Success Stories Mark Slow March to Change in Russia

The woe-is-me countenance of Yuri Skomorokhov could be said to be the face of capitalist Russia.

A successful business, a supportive family and a home in this verdant Volga River boomtown have yet to disabuse the 35-year-old entrepreneur of his conviction that Russia’s turn of history forced him to sell his soul.

Skomorokhov was near the end of his graduate studies in engineering technology and looking forward to an ivory tower existence as a college professor when he was caught in the crosscurrents of his country’s economic revolution early in this decade.

“I realized you couldn’t feed a wife and two children on a teacher’s salary in these conditions,” he says of his shattering epiphany four years ago.

So he pooled his modest savings with three friends to build a furniture factory that has grown to employ 110 workers. It pays him $1,000 a month--a princely sum, at least by provincial standards.

“I realize I am better off than most, materially,” says Skomorokhov, who takes little pride in having successfully survived an economic transition that others have failed at. “But I feel neither successful nor secure. Today, I have a good life, but tomorrow could be a completely different story.”

Bumpy Ride to Reforms

That even those who have found a profitable niche in the new order tend to see their fortune as a bargain with the devil speaks to an enduring self-image among Russians as a society of victims and martyrs. Despite abundant evidence that personal freedoms and market economics have spread far beyond Moscow, Russians in the provinces often still feel deprived of personal benefit from their country’s embrace of capitalism and democracy.

Russia’s provinces have had a bumpy ride on the way to a market economy. Most still trail far behind the capital, where sleek shops and upward mobility are as taken for granted by its residents as newfound freedoms to travel, decide their own futures and speak their minds.

But as scattered success stories, like Skomorokhov’s, instill a sense of financial security in the middle class slowly taking root across Russia, there are expectations that the transition’s survivors will begin recognizing their gains.

“Look at what people are doing, not what they are saying,” advises Grigory Rivlin, economic analyst for the local Volga Commune newspaper. “It’s traditional for us to lament life’s injustices as we sit down with family and friends for a feast.”

Indeed, the face turned to the outside world by most of Russia’s 148 million people is often one of suffering amid the freer, more varied and--many admit--more fun society that has supplanted the state choreography of life of the old days.

In Samara, the neon and noise of capitalism are a little softer than in Moscow, but so are the blows to the city’s unfortunate more cushioned and the tales of crime and corruption more tame.

The riverfront scene at rush hour shatters any lingering image of the dull Eastern Bloc. Young women in business suits gather after work to drink and gossip in umbrella-shaded beer gardens, while teenagers bobbing under headphones skate past the flow of businessmen talking on cellular phones as they stroll home.

Local officials boast that 93% of property in Samara is now in private hands--among the largest shares in any area of Russia even six years after the collapse of communism and dissolution of the Soviet Union.

Chemists and engineers who once worked at rocket factories in this city of 1.2 million are now producing pharmaceuticals, processed foods and accessories for the passenger cars that roll off auto assembly lines in the nearby city of Togliatti.

“We estimate there are about 200,000 working in small- and medium-sized enterprises on the private market,” says Alexei Syzgantsev, deputy director of the Department for Support to Entrepreneurship and Small Business. “That may be a small percentage of the population, but it is the fastest-growing sphere of the economy and the most important for the long term.”

The agency works with would-be businesspeople to find credits and partnerships in the absence of a functioning, internal lending network in cash-only Russia. Its staff also lobbies for reasonable tax, licensing and customs regulations at the federal level.

Because of the byzantine and capricious practices of federal customs authorities, much of the foreign food, clothing and gadgetry on sale at private shops here is brought in, a few suitcases at a time, by “shuttle traders.” They are Russia’s army of small-scale importers who travel to cut-rate bazaars in Turkey, Greece, Cyprus and China to keep fellow Russians supplied, despite the slump in the nation’s domestic production.

Entrepreneurship is also alive along Samara’s broad, tree-lined riverfront, where cafes and kiosks are open around the clock to offer beer, soft drinks and snacks. While the pay for salesclerks and short-order cooks is paltry, the miniature convenience stores are creating part-time jobs for housewives and students eager to work odd hours.

Ingenuity and Elbow Grease

That Samara has healed with so few social scars after decades of dependence on troubled defense industries is presented as evidence by its leaders that any region can be successful with the right formula of ingenuity and elbow grease.

“What we have that works for us is a good technical base--a lot of trained engineers and specialists who were engaged in the race for space and military supremacy [in the Soviet era] and now are putting their skills to use in light manufacturing, computer science and services,” says Vladimir Mamigonov, a vice governor of the region. “We also have a good mix of nationalities and a long history of that being an asset instead of a problem.”

Samara borders resurgent Islamic areas of Tatarstan and is close to Kazakhstan and Russia’s roiling southern republics. Because of its location, Samara has long been a haven for those repressed by nationalism elsewhere.

The region also has managed to create one of Russia’s stronger social welfare nets, which Mamigonov attributes to the local administration’s responsible use of tax revenues. He points to the $137-million, 570-bed cancer hospital under construction as an example. The facility will be equipped to care for terminal patients from throughout the Volga region.

Unlike in Moscow, where top bureaucrats zip around in imported Mercedes-Benzes and BMWs, Samara’s public servants travel in Volga sedans bought from another successful city upriver, Nizhny Novgorod. Public salaries and pensions are modest but paid on time, in contrast with the three- and four-month delays that have commonly plagued other provinces.

One of only six “donor regions” among Russia’s 89 constituent cities, counties and republics, Samara pays more in federal taxes than it receives back in benefits.

In a desire to invest in an important resource--youth--Samara officials have bankrolled an experimental program that teaches students on a single campus from first grade through college. The 15-year program at the Samara Municipal University was the brainchild of educator Marina Nayanova, who has teamed the school she opened in 1989 with correspondent programs at George Washington University, the Sorbonne in Paris and engineering and technical schools in Western Europe.

“We realized we had to prepare young people for an entirely different future from the one we were expecting,” says Nayanova. “Our goal is to develop the individualism of the students while equipping them with the skills bound to be in demand, like computer abilities and foreign language.”

All 1,200 pupils study English, French and German from elementary level and spend two years abroad after their university education.

“There is a boom underway in Samara, and this is due to our having managed to open the city,” says Oleg Sysuyev, who was mayor of Samara until April, when he was called to Moscow to take up the federal post of deputy prime minister. “It used to be a source of pride that we were closed off, that in every family there was someone with a secret clearance.”

Samara, called Kuibyshev during the Soviet era, was closed to foreigners because of its high concentration of military-industrial plants.

While Samara is touted as one of the most reformed of Russia’s regions, there are still some important industries mired in despondency and debt. At the Progress Rocket enterprise, portly officials in ill-fitting suits assemble in a conference room under the stern gaze of Soviet founder V. I. Lenin to bemoan the age of democracy and disarmament that has all but made them obsolete.

“We have no money. We don’t get paid by Moscow. What is there to talk about of ‘defense conversion’ or ‘foreign investment?’ ” director Dmitri Kozlov asks with bitter sarcasm.

Resentment and Resignation

The enterprise stalwarts disdain even the few projects that have come their way in the market era. A contract to produce potato-processing equipment for a Western European food venture is a “humiliation” of the technological skills of defense scientists, insists Kozlov.

Likewise, the mood at the Tupolev aircraft factory is one of resentment and resignation, made worse by Russian airlines’ recent orders for new Boeings and Airbuses.

But heavy industry has not entirely fallen on hard times, as the fate of the Samara Ball-Bearing Plant testifies. The company has slimmed down from its Soviet-era height of 10,500 employees to about 7,000. But sales are brisk for the range of its products, from microscopic components to 15-foot-wide bearings in demand at the dams and power plants along the Volga.

“We have no debts, we’re doubling salaries this year and we will probably need to take on more staff in the coming months to handle the growth,” says director Igor Shvidak, who attributes his plant’s successful conversion to the distribution of shares to employees that gave them an interest in efficiency.

Under the Communist system, which dealt with sloth by assigning two laborers to do the job of one, a manager had no power to threaten drunk workers or petty thieves with termination. “Now that they know they can be fired, it’s amazing how much more serious and industrious workers can be,” says Shvidak. “It wasn’t unusual in the old days to have to send 150 people home for showing up drunk. Now it’s a rare instance to have even one or two.”

Across town, at the Rossiya candy factory, employees have mostly sold the stock that they were given after privatization to the Swiss chocolate giant Nestle, but report a similarly satisfactory transition in terms of job security, working conditions and wages that average about $345 a month--three times the national average. Once a $60-million upgrade is completed, the plant producing about 10% of Russia’s chocolate hopes to give market leader Mars Corp. a run for its money, says director Alexei Khomyakov.

Agriculture in Transition

Food production and processing is only a fraction of the Samara economy, as agriculture is in crisis across the breadth of Russia. Still, farmers and manufacturers see this as a potential growth industry because of the rich soil and abundant farmland along the Volga.

Yevgeny Tisonov and 60 former comrades from the disbanded Zhiguli State Farm have rented nearly 1,000 acres and planted wheat, sunflowers and herbs. Their success hinges on the fickle weather. But the streamlined collective expects to earn enough from its first-year produce to pay its members a subsistence wage.

Throughout the Russian federation, production of meat, milk, eggs, vegetables, fruits, grains and other foodstuffs has all but ceased with the end of state subsidies to huge, inefficient and poorly managed state farms. As collectives have broken up, parceling out land to former members, even those who want to continue farming find themselves without the equipment or credit needed to get crops in the ground.

As elsewhere in the fertile regions of Russia, many who work in the shops and factories of Samara grow their own food in private plots attached to their country cottages.

Olga and Anatoly Yerin abandon their city apartment as soon as the snow clears each April to take up residence at their humble dacha and its redolent gardens. A bus stop across the street allows them to commute to their jobs at a construction-materials plant 20 minutes away in the city. On less than a sixth of an acre, they produce enough vegetables, fruit, herbs and poultry to feed themselves and their two grown daughters throughout the year.

They proudly show off last summer’s expansion projects--a sauna and a greenhouse that bursts with tomatoes, peppers and flowers. “It’s so much nicer out here than in the city,” effuses Olga. “We stay here until the frost comes back, in about November.”

Her spell of contentment is broken, though, when asked if she lived as well in the Communist era. “It was much better then. Now we are all slowly dying,” insists the plump 48-year-old, suddenly thrown into a nostalgic reverie. “I know these terrible times are here for good though. All we can do is survive from day to day.”

The contrast of her posture of suffering with the natural serenity that surrounds her prompts her husband to suggest she might be tending toward the melodramatic.

“Come on, Olya, life’s not really that bad, is it?” he prods with a gentle elbow to the ribs. “I think you have to admit, things might be getting better.”