When Prime Minister Vladimir Putin's helicopter touched down in Pikalyovo last week, it was clear that a remedy for the city's pain was at hand.
It is uncertain how long the cure might last, but observers are sure that it might turn out to be poison for the government. Putin, they said, made a risky gamble by setting the precedent of doling out more than 40 million rubles ($1.3 million) to force Pikalyovo's plants to pay their 4,000 unemployed workers.
Putin flew to the small Leningrad region town of 22,000 people on Thursday, two days after about 400 jobless workers blocked the main highway for seven hours to protest wage arrears.
"This was a very good show — a Hollywood movie," said Vladimir Ryzhkov, a former independent State Duma deputy who hosts a talk show on Ekho Moskvy radio.
Ryzhkov was referring to a meeting where Putin threw a pen at tycoon Oleg Deripaska and ordered him to sign an agreement to buy raw materials for his local cement factory. Deripaska, who was once the country's richest man and has lost billions of dollars in the economic crisis, was shown on state television dutifully stooping down to sign the agreement with mineral producer PhosAgro.
Putin made a strong man show out of the event, scolding stone-faced managers at the meeting. "Why was everyone running around like cockroaches before my arrival? Why was no one capable of making decisions?" he said.
Ryzhkov warned that the show could backfire.
"In the short term, this will be very, very good for [Putin's] ratings. People like it when a president or prime minister acts tough in public," he said.
But in the long term, he said, Putin's strategy was a daring gamble because there are 700 single-industry towns like Pikalyovo across the country.
Ryzhkov said the problem was not so much that Putin could not visit all those places. "It is that the money is not enough for everyone," he said.
Sergei Guriev, the rector of Moscow's New Economic School, put it more bluntly. "This sets a very dangerous precedent, providing incentives for further street riots and roadblocks," he said.
Chris Weafer, chief strategist at UralSib, said the lesson that unemployed workers learned from Putin's trip was that "the only way to get anything done was to make as much noise as possible."
Other business owners, meanwhile, should take note of Putin's public dressing down of Deripaska, he said. "No business leader will want to be in the position that Deripaska found himself in last week. It will encourage them to deal with such problems early and not risk Putin's wrath," he said.
Guriev said the scolding sent the wrong message because it puts the blame for high unemployment on shareholders. "Unfortunately, any crisis is accompanied with an increase in unemployment, and it is the government's — not the private sector's — job to provide the unemployed with benefits and support for retraining and reallocation," he said.
But Sergei Markov, a State Duma deputy with Putin's United Russia party, said the prime minister had no alternative last week. "Sure this might set a dangerous precedent, but the government had to act to show that these people would not be left alone. Putin demonstrated the political will for that," Markov said.
He said Thursday's solution was "absolutely a market solution" because the factories had not been nationalized, as some United Russia deputies had sought earlier in the week.
"We believe that the market is working. Putin just helped the owners to demonstrate his political will," Markov said.
Markov said the government would have to step in to help other single-industry towns where conditions were essentially nonmarket. "These places have been set up artificially. People have no opportunity to work in another industry if their old one fails. That is why the government must help," he said.
Putin told the Pikalyovo factory owners that they had three months time to solve their problems. He essentially threatened nationalization by saying that if they could not find a solution one would be found without their involvement.
Markov said nationalization is an option when capitalism fails. "We do not want a return to the 1990s when a very few got rich and the masses were impoverished," he said. "If private owners cannot safeguard [workers' right], we have to nationalize and re-privatize."
It is uncertain how long the cure might last, but observers are sure that it might turn out to be poison for the government. Putin, they said, made a risky gamble by setting the precedent of doling out more than 40 million rubles ($1.3 million) to force Pikalyovo's plants to pay their 4,000 unemployed workers.
Putin flew to the small Leningrad region town of 22,000 people on Thursday, two days after about 400 jobless workers blocked the main highway for seven hours to protest wage arrears.
"This was a very good show — a Hollywood movie," said Vladimir Ryzhkov, a former independent State Duma deputy who hosts a talk show on Ekho Moskvy radio.
Ryzhkov was referring to a meeting where Putin threw a pen at tycoon Oleg Deripaska and ordered him to sign an agreement to buy raw materials for his local cement factory. Deripaska, who was once the country's richest man and has lost billions of dollars in the economic crisis, was shown on state television dutifully stooping down to sign the agreement with mineral producer PhosAgro.
Putin made a strong man show out of the event, scolding stone-faced managers at the meeting. "Why was everyone running around like cockroaches before my arrival? Why was no one capable of making decisions?" he said.
Ryzhkov warned that the show could backfire.
"In the short term, this will be very, very good for [Putin's] ratings. People like it when a president or prime minister acts tough in public," he said.
But in the long term, he said, Putin's strategy was a daring gamble because there are 700 single-industry towns like Pikalyovo across the country.
Ryzhkov said the problem was not so much that Putin could not visit all those places. "It is that the money is not enough for everyone," he said.
Sergei Guriev, the rector of Moscow's New Economic School, put it more bluntly. "This sets a very dangerous precedent, providing incentives for further street riots and roadblocks," he said.
Chris Weafer, chief strategist at UralSib, said the lesson that unemployed workers learned from Putin's trip was that "the only way to get anything done was to make as much noise as possible."
Other business owners, meanwhile, should take note of Putin's public dressing down of Deripaska, he said. "No business leader will want to be in the position that Deripaska found himself in last week. It will encourage them to deal with such problems early and not risk Putin's wrath," he said.
Guriev said the scolding sent the wrong message because it puts the blame for high unemployment on shareholders. "Unfortunately, any crisis is accompanied with an increase in unemployment, and it is the government's — not the private sector's — job to provide the unemployed with benefits and support for retraining and reallocation," he said.
But Sergei Markov, a State Duma deputy with Putin's United Russia party, said the prime minister had no alternative last week. "Sure this might set a dangerous precedent, but the government had to act to show that these people would not be left alone. Putin demonstrated the political will for that," Markov said.
He said Thursday's solution was "absolutely a market solution" because the factories had not been nationalized, as some United Russia deputies had sought earlier in the week.
"We believe that the market is working. Putin just helped the owners to demonstrate his political will," Markov said.
Markov said the government would have to step in to help other single-industry towns where conditions were essentially nonmarket. "These places have been set up artificially. People have no opportunity to work in another industry if their old one fails. That is why the government must help," he said.
Putin told the Pikalyovo factory owners that they had three months time to solve their problems. He essentially threatened nationalization by saying that if they could not find a solution one would be found without their involvement.
Markov said nationalization is an option when capitalism fails. "We do not want a return to the 1990s when a very few got rich and the masses were impoverished," he said. "If private owners cannot safeguard [workers' right], we have to nationalize and re-privatize."
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