Issue 4353. Last Updated: 03/20/2010

Protests Spur Plan To Seize Factories

By Nabi Abdullaev
A senior United Russia lawmaker submitted a bill to the State Duma on Wednesday to nationalize the troubled factories in a Leningrad region town where residents blocked a highway over wage arrears a day earlier.

The move threatens to open a Pandora's box for the government by encouraging laid-off workers in hundreds of other one-factory towns to demand that their former workplaces be nationalized as well to get closer to the state's money spigots.

Andrei Isayev, chairman of the Duma's Labor and Social Policy Committee, submitted a bill to nationalize the three factories — BaselCement, Evrocement Group and SevZavProm — in the town of Pikalyovo for 1.5 billion rubles ($50 million).

BaselCement is part of tycoon Oleg Deripaska's Basic Element holding, while the other two plants belong to other owners.

Isayev said the "extreme measure … is not a market instrument" but will teach a lesson to the "irresponsible" owners of the factories, Interfax reported.

BaselCement management signaled on Wednesday that they would not resist nationalization.

"We believe that the question of nationalization is one of the possible variations of a solution to the problem, although there is no method so far for evaluating the company's assets," company spokeswoman Svetlana Andreyeva said, regional 47News news agency reported.

It was not clear Wednesday when the Duma might consider the bill.

Isayev said the nationalization was needed to restore production at the factories. But analysts suggested that the initiative was intended to ease social tensions in Pikalyovo, which has a population of 23,000, by throwing government money at the problem.

The BaselCement plant, which produces cement and alumina, closed in January over growing prices from suppliers, leaving its 2,500 employees jobless. The shutdown forced the other two plants, linked to BaselCement in the supply chain, to suspend operations, putting another 1,300 workers out of work.

About 500 people blocked the federal highway near Pikalyovo for several hours Tuesday, resulting in a traffic jam that stretched 400 kilometers. The protesters chanting "Work! Work!" cleared the road after Leningrad Governor Valery Serdyukov ordered that 5 million rubles ($163,000) be sent to Pikalyovo to partly cover wage arrears to some factory workers. The money also was intended to turn the town's hot water back on, which was cut after residents could not pay their utility bills.

Prime Minister Vladimir Putin had been expected to visit Pikalyovo, located some 270 kilometers from St. Petersburg, on Wednesday during a visit to the region, but he left for a trip to Finland in the afternoon without making the stop.

Putin's spokesman Dmitry Peskov said Putin was getting frequent updates about the situation in Pikalyovo and working closely with the local authorities to solve it, RIA-Novosti reported.

The government has a serious problem on its hands, and the move to nationalize the factories looks like a "panic attack," said Yevgeny Gontmakher, director of the Center for Social Policy at the Institute of Economics.

"Even if Isayev's initiative gets ditched in the Duma, laid-off workers in dozens of towns will now block roads and demand that Putin come over to solve their problems," Gontmakher said.

Alexei Mukhin, a political analyst with the Center for Political Information, predicted that the bill would not survive.

"Of course, Isayev's bill will be torpedoed, but then [President Dmitry] Medvedev will have to demand that the so-called socially responsible businessmen sell their yachts and to pay wages in order to escape a social catastrophe," he said.

He noted that Isayev represents a leftist, more socially oriented wing of the ruling United Russia party that mildly pushes the Kremlin to force wealthy businessmen to pay their social obligations to workers. The Kremlin itself routinely names the social protection of Russians as the state's prime responsibility.

While the nationalization bill may disappear, the government has nationalized two big industrial enterprises brought to their knees by the financial crisis. Last month, it nationalized the Amur Shipbuilding Plant, Russia's biggest shipyard on the Pacific coast, for a symbolic sum of several hundred dollars and promised hundreds of millions of dollars in state aid. The plant, which employs 15,000 people, was on the verge of bankruptcy, and its workers had asked Putin to return the shipyard to state control during a tour of the plant.

In December, the Yaroslavl-based NPO Saturn company, which makes engines for Sukhoi fighter jets, fell under government control after defaulting on loans. Like in the case of the Amur Shipbuilding Plant, Putin announced that NPO Saturn would be taken over by the government during a tour of the plant.



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