KORYAK AUTONOMOUS OKRUG - SAFETY FAKTOR

Three years ago, when I first took the office after the elections, I had rather idealistic notions about the realities in KAO. Undoubtedly, I did not realize the very depth of the crisis that plagued the Okrug's economy already then. The local mills and collective husbandries had practically fallen apart by that time. The only survivor that operated normally within the Okrug was the mining industry represented by two large enterprises: ZAO* Chaibukha and ZAO KoryakGeoDobycha (* ZAO - Closed-end Joint Stock Company).

For last several years we have completed auditing all earlier existing and later privatized enterprises operating in the fishing industry. Now we understand what all of them are. Right underway we determined which could and which could not be saved from the debt pit. We settled on two collective husbandries - Bekereva Kolhoz and Udarnik Kolhoz - right away, taking advantage of the opportunity at hand to revitalize them. That fell straight into the sphere of interests of the bankruptcy agency and tax collecting bodies. The tax collectors were set about a task to keep the taxpayers and, at the same time, create conditions for tax payments which could be level to taxpayers' current capacities. Today, we can say already that these enterprises return back to normal rhythm of activity. While for those, whose affairs turned hopeless, the bankruptcy procedure was carried out in due course.

Out of earlier established canneries Khairyuzovo and Korf canneries were the only survivors. But that did not mean that the failing enterprises became blanks out of the blue. The bankruptcy is a temporary state until the vacant niche is filled with newly emerging structures.

There is nothing really what is left of the old foundation. Almost all older assets were sold out or ransacked. The fleet was practically gone. The existing fisheries production sections were the only remaining old assets. Today new enterprises are being created in their place. What is interesting, throughout the same period while some enterprises struggled to survive, the others appeared quite viable. Those were Iyanin Kutkh Co. Ltd., Polluks Co. Ltd. and Marina Ich Co. Ltd. to name just a few. These companies hold the leading positions in the Okrug and are able to compete with the largest companies in Kamchatka Oblast in production volumes and modern technologies. There are not many such companies in the Okrug yet. Therefore, they have to bear the major responsibilities and tax burden. Each of these enterprises, usually, becomes an economic base for some populated area. In Tigil District, in particular, in accordance with the General Agreement with KAO Administration, Polluks Co., Ltd., became the economic base for Lesnaya village.

There is a noted head toward the improvements. The change is even more pronounced with Lesnaya village, which just recently was yet considered one of the most backward settlements in the district. This year already, Lesnovskii Gospromkhoz (State Trade Husbandry) resumed its activities, and received allotted areas on the Palana River for commercial fishing purposes. The fishermen's teams performed very well there, having proved availability of fishing expertise. Yet we hope Gospromkhoz has a good hunting season ahead.

Polluks Co. Ltd., lent a hand in harvesting and stocking wildlings, provided a total delivery of yearly reserve of provisions in Lesnaya village, took care of the sufficient fuel supplies. That is how we want to see every backbone enterprise.

Olyutorskii District for its economic sustainability relies largely on the local mining industry, which backbone is supported by the above mentioned Chaibukha Artel and KoryakGeolDobycha Co. Ltd., standing firm on their feet. The miners are distinguished by their top degree of organization and professional approach to every problem. Beside extraction of precious metal these backbone business structures, using their tax and off-budget offset and clearing schemes, pooled together to build a road to the Korf Coal Deposit. Completion of the project this year will lift the existing problems with coal supplies to Korf and Tilichiki villages, where the demands are the highest by volume. Thereby the district will acquire a good road, and, as a sequence, a year round access to the lignites of the Medvezhinskii Coal Deposit. Today we are very much interested to switch to our own energy resources and the opportunities seem to present themselves: for the second year in a raw Penzhinksii District has been supplied with its own local coal, many settlements have remainders of coal from last year. Medvezhinskoye Coal Deposit is very promising. It is being managed by a KamchatLesTopProm subdivision. The coal is also supplied from Gorelovskoye Coal Deposit, where it is extracted by KoryakUgol' Enterprise. Eventually, a license was received to develop Khairyuzovskoye Coal Deposit and next year we are to start full scale operations on it. With participation of Iyanin Kutkh Co. Ltd., the economic base enterprise for the Tigil' District, we are going to develop Tigil' Forest Lot to increase the extraction volumes at the existing coal strip-pit.

The need for new roads pushes us to further upgrade the entire ground traffic system. This year we will complete the Manily-Kamenskoye, Ossora-Kostroma and Korf-Medvezhka roads. Next year, Tigil'-Ust Tigil' road will ensure better conditions for ground delivery of cargoes unloaded at Ust Tigil's sea roads.

These are the main trends that feature the Okrug' economy. All in all, two thirds of the this complex falls on the fish harvesting and processing, which accounts for the best part of the budget income, and our interests boils down to creating conditions for stable operation and growth of fishing enterprises.

Employment of the native people in traditional sectors of economy is a very serious problem. Traditionally, the local population was occupied in in-shore fisheries. This kind of activity prevails amongst them today as well. Other occupations are reindeer herding and hunting.

In fact all gospromkhozes, except for Tigil's, were privatized. A the last sitting on local self-government, we on purpose raised the topic about restoration of hunting and crafting activities within the Okrug's territory as brunches guaranteeing employment for the indigenous population. The first positive results are already available, as I told you, in the Lesnovskii Gospromkhoz. Now we are working closely on the Tigilskii Gospromkhoz, while the Penzhinskii Gospromkhoz is already in our plans. Two cartels, Druzhba and Rassvet, operate in the Karaginskii District.

It is not reasonable applying the same recipes for different husbandries - we are in the state of search for right solutions. What was possible to accomplish in Lesnovskii Gospromkhoz could not yet be embodied in the others. What is important here is to solve the keynote problems within our own capacities - introduce tax breaks for hunters in the part related to the local budget. That is, let the hunters and craftsmen get up on the feet. I believe, we can solve these problems, including the ones relating to distribution of harvesting and trade lots, hurting no one and creating necessary conditions for promotion of traditional industries.

As far as reindeer herding, this problem concerns the interests of Penzhinskii District, which by its economic structure is exclusively depressed and mostly subsidized. This territory used to be the chief reindeer breeding specialist, as apart from coal extraction and a few minor gold artels there were no industrial activities whatsoever.

Of course, the losses are big - Ayanka village reindeer husbandry is on the verge of disappearance, the Tigil'skii Sovkhoz faces many problems.

Under the circumstances, one should clearly understand what exactly is of primary importance in and for the reindeer herding. Without establishing other trades and industries able to turn out profits, it would be impossible to foster reindeer herding. It has always been subsidized, always in want of state support, which is practically nowhere to come from nowadays. Therefore, if fish harvesting and processing complex and mining enterprises operate normally, we will certainly be able to help the reindeer herding out on the account of income redistribution and other budget means.

This year we created a foundation in support of reindeer herding (the Reindeer Herding Support Foundation), establishing it on a firm legal base - an act passed in Koryak Okrug's Duma. The Reindeer Herding Support Foundation Act determines the percentages to be contributed in the Foundation as a result of extraction of biological and mineral resources, the latter being the sources of secure finance.

The first million rubles from the fishing companies have been deposited in the foundation already. As a whole, during this year alone we count on receipt of about 15 million rubles.

It would be easier just to pour the money down the throat, as they say, but we think the Foundation should serve as an investments instrument. The leaders of the reindeer herding husbandries understand that for successful development of this trade the investments are a must. Today the money are being spent for purchase of medicines for herders, which were in short supply, if at all, for many years, some tools and provisions. Overall, the supplies cover just what is needed to let the husbandries stay afloat. In regard to each and every husbandry, we plan to develop, through the Foundation, different task programs for scale reindeer stock regeneration. We are not going to dictate anything, its our principle position. The mission of the executive power bodies is to fill the Foundation's budget with live money.

To support industry means to create conditions for influx of young people into the reindeer herding. Today, because of all these economic reasons the old-timers have practically no one to transfer their knowledge and skills to. The young would not go into the herds and traditions weaken. Therefore, the economic support of the trade is called to resolve social problem - to keep the traditional ways. Quite naturally, the issue of that complexity cannot be lifted off overnight.

Fast to destruct, long to restore - this economic axiom is familiar to every one here, from a grass-root resident to a leader of any rank. However, oftentimes the discourse on the agriculture of Kamchatka Oblast almost lets out perfidious notes of opinions: say, it is easier to close down everything and buy what is needed just for the very fish you have. Isn't there a threat of the same attitude toward the reindeer herding in the Okrug? Worse still, when the formerly strong trade is in a crumbled down state?

Reindeer herding is a traditional way of life. If it is lost forever, there will be no sense in autonomy per se. Thank goodness, there are no activists in the Okrug such as calling to do away with reindeer herding for its alleged inexpediency and lack of sustainability. No such attitudes were noted over here still.

This condition, ironically, can be named as steadily unsatisfactory, as it is, however hard that could be for any one to realize. In comparison with Kamchatka Oblast the indicators are considerably lower.

The start-out terms on entry into the market were disadvantageous for the Okrug, differing from those of Kamchatka Oblast, and, without doubt, it is useless talking about social upswing in the backdrop of ruined economy. The local population is pushed to the edge for survival. Fish, caviar, tundra and mother nature are the only means for keeping body and soul together.

All the rest is block grants, the federally subsidized wages are only good to keep the residents in place, everything else is out and beyond the available finance. The Federal Center would not dwell on our problems. They took to distancing themselves and discriminating which should be of federal and which of regional concern.

At the same time, we did not abandon any remote settlement. No matter how hard was the living in those settlements, the idea of evacuating any of them faced strong opposition. In 1997, we had serious problems with Il'pyrskii Village. When the question was raised about the evacuation of the village residents because of undersupplied wintering, they mandated the Head of Village Administration, Nina N. Yershova, to express their discontent and unwillingness to move out, and that they would do their best to prepare for the winter. That was exactly what they did.

The opportunity of getting up to one's feet boils down only to developing production sphere, which is supposed to give life to the social one. Today, we find ourselves on the level of bare survival, tomorrow we hope to come around some progressive advancement and improvements. Surely, people want to live today - kids get sick and need good nourishment already today. Hence, the exacerbation and extremities. What can we do? - These are the times we have to live through. Moscow does not heed tears. One has to work up his own assurance factor.

What is most important, the workers of our enterprises understand the today's situation. We have agreements with all enterprises for financial support on the account of allocated fishing quotas. That is, in essence we have imposed payment duties on the quotas, otherwise received free of any taxes by industrial enterprises. Although it was not a forceful decision backed by a specific legal act - simply, both us and them came to understanding that without those additional financial means we would not make it under the today's circumstances. I am very appreciative to them for this understanding.

Our resources come first to mind. For developing traditional native trades we have a system of tax breaks. We have passed a law on investment activities within the Okrug's territory, as well as other acts ensuring better opportunities for productive growth, if it is promotional for native crafts and trades development and tribal activities. We are ready to consider proposals and programs of separate enterprises, taking into account individual taxation regime depending mostly upon significance of the proposed programs.

Yes, today it is tough for us. But I believe that we are successfully building up the long-term mechanism which, in future, will allow us to reach the optimum levels, providing we use most rational approach in filling the better part of our budget relying on our own resources.