German Russian Understanding

Egon Bahr Fellowship Program for German Russian Understanding

Moscow/Kostroma/Berlin

Report 2012

Friedrich-Ebert-Stiftung Moscow Office

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Imprint:

Friedrich-Ebert-Stiftung Moscow Office Jausski Boulevard 13 109028 Moscow Russian Federation

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Responsible: Jan Henrik Fahlbusch / Dr. Rudolf Traub-Merz

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Content:

Preface 05

Simon Bujanowski, Ilia Choukhlov, Viktor Durov, Andrey Shalay, Anna Tsurkan, Julia Wanninger State and Civil Society in Russia: How to Increase the Legitimacy of Politics Through Better Participation 07

Kai Doering, Nadezhda Kurnakova, Adrian Oroz, Stefan Schimming, Marina Sitova, Sergei Zakharov “Do Not Remain Silent and Do Not Tell Lies!” Exploring the Role of Mass Media in the Oblast of Kostroma 15

Larisa Aldehoff, Ilya Andreiko, Vladimir Balakhonov, Maya Hatsukano, Kseniya Neznakina, Konstantin Ponomarev, Juliane Rinas “Kostroma Mon Amour”: Prospects for Economic Regional Development 21

Daria Efimenko, Julia Golla, Nikita Kanshin, Vasily Khokhlov, Roman Krawielicki, Martin Zielke Future of Social Policy in Russia’s Regions: On the Economy of the Housing and Utilities Sector in Kostroma 29

Egon Bahr Fellows 2012 35

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Preface

The 2012 Egon Bahr Fellowship Program has This year’s seminar was held in Moscow, brought together 24 young leaders from Kostroma and Berlin. The bilateral Germany and Russia to support mutual relationship was discusses in the two capitals, exchange and understanding by researching while regional challenges and local and discussing a variety of current political developments were researchd by using the issues. example of Kostroma.

The program was launched in Moscow in July The results of these inquiries into the reality 2012 by former German Minister Egon Bahr, of today’s political life in regional Russia are who famously implemented the “New presented in the following reports on civil Eastern Policy” (Neue Ostpolitik) with German society, mass media, economic development Chancellor Willy Brandt at the beginning of and social policy. All reports are based on the 1970s. Based on the idea of a "change extensive research and numerous meetings through rapprochement" Egon Bahr with stakeholders, analysts and experts. The successfully normalized the relations between findings of the German-Russian teams have the Federal Republic of Germany and Eastern been presented to the governor of Kostroma Europe, particularly with the German region Mr. Sergey Sitnikov during a hearing Democratic Republic, Poland and the Soviet at the local Chamber of Commerce. Union. This path-breaking policy, which The Friedrich-Ebert-Stiftung Moscow Office provided the foundation for the political thanks all partners for their cooperation. In developments leading up to the German particular we are grateful to the member of reunification, continues to surface in today’s the German Bundestag Franz Thönnes for his social democratic “Realpolitik” and guides the ongoing support of this program. We are current German-Russian partnership for thankful to Vladimir Balakhonov and Vladimir modernization. Kornev for their excellent interpretation Therefore, it was a distinguished honor for services. Finally, we express deep gratitude to the Friedrich-Ebert-Stiftung's Moscow Office our partner Maxim Erin at the Administration that on his 90th anniversary Minister Bahr of Kostroma Region and to his colleagues accepted the proposal to name our annual and friends, who warmly welcomed us in young leader program after him. With the Kostroma and helped us gain extraordinary Egon Bahr Fellowship Program we are insight. pleased to pass on Egon Bahr's commitment to vibrant bilateral German-Russian relations Jewgenia Potemkina, Jan Henrik Fahlbusch, to the next generation of decision makers. Moscow/Berlin, November 2012

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Simon Bujanowski, Ilia Choukhlov, Viktor Durov, Andrey Shalay, Anna Tsurkan, Julia Wanninger The State and Civil Society in Russia: How to Increase the Legitimacy of Politics Through Better Participation

The 2012 Egon Bahr Fellowship program was For the purpose of our case study we organized for the purpose of bringing decided to define civil society as follows: a together German and Russian perspectives society of citizens who know and use their on current political and socio-economic civic rights and who actively participate in the challenges in Russia. We identified the social and political life. We discussed this relationship between the State and civil definition with all our interlocutors in society as one of these challenges and chose Kostroma. the Kostroma region as a case study. In our opinion an active civil society can Contemporary political science pays a lot of strengthen the state. There are several ways attention to the role that the civil society to do that: plays within a State. There is much debate - Socially and politically active citizens are about whether civil society is involved and in ready to take on positions of how far it should be involved in the political responsibility. decision-making process. However, civil - This increases the people’s interest to society not only plays a role in the political accept further political mandates. life, but the social life as well. - More political ideas are generated. - Citizens are encouraged to develop their What is Civil Society? own solutions to problems. Although civil society has become a popular - Both, citizens and the government concept used by various political actors in experience a higher level of satisfaction. different contexts, not all of them have the same understanding of the term. All of our Raising the Level of Democracy by interlocutors agreed on the importance of an Strengthening Civil Society active participation by civil society plays in As previously mentioned, we started with the political processes. At the same time, a hypothesis that the state of a civil society number of them admitted that they didn’t reflects the level of democracy. We analysed know what the difference between 'society' the role that the educational system plays in and 'civil society' was. Yes, society itself is or shaping an active civil society, the freedom should become a political actor, they argued, that non-commercial and non-governmental but the term 'civil society' made things sectors have to organise and express their unnecessarily complicated. We therefore felt opinion. We also looked at the relationship the need to first give the term a more precise between the state and municipal authorities definition. in Kostroma and its civil society actors. We One of the numerous definitions of civil wanted to find out what Kostroma students society describes it as the aggregate of non- were taught about their role in society as well governmental organisations and institutions as civic education in general. As our next that manifest the interests and the will of step we examined the opportunities for civil citizens. These individuals, organisations and society actors to participate in democratic institutions are expected to be independent processes and to influence political decisions of the government. affecting the region. Finally, we analysed the

Report 2012 7 interaction between non-commercial and expert think NGOs had much influence in the non-governmental sectors and the state and matter. Altogether these conditions make for municipal authorities and tried to identify the a very favourable situation for the United strong and weak points of civil society Russia party, because the system is simply organisations in the region. too weak to compete with its power. Citizens’ While studying the level of democracy in the rights are limited and freedom of expression Kostroma region, the following questions lay exists only on paper. Our expert said that he at the centre of our work: Is civil society believed Mikhail Prokhorov to be a positive vibrant in the region? What resources and discovery for Russia, for his business opportunities exist to help society organize in knowledge that could be used to change the the spirit of democracy? What should and country. could be done to raise the level of The next day we met with the Head of the democracy in the region? school department in the city of Kostroma. During our 5-day stay in Kostroma we She told us about the introduction of student discussed these questions with a broad range responsibility and self-management of personalities involved in the political, social curriculum in schools. As of now, this is only and religious life of the city and the region. a pilot project. An average teacher’s salary is Among them was the mayor of Kostroma, 15,000 rubles per month (€372). several members of the City Duma, members The following day we met with the Mayor of of the Public Chamber, representatives of the city of Kostroma Mr. Zhurin. He reported civil society organisations, a schoolteacher as that the number of deputies has increased well as representatives of religious from 24 to 35, which, he believes, resulted in communities. better representation. When asked about the Our first expert was a Deputy of the city of most important and active civil society actors, Kostroma. He has been running his own the mayor said it was the City Duma. furniture manufacturing company since the We had a chance to meet the deputy late 1980s. At first, he told us about the director of School No. 7. She told us about political vertical of “United Russia”: according the problems and everyday life in school. to him, many decisions at the local level must Many young people from Central Asia and be coordinated with Moscow. In particular, from the Caucasus attend the school. This this concerns staff issues. Other parties, both often leads to confrontations with other at the local and federal level, exist but are students. She also reported how low mostly irrelevant. teachers’ salaries are. At School No.7 student Our expert told us that the role of the Public responsibility is scheduled to start the Chamber is minimal – a sentiment shared by following year. The deputy director described one of the region’s former governors, who to us the school’s preparations and has dismissed the work and the purpose of expectations connected with this project. the Public Chamber. The deputy also shared When asked about her opinion of Russia’s his opinion of the Russian society; saying that civil society and the possibilities a school has while power occupies a central role in the in educating the youth for an active civil society, the people themselves remain too society, she named civic values, love for the passive and occupied with other issues (one country and being active in society as of which is income). Civil society becomes important factors. Civic education, she said, is active only when something happens (such defined as empowering the children to take as the Duma elections). Neither did the responsibility.

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We also met with some representatives of well as key competencies necessary to be a the Public Chamber of the Kostroma region. Duma deputy. They told us that the members of the As a result of our meetings with different Chamber are interested in seeing their local experts, discussions among the Russian society change. Each of the members of the and German members of our working group Chamber represents an organisation. One of had intensified. One of the first difficulties to the Chamber’s members directly told us that arise was that the German participants were he is a strong supporter of the President. not familiar with certain specificities of According to him, the policies introduced by Russian politics and society. However, their the President and the United Russia party political background and experience as well have contributed to significant improvements as the Russian participants’ willingness to in Russia over the past several years. He also explain the political and educational system said he thought the army to be an important in Russia were helpful in reaching an element in the education of young men. understanding on the challenges facing the Finally, members of the Chamber told us that city and the region of Kostroma. the Russian society is not yet ready to have a Public Chamber. Reasons for a Weak Civil Society During our last meeting, we talked to two Our first meetings with local experts revealed more deputies of the Kostroma City Duma. that, according to their belief, 'civil society' One of the deputies was a candidate for the makes up a very small part of Kostroma’s post of the City Manager, while the other public sphere and that only a few city happened to be the youngest Duma residents can be considered politically or member and a member of the Committee socially active. on Urban Development. We asked both However, our working group decided to politicians about the civil society in Russia. categorize all citizens of Kostroma as ‘civil Both unanimously stressed that the public society,’ regardless of their political or social school system is the place where civil rights activism. We did this because we believe that and responsibilities ought to be taught. they are all citizens of their city, region and Neither of them had previously heard of the country and should thus enjoy the same civil “student responsibility” class. rights. Even a citizen not actively claiming When asked about the city Youth Parliament his/her civil rights should be included in the – an organization that has not worked well in political and public life. Together with our the past – the deputies said they suspected a interlocutors we agreed that the objective of lack of skills was one of the problems and every elected officer or socially engaged suggested changing the rules of the Youth public figure should be to motivate fellow Parliament. According to them, children have citizens to become an active part of society to be taught about civil society. Furthermore, and take initiative. they stated that while the administration In further discussions we analysed the does not work, the only thing that does is possible reasons for the seeming passivity of personal networks, where money is a decisive civil society in Kostroma. It was suggested factor. Both referred to a lack of experience that the historical background plays a very in making independent decisions and important role. For almost a century people expressing one’s opinion. The two men also in the USSR expected the state to take mentioned honesty, diplomacy, patience and responsibility for almost all aspects of public willingness to make changes and perform life. Often people did not even have the

Report 2012 9 opportunity to take initiative and solve their disadvantages of nominating a City Manager own problems. Over the last 20 years people instead of electing the Mayor. Although to us have slowly learned to claim and use their electing the mayor seemed like a more political and civil rights. However, there still is democratically legitimate option, our local room for improvement, as almost all our interlocutors suggested that elections are interlocutors confirmed. merely a façade where the candidate who Another issue that seems to affect the wins is usually the one with the best PR- relationship between state authorities and campaign. Therefore, a competent candidate the citizens is corruption. During our might lose an election simply because he is meetings with local experts we discovered not a good speaker or does not have a good that corruption was a highly sensitive issue. media presence. Another argument in favour There is a popular opinion that one cannot of nominating versus electing an official was become a successful businessman, politician that he or she would be hired like a public or public official without either accepting officer whose contract (in the case of corrupt proceedings or using personal Kostroma, with the City Duma) may be connections with government officials. terminated ahead of time. On the contrary, an elected mayor cannot be fired even if he However, an idea that seems to be at the or she leads the city into bankruptcy, core of the problem plaguing Russia’s civil because the resignation procedure is very society is reflected in the following comment, complicated. made by almost all our interlocutors: “First you have to repair the house, make it clean To us the debate about the advantages and and comfortable. Then you can think about disadvantages of city managers and elected which pictures to hang on the walls.” People mayors confirmed once more that corruption generally believe that solving their everyday is perceived as one of the main challenges to problems takes priority over engaging in the the efficiency and legitimacy of political political or social life. Pressing issues institutions. We believe that corruption as mentioned most frequently by people were well as the poor state of the civil society housing problems, lack of adequate reduces the efficiency of both models. infrastructure (roads, water and electricity) and environmental problems. Further Observations about the State, its Institutions and Civil Society Apart from discussing general problems and challenges affecting the development of civil While discussions inside our working group society in Russia, our meetings with local served to juxtapose different perspectives on stakeholders also allowed us to analyse some the role of civil society, our meetings with the of the specific municipal politics in Russia, local experts allowed us to make several such as the difference between the post of observations. We later used them to identify the City Manager and that of the elected our policy recommendations. Mayor. According to the information First of all, several interlocutors mentioned gathered during the meeting with our the lack of people’s knowledge about their partners in Kostroma, the post of the City rights. This could be remedied at least in two Manager is based on a US model whereby ways: civic education for the youth and an official is supposed to head the city distributing information among the citizens administration. Russian and German through direct contact with their deputies. At participants of our group had heated the same time, these options entailed discussions about the advantages and the obstacles.

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Civic education is considered to be part of a in a region only 60 km away. The same group of obligatory subjects such as social ecological damage would ensue, only this science, jurisprudence and Russian history. way another region would enjoy the Civic education is usually synonymous with economic benefits. engendering patriotism by teaching students, Generally, Kostroma’s civil society is among other things, about the Russian flag, considered to be unprepared for taking an the governmental system, the names of the active role in local politics. Hence, the Russian political leaders and the national establishment of the Public Chamber – a anthem. School classrooms have to be consultative organ representing civil society equipped with posters of the Russian organisations. However the Public Chamber president. does not have a mechanism for influencing On the other hand, schools also have the decision-making process. Although something that is called “self-governance” – political institutions have been put into place, a system that allows students to be elected many still see them as failing to perform their to a special body and to exert influence over functions. some decisions that are of relevance to Summarizing our observations, first of all it is school life. However, the rules and important to note that we do not believe in a procedures for school “self-governance” vary quick change. Instead, fostering civil society is from school to school. a task that will take a lot of time and effort. It We also presented our interlocutors with the also relies on the willingness of all actors to idea of bringing politics closer to people (in actively take part in it. the German tradition of “politische Just like there is no quick solution, there isn’t Stammtische”, i. e. regular informal meetings a simple one either. There is not one single of elected politicians with their voters or way that would lead to success. Instead, a other interested people). Although we have variety of measures will have to be heard of the regular meetings that take place implemented; some of them may seem in the offices of the local deputies, the latter insignificant, but put together they should shared their concern about the general lack have greater effect. of culture for discussion. On the one hand, During our stay in the Kostroma region, we people were always ready to blame their noted that several projects and initiatives deputies for any problem and on the other have already been launched and have the hand, people were too afraid of having free potential to be of great use to developing discussions with politicians because of the civil society. These projects can be expanded perceived social discrepancy. for better effectiveness. Based on these At the same time, our interlocutors were observations, we tried to identify several sceptical about the actual willingness of the recommendations. civil society representatives to play a constructive role in the decision-making Policy Recommendations for an Active process. We were told about the Civil Society construction of a nuclear power plant, which First of all, we believe that strengthening civil the local “green” NGOs and the residents of society has to start as early as possible. the neighbouring villages were strongly Therefore, the first recommendation relates opposed to. From the point of view of the to introducing civic education in schools. We elected officials, such opposition could lead recommend establishing a debate culture, to the same power plant being constructed where social and political issues affecting the

Report 2012 11 Kostroma region are discussed among the Furthermore, we believe that it is necessary students. The role of the teacher is very to improve the connection between the important in this context. He or she would elected representatives and the people. The have to be an equal partner in these politicians’ main task should be to listen to discussions, only moderating the debate and the civil society instead of regulating it and not interfering in it. It is also crucial that provide it with opportunities to express ideas. students draw their own conclusions, which Direct elections are an important element. they can compare to reality for a better We strongly believe that the society must be learning experience. trusted to take the right decisions; then and The existing initiatives for students’ self- only then, as a result of their own actions, management should be enhanced and can people understand politics. Therefore, introduced in all schools. The goal is to public figures such as the mayor as well as establish a representation and administration the city manager should be directly elected. system among the students. It is very Effective impeachment procedures should be important that students elect their own established. The Public Chamber could be representatives and that the latter are not supported by the Youth Chamber, which appointed by any authority. Elections have to does not only exist on paper, but actually be repeated regularly, in order to help takes part in the political decision-making students see the difference between how the process. candidate presents him or herself before the election and the work he or she actually does The Challenges of Representative during his mandate. The goal is to enable Democracy: Participation vs. Efficiency students not only to learn about the benefits Starting from the hypothesis that the state of of democratic participation, but also to civil society reflects the level of democracy, experience it. we decided to analyse the opportunities that Furthermore, we would like to emphasize the the Kostroma civil society has to participate importance of exchange programs for school in political processes and influence decision- children, students and young adults starting making. Special attention was given to the their jobs. Experiencing solutions for civil relationship between the state and the civil engagement and democratic participation society, i. e. between municipal authorities offered by other societies can have an and civil society organisations. The policy important effect and establish a mid-term recommendations based on our analytical change in the approach to civic and political work aim at increasing participation of civil engagement at home. Here, the Kostroma society actors and bolstering democracy. region already provides some opportunities Although most of our interlocutors agreed for school students; these programs should on the importance of political participation, be expanded further and made available to they did not necessarily associate as many students as possible. Kostroma’s participation with the state of civil society. European partner cities in the United Instead, they identified electoral participation Kingdom, France, Germany, Finland and as the most obvious manifestation of civil Bulgaria could help to establish exchange society. This position often comes hand-in- programs not only between partner schools, hand with the recommendation for direct but also for young professionals and those in mayoral and gubernatorial elections. the city administration.

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In our search for examples of active and well- recommendations mainly focused on very represented civil society organisations we practical on the ground ideas. Against this were often referred to the main business background we can say that the case study in organisations. Business interests seem to be Kostroma city served as a useful illustration of organised in such a way that they are in the the distinction made in political science best position to exert influence on the between input and output legitimacy. Most political institutions. The most striking feature political actors currently represented in the in the relationship between the state and the political system seek to gain legitimacy for civil society is the apparent fear that involving their political activities and initiatives by too many actors might complicate the proposing efficient political options. Efficiency political decision-making process and is measured in terms of the capacity to solve endanger its efficiency. Indeed, the concept problems. And this is exactly what the voters of efficiency figured prominently in a lot of hope for – to see solutions to problems in our conversations. Subsequent meetings with the housing sector as well as those affecting political as well as social actors revealed the the infrastructure. Much attention is given to popular use of the term “efficient politics.” the performance of the political institutions Several politicians named managerial skills (efficiency, output legitimacy), whereas less among the most important skills for their attention is being paid to the possibility of profession. increasing legitimacy by involving all relevant Although there are different ideas on how to stakeholders (participation, input legitimacy). organise and regulate civil society, there Finally, both the state authorities and the civil seem to be fewer possibilities for civil society society need to better understand the to organise itself. Therefore, our challenges of representative democracy.

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Bed-Time Stories Instead of Hard Facts – Bahr Fellowship endowed by the Friedrich- an Introduction Ebert Foundation, a group of young Russians and Germans investigated the position of the Larissa Katilova knows what she owes her media in Kostroma more closely. They talked viewers. “We only broadcast information that to journalists, visited editorial offices and has a positive effect and is useful to people”, heard what they had to say about their daily says the director of the state television work. In addition, they met with local and channel GTRK Kostroma. “After all, I don’t regional politicians and with representatives want our viewers to have sleepless nights or of the private sector and civil society who to grab a spade and start attacking wealthy related their own experiences of the media in people or bankers.” Katilova’s channel, the and around Kostroma. The six-person group regional branch of Russian state television, then put together a list of proposals for how subscribes to the motto: “We connect.” For to improve the role of the mass media in the Katilova that means “We connect all Kostroma region. These proposals, which are progressive people in the Kostroma region.” summarised below, were presented to the Albert Stepantsov is sceptical. “There aren’t governor of the region, Sergey Sitnikov, on any independent media in Russia. They are 14 July 2012. all dependent – either on the government of the respective oblast or on an oligarch.” Between Partnership and Control – Stepantsov knows what he is talking about. In Taking Stock of the Media Landscape in 2011 he founded the newspaper мой город Kostroma Oblast о ром (Kostroma – My City), financing it Albert Stepantsov’s editorial office still smells with his own money. A year later he says of fresh paint. The walls are painted bright soberly: “Many organisations are afraid to orange and on them hang several framed work with us. It is hard for an independent editions of the newspaper Kostroma – My press to survive in the Kostroma region.” City. Stepantsov’s desk stands by the window. Two journalists, two different opinions. The The only thing on it is a laptop. “We only media landscape in the Kostroma region, 300 moved in a few days ago”, says Stepantsov, km north-east of Moscow, is difficult to the founder and chief editor of the paper, by fathom, not because there are so many way of apology. The newspaper began publications and broadcasting stations, but production of its edition of 7,500 a year ago. because of the very different attitudes It is financed entirely by advertising and is journalists adopt to their work here. Then distributed free of charge in supermarkets there are expectations from outside – from and public institutions in Kostroma. Little dots politicians, the private sector, and the stuck on a map of the city show where Albert population – about what the media should Stepantsov has had a turbulent year. One be reporting, who they should present the edition of the paper was confiscated by the information, and what function they should police because it had published a report have. Under the auspices of the 2012 Egon criticising them. On another occasion

Report 15 reporters were barred from attending public dependence on money.” She believes that in events to prevent them writing about them. the worst case this can mean that the media But Stepantsov and his editorial team, most refrain from reporting on certain things if this of whom work under pseudonyms, were not runs counter to the interests of an advertising to be deterred. “We try to highlight the most client or a sponsor. She is reluctant to speak pressing problems of the people who live in of self-censorship, although she does Kostroma and adhere to the editorial concede that in writing and evaluating guideline: Do not remain silent and do not articles, a fear of dismissal is always at the tell lies!” says Stepantsov, clearly back of her mind. unperturbed. Larissa Katilova is more blunt. “We do But his situation and that of the newspaper is exercise a kind of self-censorship”, says the a difficult one. And that hasn’t changed director of the television channel GTRK much, despite the fact that the former Kostroma, “out of a sense of responsibility to governor Igor Slyunyayev was dismissed in our viewers.” The key question with any response to popular pressure in spring 2012 report, she adds, is what the report’s and replaced by the journalist Sergey Sitnikov, intended effects are. “I wouldn’t like to a native of Kostroma. “I am still not able to broadcast everything we know”, Katilova talk openly with all politicians”, Stepantsov says. For in the end you have to think about complains. Particular the members of Putin’s what the consequences will be. Katilova has a party United Russia are very reserved. And he particularly hard time criticising someone for says the economic situation is even more having put a foot wrong. “I always think difficult, with politicians having on past about whether the person might have occasions put so much pressure on children who would suffer as a result of a advertising clients that they eventually report”, she says. Most of the TV withdrew their advertisements from programmes therefore simply report the Kostroma – My City. “We need to finally get facts and they do not broadcast away from the system of state media commentaries or programmes that put financed from the state budget”, Stepantsov situations in a broader context. believes. Public money should be distributed differently and at least some newspapers and Katilova describes her relationship with the TV and radio channels privatised. oblast government as “constructive”. She says that, unlike other journalists, her editors One of the people who benefits from the talk to politicians in positions of responsibility, current system of financing is Mariya thus ensuring that “a dialogue between the Ushanova the thirty-seven-year-old chief government and the people” is created so editor of о ром кие ведомо и (Kostroma that political decisions can be explained. She Gazette), which is financed by the believes that this dialogue should include government of the oblast. Ushanova believes politicians’ answering questions put to them the three regional weeklies that appear in by citizens.

Kostroma Oblast are the most important sources of information. Yet sales figures are Aleksandr Fisher, an advisor to governor continually falling for all three, she says, Sitnikov, has already done this and regularly seeing this as a clear sign of the effects of the answers questions addressed to him by continuing economic crisis. “Dependence on Kostroma citizens through the regional the government is a thing of the past”, says Internet forum forum “Фopym ко ром ких Mariya Ushanova. “Today, what matters is джед ев”. “The government and the media

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work as partners in our region”, says Fisher, projects in the region thus fails to make it who used to be a radio journalist himself. He into the media. “A lot of good things are rejects any suggestion of political pressure happening here”, Orlov is convinced, “but being exerted on the media, let alone hardly anyone is aware of this”. He describes censorship. “Our mission is transparency and current reporting practices thus: “We honesty and we are prepared to provide the commission a particular media organisation media with all the information they need.” to cover a story, pay for it, and the journalists report on it.” Orlov thinks the press should Aleksandr Fisher is aware of the great hopes show more initiative in reporting on the work being pinned on his boss, elected governor of local enterprises, and he also favours the in the spring, by the people in Kostroma. The establishment of specialist trade magazines. mass media therefore have a big role to play in his strategy. “Governor Slyunyayev did not Larissa Katilova doesn’t understand this explain his decisions to citizens”, says Fisher, criticism, saying that she is just as willing to and you can tell that he thinks this was a report on economic enterprises as she is on mistake. While there was certainly a dialogue NGOs like Tamara Dobretsova’s. However, between the government and the media she points out: “Someone has to pay for the under Slyunyayev, there was “no airtime.” If the political will is there to allocate partnership”. This now needs to be civil society organisations airtime, then she resurrected and developed, he adds, saying won’t stand in the way, she says. he believes the situation is favourable for this. “Political will” seems to be the key factor on “The Kostroma media are well positioned to the way to more press freedom and a more provide people with objective information”, important role for the mass media in both Fisher is convinced. the Kostroma region and Russia as a whole. Tamara Dobretsova nevertheless thinks The degree of press freedom or power of the something is missing from the reporting. press depends strongly on what politicians – Dobretsova is co-chairperson of the whether governors or presidents – allow. This environmental organisation “In the Name of is the underlying impression that the Life” and complains that her organisation has members of the groups gained from all their no access to the mass media and that they conversations. It is no coincidence that the completely ignore her work. Nevertheless, general mood improved considerably after she says, Governor Sitnikov has announced the old governor was dismissed and the new that, unlike his predecessor, he intends to one appointed. meet regularly with NGOs in Kostroma Another word that cropped up often in the Oblast. Dobretsova hopes this will increase discussion was “Internet”. “We are living in an media interest in her work. era when civil society is being activated”, says “The media should not only deliver the facts Kostroma’s mayor, Yurii Zhurin. He believes but also do more in-depth reporting”, the Internet provides a decisive tool to make Valentin Orlov, president of the Chamber of contact with citizens. Mariya Ushanova, chief Trade and Commerce in Kostroma, says. Of editor of the Kostroma Gazette, predicts “a course, it is important to report on his development of the media, especially institution, he says, but often journalists fail to Internet media”. CCI President Orlov also understand the material properly and emphasises the “important role” of the global therefore either get it wrong or do not report network. Aleksandr Fisher’s announcement at all. News about important investment that “We will go further in the direction of the

Report 17 Internet” therefore scarcely raises any their reports are one-sided. This means not eyebrows. only that some reporting is not as objective as it should be, but also that there is scarcely Open Dialogue and other Sources of any analysis of important events (such as the Funding – Proposals for Reforming the dismissal of Governor Slyunyayev). The mass Mass Media media are therefore not in a position to play Sergey Sitnikov is a friendly, easy-going type. the role of intermediaries between the state The new governor of Kostroma Oblast smiles and society that so many people the team a lot, often nodding his head in approval as talked to considered important. Instead, he listens to the participants in the Egon Bahr communication works only in one direction: Fellowship 2012 group presenting the results from the government to the governed. of their week of intensive discussions. Seen from a German point of view at least, “Complete control of the media is the media in Kostroma region do a poor job impossible”, says Sitnikov, and as a former of fulfilling their role as the “fourth power”. If journalist he does not seem to regret this we take this to mean acting as a political fact, even though he is now sitting on the watchdog, then this function is fulfilled, if at other side of the microphones. The governor all, only by privately financed media such as even goes one step further, stating that the Albert Stepantsov’s weekly Kostroma – My new media have considerably broadened the City, which investigates what is going on freedom of journalists and that it is now up behind the scenes in the government and to them to make use of this new freedom. police and publishes its findings, which has “Journalists must be as open as possible”, led to its some of its journalists being Sitnikov says, “and the state must support threatened. If, however, one interprets them in their work.” “fourth power” as meaning that the media Whatever the Russian state leadership may should help people to solve their problems think of such a view of the media, the (an interpretation that cropped up several politicians governing Kostroma region seem times in the group’s discussions with leading to take an essentially positive attitude. This is media and political personalities), then one important, for the role of the local holders of can certainly say that the mass media in the power, particularly that of the governor, is a Kostroma region are doing their job. The decisive factor in the degree of press German members of the group, however, freedom in a region. The replacement of found this definition rather unhelpful. Governor Slyunyayev with Sergey Sitnikov So how can the mass media best go about seems to have been a move in the right becoming stronger and improving their direction. social function? First of all, we should Nevertheless, old habits die hard, and the acknowledge that since Governor Sitnikov media is no exception, so it may take time for was appointed, the situation in the Kostroma change to come about. One of the most region has certainly taken a turn for the crucial things that needs changing is better. He and his advisor, Aleksandr Fisher, journalists’ own self-censorship. Among the seem to have recognised the signs of the state mass media, be it Larissa Katilova’s TV times and are encouraging a more open channel GTRK Kostroma or Mariya’s dialogue between government, mass media Ushanova’s Kostroma Gazette, journalists and society, which takes the form of regular have become so used to censoring what they meetings of the governor with say or write that they don’t even notice that representatives of NGOs and swift responses

18 Egon Bahr Fellowship Program

to media questions. This dialogue should relevance rather than political function. The definitely be continued and where possible state should also put some thought into how conducted in more depth. It may even serve free media can be better supported. as a positive example for representatives of After running a private newspaper for a year other parties, which during the conversations Albert Stepansov knows only too well what it were described as very reserved in their feels like to have to come up with all the dealings with the media. funding for a media organisation. Given the In order to find out what people in the difficulties this entails even for a newspaper, Kostroma region expect from the mass to found a self-financed radio or television media it would be a good idea to conduct an station would thus seem to be well nigh oblast-wide survey. The group’s discussions impossible. Stepantsov advocates distributing with top media and political personalities state money differently, so that fewer media have already brought to light many wishes than before are financed chiefly from the and demands addressed to the region’s mass oblast budget and instead coverage of media. A broad survey would be a further specific topics could be put out to tender for step in this direction and would allow one to which different media could compete. A find out how citizens use the media and to special committee of the oblast Duma (or teach them how to make better use parliament) would decide on the allocation of newspapers, television and the Internet. funding, thus promoting a broad spectrum of Regular discussions organised by the media different media. After all, it is certainly not in on various political and social topics could the interests either of a functioning make a contribution to this. democracy or of policy-makers to retain permanent control over the media. Instead, The establishment of an independent social the state administration should use this to council for the mass media would also create incentives to motivate journalists in appear to be a good idea. This could serve Kostroma Oblast to do their jobs and to offer as a forum for representatives from civil them more latitude to realise their own ideas. society, professional associations and churches to advise the media and to ensure For this purpose it might be helpful to hold that freedom of opinion and the expressions an annual literary competition – not only for of a range of opinions is respected. “traditional” media but also for more modern media such as television, radio and Internet. Without wishing to anticipate the results of A jury would evaluate the entries in different such a survey, the group has gained the categories, such as news, reportage or film. impression that social groups, in particular The best entries would receive prize money. NGOs, are given little space to air their views This might serve to stop the current trend in the Kostroma media. While there is a whereby many talented journalists have left willingness in principle to give them Kostroma and moved to Moscow, because coverage, this is offered only in exchange for they see more opportunities there for their payment. This attitude is problematic and work and personal development. To improve needs to be reconsidered by leading media journalists’ training the journalism course at representatives. Here policy-makers could Kostroma’s Nekrasov University should be help by funding airtime for social issues. improved. Better still would be for the media to accord equal treatment and equal coverage to such In the long term the privatisation of the mass issues prioritising them according to media in the Kostroma region should be

Report 19 considered. One state newspaper, radio and wishes to the government directly. Here, station and television channel should be too, however, certain conditions must be sufficient to communicate the decisions taken fulfilled. First of all, a good net infrastructure by the governor and the Duma. must be established that allows every citizen access to the Internet to get information. Private, and above all financially Second, the Internet must not be subject to independent, media would be in a better censorship of any kind. “The boundaries position to fulfill the role of a true “fourth between bloggers and journalists are power” monitoring the activities of the increasingly becoming blurred”, Governor government and parliament. There is, Sergey Sitnikov acknowledges and behaves however, some danger of exchanging one accordingly: while listening to the form of dependence for another, and presentations of the findings of the four attention should be paid to preventing working groups of the Egon Bahr program oligarchs from seizing control of the media. If he reacted immediately to several they did, they might well use it to pursue contributions addressed to him by users of their own interests, which would run counter the portal Фopym ко ром ких джед ев. to the principle of a free press. While certainly positive, this development

One medium with great potential – in Russia also presents new challenges to journalists as a whole as well as in Kostroma – is the who now see themselves exposed to new Internet. It has the advantage of reaching a competition. Moreover, readers must be able wide audience at relatively low cost and it is to assume that the information being therefore hardly surprising that all the people disseminated is reliable. Thus in a certain the group spoke to were pinning great hopes sense the Internet reflects a change which on this comparatively young medium. Portals society as a whole is having to come to terms like Фopym ко ром ких джед ев and with. That change is democracy. “Without the k1news.ru already represent important steps. participation of the population a government This strategy should be pursued, for the will never enjoy its trust”, Sergey Sitnikov Internet offers citizens a good and relatively admits. “A government should never have to simple way of communicating their needs be afraid of its own people.”

20 Egon Bahr Fellowship Program

Larisa Aldehoff, Ilya Andreiko, Vladimir Balakhonov, Maya Hatsukano, Kseniya Neznakina, Konstantin Ponomarev, Juliane Rinas “Kostroma Mon Amour”: Prospects for Regional Economic Development

Introduction throughout Russia, but then…” After talking with local businessmen he will notice how This report explores the investment climate in much more important siding with the the Kostroma region. The following questions authorities or the “siloviki” (law enforcement will be answered: and security people), the power industry and What is the state of the economy in the a host of supervisory agencies is compared Kostroma region? How much progress have to showing personal initiative. He is sure to various sectors made and what are the notice that local business is straightening its strengths and weaknesses of the local shoulders and is desperate for mutual economy? understanding with the authorities, security What changes can be made to improve and dialogue.

economic development? What difficulties do Our business tourist is sure to appreciate the the region’s entrepreneurs face? What signs of truly Russian business acumen: contribution can the politicians make to help excellent restaurant projects, creative foster a good investment climate? advertising and the willingness of the local Our perception of Kostroma is similar to that government, businessmen and ordinary of a traveling businessman who would be citizens to forge mutual understanding and looking at the city and the region through to work here and now in order to improve the same lens as we did and assessing the life in Kostroma. He will certainly feel inspired investment potential of its economy. As a by the presence in the region of such famous guest he cannot help but fall under the spell brands as McDonalds and Kronostar. He will of Kostroma. He will surely buy a souvenir at want to gain deeper insight in their the market, window-shop for gold jeweler investment history and, if properly presented, from the village of Krasnoye-na-Volge, taste this experience will convince him that he is the famous Kostroma cheese, walk amid old not alone in being optimistic about the future houses, take a boat ride down the wide of Kostroma.

Volga River and feel awed at the sight of the The Economy of Kostroma formidable Ipatyev Monastery. According to the generally available statistics, At the same time as a person who knows the the Kostroma Region has a population of price of a good investment environment, our 662,000 people comprising 114 different colleague will be thrown off by the rudeness nationalities, of whom 197,000 are rural of the train attendants servicing passengers dwellers. Population density –11 people per on the Moscow-Kostroma route in old worn- square kilometer – is the lowest among all out train cars, notice the outdated road the regions in Central Russia. infrastructure in the Kostroma Region and heave a sigh when a local citizen, for an In the Soviet times the region’s economy was umpteenth time, begins the story of his city thriving, but in the 1990s the recession set in. with the words: “Before the Bolshevik 21st century has brought signs of sustained Revolution Kostroma used to be famous growth, which has reached the national

Report 21 average of 3%. The average salary is 14,600 A considerable part of the population lives in roubles (€360). The official unemployment rural areas, but in spite of the presence of rate is about 1%. such educational establishments as the Kostroma Agricultural Academy, agricultural The key sectors of the local economy are enterprises are short of young professionals. timber and paper industry (74% of the The wages in the sector are low and people region’s territory is covered in forests), are reluctant to work there. Skilled young electricity and textile industries, mechanic people prefer to go to Moscow, other engineering and the manufacturing of auto Russian regions or even abroad. parts, gold processing, optical and chemical industries. The production of leather, plastic Russia’s accession to the WTO threatens to and footwear has slowed down because of result in the reduction of quotas and the imports from China. The manufacturing restrictions on state subsidies until 2020. That industry accounts for about 29% of the gross means that new measures to support and regional product. develop agriculture must be worked out in agreement with the WTO rules and Retail trade has been growing steadily, with regulations. 60% of entrepreneurs in the Kostroma Region representing small and medium-size Vysokovsky Greenhouse Complex enterprises. The region can also export Alexei Sitnikov, 41, is the head of the processed timber, particularly woodchips and Vysokovsky agricultural enterprise located could boost the export of auto parts. Among just outside Kostroma. An agronomist with a the imports one can single out medical scientific degree, Mr Sitnikov is a deputy in supplies, raw materials for the chemical the Kostroma Regional Duma representing industry and components. the United Russia party. The most serious problems of the local Our visit began in a small greenhouse where economy are labour shortage and they grow bananas, pineapples and coffee. inadequate infrastructure (streets, roads as “This is for visitors and for fun. We bring well as water, power and gas supply). These children here to show how tropical fruits sectors are obviously in desperate need of grow. Not everyone here has a chance to go investment, but the process needs to be and see them in the wild,” Mr Sitnikov tightly controlled to make sure that explains. But we will talk about places to take investment is targeted. Waste disposal is your children in another part of the report. practically non-existent, domestic waste is dumped outside the city. The official inflation Vysokovsky is an example of a successful rate (6%) is significantly less than the agricultural enterprise that cannot develop country’s average (by 3 percentage points). without adequate infrastructure. This greenhouse complex is connected to gas Agriculture networks and produces its own heat and The Kostroma Region is a leader in Russia in electricity for the greenhouses. We were told terms of farming. This sector covers 300% of that there were practically no additional gas the region’s needs, and there is also potential facilities in Kostroma, and that negotiating for exporting eggs, potatoes, cucumbers and with heat and power providers for a other agricultural products to other regions. wholesale price has failed. That means that Dairy farms and livestock breeding could be such a large and successful enterprise may further developed. face a shortage of resources for develop-

22 Egon Bahr Fellowship Program

ment, which is fraught, considering the tough Mr. Sitnikov praised the work of unions of competition in this segment of the market in employers and greenhouse complexes. He Russia. considers it important to be a member of the Kostroma Region Chamber of Trade and Vysokovsky is not the only case where there Industry, especially now that he has to learn is an opportunity to show initiative and to to play by the WTO rules. help the strong and not the weak to become even stronger and compete successfully in Karavayevo Cattle-Breeding Farm the interregional market. Vysokovsky has The Kostroma breed of cattle is the region’s ambitious development plans, so investment main trademark, while the Karavayevo cattle- support for such enterprises in the form of breeding complex reflects the state and the tax breaks or interest rate subsidies would be prospects of agriculture in the region. It of much help. This does not mean that they appeared to us that today Karavayevo and should be owned by the state. We will tlak the whole Kostroma region are witnessing a about this later. revival in the meat and dairy sectors. It is

Vysokovsky received a loan for its great to see such a famous enterprise development. We were told at the enterprise survive. But on the other hand, if an that it amounted to 160 million roubles at a enterprise such as this one does not have the 20% annual interest rate, to be redeemed conditions for sustainable development, what within seven years. The 18-hectare can be said about other enterprises? The greenhouses that grow tomatoes, cucumbers manager of a dairy farm, the open joint stock and lettuce employ 400 seasonal workers. company Suchchevo, Boris Adrianov, told us Production drops between December and that today he sells milk to Danone at 16 February because the plants do not get roubles per litre, while production cost is 11 enough sun. The products are bought by roubles. The average wholesale price wholesalers, besides that Vysokovsky is charged by producers in the region is 14 developing its own retail network, positioning roubles per litre (this prices are to be proved itself as a local producer of ecologically clean again. I send the result early in the mourning products. There is tough competition among at 19th of November - KP). Danone vegetable producers in the Kostroma Region. guarantees steady volumes of purchases, but However, Mr Sitnikov sees great potential in at the moment Mr. Adrianov is developing bio-products (grown without the use of his own dairy production to boost his profit. chemicals). He says that in the winter they The businessman’s main task is to organize can cost twice as much as the imported marketing. analogues, but still sell better. Successful enterprises show what kind of

Recruiting new specialists is a problem for assistance the industry needs. These include, Vysokovsky, although Mr. Sitnikov says he on the one hand, development of one’s own pays them well compared with the average processing capacity and local brands with wage in Kostroma. Many enterprises higher surplus value. And on the other hand, complain about the shortage of working they need major consumers who guarantee hands, but looking at the brand-new black purchases (such as Danone) and major Audis gleaming in the sun at the gates of federal retail networks (such as Auchan). For some agricultural enterprises one cannot that purpose the agricultural enterprises or help but think that there is room to raise the consultancies in this sphere must have wages of the rank-and-file workers. advanced knowledge of new products in the

Report 23 market and farming technologies, possible means that Kostroma cheese needs new subsidies in accordance with the WTO rules, markets and better marketing. branding of foodstuffs, exhibitions, fairs and Tourism auctions of producers held by major retail networks. The big stumbling block is the Kostroma obviously has a certain potential in qualification of agricultural workers. Today the sphere of tourism, but it remains agriculture managers in the Kostroma region practically untapped. In 2009 170,000 tourists are thinking of bringing in foreign manpower spent at least one night in the Kostroma (Uzbekistan, Tajikistan). Managers say that Region. This is the worst figure among all the students of the Kostroma Agricultural regions in the Central Federal District. The Academy come to intern at their enterprises, figure for the Yaroslavl Region is 541,000 but once they obtain their degree, they do (according to the Russian Tourism Ministry). not return to the sector. Kostroma is part of the tourist route known

One can pay substantially less to migrant as the “Russian Golden Ring”, but it does not workers than to local job seekers. Germany appear to be as attractive as it once was. also makes wide use of unskilled migrant Getting to Kostroma is not so easy. Given the workers in the agricultural sector, but here it decline of regional aviation, the two regional is important to make sure that they have airports can hardly be of use. So tourists can decent living conditions and their children mainly reach the city by taking an overnight have an opportunity to acquire a good train from Moscow. However, the quality of education. Otherwise, such this decision this form of transportation and services is could result in social problems. poor. It seems to have remained in the Soviet period. The frequency, quality and diversity Unfortunately, even successful enterprises in of railway connections with Moscow is in our the Kostroma Region are not interested in opinion the main area for negotiations exporting to either other regional markets or between the regional authorities and the the world market. We were told about tough railway management. competition in Moscow. But there are other destinations for supplies, for example, The quality of motorways is also very Yekaterinburg. Producers need help if they important. We understand that the are to become major market players, acquire consolidated budget does not have the the confidence and knowledge to promote wherewithal to restore the network of streets Kostroma goods far beyond the region’s and roads in Kostroma and the Kostroma boundaries. Perhaps one should think about Region. So it is particularly important to promoting and defending the Kostroma identify the priorities and repair above all the cheese brand (“Kostroma” cheese is at roads and streets that reflect the quality of present produced in Belarus), open an the roads in Kostroma in general. A tourist Internet site in Russian and English devoted coach takes 5-7 hours to reach Moscow, and to this product and display Kostroma cheese yet the distance is only 300 km. In order to at exhibitions and fairs across the world. develop federal highways and interregional Today even big Russian supermarket chains roads it is necessary to cooperate with the do not carry the entire range of Kostroma neighboring regions and promote their cheese and some have none at all. And yet interests. The streets in the city of Kostroma cheese is brought from Lithuania and Ukraine are also in need of a clean-up. The main while Kostroma dairy farmers say making advantage of Kostroma as a potential tourist cheese is unprofitable. Perhaps this just centre is its history. So it should participate in

24 Egon Bahr Fellowship Program

cultural events and help to promote the connect the concept of gold and silver region and its goods. The celebration of the jewelry with Kostroma. For now, the official 400th anniversary of the Romanov dynasty in website of Russia’s biggest jewelry factory 2013 will certainly help Kostroma to make an Diamant (Krasnoye-na-Volge) does not even impact. provide an address or a telephone number for its office in Kostroma. One should not forget about the scenic

attractions of the region. The River Volga and We propose to develop this industry by the Kostroma forests can be particularly concentrating jewelry trade in Kostroma, attractive for tourists who travel outside busy which would offer convenient conditions, low cities to get some rest and relax. Ecologically prices and attract tourists. When we clean produce may also interest tourists presented our group’s report on 14 July 2012 considering the fact that the concept of we spoke about the “Golden Street” or the agricultural tourism has proven to be popular “Golden Bridge” in Kostroma similar to Ponte in Europe. Vecchio in Florence (Italy). An effective policy One should prepare for an influx of foreign of small-size business assistance, cutting the tourists by upgrading services and printing cost of rent as well as implementing restaurant menus in foreign languages. measures to stop human capital flight should Shopping areas that sell souvenirs and local make a difference not only in this sector but goods should be more noticeable, so that in other sectors, such as the tourist and tourists do not have to search for them. restaurant sectors, etc.

Perhaps one should think about building Steps to Improve the Investment Climate tourist complexes (or refurbishing other buildings) to follow the principle “bus stop- 1. We understand that Kostroma is suffering food for drivers – food for tourists – souvenir a major budget deficit. Therefore, it is shops – local goods supermarkets – jewelry necessary to strengthen the Kostroma lobby shops.” Such complexes can be located in in Moscow and use every opportunity to the historical centre of Kostroma and near obtain subsidies or subventions for the local the Ipatyev Monastery. budget. One step in that direction is the appointment of the former governor of the Manufacturing and Sale of Jewelry Kostroma Region, Igor Slyunyayev, as The Kostroma Region has a long tradition of Russia’s Minister of Regional Development. manufacturing gold decorations, but even in Taking part in all possible competitions and Kostroma jewelry shops are few and far programs organized by the Ministry of between and tourists have difficulty finding Regional Development, the Transport them. Meanwhile, only connoisseurs know Ministry (especially the development of about the Krasnoye-na-Volge brand. If the transport infrastructure), etc. is also a must. sector is to develop and to come out of the The experience of the Krasnoyarsk Krai woods it is important to bring down the proves that such work in the Moscow bureaucratic barriers that impede the corridors of power sooner or later pays off. manufacturing (branding) of items, their sale The terms and benefits for major investors and especially export. It is possible to should also be discussed at the federal level. develop and implement a program that Strange as it may sound, Kostroma’s plight would engage Kostroma in Russian and may turn out to be its advantage. Lobbyists international exhibitions, open a center and a should argue that Kostroma has the right to museum for the design of jewlry, and thereby jump the queue for obtaining assistance and

Report 25 hosting major investment projects. One pretrial detention or in jail on charges that should not forget about the international the business community considers to be programs offered by the Bank for unfair. Facilitating safe operating conditions Reconstruction and Development, programs for business, honest hearings of all the cases to restore historical heritage and so on. We and prevention of searches, confiscations are sure that Kostroma has specialists who and detentions on specious charges can gather and use all the necessary (sometimes trumped up by competitors) is a information. major challenge to the development of Kostroma and indeed the entire Russia. 2. Privatization of state property and the sale of government stakes, especially in efficient 5. Businessmen are eager to establish enterprises, can also replenish the budget. dialogue with various levels of the The authorities, in our opinion, should not do government. In Germany many cities have a business themselves, but create the best tradition of informal meetings between the possible conditions for it. It is no secret that authorities and businessmen. These informal some top managers would like to be co- meetings may bring together the head of the owners of successful enterprises or even their region, a minor official from a small town, an sole owners, but they are afraid to lose the owner of a big enterprise and an owner of a protection provided by the region as the small shop. Of course, one should invite owner. But the Kostroma Region or the representatives of the supervisory bodies, the Kostroma city does not necessarily need to Interior Ministry and the public to such hold 100% of the shares in order to influence meetings so that they could see that this the development of business. As the work is transparent and do not suspect the experience of other regions shows full authorities of being hand-in-glove with privatization can boost the growth of business. We are convinced that the business. But in that case it should still secure Chamber of Trade and Industry and the the support of the authorities. Kostroma branch of Delovaya Rossiya would be glad to take part in organizing such 3. The land and forest resources in the meetings. Kostroma Region are in need of serious preparation, evaluation and demarcation. It 6. The business community says it is ready to also has to do with replenishing the budget. tackle social tasks, for example, opening The vast tracts of forest are an excellent basis private kindergartens. But it needs support in for the development of wood processing and clearing administrative hurdles and would like the so-called “forest economy”. The the local budget to provide as money as it woodworking sector has a major player - does to the municipal kindergartens to cover OOO Kronostar (OOO is for Russian. ltd. – is the cost of attendance, while parents can for English). Its positive experience in the cover the rest. This is a very interesting region could be presented to potential opportunity for the development of public- investors in order to boost the woodworking private partnership. industry. 7. Tourism and event marketing. We have 4. Kostroma businessmen (not named in this heard many different opinions about earlier report) admit they are afraid of the pressure attempts to make Kostroma attractive for from the authorities, the “siloviki” and the tourists. Perhaps not all of the events held supervisory agencies. They give pessimistic were worth the costs they incurred. However, accounts of their colleagues who are in activists and journalists have very favorable

26 Egon Bahr Fellowship Program

things to say about events such as the many other interesting goods and services “Romanov Festival.” This may be the best that Kostroma can offer. They need a time to come together and discuss together common “umbrella,” a brand, logo and a with the citizens what annual events should slogan that would be developed and stay and which ones should be dropped. promoted both at the official and informal One can also enlist the services of Russian levels. Such promotion must be developed and foreign advisors on tourism and carried out by a private company that development. We see some potential in the has won a tender, under the supervision of “weekend” tourism from Moscow. One night the authorities and activists, for example, of on the train is very fast by Russian standards. the Kostroma Region Development The “weekend in Kostroma” can be Foundation. One creative solution could be particularly attractive for children. Kostroma the popular Russian greeting “ZdorovO, can offer them and their parents an excellent Kostroma” (Hello, Kostroma), or a more educational program on the history of Russia, intellectual and global aimed “Kostroma – ecologically clean locally-produced food, mon amour” from Boris Grebenschikov’s agricultural tourism programs and low prices popular song of the same name. A business in the services sector. Low prices and tourist we mentioned at the beginning of this proximity to Moscow is a good starting point report was very disappointed that he could for the development of congress tourism. not buy the most ordinary souvenir: a jersey Why don’t the major companies who hold with the emblem of the city and such slogans their congresses in Moscow make forays into as we have mentioned. But he hopes to do it the “real Russia” over the weekend once the on his next visit to hospitable Kostroma. congress is over? With the development of its own congress culture Kostroma could Today the main and inexhaustible potential attract more and more of such events. All this of the Kostroma region is its people. They are of course is a sphere of partnership between the people in power who know their region the authorities and business. well and who have the trust of the population. They are the people who did not 8. All the decisions require human resources, shut down their businesses and leave the whom are difficult to lure into the region but country during the hard years when it was can be educated on the ground. Developing unsafe to be a businessman. Finally they are human resource potential could use help of young people who are acquiring an higher education institutions and secondary education, raising families and who want vocational schools that train workers in their children to be successful and happy in retailing, woodworking, metalworking, Kostroma. All that remains to be done is for agriculture and foreign languages. these people to come together and agree on 9. The Kostroma brand. We have mentioned how to make Kostroma attractive for the role of jewelry in Kostroma. There are themselves, for tourists and for business.

Report 27

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If we don’t act now The housing sector affects one of the most 1 this will result in a disaster in a few years. essential parts of people’s lives and is Former President of the Russian Federation, therefore one of the most critical social issues Dmitri Medvedev in 2010 in Russia.

The roots of the current mess go back more Two years have gone by since President than 20 years to the collapse of the Soviet Medvedev urged politicians to address the Union. Lacking liquidity the Russian severe problems in the Russian housing government asked the IMF and the World sector. Residents in cities all over the country Bank some $1 billion in loans, which the latter have filed complaints about bursting water granted as a condition for the liberalization and gas pipes, damaged roofs and poor program. During Yelzin’s so-called shock electrical maintenance services. According to therapy Russia had to transit from a social the official statistics, 40% of all apartment planned economy to a capitalist market buildings are in need of renovation.2 economy. The housing sector was excluded from this liberalization process. The Come election time, there politicians of all expectation was that it would adjust on its levels begin to make promises. So, in 2012 a own by absorbing the rising cost of living4. couple of months after the elections, a group Apartment residents were offered a change of Egon-Bahr fellows travelled to the city of to buy the property they were living in from Kostroma to take a closer look at the local the state for a very small price. As a result of housing sector and the policy in place. We this, the vast majority of apartments in Russia talked to the people in the city today are privately owned. This process of administration, the residents of the affected privatization led to great social inequality and buildings and the people from the managing society transformation. 3 companies. We even had the opportunity to speak to the governor of the Kostroma Property management, however, was left Region and the mayor of Kostroma. They all almost untouched. First, this meant that seem to have a strong position on the issue bureaucratic authorities remained yet none can find common ground. responsible for property maintenance and Therefore, the purpose of this paper is to the supply of gas, electricity, water and heat. provide insight into the fundamentals of this Although many property management conflict and to explore some of the companies had also been privatized, a perspectives we have come across. number of them still remained in the possession of the community or senior We have discovered that in many ways the government officials who held 100 percent of issue of housing services and utilities is a the shares. But neither the residents nor the reflection of all major problems in post-soviet local authorities could afford to cover the Russia. Many of these problems, such as the cost of maintenance services.

oversized bureaucracy, lack of clear rules and regulations, corruption, and the absence of As a result, further reform of property competition only seem to be getting worse. management became one of the govern-

Report 29 ment’s main priorities. A number of reforms most sectors of the economy have had been discussed before Moscow realized successfully transitioned to a free-market that only private ownership could effectively model, the housing sector still remains stuck modernize the system. In 2004 the State somewhere in between. The main reasoning Duma passed a series of legislations aimed at behind reforming the housing sector was to fostering competition between fully replace the state as a provider of services privatized managing companies. But with private companies. “No landlord is experience has proven that what looked worse than the state” was the popular slogan good on paper actually failed in reality. at the time. The hope was that privatizing the Under the new law apartment owners pay for sector would reduce bureaucracy, introduce all expenses and repairs. But while few of competition and improve the quality of them can afford a full renovation, many services, while keeping the price down. Sadly others reject the very idea of having to pay those expectations have not been met and for something they believe to be people all over the country have to deal with government’s responsibility. Meanwhile, bad-quality services, deteriorated utilities and managing companies’ fees continue to rise persistently rising fees. every year in the absence of any The Case of Kostroma improvements in service. Kostroma is not an exception. In fact it is In fact, some managing companies offer no quite representative of the general situation maintenance at all, while some of the others in Russia. The price of water, gas and have used the housing market with some 43 electricity has increased by 15% in the region million tenants to their own benefit, in 2012. Rising prices are a number one organizing fraud schemes of various kinds. concern for Kostroma residents. The share of Neither has the new legislation helped to household income spent on housing services eradicate corruption. In many cities the gets bigger and bigger every year, while the housing market is controlled by crooked reason for the increase remains unclear. businessmen and corrupt city officials, who Private managing companies claim they are created an illusion of a free market only to not responsible for the change in price, divide and use the territory for profit. These saying they merely redistribute commodities hidden monopolies and cartels are another that they receive from state-owned reason why serious investors remain wary of companies. They insist that they have limited entering the market. influence over the price.

The only thing that can help to improve the This is only partly true. In addition to add- current situation is state involvement. Thus ons, managing companies also charge for far, government agencies have relied on a services like cleaning, maintenance, special fund created for using regional renovation and so on. This creates a lot of budgets to cover 95 percent of the total cost room for corruption. It is not uncommon for of renovations. But the fund’s €6 billion is residents to be billed for services they did not hardly enough to cover the cost of receive, (e.g. repair work that never renovating all residential buildings, which the happened or cleaning that was not Ministry of Regional Issues in Moscow has performed as stated). Sometimes the estimated to be €150 billion. situation can even be comical when, for All these problems that plague the housing example, residents are billed for repair work on sector could be due to the fact that while an elevator in a building that doesn’t have one.

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State companies cite their expenditures on transparency in budget allocation. If the renovations and the increasing global energy authorities were to provide more information prices as the reason for the rising cost of and statistics on how money is used it would utilities. While the first reason seems to make help dispel the notion of “us vs. the some sense (although it is somewhat unfair government” where “us” are the citizens who to the citizens of a country that is one of the feel deceived by the state. biggest exporters of oil and gas in the world), This dichotomy is well known to all Russians, the second one raises many questions. Very but people coming from abroad have a little appears to be done in regard to different perception. This is why we want to investing in utilities. Breakdowns happen with introduce two assessments of the situation in increasing frequency, leaving people without the Kostroma Region – one made by a heat, water and electricity for days, damaging young Russian familiar with the workings of their property and creating unsafe living the system, and the second one made by a conditions. young German, who provides an “outside Needless to say, the current quality of perspective.” Both are members of the services is far from perfect. In the winter, group. Their perspectives show two sides of indoor temperature of people’s homes is the same coin. often not high enough, while the water is Understanding a Russian Perception neither clean nor warm enough and the living conditions in general can hardly be When Russians talk about their country they qualified as comfortable. usually feel ambivalent: the more displeasure they express, the more love they feel. We see Again, the managing companies and the Russia as our child – we would like it to be state try to point the finger at each other, perfect, but it never fulfills our expectations. avoiding responsibility by all means. At the And no one except us has the right to end of the day, Kostroma residents and those criticize it. This is what we call amor patriae. living in other regions plagued by similar problems have to face unsatisfactory housing There are a lot of things we are proud of. services provided at a high price. First of all, it is our history and culture. But what do we understand by culture? Most According to the statistics of the Kostroma Russians will tell you it is Russia’s cultural region, annual subsidies account for 2,5 heritage – temples, museums, historic billion Rubles (3,600 Rubles per person), landmarks etc. But the word “culture” itself which means Kostroma covers most of its has many other meanings, such as political expenses without the help of the federal culture, which refers to the relationship budget. And of the 2,5 billion Rubles that it between power institutions and the people. receives, it spends up to 80 per cent on social projects. This situation points to the “Do you have a social state?” If you ask me wide gap between the federal center and the this question, I will think for a while and most regions and is quite typical for Russia. The likely say “no.” I hope you understand when I problem is that the money that Russians pay say that I am very patriotic. But isn’t it wrong in taxes to the federal authorities is not used when a person receives only €250 per month for improving life in the regions. This leads to in pension after having worked for at least 25 a lack of trust between the people and the years? Yes, you are right - free education and regional authorities. People don’t feel like basic medical care make Russia an exception. responsible taxpayers due to the lack of But this is still so much less than what people

Report 31 had in Soviet times. This is not even When you arrive in Kostroma you see a small “capitalism with a human face,” this is a city with a friendly atmosphere: clean streets “double-headed eagle” with two heads (the and open-minded people who seem to be authorities and the people) looking in cheerful. Optimism is a typical trait among different directions because their very nature Russians who live with the motto “Things won’t let them look in the same direction. used to be worse.” This is the main difference between the residents of big cities and those Going further, I would like to stress that who live in the regions – the latter are more improving the public sphere is essential if the friendly and optimistic. To help them stay government wants to make people feel safe optimistic and improve their living standards and discourage them from leaving their Kostroma authorities should first of all listen region. How can we improve the working to them. Only then can public participation conditions, including salaries? It is like be improved (according to the Maslow’s running in a circle. If we try to increase pyramid). salaries by reducing staff, we will end up with higher unemployment on our hands Understanding a German Perception Incidentally, unemployment in the Kostroma region is quite low (< 1%). However, this Russia, as it is known in Germany, is a country statistics only takes into account what is with many problems. Russians seem to have called registered unemployment, meaning enjoyed only a small share of democratic those people who have registered at an improvements over the last twenty years. unemployment office and receive a social Corruption remains a major issue, in addition allowance (it should be noted that this to a weak judiciary and press that is stuck system is quite different from the one in between self-censorship and centralized Germany). Many Russians avoid this step so control. None of this is obvious when you as not to be constrained in their job search. come to Kostroma and look around. The city As a result, statistics change, but the problem looks beautiful and even romantic when you stays. It is like in Soviet times – we have no cross the Volga River on a boat. Given my unemployment because those who don’t secret admiration for Russian culture and work are in prison. history, it was disconcerting to learn about the social situation in Kostroma, especially The housing and utilities sector is crying for a what is happening in the housing sector. moon. It is looking for a compromise between consumers and property I found myself in the middle of a conflict that management companies. People want has its roots in wrong political decisions renovations and the opposite side insists it is made by politicians who later decided that the residents’ responsibility. Who is right and the people they got into this mess should who is responsible for what? Russia has a take care of the problem alone. And to their housing code – a law that both parties can surprise they couldn’t. Today no one wants refer to. But they are unwilling to do so and to assume responsibility and as always it is most importantly, they are not aware of their the weakest that pays the price. responsibilities and rights (I put Tatiana Pavlova, chairperson of the NGO “responsibilities“ first because people usually “The Eldest in the House,” is one of the few know more about their rights than their people who do not want to accept this responsibilities). And this is the Russian situation. She fights for the residents’ rights version of democracy, which in reality is only and acts as a mediator in their aggressive capitalism. communication with managing companies.

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As the result, she has found a natural enemy: could help them to kick-start the process of Alexander Bakanov – president of an NGO fostering free-market conditions and called the “Association of the Housing competition. Home-owners should be Owners and Managing Companies.” His offered a choice of housing companies – point of view differs from Tatiana’s. He thinks something that still hasn’t happened. Once that house owners expect too much from the again the Region’s new governor Sergey state and act like they still live in the Soviet Sitnikov has given hope for improvement. He Union. Bakanov thinks they should adapt to is rumored to be bringing in some of his old the new system like he did. This leads me to connections in the Kremlin. Dum spiro, spero. the following question: who should be While I breathe I hope. financially responsible for the renovation? Alexander says it is the responsibility of the Conclusion residents. They argue that they can’t afford it Though one has to admit that since 1992 and that they have already spent years Russia has faced an unprecedented task of paying for maintenance they did not receive. having to transit from the largest social I also ask myself: where are the forces of planned economy to a huge market innovation in this country? Where are the economy. It has had to introduce the so- creative businessmen of good will? Listening called basics of a free-market economy – to each other is both a great asset and a privatized ownership, freedom of competition challenge. Why not use this as a business and entrepreneurship, contractual relationship opportunity? Every party involved in the and restrictions to state intervention. Kostroma housing debacle only cares about Although major element of a market his/her own interests without considering or economy is public participation, so far there respecting the interests of others. The are few options for people to influence the investment climate is characterized by mutual situation. Russians face a colossal distrust. Nobody wants to admit that the bureaucratic machine and have no choice other party’s position has a right to exist. when it comes to selecting a managing There should be an independent consulting company. Formally there is a possibility for company, which would carry out the inhabitants to change managing company, negotiation process, supervise contracts and but in practice it is a complicated procedure provide the local Duma deputies with that demands a lot of time and effort that updates on current developments and needs. most people don’t have. More importantly, Owners and residents could be provided with changing a managing company does not information about the housing situation to necessarily mean subscribing to better quality make sure that everyone knows about services. All companies operate in the same his/her rights and responsibilities. environment, which makes it difficult to make profit and provide good and honest service Furthermore, my experience in Germany tells at the same time. me that politicians should at least be responsible for mediating between the To sum up what has been said, we want to parties. I understand that the local budget stress that Russia needs better communi- has already reached its limits. The local cation between the actors in the conflict. authorities are waiting for the state Citizens and entrepreneurs should government to provide financial support, communicate with each other to be able to thereby sacrificing their autonomy having to find a common solution. Only politicians can depend on Moscow. Nevertheless, at least it provide a forum for dialogue.

Report 33 They should act as mediators to help resolve - Local media does not cover the issue the conflict. Only then can the warring parties even though it’s hard not to notice that settle on to a compromise. No single actor the situation in the housing and utilities should be excluded from the dialogue sector is in a dire state. process. And what is most important is the rule of law and independent observers that could provide transparency and report on the situation. Twenty years since the collapse of the Soviet Union, the housing sector reform is still incomplete, with poor communication between the parties in the conflict. The following are some of the issues to consider:

1 - Political approach to reform (concrete Voswinkel, Johannes: „Im Chaos zu Hause“, in: Zeit Online steps should be introduced by the (2011), http://www.zeit.de/2011/06/Russland- Wohnungswirtschaft [accessed September 29, 2012]. authorities) 2 ibid. - Economic implications (for the residents of 3 Different experts have provided us with the information Kostroma as well as for private business) about the current state of social security and housing system in the Kostroma Region. Anatoly Noskov, Dmitry - Social aspects (Soviet mentality lives Uryadnikov and Vladimir Konovalov as city bureaucrats alongside a new mentality that upholds referred to official statistics when they talked about the lack social Darwinism: old thinking vs. new of budget money to cover the cost of renovation and the ineffective city management. Alexander Bakanov, director of thinking?) NGO “Association of the housing owners and managing - Political actors have left the people to sort companies” provided us with another side of the issue, arguing against the notion of managing companies as a out problems they helped to create manifestation of aggressive capitalism. Tatiana Pavlova, - The federal government should not only chairperson of the NGO “The eldest in the House,” gave improve living conditions, but also more inside information that helped us understand an average Kostroma citizen who tries to fight the arbitrary emphasize the importance of social behavior of the power institutions. 4 solidarity – this as well as the willingness Tschetwernina, Tatjana: „Wohnen und Wohnungsbaupolitik to engage in a dialogue are important im Wandel, in: Russland-Analysen 111 (2006)“, http://www.laender-analysen.de/russland/pdf/ factors for a functioning community Russlandanalysen111.pdf [accessed September 29, 2012].

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Egon Bahr Fellows 2012

Germany: Larissa Aldehoff, Muenster Simon Bujanowski, Cologne Ilia Choukhlov, Nuremberg Kai Doering, Berlin Julia Golla, Plettenberg Maya Hatsukano, Frankfurt a.M. Roman Krawielicki, Tuebingen Adrian Oroz, Berlin Juliane Rinas, Schwerin Stefan Schimming, Erfurt Julia Wanninger, Brussels Martin Zielke, Berlin

Russia: Iliya Andrenko, Rostov-on-Don Viktor Durov, Woronezh Daria Efimenko, Moscow Nikita Kanshin, Nowosibirsk Vasiliy Khohlov, St. Petersburg Nadezhda Kurnakova, Kirov Ksenija Neznakina, Perm Konstantin Ponomarjev, Novosibirsk Andrei Shalaj, Moscow Marina Sitova, Kostroma Sergei Zaharov, Moscow Anna Zurkan, Moscow

Report 35

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