“If Putin hadn’t come down here, there would have been a revolution,” Gorelov told me weeks later, in August. “If only Shantsev had come out to the people [alone], then I’m one hundred percent certain that even his security wouldn’t have been able to protect him. No one would touch a woman – but it’s the women who would have attacked him. And no one could have stopped them. Putin saved Shantsev’s life.”
4.
On August 10, Putin was shown on television in the co-pilot’s seat of a Russian-built Be-200 amphibious aircraft. He was pressing a button to dump 34 tons of water on forest fires in the Ryazan region.
That month, with the fires still raging, the first homes starting going up like mushrooms in Verkhnyaya Vereya – with officials working directly under the watchful eye of the prime minister (in the form of a CCTV camera), who had promised his people that all the fire victims would have new houses by November 1.
Made to sparkle before the cameras (and the eyes of the National Leader), these homes looked picture-perfect on television, straight out of Pete Seeger’s “Little Boxes” of American suburbia. But residents were not surprised to find them flimsy and inadequate when it actually came down to living in them.
In Vyksa, officials had made spectacular efforts to fulfil the expectations of the prime minister, whose mere presence had inevitably made an example out of the town.
“Local firms were bending over [backwards] for Putin,” Tatyana Sergeyeva, one of the local volunteers, said a year later. “They would load families with five refrigerators. Just in case Putin noticed them. It was disgusting.”
Residents noticed a marked change in the way they were being treated by local authorities.
“After Vladimir Vladimirovich came here, our town was transformed,” said Julia Volkhova, tellingly using a false name and patronymic after I asked her if Putin should have visited the town.
“All the officials became polite and efficient. They started saying ‘please’ and ‘thank you,’” she said, attributing the change to Putin’s visit. And this positive attention – rather than the material compensation – seemed to be key. “Aren’t we people too? Why don’t they trust us? Why do they need orders from the very top?”
A year later, having survived the winter in their new homes, residents complained about flooding in the basements due to poor foundations – the houses were built either too deep or too shallow. Panelling would chip away and doors wouldn’t close properly, making the homes cold and draughty in the winter.
Then there was the inevitable problem of corruption. Putin had promised residents that they could have new homes built for them or opt for cash compensations equal to the market value of their homes. Though it was obvious that when building one’s own home, the care and special focus on a quality foundation would avoid the expected problems of leaks, cracks and basement flooding, residents in Verkhnyaya Vereya said that they didn’t know anyone who opted for the cash compensations.
According to Tatyana Sergeyeva, local officials were probably getting kickbacks from construction companies and had been instructed to avoid the cash compensations at any cost. It was cheaper for them to erect jerry-built block homes within a few months than pay out market values. Residents who had witnessed hell on earth, who had watched their homes consumed by fire and people burned to death, had little strength for additional court battles before the ordeal of building their own homes again.
They were habitually exhausted – and this exhaustion may help explain the peculiar gratitude that people continued to express for Putin, despite the cracks in their walls, the Potemkin villages, and the bribery that the billions of roubles in federal funds fuelled in local administrative offices.
Against that backdrop of perennial exhaustion, the Sisyphean prospect of fighting court battles against powerful local officials and then rebuilding one’s own home, the fact that such a leader could come down and walk amid the ruins as if it was his own land, who listened to their desperate cries, and who essentially rebuilt their homes for them, could not fail to elicit relief. The statements of people like Julia Volkhova were not an admission of love or admiration, they were a cry for help – attributing far more powers to Putin than he actually wielded.
The reality for most of the population is that less than thirty percent of homes have a basic insurance policy to protect them against any fire, let alone a natural disaster.46 For those residents, however corrupt, however cynical, however dishonest, the leader in Moscow must have the potential, at least, to transcend the natural disasters they are vulnerable to, and to instil fear in the local officials that they depend upon so much. Right or wrong, these qualities are often a matter of life and death. And woe betide the Russian ruler who fails at least to demonstrate those qualities.
Chapter 4
The Pikalevo Effect
“I had one [woman] come in and tell me, “Sveta, I love Putin so much.” And I told her, “You go on ahead loving him, dear. I don’t love anybody.”
- Svetlana Antropova, Pikalevo factory union leader
“Why did everyone scatter like cockroaches just before my visit? Why weren’t there people here who could make decisions?”
- Vladimir Putin
1.
ON JUNE 4 2009, Yelena Matuzova, an employee of the Pikalevo Alumina Plant and a mother of two teenage boys living on a monthly salary of £250, stood before Vladimir Putin and demanded to know when the privately-owned factory she worked at would start up again so that she could get paid.
That month, she was one of four hundred people who nearly started a revolution over months of wage arrears. The residents of Pikalevo had managed to waylay Vladimir Putin on a planned trip to St. Petersburg, forcing him to make an emergency stop in their town. They wouldn’t end their revolt any more empowered than when they had begun. But for the moment, having spent months without their salaries, they just wanted to feed their children. So Yelena Matuzova cried out to Putin. She had stood there for hours waiting for him, and was determined to tell him “how we live.”
Without knowing the economic intricacies and feudal relationships behind what had just transpired, the incident had all the trappings of a miracle: within minutes of Putin appearing before the people huddled in the rain, text messages informed them that their salaries had been deposited.
Two years later, the management of Pikalevo Alumina Plant would proudly show us the furnaces that were restarted on Putin’s orders. And then, a little sheepishly, as if they felt that Putin himself wouldn’t approve, they would show us something else: the generic black office chair where Putin sat as he threw his own pen at factory owner Oleg Deripaska. They still kept the printed tag with Putin’s name on it taped to the back of the chair. For on June 4, 2009, Putin had displayed a sovereign wrath so genuine, so seemingly humiliating for the oligarch who bowed his head and covered his eyes, that the people forgave the prime minister the fact that they didn’t believe much of anything he said, and were, for a time, consoled.
2.
The story of what actually happened in that single-industry town of 22,000 people between 2003 and 2009 – the break-up and privatization of three Soviet-era minerals plants that fed the entire town, the mismanagement, the corruption, the mass layoffs and wage arrears during the crisis, the road-blocking protests, and Putin flying in to force owners to restart the plants – was no miracle. It was a study in survival when laws and institutions prove useless, and when the people resort to patrimonial habits, the only ones that work under the circumstances. The story of Pikalevo was the story of a whole feudal fiefdom that was Russia in miniature. On some level, it was also the story of factory workers colluding in their own exploitation.
In that dimension, the searing deprivation that Pikalevo residents experienced in spring 2009 – subsisting on garden plot produce with hundreds laid off and hundreds more owed months of salaries – wasn’t only about the hunger. It was about a factory that they loved as peasants love the earth they till, a unique plant that produce
d enough aluminium for Soviet war planes. As in any Soviet single-industry town, the three joint factories didn’t just feed Pikalevo, they were Pikalevo, connecting the people of this hilly, northern town in the middle of nowhere with their country’s grand, spiritual mission.
The collapse of the Soviet Union – as it would for many remote places in Russia – changed little in that respect, with Pikalevo’s production of cement, alumina and potash remaining at profitable levels throughout the 1990s. So when private businesses moved in on the consolidated plants around 2003, privatizing each cherry-picked factory separately in accordance with profit margins – or as Putin said, “picking raisins out of a bun” – it was perceived by many locals as a crime nothing short of treason. In the case of the alumina factory, Deripaska broke no laws in his handling of the Pikalevo crisis. If anything, he was the one who had drawn the short straw in the complex chain, saddled with an expensive production process, and the two other plants refusing to sell raw materials at a loss to themselves.
When the salaries stopped, it was Oleg Deripaska, however, who came to be reviled by many locals with the kind of hatred normally reserved for a feckless father who goes out whoring while his family starves. But with no legal leverage against him, they could only appeal to the one higher force above him.
3.
Nearly a century before the Bolshevik Revolution, the poet Alexander Pushkin captured the dread of the quintessential Russian revolt in The Captain’s Daughter, a story about the Pugachev Rebellion of 1773, with two words: “pitiless and senseless.” The revolt in the town of Pikalevo in May-June 2009 – tiny by national standards, with just 400 people taking part to block the St. Petersburg-Vologda highway – was, thankfully, not pitiless. But for many participants, the senselessness would later ring true.
The complex economic chain that should have connected the people to the factory management and the owner on the one hand, and to the city administration and the regional government on the other, proved not only useless, but for all purposes meddlesome. For in the end any meaningful decisions on whether the alumina factory and the power station that supplied heat to the whole town could start up again rested on two people: the minerals magnate Oleg Deripaska, who stood well above the town’s soft-spoken mayor, and Vladimir Putin, the only person who could put any pressure on Deripaska and the other owners.
While the media presented the incident as a clear-cut consequence of the economic crisis, the problems at Pikalevo actually began much earlier – they were embedded in the unique production process to make alumina – a snow-white powder that plant managers proudly called the “noblest, purest in the world.”
Working as a single enterprise with two other plants – Pikalevo Cement and Pikalevo Soda (the soda and potash unit) – the less profitable Pikalevo Alumina Plant could rely on the two more profitable units for its raw materials.
This meant that structurally the plants and their production process were incompatible with a market economy that allowed the privatization of the three assets by different owners. Built in 1957, it was a quintessentially Soviet resource chain that mobilized each separate factory, and each separate single-industry town involved in the chain towards a single aim: building war planes.
That structure, prior to privatization, sheltered the three Pikalevo plants from the economic turmoil of the 1990s. Union leaders, managers and even locals admitted that they had been “spoiled” by the relative comforts the plants provided them during that transition period.
“Working as one, production could react to market changes. It was profitable and effective,” the plant’s general director, Sergei Sofyin told us. But when the three parts were privatized by three different owners, each one of them “went his own way” in the rush for profits. Production burdens fell on the least profitable unit, the Pikalevo Alumina Plant, controlled by Oleg Deripaska’s Basic Element (Basel) minerals holding.47
If a ton of alumina sold for $160, it effectively cost $500 to produce – a margin of loss made even worse by the time demand for cement, aluminium, and its oxide, alumina, fell in the wake of the economic crisis. This loss of demand wiped out some 70 percent of Deripaska’s fortune, saddling him with $20 billion in debt – including 20 billion roubles (about $660 million) from Basic Element alone.48
To raise margins, the company opted to diversify production at its alumina factory in Pikalevo and switch to cement production rather than the more costly alumina. In summer 2008, before the crisis hit, BaselCement Pikalevo – which controlled the Pikalevo Alumina Plant – stopped shipments of nepheline by-products to its sister plant, Pikalevo Cement – forcing the plant to close by October, laying off hundreds of people. The move triggered a domino effect that paralyzed production at all three plants by 2009, with Pikalyovskaya Soda, the soda and potash factory operated by Metakhim, also being forced to close.
BaselCement Pikalevo cut production and put half of its 3000-strong workforce on enforced leave, paying them two thirds of their salary.
By February 2009, with production in Pikalevo at a standstill, the wage arrears began.
The perennial scourge of back wages, well-known to Russians from the 1990s, frequently kicked in at debt-saddled companies as the first signal of impending ruin. When short on cash, an oligarch could always skimp on paying his workers – at least, this was how average Pikalevo residents interpreted the events of spring 2009.
As union leader, it came down to Svetlana Antropova to take action. She began petitioning regional authorities and organizing protests. She wrote repeated letters to Governor Serdyukov – only to be ignored.
“Sooner or later, all requests turn into demands. That’s what the union is about,” she told us in June 2011 as she recalled those events. Nothing worked – she was kept out of meetings with Serdyukov and stonewalled by company management.
“I’ve only met once with Deripaska,” she said. “When I started telling him about the factory’s problems and our questions, he only said, “‘I don’t like labour unions.’ And made it understood that he would not talk to me.”
Then she started taking workers out into the streets, prompting security officers to move in. Both private and undercover agents from the FSB made their persistent presence known both to her and to the locals.
But there seemed to be another aim apart from quelling social tension – security was bent on making sure that their top boss, in this case Oleg Deripaska, was not displeased.
“His company warned us, ‘you can have protests, rallies, do whatever you want,’” Antropova said. “‘As long as you don’t have the word “Deripaska” anywhere.’ I said I couldn’t promise that.”
The vague statements coming from the governor and the Kremlin only increased the panic. Governor Serdyukov met with President Medvedev in March, but no decisions came out of the meeting. In the coming months, he continued to complain that he had no leverage over the owners.
“We have no law on nationalization or deprivatization,” he was quoted as saying. The government, he said, needed to step in and solve the problem.49
On every level, attempts to put pressure on the owners seemed to be failing.
Sergei Veber, the hapless, soft-spoken mayor, would find himself answering very difficult – often violent – questions from the residents.
“From our position, as local authorities, it was difficult to affect the owner,” Veber told us in June 2011. “We worked with plant managers, with law enforcement, with prosecutors.”
What he didn’t say was that the “work” yielded no results. That was only achieved by the district prosecutor, Fyodor Veretinsky, who told a crowd of angry locals that his agency was “considering launching a criminal probe,” and that they were looking into ways of putting additional pressure on the owners. By June, he would report that prosecutors had filed 4,000 lawsuits on behalf of workers over back wages. In May a court ruled to disqualify the director general of BaselCement Pikalevo, Anatoly Maslikov, from his job.
But key to eac
h of these endeavours was that they were conducted as if in a vacuum – most of the lawsuits went nowhere, and the rulings were not enforced, making negotiation impossible. Each attempt by outsiders to force owners to do something had absolutely zero effect on the owners themselves – for in order for workers to get their jobs and their salaries back, three different owners needed to reach a joint agreement on the cost of the raw materials and by-products that they shipped to one another. But Russia’s muddled legislation had no legal framework that could force them to do that. There was no law on nationalization that they could be threatened with, and Russia’s largely corrupt courts were only a symbolic mechanism.
With neither side listening to the other, the network of administration – from municipal to local to regional – was left to make feeble signals that some higher force needed to get involved to avert disaster.
That disaster occurred on May 15, 2009, when Pikalevo’s only power station, which was controlled by the alumina factory, was shut down by Gazprom over a $4.5 million debt.50 That last measure left the entire town without hot water, causing the built-up tension to reach a tipping point.
4.
On May 20, about 200 desperate residents stormed Mayor Sergei Veber’s administration building. Yelena Matuzova was one of them.
Andrei Petrov, an electrician at the factory power station, described how word of the meeting had spread spontaneously. “There was no information. Some co-workers called me up, said there was something happening that very day, an unsanctioned rally in front of the mayor’s office or something like that.”
Inside, the mayor was holding a meeting with BaselCement Pikalevo management, as well as the district prosecutor and Federal Security Service officers, on how to get the power station running again.
The Putin Mystique: Inside Russia’s Power Cult Page 8
