Despite skyrocketing inflation, coal prices have remained steady at about 400 rubles (40 cents) a ton since September, meaning the cash-strapped government has had to cover the difference. The miners, however, say the government is ignoring the social ramifications of its actions.

"Some people say this is a coup for the reformers, but it's not because there's no safety net in place. Implementation could mean a social and political disaster," says Mary Louise Vitelli, director of the Coal Project for the US-based Partners in Economic Reform, which advises the Russian coal industry.

The World Bank and other Western organizations are organizing an emergency aid package to establish a safety net for the miners, thus easing their opposition to free prices. But the effort faces bureaucratic hurdles, Ms. Vitelli says.

As for industries, Vitelli adds, freeing coal prices could have undesirable consequences, causing factories to turn to oil, instead of coal. "If they start using more oil for domestic needs, it'll deprive them of much-needed foreign revenue," she says.

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