Russian Monotowns: Tinderboxes for Unrest

Joseph Kusluch

 

In late February 2016, renowned economist Vladislav Inozemtsev delivered a speech at the Center for Strategic and International Studies where he argued that there is little chance of large-scale demonstrations across the Russian Federation in the next few years. [1] Although this is a popular belief, there are an estimated 25 million Russians currently living in localities where one or two industries sustain the city – industries that are at risk of closing suddenly from economic strain. These cities, often referred to as “Monotowns,” were constructed during the Soviet Union to take advantage of remote natural resources with Soviet planners caring little to diversify the cities’ economies.[2] These cities are now reliant on one or two industries that are often not only the sole employer in these Monotowns, but also the main provider of social services and amenities, ranging from health care and schools to electricity and heat.[3] As economic distress deepens across Russia, these Monotowns have the potential to become hotbeds of discontent with the potential for mass social unrest. Even though many prominent analysts do not foresee mass protests occurring across Russia, this report analyzes the growing potential Monotowns have for breading social unrest.

What exactly constitutes a Monotown remains ambiguous with official Russian government data from the Ministry of Economic Development in 2014 listing over 300 locations.[4] Separate independent analysts have categorized over 315 monotowns spread across the country with one in ten Russians living in this sort of community.[5] The pace of economic decline in these remote Monotowns has accelerated as the Russian economy falters. Continuing Western sanctions and near record low oil prices have caused poverty to reach critical levels. According to Deputy Prime Minister Olga Golodets, the number of poor people has reached over 22 million. [6]

Although life is often precarious in these remote regions, Russian President Vladimir Putin enjoys significant popularity with much of his support coming from Russian Monotowns and other regions far from Moscow or St. Petersburg. Support for Putin is evident in the industrial town of Togliatti where the Russian President was instrumental in the bailing out of AvtoVAZ after the 2008 financial crisis. During the crisis, the federal government pumped billions of dollars in interest-free or low-interest loans from state banks into AvtoVAZ, helping the facility remain open. This had the effect of thwarting protests while growing Putin’s popularity as a leader who would protect the industrial regions of the country. [7]

Other Monotowns, however, have witnessed large-scale protests that foreshadow upcoming events. For example, in 2009 at the height of the financial crisis, residents of Pikalovo vented their anger over job losses and unpaid wages at one of the local oligarch’s factories by blocking the major roadway that links St. Petersburg with Vologoda causing a 250-mile traffic jam.[8] Workers had experienced unpaid wages after the town’s three aluminum plants shut down without warning,[9] causing about 300 residents to protest against local authorities demanding assistance in financing the heating of public buildings including hospitals and kindergartens. [10][11]

Shortly after the protests began, then Prime Minister Vladimir Putin, traveled to Pikalovo with the intent of publicly embarrassing the management and owners of the local plant. Oleg Deripaska, once one of the richest oligarchs in Russia, was publically shamed when Putin blamed him for “mistakes,” for being greedy, and, at the end, ordered him to pay all outstanding wages before the day was over.[12] Putin even went as far as physically throwing a pen at Deripaska, ordering him to pay the workers and get them back to work. [13]

The social problems witnessed in Pikalovo are common across the Russian rust belt. However, it is estimated that the modernization of these cities would require far more funding than Moscow can afford to invest with, or without, the current economic downturn. Igor Bolotov, of the Russian Ministry for Regional Development, has claimed that over one trillion rubles would be required to finance construction projects and update infrastructure for just one hundred of the Monotowns.[14] Public pressure may have worked in Pikalovo, but there is simply not enough political persuasion to force every Monotown to remain open and operate at a loss.[15]

Any modernization of monotowns will not only act as a significant burden on the federal budget, but as desperation grows in these cities Monotowns appear to be a ticking time-bomb ready to explode in a wave of protests.[16] With the price of oil forecasted to remain low, and the value of the ruble slow to rebound, the standard of living of the average Russian citizen remains weakened. [17] Further, Russia’s military adventurism in Ukraine and Syria has reallocated valuable resources that could have been used on long-term modernization projects in Monotowns. Before the recent cessation of hostilities, Russia was spending millions of dollars each day on operations in Syria. Russia began airstrikes in Syria on 30 September 2015 with an estimated cost of approximately 3 to 4 million dollars a day, according to figures from IHS Jane’s, a defense analysis group. At the $3 million a day, Russia’s involvement has thus far cost the country approximately $498 million. If the higher figure of $4 million a day is used, the estimated cost is $664 million![18] This has simultaneously occurred while the Russian economy shrank 3.7 percent in 2015, [19] with the International Monetary Fund predicting in its 2016 country forecast for Russia that the country’s economy would contract a further 1 percent.[20]

As the Russian economy continues to struggle, protests are reappearing. Even with Vladimir Putin’s popularity remaining high, the number of Russians who feel their country is on the “right track” has plummeted from 64 percent in June 2015 to 45 percent in January 2016, according to the independent Levada polling firm.[21] As the percentage of Russians who believe their country is on the right path decreases, the number that claim they might partake in demonstrations has risen. Although seventy percent of Russians claimed it’s unlikely for mass protests to be triggered by falling living standards, the percentage is down seven points from 77 percent since October 2015 according to polling by the Levada Center. Further, the portion of Russians who deem economic protests possible has grown by a third, from 18 percent in October 2015 to 24 percent in March 2016. Similarly, the portion of Russians who think that political protests are possible has grown, from 14 percent in October 2015 to 18 percent in March 2016. [22]

Petr Bizyukov, a researcher at the Center for Social and Labor Rights in Russia, conducted a study that concluded there were 409 labor protests in Russia in 2015, the highest since the center began keeping records in 2008. Those 409 protests are a 40 percent increase over 2014 numbers and a 76 percent increase over the 2008 – 2013 average – a timeframe that included Russia’s economic crisis of 2008-09![23]

As Russia’s economy continues to suffer from low oil prices and Western sanctions; Russia’s military endeavors in Ukraine and Syria continues to syphon off funds desperately needed to modernize remote regions of the Russian Federation. Although prominent analysts argue there is little chance of large-scale demonstrations across Russia in the next few years. If the events of 2008 – 2009 in Pikalovo are an indicator of potential discontent resulting from job losses and living standard decline, the Russian Federation could experience unprecedented mass protests. With an estimated 25 million Russians currently living in often remote localities with only one or two industries sustaining the city – industries that are at risk of closing suddenly from economic hardship – citizens’ hardships may quickly escalate. As economic distress spreads across Russia, these Monotowns need to be monitored as potential hotbeds for discontent with the potential for mass unrest.

Joseph Kusluch holds a B.A. in European history from Slippery Rock University, a M.A. in eastern European and Russian history from Youngstown State University, and an M.P.I.A (Master of Public and International Affairs) with an emphasis on international relations, economics, and Russian and East European affairs from the University of Pittsburgh. His experience includes being a research assistant at Youngstown State University, a Public Policy Fellow with the State of Utah and a research intern at a think tank in Washington, DC. Follow Joseph on twitter @Jak3811.
Notes

[1] Olga Oliker, “Russia’s Economy and Implications for Russia’s Future,” Center for Strategic and International Studies, February 22, 2016, accessed March 1, 2016, http://csis.org/multimedia/video-russias-economy-and-implications-russias-future .

[2] “Russia Faces Collapse Of ‘Monotowns’,” Forbes, June 12, 2009, accessed March 6, 2016,http://www.forbes.com/2009/06/11/russia-putin-monotowns-business-oxford.html .

[3] Martyna Kośka, “Russia: Poverty Rate Jumps,” Central European Central Observer, January 10, 2015, accessed March 2, 2016, http://www.financialobserver.eu/cse-and-cis/russia-poverty-rate-jumps/.

[4] Pravitel’stvo Rossii, “Ob Utverzhdenii Perechnya Monogorodov,” accessed September 4, 2014, http://m.government.ru/docs/14051.

[5] Martyna Kośka, “Russia: Poverty Rate Jumps,” Central European Central Observer, January 10, 2015, accessed March 2, 2016, http://www.financialobserver.eu/cse-and-cis/russia-poverty-rate-jumps/.

[6] Ibid.,

[7] Lidia Kelly, “Russian Single-Industry Town Pledges Loyalty to Putin,” Reuters, March 2, 2012, accessed February 22, 2016, http://www.reuters.com/article/us-russia-election-togliatti-idUSTRE8210M020120302 .

[8] Martyna Kośka, “Russia: Poverty Rate Jumps,” Central European Central Observer, January 10, 2015, accessed March 2, 2016, http://www.financialobserver.eu/cse-and-cis/russia-poverty-rate-jumps/.

[9] “$33.8 Billion Required to Save Monotowns,” The Other Russia, March 10, 2010, accessed March 8, 2016, http://www.theotherrussia.org/2010/03/10/33-8-billion-needed-to-save-monotowns/ .

[10] “Pikalyovo Touches On Plight of Russia’s ‘monocities’,” RT: Russia Today, June 17, 2009, accessed February 26, 2016, https://www.rt.com/business/pikalyovo-touches-on-plight-of-russia-s-monocities/ .

[11] “Protesters in Northwest Russia Block Road Over Plant Closures,” Sputnik News, February 6, 2009, accessed March 14, 2016, http://sputniknews.com/russia/20090602/155146932.html

[12] Martyna Kośka, “Russia: Poverty Rate Jumps,” Central European Central Observer, January 10, 2015, accessed March 2, 2016, http://www.financialobserver.eu/cse-and-cis/russia-poverty-rate-jumps/.

[13] Lidia Kelly, “Russian Single-Industry Town Pledges Loyalty to Putin,” Reuters, March 2, 2012, accessed March 20, 2016, http://www.reuters.com/article/us-russia-election-togliatti-idUSTRE8210M020120302 .

[14] “$33.8 Billion Required to Save Monotowns,” The Other Russia, March 10, 2010, accessed March 8, 2016, http://www.theotherrussia.org/2010/03/10/33-8-billion-needed-to-save-monotowns/ . and Lidia Kelly, “Russian Single-Industry Town Pledges Loyalty to Putin,” Reuters, March 2, 2012, accessed March 20, 2016, http://www.reuters.com/article/us-russia-election-togliatti-idUSTRE8210M020120302 .

[15] Martyna Kośka, “Russia: Poverty Rate Jumps,” Central European Central Observer, January 10, 2015, accessed March 2, 2016, http://www.financialobserver.eu/cse-and-cis/russia-poverty-rate-jumps/.

[16] Stefan Hedlund, “Russia’s Monotowns – Evidence of an Increasingly Obsolete Economy,” World Review, accessed February 26, 2016, http://www.worldreview.info/content/russia-s-monotowns-evidence-increasingly-obsolete-economy .

[17] William E. Pomeranz, “A Whiff of Panic in the Kremlin as Russia’s Economy Sinks Further,” Reuters, February 4, 2016, accessed March 20, 2016, http://blogs.reuters.com/great-debate/2016/02/04/a-whiff-of-panic-in-the-kremlin-as-economy-sinks-further/ .

[18] Lydia Tomkiw, “How Much Has the Syrian Civil War Cost Russia and the Us?,” International Business Times, March 14, 2016, accessed March 14, 2016, http://www.ibtimes.com/how-much-has-syrian-civil-war-cost-russia-us-2336199 .

[19] Howard Amos, “Russian Government Approves $9b Plan for Battered Economy,” International Business Times, March 2, 2016, accessed March 2, 2016, http://www.ibtimes.com/russian-government-approves-9b-plan-battered-economy-2328628 .

[20] Lydia Tomkiw, “Russia Economy 2016 Update: Moscow’s Once-Hot Real Estate Market Feels Oil Price Slump,” International Business Times, January 19, 2016, accessed March 7, 2016,http://www.ibtimes.com/russia-economy-2016-update-moscows-once-hot-real-estate-market-feels-oil-price-slump-2270442 .

[21] Michael Birnbaum, “As Energy Prices Drop, Ordinary Russians Are Protesting,” The Washington Post, March 13, 2016, accessed March 13, 2016, https://www.washingtonpost.com/world/europe/as-energy-prices-drop-ordinary-russians-are-protesting/2016/03/12/acfb4c26-e563-11e5-a9ce-681055c7a05f_story.html .

[22] “Poll: Most Russians Not Ready to Join Protests,” Russia behind the Headlines, March 14, 2016, accessed March 14, 2016, http://rbth.com/news/2016/03/14/poll-most-russians-not-ready-to-join-protests_575353 .

[23] Stephen Crowley and Irina Olimpieva, “Is Putin About to Face a ‘colored Revolution’?,” The Washington Post, February 10, 2015, accessed March 20, 2016,https://www.washingtonpost.com/news/monkey-cage/wp/2016/02/10/is-putin-about-to-face-a-colored-revolution/ .

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