08/03/1998 02:07:55 FEATURE - Bureaucrats are a big force in Russia reform war
By Philippa Fletcher
KOSTROMA, Russia, Aug 3 (Reuters) - Yuri Tsikunov, one of Russia's vast army
of bureaucrats, is anxious that people recognise his importance.
"Before you, you should know, sits the head of the emergencies committee
with colossal powers, so whatever I order, it will be carried out," he says in
his imposing wood-panelled office in the historic town of Kostroma.
The reach of those powers is miniscule in Russian terms -- Tsikunov is first
deputy governor of just one of 89 regions.
Combine the Kostroma region -- itself the size of Belgium -- with the
others, however, and Tsikunov and his like make for a formidable force, whose
views and actions shape what happens in Russia every bit as much as the central
That government, trying to show the International Monetary Fund it can plug
its leaking budget, should be encouraged therefore, by Tsikunov's frankness
about where the holes are in Kostroma, 340 km (200 miles) northeast of the
MIDDLEMEN SYPHON OFF RUSSIA'S WEALTH
"Local factory directors think to themselves 'why should we spend all our
time trying to pay wages on time?' So they create some little companies. The
factory's production is sold through these companies and they get gigantic sums
of money," he said.
"In some places the cynicism of those directors is so great that they've
lost their humanity. They end up thinking 'I've come out on top and you are my
The result is plain to see, not only among Kostroma's 800,000 population but
across Russia, where countless workers and pensioners go unpaid for months on
end while their bosses and their friends acquire luxury cars and foreign bank
Corruption does not account for all the wage delays -- reluctance to close
moribund, communist-era industries for social reasons has allowed a web of debts
to strangle even well-run firms -- but it does tell a big part of the story.
Which makes it all the more surprising that neither the government, nor
Tsikunov, for all his avowed powers, appears to have done much about the graft,
which has helped create conditions reminiscent of Russia's pre-revolutionary
Until now that is, when financial instability and popular exasperation are
beginning to force Moscow's hand.
Ministers have been sent on rare forays to the provinces to stop blockades
of key railway lines by miners fed up with not being paid. They have promised to
crack down on the middlemen who spirit the coal away without the miners seeing
PROTESTING WORKERS RISK PUBLIC IRE
In Kostroma doctors and teachers are also angry, but have not resorted to
such desperate measures, confining their protests to banging pots and pans
outside Tsikunov's office in a pre-revolutionary church school for girls by the
He said the protest was unlikely to develop since workers risked the wrath
of friends and neighbours by going on strike.
In June, President Boris Yeltsin chose Kostroma to try to show workers that
the government was on their side. Departing from the traditional script, he
lashed out at officials who had papered over the cracks for his visit in
The director of Kostroma's biggest plant, a linen factory, may have made
Yeltsin smile by getting attractive young models to show off his cloth, but he
did not escape the presidential wrath when he said he was seeking big new
"Perhaps the money will go to finance your easy life," Yeltsin stormed in
front of a crowd of workers nervous of discussing delays in their pay under the
eye of their boss.
The manager of a cattle-breeding farm fared little better.
"I always hear such phrases," Yeltsin snapped when the man said output was
up. "The Bolsheviks have already said this," he said. "Do you think I don't
Yeltsin also accused Kostroma's governor of trying to blame Moscow for all
the region's wage and pension delays even though he was responsible for half.
But though he may claim to understand the problems, he did not set much of an
He brought with him 46 million roubles ($7 million) owed to pensioners,
teachers and doctors and other state workers. His spokesman said it was an
unfortunate tradition that money tended to be released in time with official
IMF DEMANDS PUT LOCAL LEADERS IN HOT WATER
The IMF is not happy with such loose financial planning.
The Fund's first deputy managing director Stanley Fischer said on his latest
visit to Russia it was time companies, especially big monopoly energy companies,
began paying taxes.
"It's a very unusual belief that you don't have to pay taxes, that they're a
subject of negotiation," he said. "That should not be the case."
Driven by fears that without IMF cash the rouble could slide, sparking
inflation and wiping out the gains of seven years of painful reform, the
government has taken Fischer's message to heart, declaring an end to the
practice of writing off mutual debts and insisting taxes are paid in cash.
In Kostroma, the effect of the measures has been dramatic. The town has been
one of several to have lost its hot water when the local gas company, under
pressure to pay taxes to Moscow, responded to local non-payments by simply
turning off the taps.
Tsikunov admitted to playing a role in the tax problem, saying he lets some
local firms off their taxes because they would otherwise go under.
Arguing "it is harmful to give up smoking all at once", he predicted the
government's crackdown would not last the summer.
"All talk about getting all taxes in 'real money' today is groundless. It
won't happen," he said, adding that he had to think about the well-being of the
For all the government's good intentions about imposing financial
discipline, local leaders in a country where the temperature drops to minus 40
degrees Celsius (minus 40 degrees Fahrenheit) have other priorities.
Come the winter, Tsikunov said he would use his emergency powers to keep the
hot water running, though he did not make clear whether he would target tax
dodgers or the energy firms.
"In the winter we will behave differently. If necessary we will take them
all and put them in prison. We will not allow the pipelines to be shut off," he