Chechnya: Economic Policy Under Scrutiny

Local politicians in Chechnya say a planned Russian government cash infusion next year will do little to revive the war-torn republic's fortunes.

Moscow plans to allocate around 120 million US dollars in 2004 to help restore the Chechen economy. Russia's deputy minister for economic development and trade, Mukhamed Tsikanov, said at the end of October that priority investment targets would be oil industry, construction and food production companies damaged during the conflict.

Rashid Yunusov, head of the analytical department of the Chechen finance ministry, told IWPR this would go some way to reviving a number of moribund factories, but warned that they might struggle as Russian firms had cornered many of the domestic markets.

Chechnya once had a myriad of enterprises and there's still a pool of skilled workers keen to get back to work - but with the economy in tatters they lead a hand-to-mouth existence.

"In Soviet times Chechnya was primarily an industrial republic - at the moment, though, the priority is entirely on agriculture," said Musa Doshukayev, Chechnya's minister for industry, transport and communication until a recent government reshuffle.

Conflict has destroyed much the country's industrial and commercial infrastructure. However, in the last three years there has been a modest recovery, with 13 new businesses now up and running, employing more than 300 workers and producing a variety of products, from tractor trailers to slippers.

But these companies face many difficulties and get little help from the local authorities.

A number, for instance, have their bases in Russia and therefore suffer logistical problems.

One of the new enterprises, a sewing factory, employs 100 staff, though its head of production Zaindi Dulayev, says it's stymied by its dependence on head office in the southern Russian town of Rostov.

"We do not control our own finances - they are transferred to the head office," he said. "Because of this, our production only brings in around 900,000 rubles - 30,000 US dollars - a month, although it could bring one and a half times as much.

"Accordingly, problems arise with paying our workers. The average wage is 1,800 to 2,200 rubles a month, and this can sometimes be delayed. Sometimes we pay our staff in goods, as we did this month - with sets of bed-clothes worth 1,000 rubles each."

Another problem is the republic's high crime rate. "We are also hindered by the criminal situation. In the period from 2000 to the first half of 2002, we spent more time fighting looters than on economic revival," said Doshukayev.

The former minister complains that the local administration does little to help the Chechen economy get back on its feet, " The heads of local ministries and departments don't wish to arrange orders within the republic, and prefer to buy products in other regions at higher prices."

Given the many obstacles and uncertainties facing those attempting to revive the republic's economic fortunes, one prominent businessman, ex-Chechen presidential candidate and millionaire Malik Saidullayev recently proposed that only war-damaged companies that have a real chance of being competitive should receive investment.

"It makes no economic sense to attempt to restore many industrial enterprises in Grozny which are now in ruins," his election manifesto said. "There are dozens of factories in Russia which have a similar function to the ones here, whose production cannot compete on the market in price or quality."

Timur Aliev is the editor of the newspaper Chechenskoe obshchestvo in Grozny and a frequent IWPR contributor.