Kremlin faces more strikes as miners' unrest spreads

Yeltsin's dilemma: Making sure workers are paid may help President's chances of re-election, but inflation waits in the wings

PHIL REEVES

Moscow

The Russian government spent a second day struggling to find a resolution to a national miners' strike yesterday amid fears that the dispute has further dented Boris Yeltsin's flagging chances of re-election, and could spread to other industries where workers also have gone unpaid for months.

The Yeltsin administration is acutely aware that the hundreds of thousands of miners who have downed tools - a protest that seems to have been co- ordinated with a mass walkout by their counterparts in Ukraine - are in a dilemma shared by millions of other Russians. Sectors that rely on the Russian government for funds - defence plants, nuclear power stations, the armed forces, teachers, health workers and many more - have experienced long delays in pay recently. Scarcely a day passes without a group of employees launching a protest after going unpaid for months; some even resort to hunger strikes. Last night, Russia's air traffic controllers announced plans to resume their national strike next week, an action launched in December but suspended shortly afterwards.

Delays in pay often are simply the result of the ruthless application of economics. Russia's high inflation (currently 4 per cent a month) means the cash-starved government can cut its costs merely by holding back funds for long periods. Power stations, defence plants and other enterprises which owe billions of roubles to the coal mines have resorted to the same tactic. Nor are matters helped by the absence of any effective state institution for recovering debts.

But the miners are also the victims of a more basic Russian phenomenon: theft and corruption. There is little doubt that a proportion of the government funds sent out to pay them has disappeared into the pockets of bureaucrats on the way. Significantly, some of those lobbying for the outdated and uneconomic coal industry to be overhauled are demanding that Rosugol, the state-run coal monopoly, is stripped of its power to handle government subsidies. "Clearly there is a lack of control over money that is handled out to Rosugol," one Western economist said.

For the miners, the knowledge that their wage packets have been stolen is yet another addition to a long list of grievances. Although they earn an average of about pounds 130 a month, well above the national norm, safety, health and general working conditions are dismal. However, miners do not usually go hungry. When unpaid, they fall back on a strong extended family structure as well as supplies that they, like almost every Russian, have amassed from farming their allotments, and money earned in the country's massive black economy.

Yesterday the government was working to solve the strike, which has shut down 80 per cent of Russia's mines, stretching across several time zones from western Russia to the Far East. The administration, which claims to have paid all its debts to the miners - and is, at times, posing as a champion of their cause - dispatched its new economics minister, Vladimir Kadannikov, for negotiations with union leaders. In discussions which one labour leader described as "rich in context and useful", he offered to produce settlement terms next week.

The betting in Moscow is that the government will settle its differences with the miners soon, before the mid-winter power cuts that some predict. But the worries of either party will not end there. The miners know that, if it is re-elected in June, the Yeltsin government is bent on closing down 140 of Russia's 240 mines, many of which are Stalin-era relics and reflect the utter disregard for profit of a centrally-planned economy.

The Kremlin knows that if other sections of Russia's restless workforce start clamouring for their money - teachers in 53 regions are already on strike - it may have to cough up. This would risk a return to runaway inflation and could jeopardise a crucial $9bn (pounds 5.8bn) loan under negotiation with the International Monetary Fund.