Prepared by Lisa Holtyn, CNS Graduate Research Assistant
Edited by Laurel Nolen
January 1998
 

INTRODUCTION

On 3 July 1997, workers from the Smolensk Nuclear Power Plant (NPP), later joined by colleagues from the Kalinin, Leningrad, Kola, Kursk, Novovoronezh, Balakovo NPPs and various scientific research institutes,[1,2,3] began a protest march from Desnogorsk to Moscow which culminated on 18 July 1997 with executive-level intervention into an industry-wide pay crisis. The march was organized by Vyacheslav Vorobev, chairman of the Smolensk NPP workers' union.[4]   In all, as many as 300 workers participated, although only 30-70 marched at any given time, as tired marchers were replaced by their colleagues at various intervals[5] along the 360km (216 mile) route.  Workers marched only in their free time, thus, operations at the plant were unaffected.[6]  In support of the march, more than R5.3 million (approximately $900)*was collected by the residents of Desnogorsk.[7]  The issues at hand were four months in back wages (R27 billion--nearly $4.7 million) owed to Smolensk workers,[8] and dangerous working conditions primarily due to lack of funds for routine maintenance and repairs.[1]  According to one source, as of 10 July 1997, Russian nuclear power plant workers were owed R250 billion ($43 million) in back pay.[9]  However, according to the Moscow Trade Union Federation, as of 16 July 1997, back wages were estimated at R147 billion ($25.4 million).[10]  Concurrently, as a show of solidarity, 16 workers at the Smolensk station participated in a hunger strike.[9]

BACKGROUND ON PROTESTS

This incident, which gained the attention of the entire nation, was the latest and most provocative in an ongoing series of protest actions at the Smolensk power station, which date back to the summer of 1994.  At that time, angry workers who had not received their wages demolished a tent city near the NPP.[11]  After a series of meetings between the administration and representatives from the labor union failed to bring about a solution to the pay problems, on 21 October 1996, both Smolensk and Kalinin NPP workers each separately held a one hour strike, during which time all operations, except those required to maintain minimum safety levels, were suspended. [12, see also the 10/21/96 Smolensk NPP database entry.]  Although Russian law forbids strikes at nuclear power plants, and charges against the strikers were subsequently filed at the prosecutor's office, a division of repair workers from the Smolensk NPP again went on strike on 1 March 1997 over nine months' unpaid wages.[See the 10/21/96 and 3/1/97 Smolensk NPP database entries.]  Workers from all nine of Russia's NPPs have staged joint protests over the past few years, including the first strike at a Russian NPP in history at the Bilibino NPP in August 1996[12] and  hunger strikes at the Leningrad NPP in November of 1996 and on 20 March 1997.[13, see also the 11/29/96 Leningrad NPP database entry.    For more detailed information on protest actions, please see the entries in the Developments subsections of the Bilibino and Leningrad NPPs, and the Nuclear Power Developments section.]  Repeated promises by both local and federal governmental officials to ameliorate the wage arrears have been broken, leading to the unprecedented protest march to the capital.[14]

In addition to the ongoing problem of non-payment of wages, Smolensk NPP workers cited a number of safety issues which they said were actually their number one priority.[1,2,5]   One engineer at the plant stated that because of the chronic shortage of funds, the plant management was unable to replace several broken water meters or make other routine repairs, and the plant often had to operate at reduced power because it was unable to pay for adequate amounts of uranium fuel to keep the plant operating at full capacity.[15]  Of the three reactors at the plant, only reactor number one was operating at the time of  the march, at reduced capacity.[8]  Shortages of fuel and money to make repairs have also been an ongoing problem at the other NPPs.  (For further information on the operational status of Smolensk NPP, see the Smolensk NPP and Nuclear Power Developments sections.)
 

SOURCE OF THE DEBT

The problem of non-payment of funds to NPPs dates back to 1992, immediately following the collapse of the Soviet Union. At that time, the energy sector was reorganized, and the Russian Federation Ministry of Atomic Energy (Minatom) was established.  Rosenergoatom was created as a part of Minatom's 27th directorate to oversee the operation and construction of nuclear power plants.  It comprises various organizations and enterprises, and is a state-run association with full departmental status.   Although power production falls under Rosenergoatom's jurisdiction, power transmission is actually the responsibility of the Russian Joint Stock Company (RAO) Unified Energy System of Russia (YeES Rossii), which owns all Russian electric power lines and thereby has a monopoly on all sales of electric power, both domestically and abroad.[16]  YeES Rossii acts as a middleman for electricity sales, on behalf of both nuclear and non-nuclear power producers.[17]  All NPPs are obliged to sell the power that they generate through YeES Rossii, therefore they do not receive payments for their production directly from the customer.  YeES Rossii, as the sole buyer of wholesale electricity, pays the NPPs (through Rosenergoatom) for the power they generate, and in turn sells directly to the consumer at a markup.[16,17]  YeES Rossii is partially privatized; 51% is still state-owned, under the control of Goskomimushchestvo (the State Committee for the Management of State Property).  The government issued a 1996 decree appointing the Minister of Fuel and Energy as the state representative for YeES Rossii on behalf of Goskomimushchestvo; nonetheless, Goskomimushchestvo has apparently proved ineffective in its ability to manage the company, even though it holds a majority interest.[17]

The root of the non-payment problem is the debt incurred by consumers (primarily enterprises) of electric power and heating.[14,18] As of July 1997, the total amount owed YeES was more than R100 trillion ($17.3 billion), and of that amount, R5.2 trillion ($899 million) was for power produced by NPPs.[18]   In 1996, NPPs received only 64 percent of the amount they were owed for energy produced.[17]   In addition to outstanding debts, the other factor contributing to the non-payment of wages to NPP workers is the means of payment for energy consumed.  YeES Rossii receives less than 15 percent of payments from  consumers in the form of cash; the rest is in the form of barter payments, reciprocal crediting, promissory notes, and other surrogates.  However, YeES Rossii only pays cash for less than two percent of its debts to NPPs, which is insufficient for wage outlays. Workers' salaries account for between seven and eight percent of all energy sales, thus, at least that much in cash is necessary from YeES Rossii just to pay monthly wages.[19]  Igor Fomichev, chairman of the nuclear energy workers' union, estimates that at least eight percent of income from energy sales in cash is needed for the plants to function normally.[20]  This figure does not even take into account funds needed for maintenance, repair, and purchases of fuel to power the reactors.

In addition to the above-mentioned issues of non-payment by energy consumers and payments in surrogates, another major contributing factor to the lack of funds at NPPs is the debt owed by the government itself.  According to Viktor Mikhailov, Minister of Atomic Energy, Minatom was owed approximately 2 trillion rubles ($346 million) as of July 1997[5], and had received only 30 percent of state funds allocated to it in the federal budget for the first half of the year.[20]   The NPPs are simultaneously in debt to the federal government, not only for fuel supplies, but also for back taxes, and pension and insurance fund arrears.[21,22]  According to a report published in Kommersant in May 1997, the State Tax Service declared its intent to bankrupt its largest debtors and published a list which included YeES Rossii, Rosenergoatom, Kursk NPP, and Leningrad NPP.[22]  Viktor Mikhailov, in discussing the situation at the Smolensk NPP, commented that their balance was in theory positive, as, although they owed R1.3 trillion ($225 million), they in turn were owed R1.5 trillion ($259 million.)[5]  In September 1996, a spokesperson for Rosenergoatom said that everyone realized the absurdity a situation in which the government owed large sums of money to the very same organizations who owed them, and yet no definitive solution for the non-payments problem could be found.[21]

PAST EFFORTS TO AMELIORATE THE DEBT

In response to earlier protest actions, the federal government made several attempts in the past to find a solution to the ongoing problems of wage arrears.  In July 1996, Boris Yeltsin signed Presidential Edict No. 1012 "On Guarantees of the Safe and Stable Functioning of the Nuclear Power Industry in the Russian Federation," which directed RAO YeES Rossii to immediately settle its back debts with the NPPs.  The edict also requested the government to approve the basic principles of a federal wholesale energy market which would include a mechanism to allow for direct payment to NPPs by large consumers, and also, regarding smaller consumers, force YeES Rossii to pay NPPs a minimum of 10 percent of its earnings in cash for the electricity they generated.   The deadline for carrying out the edict was December 1996, but it was never fufilled, as procedures for establishing direct accounts between consumers and NPPs were not defined.[17,21]  Regarding the back pay owed to NPPs at that time, RAO YeES transferred only R18.6 ($3.2 million) of the scheduled R82.1 billion ($14.2 million.)[21]
 
Some NPPs, in an effort to get around dealing directly with YeES, switched to dealing with the regional daughter structures of the YeES Rossii enterprise--the regional energy joint stock companies--in the hope that they would have better success at receiving payments in cash.[17]  This did not alleviate the problem, however, and in fact, the power systems of Bryansk, Nizhniy Novgorod, Tula, Vologda and Arkhangelsk regions have become some of the biggest offenders, owing R1.6 trillion ($276.6 million) to the Smolensk NPP alone.[14,18,23]
 

OFFICIAL REACTION TO THE MARCH

At the outset of the march, the initial response of Viktor Mikhailov to the demonstrators was highly critical.  Although he validated the workers' complaints about the non-payment problem, he downplayed the extent and severity of the crisis, stating that his department would not "encourage these egotists by singling them out" over other groups who had not yet been paid. [15,20,24] He also objected to the means of protest that the workers had chosen, and said that he doubted that it would bring about any change in the situation.  Mikhailov argued that since NPP workers earned on average R1,900,000 ($328) per month as opposed to the national average of R660,000 ($114) per month, the NPPs could easily survive the wage delays.[15,20,25]  He and other officials at Minatom also said that salaries were delayed to workers on average only two months[2,24,25] (as opposed to the five to six month delays that workers and trade union officials cited),[1,26] and that although they did not receive their full pay, they were constantly receiving partial wages of some type. [2,24,25]

Other government figures were equally critical and unsupportive of the actions of the protesters.  Deputy Prime Minister Vladimir Bulgak gave the same argument as Mikhailov: since atomic energy workers received such a high salary in comparison with the average wage in the Smolensk region, their situation was really not that critical.[25]  In addition, Yuriy Vishnevskiy, chief of the Russian Federation Inspectorate for Nuclear and Radiation Safety (Gosatomnadzor) commented in an interview with Nezavisimaya gazeta on the high salaries of the NPP workers, and said that contrary to the claims of the protesters,"there were no hungry people" in the NPPs, and therefore, the pay crisis posed no real threat to the safety of the plants.  He stated that the situation was overdramatized, and that one need only look in the parking lot outside the entrance to any NPP to gauge the relative wealth of the workers.[2]

The marchers reached the capitol on 16 July 1997.  In addition to the increasing shows of support by colleagues within the nuclear industry, the march was being given increasing media attention.  Marchers picketed the White House and refused to leave until they met with First Deputy Prime Minister and then Minister of Fuel and Energy Boris Nemtsov, because of his capacity as state representative to YeES Rossii; or at least an official at the level of Deputy Prime Minister.[27]  The increasing negative publicity quickly spurred the Yeltsin administration to take action to quell the unrest.[19,20]  On 16 July 1997, as protesters waited, a conference on the issue of payment of wages to the NPP workers was organized in the office of Deputy Prime Minister Bulgak.  Representatives from Minatom, Mintopenergo, and YeES Rossii took part in the discussions.   Minatom was represented by Viktor Mikhailov, General Director of Rosenergoatom Yevgeniy Ignatenko, and Chairman of the Central Commitee of the Nuclear Power Plant Workers' Union Igor Fomichev.  Mintopenergo was represented by Deputy Minister Viktor Kudryavyy and Chief of the Federal Wholesale Electric Power Accounting Center Vladimir Dorofeyev.[19]

The outcome of the conference was the signing of a protocol on payment of wages to the power plant workers.  However, according to an August report by Kommersant, a power struggle ensued among the three factions before an agreement was reached.  Minatom officials demanded immediate payment of all back debt from YeES Rossii and a mandate that YeES Rossii henceforth pay NPPs the same percentage in cash (10-14 percent) which it received from its customers.  Mintopenergo officials defended the fact that YeES Rossii paid the NPPs a lower percentage in cash on the basis that YeES was required to pay taxes in addition to wages, and also criticized the usefulness of Rosenergoatom, which they claimed was concealing up to one quarter of all proceeds from nuclear power plant sales.  Mintopenergo officials went as far as recommending the complete elimination of Rosenergoatom and the transfer of all NPPs to their jurisdiction, although the official proposal which they brought to the conference only called for a significant reduction in the functions of Rosenergoatom and curtailment of its share of proceeds from electricity sales.  Nemtsov had long advocated this idea, as it would have greatly increased his sphere of influence, however Bulgak was opposed to the idea of transferring the NPPs, which were under his jurisdiction.  After many hours of heated debate, the representatives of Mintopenergo agreed to sign a protocol which only addressed the issue of payments and did not include a reduction in the functions of Rosenergoatom.[19]                  

On 17 July 1997, President Yeltsin summoned Mikhailov to his vacation retreat in Karelia  to discuss the situation.  According to some sources, Yeltsin was highly displeased with the remarks that Mikhailov had made regarding the plight of the nuclear power workers,[20,28] and ordered an immediate resolution to the pay crisis.[3,18,20,23]  Mikhailov was instructed to pay all back wages to the Smolensk NPP workers by 10 August 1997 and back wages to the other NPPs by 10 October 1997.  However, according to the Kommersant report, which cited sources close to Minatom, Mikhailov was able to use the visit to reaffirm the position of Minatom as head of the nuclear power complex.[19]

Nemtsov was extremely unhappy with the renewed presidential support of Minatom as well as the outcome of the protocol, which had not given his ministry the scope of influence which he desired.  While Mikhailov was meeting with the president, Nemtsov decided to appeal directly to the demonstrators outside the White House in an effort to garner more personal support and influence.[19]  Nemtsov said that he had personally spoken by telephone with Boris Yeltsin, who had said that he and the government had taken the issue of non-payment of wages to the NPP workers under their personal control. [3] He announced that all NPP workers would be paid all back wages by the end of the year, and invited 12 representatives of the workers, headed by Vladimir Kashkin, deputy chairman of the central committee of the Nuclear Workers Trade Union, to his office in order to work out the details of the protocol.  During the meeting, Nemtsov attempted to persuade the NPP representatives of the inutility of Rosenergoatom, but failed to win their support on the issue.  However, the workers, who were dissatisfied with the protocol due to its lack of specificity, did succeed in getting Nemtsov's official support and personal guarantee on a firm schedule for repayments to each NPP.  They requested that he sign an official directive stating exactly when and how much money each plant would receive as a supplement to the protocol.  Nemtsov was reluctant to break the chain of command by acting unilaterally, as Deputy Prime Minister Bulgak, who had signed the protocol, was directly subordinate to Prime Minister Chernomyrdin.  Not wanting to lose the confidence of the NPP workers however, he signed a payments schedule for July after first obtaining a directive from Chernomyrdin commisioning him to ensure implementation of the protocol.[19]
 

OUTCOME OF THE PROTOCOL

The protocol called for R123.5 billion ($21.3 million) to be paid NPPs in July and again in August 1997, with an increase to R300 billion ($51.9 million) per month beginning in September 1997.[14,19,20,29]  Additionally, an immediate payment order of R24.8 billion ($4.3 million) to liquidate back wages to the Smolensk NPP workers was drafted and given to the protesters on 17 July 1997. [19,20,23,28]   According to Smolensk NPP labor union leader Vyacheslav Vorobev, Boris Nemtsov also pledged to make the Smolensk NPP a direct electricity supplier, allowing it to bypass its intermediaries.[28]  Additionally, a decision was made to transfer $1 million per month to Rosenergoatom from hard currency proceeds of electricity exports to Finland.[30]

Although the terms of the protocol and receipt of the payment order by Smolensk workers satisfied the immediate demands of the protesters and brought an end to the demonstration, the government has since had difficulty in meeting its obligations to the NPPs.  Sources from Minatom considered the repayment plan unrealistic and unenforcable, especially given the fact that the Ministry of Fuel and Energy has no real power to force delinquent customers or YeES Rossii to settle their accounts.[19,31]  The August Kommersant report stated that in order to pay the promised R123.5 billion for July, Nemtsov was forced to transfer R14 billion ($2.4 million) from current accounts and R23 billion ($4 million) from the insurance funds of the Ministry of Fuel and Energy, which completely exhausted all of its reserves.[19]

Since the demonstration ended, there have been conflicting reports as to the amount still owed by the government, YeES Rossii, and its regional daughter structures to the NPPs.  According to a Nezavisimaya gazeta report at the end of July, NPPs had received only R83 billion ($14.3 million), or 67.2 percent of the R123.5 billion ($21.3 million) owed them by the regional structures of YeES Rossii.[31]  A September 1997 report in Nuclear Engineering International stated that, according to officials from YeES Rossii, payments to the NPPs were made in accordance with the protocol, yet regional authorities still owed many times the amount already paid.[30]  Regarding the financial situation at the Smolensk NPP, reports at the end of August 1997 stated that workers had only received 20 percent of their July salaries, that the federal government had not paid R14.8 billion ($2.6 million) for salary arrears,[32] and that less than one percent of the payments received for energy produced in August was in the form of cash.[33]  As of October 1997, debt to the Smolensk NPP had almost reached R1.6 trillion ($276.6 million), and workers had only received full wages for August.[34]  Also, the station had continued to operate below full capacity because of lack of cash for repairs and fuel.  In spite of the continuing non-payment problem, the Smolensk NPP workers had no plans for another protest.[32,33,34]

*All of the above currency conversions are approximate amounts, and are based upon the exchange rate from 17 July 1997, which was R5785.24 per US dollar. 

Sources: 

[1] Andrey Kamakin, "Kolonna atomshchikov podoshla k stolitse," Nezavisimaya gazeta, 15 July 1997. 

[2] Andrey Kamakin, "Vozmushchennye atomshchiki doshli do Moskvy," Nezavisimaya gazeta, 17 July 1997. 

[3] Valeriya Sycheva, "It Is Not Our Method But One Must Pay," Segodnya, 18 July 1997, p. 3; in "Government To Meet Demands of AES Workers," FBIS-SOV-97-218, 6 August 1997. 

[4] Vladimir Andreyev, "Atomshchiki priblizhayutsya k Moskve," Pravda, 9 July 1997, p. 2. 

[5] "Atomnyy vzryv v Moskve. Sotsialnyy," Vek no.26, 18 July 1997, p. 3. 

[6] Oleg Artyushin, ITAR-TASS, 6 July 1997; in "Smolensk Nuclear Workers Continue Protest March to Moscow," FBIS-SOV-97-187, 6 July 1997. 

[7] Vladimir Korolev, "Zhiteli Desnogorska okazivayut finansovuyu poderzhku rabotnikam Smolenskoy AES - uchastnikam marsha na Moskvu," RIA Novosti, 16 July 1997. 

[8] ITAR-TASS, 4 July 1997; in "Smolensk Nuclear Plant Workers Continue March on Moscow," FBIS-SOV-97-185, 4 July 1997. 

[9] "Nuclear Energy Workers Continuing March to Moscow Over Back Pay," Interfax, 10 July 1997. 

[10] Floriana Fossato, "Protest Marches Converge on Moscow," RFE/RL, 16 July 1997. 

[11] Aleksandr Makarov, "Atomnyj marsh protesta," Yadernaya bezopasnost, July 1997, pp. 1-2. 

[12] Andrey Kirillov, "Nuclear Industry Workers Have Also Encountered a Threat to Life," Rossiyskaya gazeta, 23 October 1996, pp.1-3.; in "Official Interviewed on Strikes in Nuclear Power Sector," FBIS-SOV-96-207, 23 October 1996. 

[13] M. Kondratkova, "Profsoyuz atomshchikov prinyal uchastiye v aktsii protesta FNPR 27 marta," Atompressa, no. 12 (248), March 1997. 

[14] Pavel Kuznetsov and Tatyana Markelova, ITAR-TASS, 17 July 1997; in "Smolensk Picketeers Seek to Meet Officials," FBIS-SOV-97-198, 17 July 1997. 

[15] Inga Saffron, "In Russia, Nuclear Workers are Putting Their Foot Down," Philadelphia Inquirer, 17 July 1997. 

[16] Judith Perera, The Nuclear Industry in the Former Soviet Union: Transition From Crisis to Opportunity, vol. 1  (London: Financial Times Energy Publishing,1997), pp. 35-42. 

[17] Vladimir Kucherenko, "Situatsiya v energetike: Nervy natyanuty, kak provoda," Rossiyskaya gazeta, 14 January 1997. 

[18] Mikhail Andreyev, "Na rynke elektroenergii slozhilas tyazhelaya situatsiya," Krasnaya zvezda, 18 July 1997, p. 1. 

[19] Aleksandr Malyutin, "Mirnyy atom pod Vitse-premerskim kreslom," Kommersant, 29 July 1997, pp. 30-33. 

[20] Renfrey Clark, "Russian Nuclear Workers March on Moscow," X-USSR Antinuclear Campaign Newsletter, no. 6, June-July 1997. 

[21] Ann MacLachlan, "Russian Plant Workers Talk Strike as Government Fails to Pay Debts," Nucleonics Week, 3 October 1996, pp. 7-8. 

[22] Vladimir Stupin, "The State Tax Service Will Give Tax Evaders Their Last Debt," Kommersant, 25 May 1997, pp. 52-55; in "Strategy for Tax, Pension Arrears Seen," FBIS-SOV-97-084, 25 May 1997. 

[23] RIA-Novosti, 17 July 1997; in "Official on Plans to Pay Nuclear Power Workers' Wages," FBIS-SOV-97-198, 17 July 1997. 

[24] Aleksandr Milkus, "Atomnye strasti u sten Moskvy," Komsomolskaya Pravda, 17 July 1997. 

[25] Mayak Radio Network, 14 July 1997; in "Deputy Premier Unsympathetic to Marching Nuclear Workers," FBIS-SOV-97-195, 14 July 1997. 

[26] Andrey Malosolov, "Aktsiya protesta rossiyskikh atomshchikov dolzhna zastavit pravitelstvo peresmotret svoye otnoshenie k atomnoy promyshlennosti i deyatelnosti RAO YeES, polagayut v profsoyuze," RIA Novosti, 16 July 1997. 

[27] Oleg Lebedev, "Nuclear Power Plants Workers Marching to Moscow Want to Meet with Russia's Prime Minister, Better With Nemtsov," RIA Novosti, 15 July 1997. 

[28] Vladimir Korolev, RIA Novosti, 17 July 1997; in "Yeltsin, Nemtsov Act on Smolensk Nuclear Power Station," FBIS-SOV-97-198, 17 July 1997. 

[29] "Reshat problemy soobshcha," Rossiyskaya gazeta, 18 July 1997, p. 2. 

[30] "Wage Arrears Issue Resolved for Moment," Nuclear Engineering International, September 1997, p. 8. 

[31] Andrey Kamakin, "S atomshchikami vryad li uspeyut rasschitatsya vovremya," Nezavisimaya gazeta, 31 July 1997. 

[32] Oleg Artyushin, ITAR-TASS, 28 August 1997; in "Smolensk Nuclear Power Plant on 'Verge' of 'Economic Crisis,'" FBIS-SOV-97-240, 28 August 1997. 

[33] Viktor Artemenko, "Smolenskuyu AES dushat dolzhniki," Pravda, 23 August 1997, p. 1. 

[34] Oleg Artyushin, ITAR-TASS, 16 October 1997; in "Smolensk Nuclear Power Plant Resumes Operations After Repairs," FBIS-SOV-97-289, 16 October 1997.
 

 

Comments or questions? E-mail Cristina Chuen at MIIS CNS: Cristina.ChuenATmiis.edu

This material is produced independently for NTI by the Center for Nonproliferation Studies at the Monterey Institute of International Studies and does not necessarily reflect the opinions of and has not been independently verified by NTI or its directors, officers, employees, agents. Copyright © 2002 by MIIS.

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