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Cablegate: Artyakov's Avtovaz Polices Shaped Popular Opinion of New

DE RUEHMO #4710/01 2681350
R 251350Z SEP 07




E.O. 12958: N/A
SUBJECT: Artyakov's Avtovaz Polices Shaped Popular Opinion of New
Samara Governor


MOSCOW 00004710 001.2 OF 002

1. (SBU) SUMMARY: Popular opinion toward the newly appointed
governor of Samara, Vladimir Artyakov, is likely to be shaped by
perceptions of his policies while serving as general director of the
region's largest industrial enterprise, Russian auto-manufacturer
Avtovaz. Artyakov fought to strengthen the company in the face of
increased competition, but his decisions soured relations with many
employees. The more than 100,000 workers at Avtovaz have the
potential to significantly impact the region's new political
atmosphere with Artyakov as governor. Our discussions with
journalists, regional political observers, and party leaders in
Samara suggested that the ways in which Artyakov and his management
team worked to reform Avtovaz, including a decision last spring to
end "social welfare" payments to company employees, created a
negative attitude toward Artyakov and what the locals see as his
"Moscow" team. Other actors in the region are looking for ways to
exploit that dissatisfaction for political gain, potentially
complicating Artyakov's ability to achieve his goals as governor,
including increasing the fortunes of the Kremlin-backed "United
Russia" party in the December 2 Duma elections. END SUMMARY

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Problems at Avtovaz

2. (SBU) Artyakov assumed the position of chairman of the board at
Avtovaz in December 2005, after the company was purchased by
Rosobornoneksport (the state-controlled military/industrial holding
company). The company has faced increasing competition from
imported and domestically-produced foreign vehicles and according to
Vedemosti (a Wall Street Journal affiliate), total vehicle sales
fell 15% in the first half of 2007. Workers claimed the United
Russia party, of which Artyakov is a member, promised wage increases
during local elections earlier this year. Acting on these events, a
small number of workers at the main plant in Togliatti held a strike
on August 1 and demanded the company triple minimum wages to $1000
per month. Estimates conflict on how many workers participated in
the several-hour strike, ranging from 150-1,000 workers. Because
only a small number of people stopped working, Avtovaz management
did not recognize it as an official strike.

3. (SBU) In rejecting the strikers' demands, Artyakov's team
maintained that average wages were already the highest in the sector
and tripling them would drive up vehicle prices, making the company
even less competitive, and would force the plant to close. They
also claimed that the strike was an attempt to destabilize the plant
during a period of corporate restructuring, playing up to those who
didn't support the new reforms (a reduction of the work force by
1.5% to increase efficiency). The United Russia party admitted it
pledged to raise wages, but over a five-year period and claimed to
not have made any specific promises to Avtovaz workers. Some press
reports link the strike to "Yedinstvo" ("Unity"), a small,
unofficial, independent trade union representing fewer than 1,000
out of the 110,000 total workers, although other interlocutors
report that the strike was an "independent" action by disgruntled
workers. (AvtoVAZ has an official, larger trade union, representing
approximately 100,000 workers that did not support Yedinstvo's
strike. The official union insisted that wage negotiations with
management were ongoing. Nikolay Karagin, the official union's
leader, warned Yedinstvo members that if they didn't follow the
proper procedures under Russia's Labor Code, strikers could be

Fodder for Regional Politics

4. (SBU) Avtovaz management and a number of observers claim the
strike was not about economics, but was rather a political
manipulation during a local pre-election struggle. The director of
Samara's "Just Russian" campaign Mikhail Sychev dismissed the strike
as an effort by unspecified political parties (not SR, one assumes)
to create a disturbance in the run-up to Duma elections. He
characterized the pay issue as a long standing problem between the
workforce and management and argued that the strike coincided with
the peak of discord in a cyclical pattern of dynamic relations. He
claimed that most of the workforce realized the strike had been a
"mistake" and a non-constructive method for expressing grievances.
Sychev underscored that the "Yedinstvo" union did not participate in
the strike and asserted that his party organization had "good,
constructive relations" with the independent union's leadership.

5. (SBU) Sychev may have been disingenuous, at least about the role
that SR played in encouraging the strike. Speculation in the
national press suggests that Sychev's SR has the most to gain from
promoting unrest at Avtovaz. Powerful local businessmen affiliated

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with SR, including Vitaliy Ilyin (the head of the Samara city duma,
connected to the largest distributor of Avtovaz spare parts, the SOK
group) who had lost out from Artyakov's new polices may have been
seeking some retribution.

6. (SBU) The strike provided an opportunity for other political
actors to win points with worker-voters by demonstrating solidarity
with the workers against management. A rally in Togliatti on August
11 by the Liberal Democratic Party of Russia (LDPR), ostensibly in
support of the strikers, again demonstrated the political
opportunism and clever populist instincts of the party's leader,
Vladimir Zhirinovskiy. Further, the head of the "Yedinstvo" union
Petr Zolotarev announced in August that he had plans to start his
own party and potentially run for mayor. Both of those events
deepened suspicions that the strike served the interests of a range
of political forces.

Regional Observers See Political Fallout

7. (SBU) The chief editor of the regional edition of Novaya Gazeta,
Sergey Kurt-Adzhiev, claimed that the way in which the Avtovaz
management team made and implemented decisions undermined popular
attitudes and would likely shape perceptions of Artyakov as
governor. Whereas the previous management of Avtovaz had largely
comprised local businessmen, most of whom were essentially "Red
Managers" from the Soviet period, the new Artyakov team had been
primary Moscow-based and distant from Samara society, according to
Kurt-Adzhiev. He said that the locals had jokingly termed the new
managers "desiantniki" (Russian term for paratroopers) because they
flew to Samara on Monday for work and then jetted back to Moscow
when the week had ended.

8. (SBU) Ekho Moskvy's Tatyana Prokopavichene said that the decision
to cut a host of "social support" financing that the factory had
traditionally supplied the workforce -- money for schools, special
medical units, housing subsidies, and other non-salary benefits --
had created the perception that Artyakov and his team did not care
about the workers' interests. According to Prokopavichene, the loss
of subsidies was a substantial blow to the living standards of the
Avtovaz work force, particularly since the municipal government was
unable (or unwilling) to help make up the difference. She said that
Mayor Nikolay Utkin of Togliatti spoke out against the decision,
saying that it was "not right" that the company simply abandoned its
responsibilities. Kurt-Adzhiev opined that the decision to suspend
the subsidies was particularly galling to many in Togliatti, because
Artyakov and others from Avtovaz/Rosoboroneksport only recently had
been elected to the oblast duma on a platform that the workers
believed had promised increases in pensions and worker salaries.

9. (SBU) The way in which the Avtovaz management dealt with the
August strike also negatively affected popular perceptions of
Artyakov and his leadership team in the governor's office, according
to our Samara contacts. Ivan Mironov, then the Avtovaz vice
president and security director, was the only member of senior
management to address the striking workers. "Yedinstvo" activist
Anton Vichkunin said that Mironov promised that he would arrange a
meeting between the workers and Artyakov and assured the strikers
that none would suffer negative consequences if they ended their
protest, according Vedemosti. However, none of those promises were
kept. Kurt-Adzhiev and Prokopavichene claimed that about half of the
workers involved in the unsanctioned strike had lost their jobs,
with many of the remaining strikers under indictment for
"extremism." Lydumila Kuzmina of the NGO "Golos" reported that some
of the strike participants have faced police harassment. They claim
that the rest of the workforce now is cowed and afraid, certain that
a new round of layoffs is imminent. However, union officials in
Moscow do not share the same concerns as our Samara interlocutors
and claim that they have not heard of any firings or harassment.

10. (SBU) COMMENT: Artyakov's history as Avtovaz chief will likely
complicate his ability to achieve what many see as his primary
purpose: serving as a regional "locomotive" to bolster the United
Russia's standing in the December 2 Duma elections. (According to
polling by the Fund for Societal Opinion, support for United Russia
is comparatively low, at 31 percent in Samara Oblast.) Putin's
decision to appoint Artyakov as governor likely resulted from
broader political calculations related to upcoming elections and the
Kremlin's agenda of breaking the power of regional elites, (REFTEL)
but seems to mesh poorly with popular attitudes within Samara
oblast. END COMMENT.

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