Federal authorities primarily wait for a grassroots initiative

6 october 2015 | Rossiyskaya Gazeta

About twenty cities in the next three years will receive money from the Single-Industry Cities Development Fund. They will go mainly for the construction and the reconstruction of the infrastructure for new investment projects. Sergey Aristov, the Adviser to the Head of the Analytical Center talked about the way it is going to happen in an interview to "Rossiyskaya Gazeta".

Sergey Aristov
Sergey Aristov
Department for Regional Policy and Far East Development

- Sergey Anatolievich, a number of single-industry cities in recession increased from 75 to 94 during a year. Will it continue to increase?

- Most of the city-forming enterprises of the first group of risk finished its activities until the end of the 2000s. And the fact that this group has increased now, mainly is the result not of the current economic issues, but a more detailed analysis of the situation in these cities by the Ministry of Economic Development. After all the separation of single-industry cities into three areas of risk occurred only in the last year.

- So you cannot say that the situation in single-industry cities sharply deteriorates, can you?

- No. It is not getting better but at a whole the situation is smoldering. People live there approximately at the same conditions like it was in a recession year 2009 and in comparatively good 2012-2013.

- How many cities completely lost their city-forming enterprises, and a hope for the resumption of their work is meaningless?

- More than a dozen. There ventures are either dying or already dead. That is, historically this is a one-industry city, but in fact it has lost any specialization, and we must come up with a new term - "one-industry city" is no longer relevant.

And how many one-industry cities can rely on the funds of the Development Foundation?

I believe about twenty in the next three years. It is expected that by the end of 2017 the Foundation will receive 29 billion rubles that will be used mainly for the construction and the reconstruction of the infrastructure for new investment projects. Given the number of cities in need of such support, it will not be enough for everybody. However, we realize that even with limited funds the Development Foundation of one-industry cities there are resources to improve the situation.

After all, you can use many more support tools - industrial parks, the Development Foundation for industry, programs for small and medium-sized enterprises, subsidies to industrial parks, dozens of measures in agriculture, development institutions and so on. In addition, one-industry cities from the first group can now count on the status of the territory of priority development. The synergy of these measures  should be this new development methodology for single-industry cities. This very initiative our colleagues in the administration of the Irkutsk region and we are trying to implement in Usolye-Sibirskoe.

Have you succeed?

- Yes, we have , however the project is difficult. There was a huge chemical plant with 12 thousand employees. It did not just stop, it was destroyed physically. A lot of damage, it is a real stalker zone on 600 hectares.  In addition, there are many environmental issues left from the plant, so we also need to liquidate the accumulated damage. By the way, this problem is a characteristic feature of many of such cities. There is a huge amount of accumulated waste, mercury, there are still carriages with chlorine.

At this place, an industrial park "Cluster Usolye Khimprom" will be created. There will be a chemical industry - after all there are many experts worked at the chemical plant in the city. But in order not to return the city into the single-industry state, we decided to develop also engineering and metalworking industries. We have chosen several areas, units within each, in addition to the PDA mode, the federal support tool will be applied. The investment plan foresees that by 2021 there will be more than 4.5 thousand work places. We have found most of the residents.

How can you attract investors to such a city? There is a problem with them in general, even rather successful cities run short of them.

- Really? In Ulyanovsk, for instance, new businesses start each month, in Tatarstan there is already no space for new productions. Simply, there are regions where there is a long-term, methodical work, which can "invite" investors, and somewhere they wait for something to fall from the sky. But nothing ventured, nothing gained.

That is, it will never be such a situation when the federal center will take a list of single-industry cities and will begin to work with them in an alphabetical order?

- Like they ask a homework in school? Of course, not, it is a selective work, tied at the initiative of the regional and municipal authorities. Of course, it is not easy to invite an investor to the one-industry city. If it is large, it has, like it or not, social obligations. What is perceived as an additional risk. Therefore, all measures are aimed at the economic stimulation in order to overlap a risk with a possible profit.

The task is facilitated by the fact that still an infrastructure of the town-forming enterprise remained in varying degrees in single-industry cities. It is clear that some parts of it should be repaired, modernized, supplemented, but it is important, in particular that the power plant is usually already available. For instance, in Baikalsk, where a pulp and paper plant stopped, there is an enormous heat and power plant. The Usolye-Sibirskoe heat plant's capacity of more than 200 MW is lost, and the energy cost is the cheapest in Russia. And you need to utilize all these facilities and to present them to an investor in the favorable light.

The hardest thing is to bring an investor in a small one-industry town, and many of them are actually not even towns but townships - five or six thousand inhabitants. Any major investor will turn one-industry town into the same one-industry town, just with the other sectoral specialization.

Let me stress again that without an initiative from the entities and municipalities it is impossible to do something, the selection of potential investors is their area of responsibility. The federal government primarily waits for a grassroots initiative.

So how does it start to show itself? Or they need a couple of years for stirring up?

- It is not in stirring up, but in knowledge and in psychology. You have to understand who is the head of the municipality, especially the small one. He is like a pioneer, in charge of everything, always rolls up, worn, puts out fires here and there, prosecutors press on him in cases related to public utilities. He wants to get money to repair the water supply system and here you come with some lofty matters ... And he thinks: the investor is good, but where am I supposed to get him in a forest, and when I shall do it?

- May be they are afraid of difficulties in receipt of the territory of the priority development status?

- The procedure is very simple, efforts are minimal. If types of activity which the PDA mode will cover, the minimal scope of investments and the minimal number of workplaces are mentioned in the region’s request, the municipality will automatically receive the PDA status. Just within the city boundaries, and not in a particular area, like in the Far East.

After that you need to configure the industrial site. This may be a plot under the same town-forming enterprise or a bare field. Next you need to understand where and what kind of production will be located there, to exert a certain specialization in terms of the demand from investors. Then you can submit an application to the Development Fund and to get money for the development of the infrastructure for the project.

- How many single-industry citiess will be able to overcome their single-industry status in the end?

- If things shape up in our favor, if we do everything right, three to five cities in the next several years.

- Quite modest perspectives.

- Most of the single-industry cities will remain as such, but the single-industry status of their economy is not always a waste. In most of the cases it is a rational economic choice. There are small towns like in Karelia where there is nothing you can do except of logging. There are many towns where undertakings are connected to the military-industrial complex, to Rosatom, they cannot stop. They are stable and will be stable in future.

- And decisions like disestablishment of single-industry cities, are they excluded? May be sometimes it is easier, cheaper and even compassionate, than to try bringing a city back to life?

- I'm not sure that many people would like to do this. Now it is not the 1937, no one will send echelons full of people, and then raze the town to the ground. Yes, somewhere those who cannot find a work must be encouraged to move. However, for elder people earning the leaving is problematic, they are baked onto their land. After all, what are single-industry cities? First of all, they are the private sector, the garden, the forest. After the age of forty moving from a 5000th city and settling in a 100,000th is problematic.