21.11.2017 | New plan to revive Russian ‘monotowns’ - the analyst’s view

Septimus Knox, Senior Analyst at Alaco, quoted in a World Economic Forum report on efforts re-energise Soviet-era, single-industry towns.

 

20 Nov 2017

Adam Jezard

Senior Writer at Formative Content.

To some people, a river turning red might be a biblical prophecy coming true, but in fact it’s more likely to be industrial-scale pollution contaminating the water.

Certainly when the Daldykan River in Russia turned crimson in 2016, fingers were pointed at the nearby Nadezhda metallurgical plant owned by Norilsk Nickel, the world’s largest nickel and palladium producer. Initially the metals giant would not confirm involvement, but it later admitted that heavy rain had caused a filtration dam to overflow.

This was just another day in the life of one of Russia’s “monotowns”, throwbacks to Soviet-era policies which built whole communities around a single industry.

Many monotowns have collapsed or been greatly reduced in scale because of social, financial and industrial change following the fall of the Soviet Union and suffered further since the 2008 financial crisis.

Big problems

There are about 319 monotowns, accounting for a large part of the urban population and 40% of GDP, according to 2014 data reported in the Financial Times.

A report in Asian Social Science highlighted the scale of the monotown problems, including: failing social infrastructure, with smaller living spaces, fewer hospital beds and doctors than other parts of Russia; reduced public facilities such as swimming pools and sports grounds; ageing engineering and social infrastructure due to the local budget deficits; lack of opportunities for small and medium-sized businesses because of citizens’ reduced living standards; and young populations moving away.

Septimus Knox, an analyst with business intelligence consultants Alaco who wrote about the conditions in monotowns for the FT, said that in 2014 Russia created a Monocities Development Fund, now valued at approximately 30 billion roubles ($503 million).

This aimed to develop and promote sustainable socio-economic development of monotowns through private and public sector cooperation, to make them attractive to investors and ensure government consistency in stabilizing their economies and social conditions.

“The question is,” Knox asked, “how effectively equipped is the fund to tackle such enormous problems and revitalize hundreds of sclerotic Russian towns? Is $500 million enough to turn around towns in which approximately 11% of the population live?”

Urban improvements

The money is already being used to improve the lot of monotown populations. In 2017 the government launched a website, Monotown News, to crowdsource improvement ideas from their inhabitants.

Maxim Isaev, who works at Strelka, a non-governmental agency, and headed the monotown improvement project, said: “The residents of all 319 Russian monotowns were given the opportunity to participate ... by adding their proposals about what they would like to improve in their cities.    

“Also they could vote for the proposals they liked, thus the officials in each city could understand the most popular ideas that reflected their needs and wants.”

For three months they collected more than 15,000 proposals, some of which were incorporated into municipal plans. The website also became a knowledge base, with links to improvement ideas from around the world.

Local examples include schemes to open a library and cultural centre, redevelop a park and open a youth centre.

Isaev said that about 1,500 such schemes were due to be completed by the project’s end in March 2018.

He added: “These projects generally are not about genuine transformations into a new-style economy, but more about making the changes visible for people in a short run.”

The project prioritized city schemes meeting certain criteria, which included renovating the most popular public spaces, creating public spaces for young people, restoring sites of historical interest and making over abandoned spaces or sites.

“The scale of changes is phenomenal and unprecedented,” Isaev said. “Due to the projects residents got new or improved public spaces and that creates a completely different ambience and an agenda of positive changes.”    

He added that the Russian government had initiated the national strategic programme aimed at rejuvenating them further.

A government-commissioned report considered the redevelopment of similar towns in Europe, Japan and the US and called for the cultivation of multi-industry employers based on available competitive advantages, as well as developing infrastructure in the towns and making them friendly environments to live in.

Poster-child

Knox said that one city often held up as the poster-child of redevelopment is Kogalym, home of energy company Lukoil’s main oil fields.

The town, he says, has successfully diversified its economy and there are now numerous small businesses operating in the region and even a fledgling tourism industry.

“It is probably the poster-child for how monotowns can be transformed but as Kommersant [a Russian newspaper] pointed out in September, it is very much the exception and not the rule.”

Knox adds that Lukoil has poured an enormous amount of money into the city through private-public partnership and for many monotowns a comparable level of investment is not imaginable.

Isaev called the projects that have been completed so far “quick wins” aimed at improving the lives of monotown citizens and the appearance of cities.

But given the scale of the problem, Knox says: “It is likely that the plight of most towns will continue. I think it is very rare for these towns to enter the national consciousness and when they do it’s only as a result of the most dramatic incidents. Otherwise the issue continues to bubble along in the background.”

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