Soviet Railways to Russian Railways

Soviet Railways to Russian Railways J. N. Westwood

Studies in Russian and East European History and Society Series Editors: R.W. Davies, E.A. Rees, M.J. Ilie and J.R. Smith at the Centre for Russian and East European Studies, University of Birmingham Recent titles include: Lynne Attwood CREATING THE NEW SOVIET WOMAN John Barber and Mark Harrison (editors) THE SOVIET DEFENCE-INDUSTRY COMPLEX FROM STALIN TO KHRUSHCHEV Vincent Barnett KONDRATIEV AND THE DYNAMICS OF ECONOMIC DEVELOPMENT R.W. Davies SOVIET HISTORY IN THE YELTSIN ERA Linda Edmondson (editor)

GENDER IN RUSSIAN HISTORY AND CULTURE

James Hughes

STALINISM IN A RUSSIAN PROVINCE

Melanie Ilie

WOMEN WORKERS IN THE SOVIET INTERWAR ECONOMY

WOMEN IN THE STALIN ERA (editor)

Peter Kirkow

RUSSIA'S PROVINCES

Maureen Perrie

THE CULT OF IVAN THE TERRIBLE IN STALIN'S RUSSIA

E.A. Rees (editor)

DECISION-MAKING IN THE STALINIST COMMAND ECONOMY

Lennart Samuelson PLANS FOR STALIN'S WAR MACHINE Tukhachevskii and Military-Economic Planning, 1925-1941 Vera Tolz RUSSIAN ACADEMICIANS AND THE REVOLUTION J.N. Westwood SOVIET RAILWAYS TO RUSSIAN RAILWAYS

Studies in Russian and East European History and Society Series Standing Order ISBN 0-333-71239-0 (outside North America only) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of diffculty, write to us at the address below with your name and address, the title of the series and the ISBN quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England

Soviet Railways to Russian Railways J. N. Westwood

Honorary Research Fellow Centre for Russian and East European Studies University of Birmingham

in association with

the Centre for Russian and East European Studies, University of Birmingham

© J.N. Westwood 2002 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identifed as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2002 by PALGRAVE Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE is the new global academic imprint of St. Martin's Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN 0-333-67417-0 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Westwood, J. N. Soviet railways to Russian railways / J. N. Westwood. p. cm

Includes bibliographical references and index.

ISBN 0-333-67417-0

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Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire

Contents Preface

Part I

viii

Restructuring the Old Railway

1

1

The Soviet Legacy The Old Regime The market economy The view from the Ministry An editorial view

3

3

7

12

14

2

New Frontiers Partition The Railway Transport Council Russia loses its ports The freightcar share-out The Extra-territorial Trans-Sib Constructive inertia

18

18

21

25

26

29

30

3

Privatisation First steps The railway repair works Industrial railways The frst private railway A new railway law Defender of the faith Privatisation of railway catering Fadeev's last stand

31

31

34

38

39

41

42

43

47

4

The Zaitsev Interregnum The man Zaitsev as Minister Restructuring the railways The Canadian National model Merging the railways Zaitsev in retreat

50

50

52

54

58

62

66

5

Rethinking Restructuring The new Minister Purge on the October Railway

68

68

70

v

vi

Contentf

New pressures for privatisation The tariff argument The freightcar issue Competing proposals The natural monopolies service proposal The Railway Ministry's concept Finalising the reform

Part II

Operating the New Railway

77

78

80

82

83

84

88

93

6

Freight in the Market Economy Traffc 1995: a key year A New Railway Charter Freight forwarders Marketing Premium freight centres The railway banks The Reffervif failure The mail service competes Intermodal services Cherepovets; plans and realities Container traffc The rolling highway Trans-Sib

95

95

96

97

99

104

105

111

114

118

119

119

121

128

130

7

Passenger Service in the Market Economy Traffc Fares and fare collection Commuter subsidies Cost reduction Commuter services Passenger companies Long-distance passenger services The Passenger Time Book

134

134

135

138

140

141

142

146

149

8

The High-Speed Railway First thoughts The October Railway and the HST High speed, snail's pace The author as primary source

152

152

157

159

162

Contentf

9

Money Problems Ingoings and outgoings Tariffs The debt problem Taxation

vii

166

166

170

185

191

10 Crime and Violence Bribery and fraud Theft Smash and grab 'A real Russian mess' The 'rail war' Accidents Sinking the 'Avrora' Vandalism

196

196

201

207

208

211

213

217

219

11 The New Century Restructuring in retrospect Equipment Infrastructure Labour

221

221

226

228

229

Notef Bibliography Index

232

249

251

Preface

Falling between two stools is seldom accomplished with elegance. This book attempts to interest two distinct readerships - those interested in contemporary Russia and those interested in railways and this is refected in its ungainly structure, which is designed to aid those for whom some parts of the text will have scant interest. For those interested in the frst decade of post-Soviet Russia this book offers a narrative, with comments, about how a major and vital industry weathered the gales generated as the new leaders of governments and new leaders of opinion sought to create a market economy. That the railways in their size and signifcance were exceptional does not necessarily mean that their experience has no relevance to the study of other parts of Russian society and industry. In places, the book implies that the course taken by the railways might have advantageously been taken by other Russian industries and institutions. For those interested in railway development, the Russian railways have always provided a useful subject for international comparisons; they have followed the trends of contemporary technology but at a certain remove, with their own particularities. Soviet Railways showed how far a railway system could be pushed. PostSoviet railways have shown a railway system simultaneously coping with the political disintegration of its territory and the introduction of a completely new social and economic framework. Concurrently, railways the world over have been undergoing their own reappraisals, with debates over privatisation, over separation of infrastructure from operations, over the role of information technology. Here again, Russian railways are responding to the new universal currents, but in their own particular, and therefore instructive, way. Convention dictates that the last paragraph of the Preface should express thanks to those who helped, and absolve them from any defects of the book. In the case of Birmingham University's Centre for Russian and East European Studies, and the library of the St Petersburg Transportation University, this is easily and gladly done, for their members have offered help and hospitality which always seemed a little more than had been hoped for. Likewise, the reader viii

Preface

ix

should be grateful for the efforts of Holland Hunter and Arfon Rees, who have suggested several improvements, both of substance and of syntax. No thanks are due, however, to the distributors of research funds, public and private, for despite an effort which at times approached that put into the book itself, no fnancial aid has been forthcoming. Attribution, rather than absolution, of responsibility for defciencies would therefore seem more appropriate here. �.N. �EST�OOD Bir�ingha�

Part I

Restructuring the Old Railway

This page intentionally left blank

1

The Soviet Legacy

The Old Regime Anybody looking for a promising microcosm to represent Soviet Railways on the threshold of partition could have found it on the Helsinki-Leningrad night train, where the car attendants had vis­ ible holes in their socks as they went about their unoffcial business of supplying teenage girls to male passengers.1 Here, on the one hand, was time­expired equipment giving usable but ineffcient ser­ vice, and on the other a dawning realisation that there was money to be made in user­friendly auxilliary services. User­friendliness and the provision of extras were not at all typi­ cal of Soviet Railways but began to manifest themselves in the fnal years, when new freedoms and the beginnings of a market economy had yet to be overtaken by the dissolution of the USSR. Over the longer term, the Soviet period was characterised not perhaps by neglect of the railways, but by the policy of extracting the greatest possible output at the least possible expense. This in principle was not wrong, but it was carried to extremes that helped neither the railways nor the economy in general. On some lines, intensity of utilisation was such that a delay to one train would have a knock­ on effect on following trains for hundreds of kilometres in the rear. Mainline track was never good enough, in terms of maintenance and rail weight, for the traffc it had to carry, and speed restrictions and derailments were the result. The obsession with ensuring that freightcars were fully utilised meant that their numbers were lim­ ited, so many shippers had to wait days for empty cars. Presiding over these policies of denial was Gosplan, the State Planning Com­ mission, which preferred to allocate available resources to industries 3

4

Soviet Railways to Russian Railways

other than transport. In its way, but on a much grander scale, Gosplan paralleled the US Interstate Commerce Commission, for each of them limited initiative in the name of an ideology that was generally ignorant of transportation realities. For Soviet railway managers at all levels, survival and promotion depended on how well they moved the traffc. The Soviet economy depended on rail transport, and industries' plan fulflment could be threatened by transportation shortcomings. The railways were given their own plans, ranging from the broad outlines of successive fve­ year plans through the more relevant one­year plans to the quarterly and weekly plans of divisions and stations. Provided the plan was fulflled or over­fulflled a manager was more or less safe; labour productivity, effciencies of utilisation, even accident mortality, were only secondary. Proft at various periods was given some import­ ance, but accounting practices were such that the high proft fgures of the railways as a whole and of most of their constituents did not mean very much. However, with claimed freight operating profts around 40 per cent in an average year and passenger profts around 10 per cent, it is reasonable to assume that freight did bring in a genuine proft and that long­distance passenger service might have broken even in the fnal Soviet decades. In almost all their operations the railways had a monopoly, and state­imposed restraint meant that they also had limited resources. They therefore went about their business in the ways one would expect in a sellers' market. They were usually hard­pressed, having too few resources to handle the traffc offered, and they therefore expected clients to conform to operating conveniences. But ship­ pers, too, had their problems. They, too, felt safe when they fulflled their output plans, and everything else was secondary. Thus there was a confict of interest, which could be seen in the clients' tend­ ency to load and unload freightcars at a time that would ft in with their production processes, despite the railways' requirement that freightcars be turned around quickly. Although fnes were levied for excess detention of freightcars (and, conversely, for the railways' late delivery of empties) and despite the occasional intervention of local Communist Party offcials, this confict had continued for decade after decade. Some clients were more powerful than others, and at ministerial level the railways were far from all­powerful. Although in the early decades of Soviet Railways a top Party man might at times of crisis become railways minister, by the end of World War 2 the tsarist

The Soviet Legacy

5

tradition of the railways ministers being drawn from the ranks of career railwaymen had been re­established. Thus, among ministers, the railways minister was one of those who was a technical rather than a political fgure. But whereas at the very top the railways might lack power, the same was not true at local level. In many, probably most, cases local railway managements and their industrial clients cooperated in a we're­all­in­the­same­boat spirit. But there were times and places where failure to communicate and lack of mutual sympathy meant that real but solvable problems were turned into dragging and bit­ ter disputes. Who would get the upper hand in such struggles depended on who could mobilise the support of the local Party offcials or, more generally, who had the most at stake. Poor relationships often existed even when operations went smoothly, and this was almost a cultural problem. At the mundane level, clients, having queued for a ticket, might have the ticket window slammed shut in their face before (and even during) the transaction. A restaurant car might close for its lunchbreak. Similar phenomena, less noticed by the general public, could be heard in negotiations between would­be shippers and railway station staff. When would empties be available? What time must the loaded cars be delivered to the railway? What happens if the shipment is above or below the planned volume? If the discussion became diffcult, the railway offcial might feel suffciently monopolistic to slam down the telephone receiver. The concept of user­friendliness was unknown because it had never been required, although subservience and sycophancy sometimes were. One of the problems of Soviet Railways and its successor after the market economy made itself felt was that a lot of railway offcials had no idea of how to be nice. On the whole, Soviet railway managers were no more conservative than railway managers anywhere. Like the latter, their professionalism was above all based on respect for the rules, since railway operation everywhere depended on rules and closely­observed schedules. Within that limitation, or strength, they were dourly ready for anything. Under the fve­year plans, they had been required to handle large increases of traffc with minimum help from new investment. If this meant acting against their better judgement, so be it. Their's was not to reason why, but to get on with the job. For them, the emergence of a market economy in the late 1980s merely meant a new set of circumstances that might change the nature of the job.

6

Soviet Railways to Russian Railways

This they foresaw, and got on with it. There was a good deal of discussion, but little resistance. Any discomfort they felt centred on the need to enter felds, such as salesmanship, of which they had hitherto had no experience. To make up for the lack of capital investment, managerial initiat­ ive and enthusiastic workforce, the Soviet regime placed considerable faith in exhortation, sloganeering and mass campaigns. In the late Soviet period the Baikal Amur Mainline (BAM) was a signifcant campaign objective not only for transport but for the economy as a whole. This was one of those Great Works of Socialist Construction that absorbed capital and enthusiasm that might have been better devoted elsewhere. Among the specifcally railway campaigns, the Heavyweight Freight Train had been a highly­publicised objective since the 1970s. Its aim was to reduce line congestion as train fre­ quencies under conditions of increasing traffc grew close to maximum line capacity; in other words, to pursue the policy of forcing maxi­ mum capacity from existing track. The head of the Moscow Railway had taken a leading role in this campaign, something which was not always welcomed by his equals; a railway receiving heavyweight trains from a neighbouring railway better placed with regard to loop length and grades often had diffculty in coping. Moreover, there were some safety questions involved. In 1996, for example, the Operating Rules were belatedly modifed to forbid the placing of empty cars at the front of heavyweight trains.2 A somewhat younger campaign was known as the Byelorussian Method (it was frst tried on the Byelorussian Railway). This aimed at increasing labour pro­ ductivity by eliminating some jobs as unnecessary and transferring others, making them additional responsibilities for other workers. The Byelorussian Method did seem to cut labour requirements, but it was already being blamed for various phenomena; like most Soviet­ era campaigns, it was a good idea pushed far too far. It meant that way­stations might no longer be staffed and on the October Rail­ way, for one, it was blamed for the rise in theft of freight.3 By the time Soviet Railways disappeared, the Byelorussian Method was about to lose its relevance, too, for falling traffc would cause manage­ ment to seek justifcations for the retention rather than the shedding of labour. The Soviet railway industry was vertically integrated, although not excessively so, the same situation as obtained in other coun­ tries. But it was also responsible for functions that could have been performed by other ministries. It provided not only professional

The Soviet Legacy

7

training institutes, but also primary and secondary schools for rail­ way families (typically, but not at all exclusively, in remote railway settlements). Like other industrial ministries, it built and adminis­ tered housing (if it had not, it would have had diffculty in keeping its workforce). It also maintained a network of medical and conva­ lescent facilities. It was customary to refer to the transportation function as the 'basic activity', a term which closely parallels the 'operating workers' of other railways (although a few railways might exclude managerial staff from this defnition). In 1990, the Railways Ministry had 3 793 000 workers on its books (a decline of 287 000 since 1985). Of these, 2 626 000 were engaged in the 'basic activity', 208 000 were involved in railway industry, 78 000 in construction, 53 000 in Ministry­operated industrial railways, 48 000 in urban metro systems, 314 000 in trade (including station and train restau­ rants), 211 000 in education and 226 000 in medical/convalescence institutions.4

The market economy For most railway managers, the term market economy had covered a multitude of sins and perhaps a few opportunities. It overlaid a situation that was already diffcult and that was in the course of slow change. Soviet Railways, on the eve of liberalisation, had al­ ready been labouring under diffculties which had accumulated under decades of a planning regime that had skilfully kept the railways on the brink of crisis. Some of the conceptual changes associated with the perestroika period ftted in well with new trends on the railways; others did not. Decentralisation of decision­making, for example, was a con­ cept congenial to those who had long been advocating greater independence for the individual railway (independence, that is, from the Railways Ministry). By the end of Soviet Railways there had already been a substantial move in this direction. The old practice formally survived whereby railways placed their incomes in the Railways Ministry's account and the Ministry then paid back their costs and also provided capital in accordance with its own scheme of priorities. But there were already changes, some subtle, some obvious. A major change was that the Ministry no longer allocated funds for electrifcation; individual railways were to fnd their own capital for such work. The almost immediate reaction to this was a fall in the rate of electrifcation. Railway managements who had

8

Soviet Railways to Russian Railways

constructed strong cases for the electrifcation of one or another route discovered that the projects were not quite so attractive if they had to fnd the money themselves. Railways were soon making agreements with outside organisations, even foreign ones, which previously would only have been poss­ ible, and then unlikely to succeed, by going through Moscow channels. For example, in 1991 the Trans­Baikal Railway sent some of its decrepit diesel locomotives to North Korea in exchange for urgently needed raw materials, a transaction that must have raised some eyebrows because the diesels did not formally belong to that Rail­ way. 5 An extreme case of independence­seeking came in late 1991, when the head of the Ulyanovsk Division of the Kuibyshev Rail­ way put together a scheme for its becoming a private company. He was not the only one to recognise that the division, as an admin­ istrative entity, was redundant; although its head offce duplicated that of the railway, with the same functional hierarchy, it had very little freedom in decision­making and its income went to the rail­ way (and thence to the Ministry). It could do better on its own, he thought, and he had some support among his colleagues. But the transformation would depend on the Railways Ministry and, es­ pecially, the Russian State Property Commission (which would have to approve the transformation of an item of state property into a joint­stock company).6 Increased independence for the railways could be justifed not only in terms of creating opportunity for initiative, but also by the circumstance that there was so much difference between their situ­ ations. The paragraphs that follow describe how just two of the railways, the West Siberian and the Northern, reacted to the new conditions in 1991, the last year of the old Soviet Railways. The two railways faced some common problems, but were very different; such differences were to be seen between other railways as well. The West Siberian Railway, whose Omsk-Novosibirsk main line formed part of the east-west Trans­Siberian but which also had important routes south into the Altai, had the economic advantage (since tariffs were standard throughout the railways) of high inten­ sity of traffc plus below­average terminal costs. It was a 'bridge' railway par excellence, and in 1989 its costs per tonne/km were 40 per cent lower than the network average. It was evidently reacting defensively to current diffculties.7 Its traffc in the frst half of 1991 was down 10 per cent on the same period in 1990, which itself had not been a peak year. Its management seemed to have two

The Soviet Legacy

9

overriding concerns, how to maintain its staff in the face of re­ duced traffc, and how to cope with decrepit track. Despite the traffc fall, the Railway had somehow succeeded in increasing its comple­ ment of locomotive drivers by 1600 individuals. This would have been encouraging in former times, when skilled workers were in short supply, and the Railway was very reluctant to lose any of them. It decided to reduce staff by a number related to the traffc requirements; surplus drivers would be transferred to other work, for example, in construction. When traffc increased, short courses would be organised to enable the workers to return to driving (the rule on Soviet Railways was that if a driver spent three months without working a train, he had to take tests before he could drive again). In the meantime, the Railway would continue to create in­ centives for its workers to stay, rather than to leave railway service in response to the considerably higher pay that could be earned by joining, say, a local cooperative. Such incentives notably included the provision of railway­owned apartments. As always, there was a long waiting list for these, but so long as new ones were in the course of construction many workers would think it worthwhile to wait and therefore remain railwaymen. Providing cheap food for the workers was another consideration and the Railway had passed beyond allotments for food supplies to the acquisition of former state farms. What seems to have been the largest, on the Novosibirsk Division, was of no less than 42 000 hectares. Such efforts to hold on to workers were typical of earlier Soviet times, but in retrospect seem out of tune with conditions of declining traffc and the fnan­ cial problems caused by infation. Equally mystifying, at frst sight at least, was the hiring of 150 Chinese ftters; the explanation was that skilled track workers were needed and the Chinese were very good workers. Other deals with China involved the export of old rails in return for food and footwear. This was about the limit of the Railway's foreign involvement. It had little means of raising foreign currency. Its offcials could only let their mouths water when, at the Novosibirsk Fair celebrating the jubilee of the Trans­Siberian Railway, they viewed German passenger rolling stock and Austrian track machines on exhibition. The Railway badly needed such equip­ ment yet not only did it lack foreign exchange, it was also unable to place the large orders which foreign suppliers required. Old­style centralised purchase by the Railways Ministry, for this Railway at least, still had its attractions, even though the Ministry was always inclined to turn down requests for imported equipment.8

10

Soviet Railways to Russian Railways

As for the West Siberian Railway's track problem, this as else­ where seemed to revolve around the supply of cross­ties (sleepers). Forty per cent of the mileage was suffering from deferred, some­ times long­deferred, maintenance. There were simply not enough sleepers. In 1991 the Railway had done rather well out of the Ministry's centralised supply organisation: the railways as a whole had received 420 000 centrally­supplied sleepers, of which the West Siberian got 120 000. But even this was not enough to eliminate the problem. In general, the West Siberian Railway seemed to be plodding dog­ gedly along, meeting each crisis as best it could but hardly departing from time­worn concepts. But even on this railway, there was the occasional patch of initiative. Its Inskaya station, for example, was the location of one of the frst small enterprises offering extra ser­ vices for a price: it flled out documents for shippers, would locate and re­address freight, and arrange repairs for industrial railways.9 It was one of several harbingers of what would later be called pre­ mium freight centres. However, it was the Northern Railway which later claimed that the frst real prototype of the premium freight centre was its own small operation at Yaroslavl. This started up at the beginning of 1991, consisted of three persons, and was grandly called The Department of External Economic Communications and Contractual Relations. It offered, for agreed payment, services that shippers previously either had to perform for themselves or that were not performed at all. These included the services which soon would be offered by pre­ mium freight centres on other railways: for extra payment (making an 'agreed tariff') clients could have their empty freightcars deliv­ ered by timetable (that is, at times of their own choosing); they could rent station tracks and pieces of station land; they could have their shipments readdressed en route; their traffc plan could be changed and extra empties found if output was above­plan. The centre was soon bringing in a substantial proft, ensured partly by the research its operatives did on the economic and fnancial strengths and weaknesses of potential clients. However, it was not all smooth going. Yaroslavl had a number of big businesses, including a tyre factory, an engine factory and a cable factory. Their managers were unwilling to drop the old practice of telling the Railway's head offce what they wanted, knowing that the Railway would then telephone or telegraph the relevant divisions or stations, peremptorily instructing them what to do. That way of organising

The Soviet Legacy

11

things, with no preliminary economic study, was one of the prac­ tices which the centre was designed to eliminate, but it took time. The services themselves were not novel to the centre, they were offered elsewhere on the Railway (of the 25 types of auxilliary ser­ vice that the Ministry had suggested, 17 were offered by this Railway), but the centre's attraction for shippers was that it was a one­stop facilitator; clients no longer had to trail with briefcases full of docu­ ments from one railway offce to another and then, quite often, back again. The Northern Railway in 1991 was probably worse off than the average railway. Its freight in the frst six months had fallen by 11 per cent and its passengers by 8 per cent. Prime Minister Pavlov's price reform, it claimed, had brought proftability down to a ff­ teenth of its previous level (in fact it was not just the price reform that had this effect but the general outpacing of tariffs by infated input costs). The Railway was mainly a heavy freight carrier; al­ though it carried the Trans­Siberian passenger trains on one of its divisions, its two long lines were to Archangel and Vorkuta. The latter served the Pechora coal basin, which was the Northern Railway's main source of freight. The mines at the time had been on strike for two months; the biggest shipper of timber, Mezen'les, had practi­ cally ceased production, and to make matters worse there were severe blizzards at the northern ends of its two main lines. All in all, therefore, the Railway's loss of freight traffc could have been worse, and it does seem that this was a railway that was struggling hard to cope with the new economic situation. Its Vologda Division had become joint founder of a new bank, which gave it privileged cut­ price banking services and at the same time allowed it to infuence local economic decision­making insofar as the latter depended on bank credit. Certainly the Northern Railway needed all the fnancial expertise it could obtain. It was suffering from non­payment of debts. It blamed in particular the cooperatives (which were controversial at that time). Cooperatives, it claimed, sometimes simply refused to pay up, and it made the point that divisions and stations should not deal with these and other clients without frst examining their solvency. What was especially irritating was that sometimes the Railway had no proof of such debts; this was because its local offcials habitually never bothered to carry out the required documentation and were reluctant to begin mending their ways. Here, again, there was what might be seen as a cultural problem. The decentralisation of initiative

12

Soviet Railways to Russian Railways

and responsibility to the lower units was seen by some as an an­ swer to this kind of situation, but in this connection there was a retrograde all­network move in June, when the fnes collected from shippers for detention and delay of freightcars were henceforth re­ quired to be sent to the division and thence to the railway. This discouraged stationmasters, even more, from demanding these fnes from their local clients. The Railway was meanwhile troubled by the increase in the compensation penalties it had to pay industries for delayed delivery of empties. At a time of falling traffc and hence lower tension and less pressure on the freightcar stock, these fnes might have been expected to diminish. The trouble was that indus­ tries were becoming more market­orientated and were actually claiming what they were entitled to, unlike the situation previously, when the collection of a few hundreds or thousands of roubles of fnes­due was not considered of great importance.

The view from the Ministry On 14 February 1991 the traditional meeting was held in the Rail­ ways Ministry to discuss the previous year's performance and, in this case, performance during the fve­year plan period that had just ended. There were representatives from the Supreme Soviet and Gosplan and, as in the past, a representative from the Party's cen­ tral committee. That times were changing, however, was emphasised by the presence of the chairman of the new (and less deferential) trade union, the Independent Trade Union of Railwaymen and Rail­ way Builders. N.S. Konarev, the Railways Minister who presented the report, was soon to be replaced. His report was plaintive, comparing the encouraging rise of traffc and productivity in the frst years of the Plan with the fall in both that occurred after 1988. At the begin­ ning of his report he blamed 'external' factors for this decline: not only social disturbance and industrial decline but: Destructive forces got into power and directed their main effort to undermining the normal functioning of the Union's transport. Unfortunately, certain managers of railway enterprises for a time also began to forget that general state interests must prevail in our work.10

The Soviet Legacy

13

Konarev evidently was not a happy man. Having accepted that the railways were carrying less traffc because the traffc was not there, he went on to blame railway ineffciencies for preventing the carrying of more traffc. Thus, towards the end of his report he suggested that the 1990 slowing of average freightcar turnaround had thrown away the chance of carrying 60 million tonnes of ex­ tra freight. His formula for a successful 1991 also seemed somewhat removed from reality, with its emphasis on indices that had seemed important in the past but were not necessarily relevant in the rap­ idly changing current economy. The year 1991 would be a successful one, he said, if 4.1 billion tonnes of freight were carried (the gov­ ernment had just specifed 3.93 billion). That 4.1 billion fgure had a nostalgic touch, for it was the tonnage carried in the last good year of 1988; 1990 had registered 3.86 billion. He also specifed a 2 per cent cut in costs and, more in line with recent thinking, re­ quired ancilliary activities to reap an above­plan proft of 900 million roubles. It was important, according to Konarev, to achieve an aver­ age carload of 55.5 tonnes and an average train weight of 3300 tonnes, with corresponding improvements in locomotive and freightcar productivity. This was an optimistic programme, based on the as­ sumption, or wishful thinking, that the economy would return to normal and that the railways' task would remain as before, to cope with constantly increasing traffc. In 1990, Konarev went on, freightcar retirements, for the frst time since the war, exceeded new deliveries to the extent of 10 000 units. Turning to the fnancial side, Konarev reported that in 1991 a 35 345 billion roubles income was planned, taking into account current tariff changes (a 25 per cent tariff increase on through freight and the right granted to railways to make agreed charges for local freight services and also a 70 per cent rise in passenger fares). Profts from transportation were to be 6327 billion roubles, which with profts from ancilliary activities would make 7572 billion. The 45 per cent tax burden meant that 4165 billion roubles would remain with the railways. For capital investment, 1553 billion was to be allocated, plus depreciation funds of 4270 billion. But 10.518 bil­ lion was needed and the outstanding 4800 billion was expected to come from the Union's stabilisation fund. These intentions, how­ ever, could be overturned by continued price rises and by delay in getting agreement on passenger fares, he said. A new way of defn­ ing income for the railways under the market had been adopted, with fxed values for various services performed.

14

Soviet Railways to Russian Railways

An editorial view The monthly Zheleznodorozhnyi transport was essentially an organ of the Railways Ministry; it published for the most part in­depth studies of problems and of research in progress. It never differed from the Ministry's view on fundamentals, and was rarely critical of details. Its leading articles took the form of editorials devoted to what seemed to be the issue of the moment. 'You ain't seen nothing yet!' is a tempting comment on its Febru­ ary 1991 editorial, entitled 'Basic Ways to Stabilise Work'.11 The year 1990, it remarked, had been 'one of the most complicated for the life of the country and for transport work'. As things turned out, the 'country' was in its fnal year, and so was Soviet Railways. Although railway managers did not foresee the end of the USSR, they were well aware that much uncomfortable change lay ahead. 1990 was a year in which the old and new ways of looking at things still coexisted. The old fxation about fulflling or overfulflling the Plan, and especially the plan for traffc carried, still dominated managerial minds, but those minds were already pondering the best ways of coping with the encroaching market economy; that is, with an environment in which traffc and the means of carrying that traffc were no longer delivered automatically but had to be sought. The traffc decline that began in 1989 was doubly disturbing, for it represented a failure to fulfl the sacrosanct Plan and it presaged a future in which falling traffc might throw doubts upon the pri­ macy of railway transport. But, at least publicly, as in the editorial under discussion, the falling traffc was attributed to strikes (which especially affected traffc of coal) and social disorders in the Caucasus, Moldova and the Baltic republics. With this diagnosis, the traffc fall could be regarded as a short­term diversion. Under this belief, that the shortfall of traffc was an 'external' matter and temporary, it was understandable that minds were still concentrated on increasing capacity. New lines were being built at an average rate of 520km per year in the just­ended (1986-90) Plan, although this had dropped to 100 km in the fnal year (1990). New locomotives and cars were still being acquired under the 12th Plan, although at a slightly slower rate than in the 11th. In the 12th Plan, another 5752 km of route were electrifed and, in line wih the emphasis on heavyweight trains, many sidings and loops had been lengthened. When the Plan fnished on 31 December 1990, the total Soviet Railways route mileage stood at 147 500 km, of which

The Soviet Legacy

15

54 100 km were double­ or multi­track. 54 200 km were electrifed, carrying 63.7 per cent of the freight traffc.12 1991, the fnal operating year of Soviet Railways, would be the last in which it could be claimed that Soviet Railways, possessing a tenth of the world's railway mileage, carried almost half of the world's railway freight traffc. Average density of freight traffc at 25 200 000 tonne­kms per km in 1990 was far higher than in other countries. Hence the ingrained emphasis on capacity­increasing measures both in terms of investment (electrifcation; line­doubling; centralised train control) and in operating (heavyweight freight and passenger trains; faster train speeds). Since the traffc reduction was regarded as a temporary phenom­ enon, born of social disturbance and the failure of the economy to produce the expected volume of commodities, the question of whether it was wise to increase capacity at a time of declining demand was not publicly raised. Attention was directed to the loss of revenue and the concurrent 4 per cent rise in costs during 1990. However, the railways claimed that they were still proftable even although some effciency indices such as daily locomotive mileage and aver­ age turnaround time of freightcars had begun to deteriorate. It had been thought that better operational planning and better observance of operational plans would improve matters and a conference on that subject had been held in late 1990. In that year freight traffc declined by 3 per cent but the wagefund had grown by 10 per cent. Slackness was blamed, and this seemed to be confrmed by a rising accident rate, and by the circumstance that freight work at week­ ends was falling faster than on weekdays. The struggle against slackness had been waged for at least six decades, with sticks and carrots of varying heftiness, but was evidently far from won, and the surrounding 'destabilisation' was not helping. Any user of Soviet Railways could see that the track was sub­ standard, and recognise that the maintenance backlog was growing. Measurement of this backlog, expressed in the number of kilometres awaiting capital repair, was one way of measuring this decline. Another was the mileage, also growing, that was under speed re­ strictions. Lack of good track­repair equipment and the diffculty of fnding 'windows' for track work between trains on an intensively used network, were the main problems here. So whatever a traffc decline might mean to Soviet Railways as a whole, it was likely to be a valuable relief for the track gangs.

16

Soviet Railways to Russian Railways

That same editorial of early 1991 pictured the railways as stand­ ing on the threshold of the market economy and urged that all workers should realise that their wellbeing would depend on the elimination of faults in their work, as well as on radical changes. These radical changes were listed, and a lot of them seemed to be merely repetitions of exhortations that were inherited from the old days: strict observance of the timetable, increased independence of railways and their divisions, better 'technological stability' (a term covering a multitude of sins; reliability and predictability was prob­ ably what was meant). But there were other requirements which seemed to have some bearing on a new future: fexible response to changing traffc directions and volumes and an extension of agreed tariffs (which meant providing more services, or premium services, at an attractive price). The railways' commercial policy was to be oriented towards pro­ ducing profts from each of its enterprises, including ancillary enterprises such as workshops that could additionally produce goods for the consumer market. It was by no means certain that the rail­ ways would retain the right to use capital to pay wages for workers not used due to circumstances beyond the railways' control. For this and other reasons a new railway law, a new railway charter and new operating rules were required to provide a legal basis. Other needed changes mentioned in the editorial were a move towards user charges for freightcars and containers in place of the existing system of fnes for excessive detentions. A review was needed of the requirement that the railways provide free loading and unload­ ing of freight for agricultural and trading enterprises, something which seemed to be quite contrary to market principles. It was desirable for the railways to take over freight­forwarding functions, and for this a resolution of the Council of Ministers was being sought. A railway bank (Zheldorbank) had already been founded and this, the editorial suggested, should be followed by a network of railway banks. A stabilisation fund, consisting of the massed credits of railways that had no immediate use for them, was another aim. The break­up and privatisation of the railway network was a by no means impossible outcome, and both the Railways Ministry and its journal were opposed to a break­up. The advantages of a cen­ trally directed system with its multitude of ancillary services seemed self­evidently the best structure for a service that served the whole of society and the whole Soviet Union. However, the editorial ac­ knowledged that there had to be a better mutual responsibility among

The Soviet Legacy

17

units, especially on the fnancial level. It was right that incomes, including foreign exchange, should be centralised in the Ministry itself, but units should be able to gain fnancial compensation when parts of the organisation failed to carry out their assignments. The ever­present question: how much power to the centre and how much to the railways, divisions and enterprises, was evidently to be gone over again. In the meantime all units, including divisions and line enterprises, should have the status of legal entities for it was only thus that they could enjoy genuine independence of decision­making. Because of the importance of centralisation in an industry that was still formally regarded as one of all­union state ownership, the scope for privatisation would be somewhat limited. Leasing was one way forward - on the level of workshops and line enterprises concerned with rolling stock, containers, track and signalling, for example while trading and catering organisations were especially suitable for new forms of operation. The formation of companies, the edito­ rial continued, should be taken cautiously, lest they damage the transportation process, but they had the advantage of attracting new investment capital. The Ministry was seeking agreement with the Finance Ministry for central, railway and line participation in the making of union, republican and local budgets. The immediate stimulus for this was new taxation law and the feeling that the peculiarities of railway proft and loss might not be fully understood by the budget­makers. In any case, current circumstances made it highly desirable for the railways to reach understandings with governments at all levels. In the meantime, concluded the article hopefully, every railway worker was required to give maximum effort at the workplace, to display endurance and self­control, while at the same time under­ standing that the diffculties were temporary.

18

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2

New Frontiers

Partition The dissolution of the USSR at the end of 1991 entailed the dissolu­ tion of Soviet Railways, too. In Russia, Soviet Railways became simply Russian Federal Railways, which in due course claimed to carry a quarter of the world's railway freight while possessing only 7 per cent of the world's railway mileage. Russian Federal Railways was more a title of convenience than an executive organisation, just as the term 'Soviet Railways' had been. Rolling stock never bore the inscription Soviet Railways and therefore was not relabelled Russian Railways. The three levels of management remained as they had been: the Railways Ministry (tra­ ditionally but not accurately titled in Russian 'Ministry of Ways of Communication' or MPS), the individual railway administrations, and the divisions into which the railways were subdivided. The MPS operated the railways and also, incompatibly enough, super­ vised them on behalf of the government. In its last year of life, Soviet Railways embraced 32 railways with a total route mileage of about 147 000 km. Few of the railways crossed the borders separating the union republics, a circumstance that made partition easier. At partition, the Donetsk, Lvov, Odessa, Dnepr, South Western and Southern railways fell within Ukrainian borders, the Byelorussian Railway became the Belarus Railway, and the Moldova and Azerbaidzhan railways became the state systems of their re­ spective nations. Kazakhstan gathered three railways, the Alma­Ata, West Kazakhstan and Virgin­land, while the one­time Baltic Rail­ way was divided between the three emergent Baltic states and the Russian enclave of Kaliningrad; the Kaliningrad Railway (with an 18

N��� Fr�����r��

19

extent of 570 km in 1999) was the smallest of the Russian railways and, like the Sakhalin Railway (957 km), was not only untypically small but also isolated. (The biggest railway was the October at 10 158 km, followed by the Sverdlov at 7130 km.) Elsewhere things were not quite so simple. The Trans­Caucasus Railway had to be divided between Georgia and Armenia to form two national systems. Uzbekistan inherited the Central Asian Rail­ way, less the part that became Turkmenistan Railways. Russian Federal Railways consisted of 17 railways, subdivided into 104 divisions, and totalling over 86 000 km. They amounted to 59 per cent of the former Soviet Railways' route mileage, and had car­ ried 68 per cent of the USSR's rail freight traffc and 65 per cent of passenger traffc. The immediate effect of partition was felt unequally by the Rus­ sian railways, although all of them discovered that for certain designs of locomotive they no longer had specialised heavy­repair works. As for the routes, the main lines to the east and the Pacifc were scarcely affected, although part of the Trans­Siberian route hence­ forth passed across foreign ('near­abroad') territory, Kazakhstan. The October Railway's main lines between St Petersburg and Moscow and Murmansk were unaffected, but that Railway found itself bur­ dened with new international frontier crossings; it had long managed links with Finland, but now found itself coping with cross­frontier exchanges with the new Baltic states and Belarus. In the south, things were more complex. Astrakhan could imagine itself back in its historic role as frontier town. The Southern Rail­ way, which had once provided tracks for trains between Moscow and Rostov­on­Don and the Caucasus, was no longer Russian, but Ukrainian. The closest historical parallel to the dismemberment of Soviet Railways is the division of another great imperial railway, the Royal Austrian State Railways, in 1919. The division of the latter between the new states of Central Europe was not accompanied, as was the Soviet division, by a reversal of economic ideology, but was never­ theless shattering enough. Yet in neither case did the partition cause transport crises. In the Central European case, the main legacy of the upheaval was the existence of lines, former main arteries of the Austrian Empire, which were absurdly well­endowed for the traffc they were destined to carry in the interwar years. The fundamental reason why neither the Austrian nor the Soviet railway partitions caused catastrophe was that although they formally

20

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appeared to be overnight changes, in reality they were lengthy pro­ cesses of adjustment; nothing seemed to change on Day One, nor very much in Year One. In the case of the new Russian railway system, partition was only one of a series of basic transformations and moreover it had begun to take place even before the USSR's union republics became nation­states. As will be seen, the real chal­ lenge faced by Russian railways was not partition but the new economic liberalism represented by the market economy: and that was a challenge which had already emerged in the late 1980s. In the fnal months of the Soviet Union the governments of the union republics were already asserting themselves, and the division of powers between the All­Union government and the republican governments became a battlefeld as the republics sought to wield rights that previously were the unquestioned prerogative of Mos­ cow. For example, under Soviet legislation, railways were the property of the Soviet state and under new Ukrainian legislation the Ukrainian railways were the property of the Ukrainian state. Ukrainian railways received conficting instructions; for example (one of many small issues) Moscow and Kiev issued differing infation indexes for postal and telephone services.1 Kazakhstan was the frst to extract an agreement giving it greater control over transport (the Baltic republics had tried earlier, but were so uncompromising that no agreement was reached). In March 1991, the Kazakhstan government elevated the head of the Alma­ Ata Railway to the post of republican transport minister and the same month signed an agreement with the Soviet Railways Minis­ try (MPS) by which, among other things, responsibility for the railways' social services would be shared between the Republic and the MPS. Heads of railways were no longer to be appointed by the MPS, with the Republic's approval, but by the MPS and Republic acting together. The Republic was empowered to have its own tariff structure (in effect extending 'local' tariffs from freight moving within one railway to freight moving within Kazakhstan). Thorny ques­ tions concerning ownership of plant and equipment, and whether the MPS should continue to collect taxes from the local railways to be paid into the central budget, were wisely postponed to a later date.2 By the end of 1991, while Ukrainian railways were coming more and more under administration of the local republican govern­ ment, Byelorussian railways were still closely tied to Moscow. The Baltic Railway, serving the three Baltic republics, had been drawn away from Moscow, and while the railways of Moldova, Azerbaidzhan,

N��� Fr�����r��

21

Armenia and Georgia had come under direct local control, the Ashkhabad Division of the Central Asian Railway had been detached to form the Turkmenian Railway. Situations and policies were broadly discussed at periodic meet­ ings of the MPS Collegium which consisted of leading Ministry offcials, notably heads of departments and the heads of the various railways (which until 1992 meant the heads of all the Soviet rail­ ways). For most of 1991 the general line of the Collegium was that whatever might happen politically, everything should be done to maintain the Soviet railway system as a single network. Gorbachev's concept of the 'single economic expanse' ftted nicely here. It was only at the very end of 1991, when the writing on the wall could no longer be denied, that it was decided to transform the Soviet Railways Ministry into a Russian Federal Railways Ministry. This was done, virtually by the stroke of a pen, by the Russian President (Boris Yeltsin) and the Russian government. The frst session of the new Ministry's Collegium (essentially the old Collegium minus the representatives of non­Russian railways; in this instance it was an 'expanded Collegium', in which representatives from other minis­ tries took part) was held on 28 January 1992 to hear the report of the newly appointed Railways Minister, G.M. Fadeev. In accordance with decades of tradition, this report was reprinted in full over three pages of the 4­page railway newspaper G�k�k.3 One change in emphasis, however, was that Fadeev, after his intro­ ductory remarks about the formation of Russian Federal Railways, turned immediately to the problems of railway workers under the new conditions. His predecessor, Konarev, in his report a year pre­ viously, had followed tradition in dealing with labour questions towards the end of his report. No doubt the new minister was very consciously, if not affectedly, creating an image of a boss who puts his workers frst. During the fve years of his stewardship, Fadeev did in fact give every sign of genuine concern for his workers and of an implicit understanding that railway workers of all grades formed a defnite professional community.

The Railway Transport Council4 To smooth the process of dividing the USSR, several specialised coun­ cils had been established. One of these was the Railway Transport Council, whose task was to coordinate the new independent railway systems. The agreement that set it up was published in the railway

22

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newspaper G�k�k on 28 January under the headline 'While politicians argue, transport people are uniting'. Successive meetings were held at different state capitals. The Council met six times in 1992, the ffth meeting at Minsk in October being the busiest, and between sessions it maintained a directorate and various sub­committees. Its membership consisted of representatives from the new national rail­ ways. Georgian Railways was an associate member and the railways of the Baltic States, which had no membership, sent representatives. When cross­border movements of rolling stock were under discussion, representatives of the Finnish and Mongolian railways were also invited; at such times the Council was a kind of broad­gauge union. The Council was initially established for a one­year term in January 1992 but this was renewed in December and the Council has con­ tinued to the present time. In its early months, when it seemed to be coping successfully and amicably with the problems raised by the dismemberment of Soviet Railways, it seemed possible that it might take over the role of coordinating operations as well. As one Ukrainian journalist expressed it in July: It could be that a real coordinating centre, able to take responsi­ bility for transport activity, is already clearly manifest in the Directorate of the Railway Transport Council.5 Its frst main task was the division of assets, and especially of freight rolling stock (see below), but it had many secondary func­ tions, some of which were very important at the time. These included matters that were uncontroversial, such as the acceptance of Rus­ sian as the language for document exchange (although it was resolved that the Distinguished Railwayman Medal would henceforth be let­ tered in the language of the relevant nation). Unsurprisingly, delegates expressed themselves in favour of maintaining free travel privileges for railway workers over the former Soviet network rather than restricting them to the new frontiers. More signifcantly, in the interest of maintaining the old network, it was agreed that a common electronic information system would be maintained and developed. Agreement on current problems (carrying the troops coming back from Germany; fnding and distributing fuel supplies), all important in 1992, was usually easy. Delegates agreed that the newspaper G�k�k, published in Soviet times by the Railways Ministry and the Rail­ ways Trade Union, and which was going through hard times, should be assisted fnancially by all the railways, since it would continue

N��� Fr�����r��

23

to cover ex­Soviet but non­Russian railways in the future. Similar sympathy was shown for the professional monthly Zh���z��k�r�zh��� �r���r�r�. This once again demonstrated the assumption, or determi­ nation, that Soviet Railways would in some way have an after­life. Working out cross­border passenger train schedules seemed simple and most delegates agreed that 40­minute halts for customs exam­ inations were excessive. But despite agreements, not all was sweetness between sessions, when one national railway or other, possibly under political pressure, would seek to reduce its obligations. In February, for example, Ukraine Railways, on grounds of high costs and low demand, withdrew several cross­border trains. Many of these were important for intermediate Russian passengers, in­ cluding the long­standing Kharkov-Vladivostok train, celebrated as the longest­distance train in the old USSR and also notable for the fact that each train setting out from Kharkov carried no fewer than 8000 sets of bed linen. (This, if anything, should have gained Soviet Railways a mention in the G�������� B��k���� ��d�rk�. It is also a good example of how things were organised in the USSR; it would have been cheaper to exchange soiled bedding for clean at intermediate points, but this would have meant relying on other, faraway, workers doing their job properly and punctually, plus a good deal of extra book­keeping; it was easier to bring the soiled linen back to the Kharkov laundries.) Some railways seemed unable to provide clean rolling stock or safe transit for their passengers. The Council had to agree that sched­ ules could be changed in conditions of chronic crime, civil warfare or disturbance: this was applicable to the Caucasus, with lines effec­ tively cut because of developing hostilities in Ossetia and Armenia (and later in Chechnya). The Uzbekistan Railway, according to Rus­ sian offcials, failed to provide decent rolling stock for cross­frontier passenger trains; sometimes the Russian Railways had to refuse to accept bad­order Uzbekistan vehicles (just as Finnish Railways turned back Russian freightcars for the same reason). Procedures for working out freight train schedules were formu­ lated by the Council and its Directorate. These followed Soviet practice wherever possible. With debts mounting and the former orderly system for their repayment failing to cope, a new method of settling inter­railway accounts was becoming necessary. The Belarus Railway, with its high level of transit traffc, may have needed this more than others and its representative proposed that in future railways should make bilateral agreements with each other, setting off claims

24

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against debts. As the year ended, this proposal was still being studied. What might have become a contentious issue, how foreign exchange earnings should be shared between the railways concerned, was settled without any fuss on purely practical considerations. In gen­ eral, participants made great efforts to accommodate the special requirements of one state or another. Armenia received 321 extra freightcars in the great share­out, citing its special circumstances (Azerbaidzhan and Armenia were in a state of hostility at this time and Armenian railways were cut off from the main network). The growing problem of bad debts attracted some attention and at Minsk it was agreed that pre­payment should be required for transit goods to and from ports. All the railways were advised to urge their exporting shippers to make use of the newly­established Ukrainian I���r�r��� forwarding agency, which would look after questions of payment (Belarus was establishing its own B������r�r��� at this time and similar commercial structures were welcomed by the Council.) Many proposals or studies came to nothing, being unpopular in detail or overtaken by events. The Council spent some time study­ ing the question of locomotive standardisation between the states but not much came of this. Only when Belarus grew closer to Russia, years later, did anything positive emerge, and this had little to do with the Council. Nor did the desire, expressed at Minsk, for a common railway charter have any results. Common operating regu­ lations and standards were also urged, and this seemed to raise few problems as it was simply a matter of leaving Soviet practices untouched for the time being, although subject to agreed modifca­ tions later. As the years passed, the Council moved from immediate, critical decisions to supervision of their execution and perfection of their formulations. For example, in the summer 1999 session in Georgia, several problems were considered: the speed­up of international trains by the elimination of unjustifed frontier stoppages; the chiding of certain railways that were failing to promptly return freightcars that did not belong to them; the continuing discussion of the inter­ state railway computer network that among other things was to allow rolling stock to be used more effciently; and the passing of a resolution obliging railways to consult with their neighbours before withdrawing inter­state passenger trains.6

N��� Fr�����r��

25

Russia loses its ports Although partition left Russia with three­ffths of the Soviet railway mileage, and nearly nine­tenths of highway mileage, it placed beyond her frontiers three­ffths of the port capacity. On the Black Sea, where Odessa and several other ports were separated from Russia, the situation was redeemable, thanks to the retention of Rostov and Novorossiisk, among others. The situation was much more complex with the Baltic ports. In the extreme west, Kaliningrad remained Russian, but rail access was across two, or three, international fron­ tiers. Continued use of the former Soviet ports in Estonia, Lithuania and Latvia involved other frontier crossings as well as the likelihood that the newly­independent states would increase their tariffs and port dues; at best, there would be an uncomfortable 'what the traffc will bear' philosophy; at worst a naive loading of tariffs and dues actually beyond what the traffc could bear. As things turned out, rates did go up, and were payable in hard currency, but outbreaks of self­defeating greed were rare and short­ lived. Nevertheless, in the late 1990s, the thought of the 8-15 dollars per tonne that the Baltic states took on Russian oil exports was evidently painful for many Russians.7 This was a time when the governments of the Baltic states were discriminating against the Russian­speaking part of their populations, so they were unlikely to get a sympathetic hearing when, for example, a Latvian delegate suggested that instead of building new Russian ports to replace the Baltic state ports it would be better for everyone if the Russians would regard the Baltic state ports as simply Russian ports that happened to be on non­Russian territory - just as the Germans had treated Rotterdam, as a German port on Dutch territory.8 To remedy what to the Russians seemed an unsatisfactory situa­ tion, it was decided to build three completely new ports on Russian territory in the Gulf of Finland. Work started on the frst of these, Ust'­Luga, in 1996, with the wartime mines being cleared from the waters by 1997. The frst construction was devoted to a coal port, and the whole scheme was largely a coal industry idea. Coal from Vorkuta was to be exported here. It was also optimisti­ cally believed that coal from a mine in the far­distant Kuznetsk Basin would fnd an export market through this new port. So the port would help the ailing coal industry and, moreover, redundant miners could be employed in the construction work. To an outsider, it seemed that the scheme depended on low railway freight rates,

26

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maybe a return to Soviet practices with Kuznets coal carried at less than cost. When the coal conglomerate �������� disappeared, so, it seemed, did the main impetus for the port; in late 1998 it was reported that construction work had ceased, although the general port project was still alive.9 In addition to the loss of ports, the new frontiers themselves were a problem. Customs inspections and documentation could take hours or sometimes days, and there were duties and other charges to be paid. The Railway Transport Council had at frst agreed that when freight train schedules were fxed, the old Soviet practice of sending trains by the shortest route should be adhered to. But it soon became clear that the route with the fewest frontier crossings could be the best. At the urging of Ukrainian Railways, it was ac­ knowledged that the shortest route need not necessarily be the one adopted. The Soviet practice was retained for internal freight services while international trains were routed so as to minimise the number of frontier crossings. This created a situation where trains bound for non­Russian Baltic ports would proceed by a route that was longer but involved fewer frontier crossings whereas the empties would be returned via the shorter route; since they were empties, customs formalities were no problem. But empties brought no proft to the railway carrying them, and this caused a great deal of ill­will each time the freight schedules came up for revision. It was not until 1998 that the different national railways came to an agree­ ment that in the long run everybody would be better­off if freight trains went by the shortest route, irrespective of frontiers.10

The freightcar share-out Most of Soviet Railways' assets could be divided without dissent. Tracks, stations and other structures obviously fell into the posses­ sion of the state in which they were located; the only resentment seems to have been a feeling in Russia and Belarus that port facili­ ties in the Baltic States, which had been fnanced by the centre for the beneft of the whole Soviet Union, should be handed over to Latvia, Lithuania and Estonia (a resentment sharpened when sun­ dry Baltic politicians spoke of raising port charges on transit freight from Russia and other republics). Locomotives and passenger cars were allocated to specifc railways, and so naturally fell into the territory of one or another of the new republics. Where they could go for heavy repairs proved to be another matter.

N��� Fr�����r��

27

The freightcar question was different, imbued with historical and operating memories that imparted an emotional tinge to discussions. Freightcars, even under the tsarist regime, had been kept in short supply, and their scarcity value had been enhanced in Soviet times. Every railway manager and indeed most industrial managers believed that as far as freightcars were concerned, the more they could lay their hands on the better. On the other hand, railway managers did not want to actually own freightcars; they simply wanted to have the use of as many as possible of them. It was a feature of Soviet Railways (though not of the tsarist railways) that freightcars did not belong to individual railways. It was thought that ownerless freightcars, not needing to be sent back to any particular railway, would be spared a good deal of empty running. Towards the end of the Soviet regime it was fnally realised that the 'wagon­orphan' created a real problem in exchange for a doubtful beneft, simply because nobody had any responsibility for its proper care. Against a background of intense freight traffc activity, a secondary game of pass­the­parcel was in progress all over the network. Losers were those railways which were left holding defective freightcars, and parallel games were played at the division and station level, with movable but defective cars being dumped on a neighbour. Nobody was responsible for bad­ order cars; unavoidable repairs were done at workshops located usually at freightyards. Damage inficted on freightcars in yards was heavy and frequent because, except in extreme cases, the car would eventually be repaired by somebody else. In discussions about the freightcar share­out, which lasted through 1992, there was an explicit identity of views: the freightcar stock must be usable and interchangeable across the new frontiers, while responsibility for its maintenance must once­and­for­all be settled. This was seen to be a diffcult problem, especially as not all the republics possessed repair works, and it involved working out standard charges for the use of 'foreign' cars. By the time of the third meeting of the Council at Kiev in June 1992, a working group had arrived at percentages for the distribu­ tion of the freight stock. This was derived from the average annual stock of freightcars that had been present on the railways of each individual republic over the 1986-90 period. By this calculation, Russia's share was 61.98 per cent. Ukraine, at 18.04 per cent, was the next biggest recipient followed by Kazakhstan (with Kyrgyzstan) at 7.15 per cent. Belarus Railway's low share, 2.4 per cent, confrmed

28

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its role as a transit railway. Data for these calculations came from the card index held at the Ministry in Moscow, and only general freight vehicles were covered. Specialised vehicles, including refrig­ erator cars, were to be dealt with later. At the subsequent Minsk meeting some questions were quite justifably raised about the data; there was a difference between actual and 'inventory' locations of freightcars which could, it was thought, make quite a difference to the share­out percentages. A proposal to postpone the whole busi­ ness to allow for a proper survey based on car serial numbers was unpopular; by this time managers were in a hurry because every­ one knew that, due to the prevailing uncertainty about which cars belonged to which state railway, nobody wanted to repair freightcars. At the November meeting an agreement was ready to be signed, but there was a last­minute hitch when the Belarus representative, no doubt responding to pressure from his government, refused to sign. This was because Belarus objected to the share allocated to the Baltic republics which, it claimed, had taken for themselves an unfair share of the Baltic shipping feet and had made diffculties for their neighbours who wanted to use their ports. When the agreement received the approval of the heads of governments in late November it was restricted to those states that were members of the Common­ wealth of Independent States, thus neatly excluding the Baltic States, whose allocation was to be fnally settled in the context of a general settlement over the transportation assets of the USSR. For Latvia and Estonia at least, a restricted allocation of freightcars was actually advantageous because, being mainly import/export rail­ ways, they could rely on their neighbours' freightcars without having the expense of repairing their own. This situation was probably too subtle to be noticed by the Belarus government. In due course the agreement went into force for all railways of the former USSR. It covered only the major freightcar types and containers. A later agreement put the rolling stock designed for extra­ heavy and extra­large shipments into an independent organisation serving all states. The refrigerator car feet, a sensitive point with the fruit and vegetable exporters of the southern republics, was eventu­ ally settled, with units allocated proportionally by value rather than by number. As for the long­standing question of freightcar repair, it was agreed that up to 1993 the old system of repair depots being fnanced from the centre would continue. The individual railways, in what now seems to be a display of excessive optimism, were urged to ensure

N��� Fr�����r��

29

that their respective governments made their proportional contri­ butions to the central fund. Also to be introduced in January 1993 was a new system of calculating and paying the fees that each national railway owed the others for the use of their freightcars. Agreement on this had been diffcult and was not achieved at the Kishinev session in late November. This was not because of any principles involved, but because two different methods of compiling the necess­ ary data were suggested, and neither was perfect. A computerised accounting system for this purpose was therefore to be worked out and this was expected to solve the problems of registering freightcars. The agreements reached at these sessions did not always work out in detail over subsequent years, but in the main they were successful; they maintained the freightcar stock as a common­user asset for the entire ex­Soviet network; they went some way towards managing the repair problem; and above all they were acceptable to all railways and therefore could be introduced in good time and before the emergence of a crisis.

The Extra-territorial Trans-Sib 188 km of the Trans­Siberian line, a large part of the Petropavlovsk Division of the South Urals Railway, passed through the new state of Kazakhstan. Petropavlovsk itself was just inside Kazakhstan. The situation was not quite the same as with the railways crossing the Russia-Ukraine frontier, because the Petropavlovsk Division, in its entirety, remained part of Russian Railways. However, it was only in autumn 1996 that the Russian and Kazakh prime ministers met and ratifed this situation, and even after that there were many Kazakh offcials who sought to make the most out of this railway. 11 The railway land tax was raised and in 1999 there was a crisis when the Division was unable to pay its electricity bill (the American­ owned power company had enormously raised the price of power used for traction). In mid­March, power­supply to railway depots and fats was cut off, and a day later supply for traction was also cut off. The Division thereupon borrowed diesel locomotives from other divisions for its passenger trains and freight trains were re­routed to avoid Kazakhstan. The head of the South Urals Railway paid a visit to Kazakhstan and things returned to normal soon after.12 Earlier, there were occasional diffculties; one occurred when a division engineer, bringing in track fttings, was arrested for smuggling them in. The emigration of much of the Russian population of Kazakhstan

30

������� ��������� ��� �������� ��������

threatened the supply of new workers for the line. Within a few years the only Russian­speaking secondary school in Petropavlovsk was a railway school. In 1999, when Russia banned export of diesel fuel (to ensure there was enough for the harvest), the Division could no longer fuel its diesel locomotives. Liquid fuel was short in any case because of the high duty levied on it. In addition, in 1999, a classic case of golden­egg goose slaughter occurred. The Bobrovskii reinforced concrete works was located in Russia but was served by a branch line off the Petropavlovsk Division in Kazakhstan. The Kazakh authorities levied a charge on all consignments and this tended to increase with time. When the factory received a large order from the Surgut oil industry and began 3­shift working, the levy was again raised, fvefold. At this point the works, despite the unsuitability of highway transport for its heavy extra­wide products, decided to build an access road over Russian territory, and the branch line lost its traffc and hence its purpose.13

Constructive inertia Throughout the 1990s and into the new century, the railway news­ paper G�k�k still contrived to include the hammer and sickle and the letters CCCP in its masthead. It did this by retaining the old Soviet Railways crest. This was not only a sop to those who were nostalgic but also symbolic recognition of the survival of Soviet Railways. The name was different, the railways of the Baltic States had returned to their pre­1940 status, outlying railways were owned and controlled by new states, but the essential Soviet system was still there, both in body and spirit. There had been big changes, some directed towards solving old problems and some towards coming to terms with the new post­Soviet society. But unlike the Soviet­era airline and shipping enterprises, the railways survived that decade more or less intact, and in some periods seemed to be almost the only major industry showing signs of stability. Surrounded by in­ dustries subjected to change for the sake of change, the railways, when they changed, did so in order to stay the same.

3

Privatisation

First steps I.L. Paristyi, the outspoken head of the Moscow Railway, thought the Moscow public toilets provided a useful lesson in privatisation. They had been taken over from the city council by a cooperative which promised that, in exchange for the concession, toilets would be better looked­after and new ones would be built. In the end the entrepreneurs made a lot of money but the Muscovites simply dis­ covered that public toilets had become pay­toilets while there were no improvements and no additions.1 Like other professional railwaymen, Paristyi could visualise only trouble if the railways were to be privatised. Railwaymen had a natural attachment to the status quo; the Soviet years had left much that had to be changed, but on the whole the structure of the rail­ way industry was familiar and in a sense comforting. But to this sentimental resistance against privatisation there were attached some weighty arguments. The existing network had been seen to work, often in the most diffcult circumstances, and breaking up what was a complex nationwide integrated system seemed perilous. A distinction was made between privatisation and conversion to a share company. The latter did not necessarily imply the former, and there were many railway managers who opposed privatisation and dismemberment of the railway system but accepted that com­ panies could either be formed within it or even to head it. The so­called 'Finland Model' resembled this with its state­owned hold­ ing company supervising two affliate companies, one for track and one for operations, with those two affliates each having their own affliates. In a Russian version, a share company could own the 31

32

Soviet Railways to Russian Railways

network assets, and all of its shares could be owned by the state. It would form affliate companies for handling work that was not di­ rectly part of the operating process (repair shops, restaurants and so on). Not all the shares of these companies would be held by the state; there would be some degree of privatisation. Meantime, al­ though with an entirely state­owned company there would not be a market in its shares, there would be opportunities not only for raising capital (by issuing bonds or bills) but of ensuring that the capital was applied where it was most useful.2 Operating companies were also possible and indeed these were among the frst railway companies to appear, in the form of wholly­ owned subsidiaries. Some railways formed companies to run passenger services (see p. 142) and a company was formed to run refrigerator car services (see p. 114), although this began disastrously enough. The railway­owned forwarding companies, which will be discussed in Part II of this book, were also to attain importance, and occa­ sionally notoriety. In 1992 there was a wave of privatisation in Russia, but only the most enthusiastic privatisers saw an urgent need to privatise rail­ way transport as a whole; there were many other more suitable targets. Among these targets, however, were several industries that were closely connected with the railways. The Ministry of Trans­ port Construction, the builder of new railways as well as of other transportation infrastructure, was abolished and replaced by a cor­ poration, Transstroi. This did not prosper initially; its restructuring only made it more vulnerable to the fall­off in demand for its ser­ vices. During 1995 it did not put into service a single kilometre of new line. Many of its constituent trusts fell by the wayside but the more enterprising were engaged in new kinds of work, even in­ cluding the restoration of Kremlin cathedrals. Its long­term future was probably secure, but it lay more in road, port and civic con­ struction than in railway­building.3 In the later 1990s there was renewed interest in the concept of train operating companies that would not be mere dependencies of the Railways Ministry. The 'concepts' of future structural changes (see p. 86) visualised these, although the Ministry was cautious in its attitude to the transfer of freightcars to such companies. By the end of the century, various approaches were beginning to take shape. For example, in 1998, the Link Oil company was preparing to operate oil trains between Kirishi (east of St Petersburg) to Muuga in Estonia. By eliminating a locomotive change at the frontier, the round trip was expected to

Privatisation

33

come down to 50 hours. The idea was quite acceptable to the Railways Ministry because locomotives would be hired, not fully­owned, and the October and Estonian railways had shares in the company.4 On a much larger scale, the Cherepovets steel works, which had become the Severstal' company, was planning to revise its railway transport arrangements by setting up its own train operating arm. Evidently it believed it could do things more cheaply than its exist­ ing carrier, the October Railway. Working out a plan for this change with the Railways Ministry was evidently expected to be a long process, partly because there were many points to be settled, but largely because a resulting agreement was likely to be the model for future operating companies. The Severstal' management believed that, with closer control of operations, trains could be turned round faster, with freightcars loaded in six hours instead of the traditional 12. With controlled, regular movement of trains and accelerated operations, the existing large stocks of materials could be scaled down. The example of British Steel and its train service appears to have been one inspiration of the Cherepovets managers. The intention was to acquire locomotives that would be allowed to run over Railways Ministry tracks. The existing rolling stock was worn out and time­expired. Cars could be hired from the Ministry, bought from the Ministry or bought new. Tenders had already been invited for new freightcars and Abakanvagonomash would get a con­ tract for 150 of these, receiving payment in the form of steel, some of which would be obtained by melting down the old cars. Within the Railway Ministry there was some misgiving, and it seemed that nobody was in a hurry to reach an agreement. What to charge an operating company for the use of the tracks was a crucial question, and the Ministry was evidently going to take its time over that one. The possibility of the operating company having its own freightcars also sent shivers down some ministrial spines, be­ cause any step toward depriving the Ministry of its freightcars was a step toward downgrading the Ministry into a mere track authority. There was also the interesting question of whether the operating company tariffs might escape government regulation. Might the operating company in some way raise, say, the tariff on the Vorkuta coal it used and thereby, in effect, reduce the cost of coal? Despite the anxieties expressed by some railway managers, an outside observer would have described the consultation process as unhurried, amicable and considerate. In fact the steel company invited the Railway Researh Institute to work out a business plan for the

34

Soviet Railways to Russian Railways

proposed company and the Ministry's Finance and Credit Centre was also taking part in this.5 In March 2001, Severstal'trans received fnal confrmation of its status as an operator in the form of the Railway Ministry's allocation of its identifcation number.

The railway repair works When in 1992 a presidential ukaz opened the way for state enter­ prises to become share companies, the various non­operating railway enterprises (typically repair works and works producing specialised equipment) were faced with a choice. Most decided to stay as they were, being at that time comfortable with their situation in which the Railways Ministry allocated work to them and supplied invest­ ment capital for development. They may also have foreseen that if they became independent share companies not only would they have to actually seek work and capital but would also lose railway fare concessions (this in fact happened; even holders of titles like 'Honoured Railwayman' or 'Distinguished Transport Worker' lost their free ticket privileges when their repair works became a company). But there were a few enterprises that embraced the new order enthusiastically. Typically, they were those where managements had attempted to be enterprising but found themselves frustrated by centralised direction. Best­known among these early innovators was Murom Switch Works and the October Electric Train Repair Works. Both of these had very long histories and high reputations. The October Works was the descendant of the old Aleksandrovsk Works which had built rolling stock for the Moscow-St Petersburg Rail­ way as early as the 1840s. It had a virtually captive market in the form of the nearby October Railway, whose electric multiple­unit trains it repaired. In the decades before 1992 it had developed many good ideas for improvement or expansion, only to have the Railways Ministry refuse the necessary investment funds. Moreover, with the centralised fnancial administration, the profts of the best repair enterprises were used to help the worst­off enterprises. To the October Works management this looked like a case of the effcient subsidising the ineffcient, and of investments being made precisely where they would pay off least. This was perhaps an unfair view, but it was a great incentive when the chance of release came in 1992.6 The enterprise registered itself as a share company in 1992 but it took two years for it to formally emerge. Privatisation was effected by a

Privatisation

35

voucher auction in accordance with the practice approved at that time (at this period, a rapid liberalisation of the economy - includ­ ing a rapid sell­off of state assets - was in course, led by young politician/economists who were collectively known in some quar­ ters as the 'young men in pink trousers'). The German DWA company helpfully bought 20 per cent of the shares (DWA had supplied most of the Soviet Railways long­distance passenger cars but after the disappearance of the German Democratic Republic its prices had become unacceptable). Ten per cent of the shares went to the workforce. Apart from its investment of fve million marks, DWA helped in other ways; the Works exported 2000 wheelsets to Ger­ many in 1993-94.7 In the frst fve years of its existence the new company attracted 9 million dollars of investment, of which 3.5 million came from abroad. With these funds, it was able to widen its range. It began a programme for the capital repair and refurbish­ ment of German­built vehicles dating from the mid­1970s. It also equipped itself for the assembly of new passenger cars, using bodies supplied by DWA. It seemed assured of future electric­train refur­ bishments by the mere fact that the October Railway's very large stock of trains was seriously over­age. It refurbished the original ER­200 high­speed train. It involved itself in the new trains planned for the reconstructed Moscow-St Petersburg route. It led the way in the introduction of closed­cycle train toilets, and it assimilated the manufacture of electric­train reduction drives, formerly obtained from Latvia. By 1998 it was angling for a government credit to expand production further.8 For that proportion, the majority, of repair works that remained within the status quo, continued attachment to the Railways Minis­ try was by no means certain. In the early 1990s, when the ideology of privatisation was backed by keen privatisers within government, forcible conversion to companies, partly or entirely privately­owned, was possible. It was suffcient to declare an enterprise bankrupt, after which would follow a bankruptcy sale. Just as in the long­ standing capitalist societies of the West, it was easily possible for a basically sound enterprise to sink into bankruptcy. A reduction in orders, or non­payment of invoices for work done by the enterprise, could bring it to a situation where it was itself unable to pay its bills, and particularly what it owed its suppliers and workers. When this situation arose the enterprise could be legally closed, put under 'temporary outside management' (receivership), and then sold off. There were examples elsewhere in the economy of this happening.

36

Soviet Railways to Russian Railways

Sometimes there was a sudden infux of orders and outstanding debts as soon as the new private company was established, leading to allegations of manipulation for sinister ends. The case of the Rybinsk Motor Works, makers of jet engines and tractor motors, caused a great tremor in the headquarters of the Northern Railway, for example. In that case the Federal Bankruptcy Service entered the premises and at gunpoint removed the company's seal and its managing director. The claim was that the enterprise (already a state­owned share company) was bankrupt, but soon the regional government and courts were involved in a bitter slogging match that would decide whether the government would continue to hold a controlling number of shares. What connection does this have with the railways?, asked Gudok, and then went on to answer its own question:9 It matters because it means that great caution should be shown in matters of privatisation, and the conversion of federal prop­ erty to share companies. Are we bartering off a national asset is a question that must always be borne in mind. Nowadays we have more than enough predators who want to feece state enter­ prises. In the turbid economy, shoals of golden fsh have already been caught and they brought a fat proft to the new kind of businessmen. And the privatisers are not indifferent to the railways. The Northern Railway simply had to fall behind in its payments into the budget and the tax people immediately threatened to confscate part of the northern railwaymens' property. The Vologda car­repair and Kharovskaya cross­tie plant only just escaped bank­ ruptcy. In brief, the apparatus of repression was put into action and our home­grown capitalists rub their hands in anticipation of their profts after the auctions, after the hammer falls. Down at Voronezh, on the South Eastern Railway, there was a whiff of dementia in 1994. The conventional wisdom that Russians can always be relied upon to convert a good idea into a triumphalist ideology seemed to be confrmed by the local agency of the State Property Service (Gosimushchestvo). Here, in a paroxysm of virtue, it brought bankruptcy proceedings against the aviation works (then engaged in producing the IL­96 airliner), the Telman Railway Car Works (which at that very moment was receiving the Railways Ministry's quarterly prize for the best railway works and which currently held a good order book), and the Voronezh Diesel Loco­

Privatisation

37

motive Repair Works (which had an order book stretching into 2000). The situation was so absurd that the crisis did pass. The aviation works fought hard and, according to oral sources, Fadeev ordered guards to be placed at the threatened railway works. The Railway Car Works went on to become a rebuilder of passenger cars, using German and Spanish experience.10 On the other hand, some repair enterprises that were bankrupted may well have been ripe for drastic reorganisation. For example, the Bogotol freightcar repair works near Krasnoyarsk, which foun­ dered in 1998, went into receivership and was then sold off, probably benefted from the process. The works had a monopoly of facilities for repairing cement cars and so had a captive market, not only in the state railway system but also with the private owners of such cars. At least it thought it had, but as other car works saw their business dwindle they sought to broaden their range, so Bogotol's market was threatened. Very little investment had been made in the works, and it was not effcient. It was a small works, and very close to a car depot with which, probably, it could have advanta­ geously been merged. But when it was put up for sale it was, interestingly, Zheldorremmash which bought it.11 Zheldorremmash was the share company affliated to the Railways Ministry that looked after the repair enterprises that had stayed tied to the Ministry, so in effect the Bogotol Works had merely come home after a nasty fright. Probably Zheldorremmash's decision to purchase was a pre­ emptive strike to prevent what was seen as a vital facility falling into unreliable, private, hands. Zheldorremmash itself was regarded as only a temporary expedient, and in the later 1990s the question of what to do next was becoming urgent because the beginning of the 21st century was expected to coincide with an upsurge of business for the repair works.12 In 1997, the Railways Ministry still had 51 rolling stock repair works, employing about 75 000 workers. The busiest of them, the Moscow Locomotive Repair Works, was working to 86 per cent of its capacity but some, like the Vologda Works, were at 30 per cent. The intention was to shed 24 of these works with subsequent privatisation. The 27 others, each of which had its own speciality (that is, monopoly), would remain with the Ministry. By 2001, opinion had moved towards retention by the railways of their repair depots, and with operating depots separated from repair depots for the sake of 'transparency'.13

38

Soviet Railways to Russian Railways

Industrial railways The operation of industrial railways, although not exactly a non­ transport activity, was also regarded as something with which the Railways Ministry should not be involved. There were many in the Ministry who fervently agreed with this, because industrial feeder railways - belonging to enterprises and linking the latter with the mainline railways - had always been a problem. More than two­ thirds of railway freight traffc originated on them and their physical condition was usually poor and their operational techniques some­ times primitive. Accidents were frequent. The railways depended on them, often in vain, for punctual return of loaded and unloaded vehicles. In the later Soviet years many had been taken over either absolutely or for operating purposes only - by the MPS which had its own department for them. There was a tendency to unite industrial railways in territorial combinations (industrial transport enterprises or PPZhT). Some of these PPZhT represented an improve­ ment and some did not. Among the latter, according to the managers of the Far Eastern Railway, was the Khabarovsk PPZhT, whose foun­ dation in 1988 meant an immediate loss to the Railway of the fees it received for the working of the previously separate feeder lines, and then extra trouble as the PPZhT began to relax the norms for such things as car turnaround times. As its performance deterio­ rated, this PPZhT hired more staff (according to one account workers increased from 12 to 230), and tripled the charges levied on its industrial clients.14 The basic problem was that the MPS department concerned, Glavzheldortrans, represented a fnancial drain and although some initial subsidisation had been accepted, a long­term liabiity was unwelcome. So the PPZhTs were allowed to reduce the range of their activities, which became limited simply to moving freightcars. When Glavzheldortrans was removed from the MPS to become the Promzheldortrans corporation, the mainline railways continued to subsidise the new open share companies that had emerged in place of the state PPZhTs. Even though traffc was falling, indices of car utilisation on the industrial lines, paradoxically, were also falling. One of several reasons for this was that labour discipline, low as it had been, was getting even lower. Offcially, even when a PPZhT had become independent of the MPS, it was still subject to MPS regulations. But not everybody seemed to understand this, and in any case infractions of those regulations were dealt with by the

Privatisation

39

PPZhT management, not by the MPS.15 Meanwhile, the PPZhT began to skim the cream, refusing to serve low­traffc, unproftable, feeder lines and exploiting their monopoly position to extract as much revenue for as little effort as possible from the industries they continued to serve. Some enterprises appealed to the MPS for help, and in many cases the mainline railways did agree to operate feeder branches. At this time Paristyi was advocating that the railways should take over the industrial lines.16 By 1996, it seemed that things had settled down. The much ma­ ligned Moscow City Industrial Railway Company (Moskovskoye gorodskoye aktsionernoye obshchestvo 'Promzheldortrans' or MGAO) was serving 120 clients and possessed 50 diesel yard locomotives and its own locomotive depot.17 Out east, the Krasnoyarsk Industrial Railway Company, which had its origins in 1976 when three PPZhT were combined, had grown to a combination of ten affliates, three districts of the Krasnoyarsk railway network, a trading and com­ mercial centre and, somehow, a furniture factory. It served not only the Krasnoyarsk region but had also penetrated the Kemerovo and Irkutsk regions and served 500 industrial sites, including the Novokuznetsk metallurgical complex. Its workers had a sanatorium and could holiday at the Company's Black Sea leisure site. There were similar success stories elsewhere. Probably Paristyi had been too negative in his attitude towards these new companies. There was a positive side to the criticisms levelled against them. The best of them, in shedding all functions apart from actual car movement, used this concentration of effort to improve their performance. Refusing to serve low­traffc clients pushed the latter towards road transport, which was often more suitable. On the other hand, there were many decrepit, low­traffc, feeder lines that the railways still operated; in those circumstances, if an enterprise was privatised, the railway still had to pay for the up­ keep of its feeder line, something which seemed wrong.

The frst private railway Although it was never privatised, being a 'commercial' project right from the start, the railway between Ledmozero and Kochkoma does deserve mention since it was regarded as part of the privatisation, or commercialisation, process. It was a 126 km line in Karelia link­ ing the October Railway's main line to Murmansk with the north­south Kostomushka branch to its west. Such a line had been suggested to

40

Soviet Railways to Russian Railways

the MPS in the past but the idea had been put aside because of, among other things, the fnancial situation. The new, commercial, company had its beginnings when an offcial involved in Moscow roadbuilding made a vain trip to Karelia in search of road­gravel and on the train home met the head of the Petrozavodsk Division of the October Railway. The latter told him of vast dumps of waste gravel (gellefint) lying at the Kostomushka ore enrichment plant. He also said that the plant was constrained by the low traffc capac­ ity of the Kostomushka branchline. By the time they got off the train the two men had evolved the idea of setting up a gravel plant at Kostomushka and building a new railway line to link up with the high­capacity Murmansk line.18 The idea was so good that little diffculty was found in raising capital. St Petersburg and Moscow city governments, keen to obtain gravel, contributed. So did the October Railway, the Karelian gov­ ernment and the Kostomushka enrichment plant. Transstroi was contracted to build the line and construction started. The new com­ pany was called Gellefint. It was decided also to build wharves at Belomorsk so that freight could be shipped out during the naviga­ tion season. There was talk of extending the line's catchment area eastwards. A link with Finland was also envisaged, and the nearby Finnish city of Oulu was quite enthusiastic. New routings for Vorkuta coal and Cherepovets ore would thereby become possible. The line was due to open in 1994, but enquiries in subsequent years repeat­ edly obtained the same reply, that the line was almost ready (apparently there were recurring liquidity problems). Apart from railway troops, many of its builders came from Transstroi sites on the BAM railway, but the company prided itself on the small num­ ber of technical staff employed at its head offce (28 in 1993 compared, it was said, with the thousand or so that a state construction work of equal magnitude would have had). There were problems; part of the route was over bog, and supplies were sometimes hard to get. A contract for sleepers was made with the local timber industry, which failed to deliver, so sleepers were eventually obtained from beyond the Urals, by which time their price had multiplied. By late 1993, the company had already received a couple of hundred applica­ tions from would­be shippers. The only people who seemed dissatisfed were some Karelians, who resented this intrusion by outsiders.19 In 2001, completion of this still­unfnished line was regarded as a pri­ ority investment goal for the October Railway. In 1995, the Northern Railway, which feared an invasion of its

Privatisation

41

territory when there was talk of following the Gellefint example and laying a private railway from Archangel to Solikamsk in the Urals, nevertheless supported the project of the Belkomur company in the Komi Republic to link the White Sea with Perm and the Urals.20 In October 2000, the driving­in of this line's initial silver spike was reported. A later private company was founded by the Far Eastern Railway and local interests, and in 1999 the company built a line from Kraskino, near Vladivostok, to link with Chinese railways. But be­ cause the local bureaucracy had no set procedures for dealing with a private railway, very few freightcars could be moved in its frst operating year.21

A new railway law A specifc railway law, defning what the railways were, who they belonged to, their rights and obligations, had not been required in tsarist and Soviet years, railway legislation being scattered among numerous specifc and non­specifc statutes. It was only in the very last year of the Soviet period, 1991, that a frst Railway Law was passed; by that time uncertainties were accumulating as the up­ heaval launched by Gorbachev's glasnost' undermined long­standing conventions. In April 1991, the USSR Law on Railway Transport was passed by the Supreme Soviet. It reaffrmed that the railways were state property, fnanced mainly from the state budget. It gave them new commercial freedoms, however, by returning to the tsarist situation in which railways could participate in non­transport business (such as banking). It allowed them to set up share and cooperative companies, but did not permit private (chastnyi) enterprises. The individual railways' share of network income was to depend on their contribution to the production process (that is, the Railways Ministry would con­ tinue to centralise and supervise the distribution of income). The railways were categorised as extra­territorial and their administrative divisions were permitted to cross the frontiers of the republics.22 Having waited one and a half centuries for the frst railway law, the Railways Ministry became impatient for a second one; it claimed that the frst had been prepared in disturbed times and that in any case the USSR had now disappeared so a new, Russian, law was needed. After some genuinely infuential discussion in the press and in the Duma, the Russian Federal Railway Law was passed by

42

Soviet Railways to Russian Railways

the Duma on 20 July 1995 and was subsequently signed by the President. The text occupied two closely­printed pages of the rail­ way newspaper Gudok.23 Page 1 of the same issue was occupied by an equally close­printed introduction by Fadeev, which was largely concerned with what the Law omitted and needed to be worked on. Despite this approach, it was clear that Fadeev was pleased that the draft law had become a substantive law. And so he should have been, for the new Law included some key declarations that the Railways Ministry had long sought. Article 1 asserted that the railway was Russia's basic form of transport, super­ vised by the state, and a natural monopoly with particular conditions of development and function. Article 4 confrmed that railway en­ terprises and institutions were state property and that those which were directly part of the transportation process were not liable to privatisation or de­nationalisation, while those that were not di­ rectly concerned with transportation could be privatised. Moreover, unlike the previous Law, it was now stated that the sale or lease of railway property required the approval of the Railways Ministry, not the State Property Commission (this was especially important because when transactions had to pass through the Commission the railways did not get the receipts, but only their transaction expenses). Article 17 was noteworthy: its Clause 2 outlawed strikes by railway workers.24 The Railway Law, although very detailed in its coverage of the responsibilities and relationships that should exist between the rail­ ways and their clients, was confned to fundamentals. On the more practical level, it was the Railway Charter that determined how daily transactions should be carried out. A new Railway Charter was indeed introduced at this period and, in general, favoured the railways. As the Charter relates to railway operation, it will be cov­ ered in Part II of this book.

Defender of the faith 'The railways must not be put into private hands. That is my frm conviction', said Railways Minister, G.M. Fadeev, during a friendly interview in March 1996.25 There were enough wise people in the government to prevent the railways melting away, as seemed to be happening with the armed forces. Fadeev had a transport map of the old USSR in his offce and kept it always in view. The essential achievement of the last few years, he said, was the transfer of

Privatisation

43

responsibilities to the 19 Russian railways and the successful coor­ dination of the ex­Soviet networks through the Railway Transport Council. His interviewer mentioned the strong defence Fadeev had put up against 'Chubaisation' (Chubais was the best­known of the government's song­in­the­heart privatisers) and against the conver­ sion of his Ministry to a department, thereby upholding the interests of 'the last imperial bastion, the MPS'. The minister responded with ferrophile sentiments that would have done credit to a mature train­ spotter, referring to the fact, among others, that Russian railways were different because they held together a huge, practically road­ less, territory. He mentioned the sensitive railway episodes in the novels of Garshin, Mikhailovskii and also Tolstoy, Chekhov and Bunin (somehow he failed to mention Solzhenitsyn and Pasternak, both of whom described train journeys in loving detail, but he did mention 'our own' Platonov, who had once been a locomotive driver). He went on to interview the interviewer: '. . . as a passenger, how do you like, say, our bed­linen and restaurant car food?' Playing along, the interviewer said he wouldn't put his dog to bed on some of the linen he had seen provided by Russian rail­ ways. As for restaurant cars, a spirit of self­preservation had prevented his visiting them recently. This gave Fadeev the opportunity to hold forth about the absurdities of the attempts to privatise railway ca­ tering. The MPS had been pressurised by the 'reformers' into putting the passenger catering services into other peoples' hands. The new owners, in search of proft, had begun to serve local populations in preference to passengers, he said. The passengers blamed the rail­ ways. The railways were then obliged to spend their own money in making up this defciency and, fnally, local offces of the State Prop­ erty Service had decided not to encourage privatisation of the remaining railway­owned catering establishments after all.

Privatisation of railway catering As the Moscow public toilets were to Paristyi, so railway catering was to Fadeev: a glaring example of how privatisation could cause a lot of trouble without bringing any beneft to the public. Railway catering has similar problems all over the world. Station restaurants and cafes have a captive clientele and will prosper so long as passenger fow is high. Restaurant cars can be made proft­ able only rarely, because the car itself is expensive to operate and it has restricted working hours; most railways regard restaurant cars

44

Soviet Railways to Russian Railways

as worthwhile only because they make passenger travel more at­ tractive. However, in Russia, there were entrepreneurs who were more optimistic. They had some grounds, because there were a few restaurant car routes that seemed proftable. These were on longer­ distance services, where equipment utilisation was higher. Together with the industrial railways, railway catering was seen as an early target for privatisation. It was not a basic transportation activity and it seemed likely to respond to energetic management. However, the belief of some privatisers that a change of ownership would bring competition and therefore better service was optimis­ tic. Even in Russia there were unlikely to be cases of competing restaurant cars attached to the same train; competition would take the form of entrepreneurs competing for contracts, something that was as likely to lower standards as to raise them. Even before privatisation there had been moves to restructure and reorganise this service. At one time, restaurant car interiors were operated by the Ministry of Internal Trade and their external bodies by the railways. This accounted for the Soviet­era phenom­ enon of restaurant cars and buffets closing for lunch; their staff were offcially shopkeepers, and shopkeepers had the right to a lunch­ break.26 Later, railway enterprises were established in place of the Internal Trade organisations, under the auspices of the MPS Transrestoranservis. In Moscow, for example, there were two restau­ rant car enterprises, the Western and the Eastern, each working on a lease system; a more or less symbolic fee (16 roubles per day) was paid to the car district (vagonnyi uchastok) which provided the cars.27 But in the summer of 1992 the fee was raised as consciousness of proft­and­loss (and infation) struck the car district managers. The leases now cost from 1000 to 1600 roubles per day. At these rates, only the Moscow-Vladivostok and Moscow-Beijing trains were likely to be proftable restaurant car routes. Some other services, hitherto just proftable, suddenly found their costs rising to two or three times their incomes. Some reductions were subsequently negotiated, but these simply lessened the pain. Appeals were made to the Rail­ ways Minister, suggesting that the restaurant car enterprises be allocated restaurant cars, whose maintenance they would then take over. But nothing seems to have come of this; privatisation was already on its way. This involved the privatisation of the catering equipment used by the restaurant cars, but not the cars themselves. In effect, a restau­ rant car would be private on the inside and state on the outside.

Privatisation

45

Another deterrent for entrepreneurs was that they would indeed have competition in the sale of packaged items (a very proftable business; items could be bought cheaply 'on shore' and sold expen­ sively on board) because the car attendants would also be selling these, and car attendants, more successfully than restaurant car en­ terprises, managed to avoid tax on this business. In October 1993, the State Committee of the Russian Federation for the Management of State Property published its decision on the privatisation of Transrestoranservis.28 This divided the enterprise's assets into state property (station restaurants and cafes together with res­ taurant cars) and municipal property (lesser cafes and buffets). The state enterprises were to become joint­stock companies while the latter were to be sold off competitively with the proviso that they should continue to serve railway passengers. The decision did not receive unanimous praise. There were too many misgivings about whether the result would beneft the pas­ senger. Already, on the North Caucasus Railway, there had been signs of problems to come. There, conversion to companies had come early. Several entrepreneurs had wanted to acquire the lucra­ tive Sochi station catering facilities and also the restaurant cars. They had largely been anticipated by a smart Russian entrepreneur, who had already taken over the Sochi enterprise that leased 52 restaurant cars and operated the station restaurants at Adler and Khosta. But there had been all kinds of delay with the paperwork, involving, it seemed, deliberate foot­dragging. Sochi had been raising prices somewhat, but was giving a very good service. It therefore had made enemies. When the privatisation instruction was pub­ lished, its precise status was uncertain. Sure enough, in 1996, the Sochi enterprise was ousted and replaced by the Vesna company. According to local and perhaps hyperbolic comment, this meant that menus that had become famous in the North Caucasus sud­ denly disappeared, to be replaced by dishes based on time­expired tins of imported food. It was sagas like this that had irritated Fadeev. A year after this instruction, the head of the MPS property ad­ ministration said that things were not encouraging, '. . . station cafes and restaurants are standing empty'. With the consent of the local state property organs, railways were now taking back station cater­ ing. As for restaurant cars, he said, it did not really matter who operated them or whether or not the previous employees were re­ tained. It was a question of what service they gave. But high leasing costs were deterring entrepreneurs.29

46

Soviet Railways to Russian Railways

Such was the confusion that in 1997 a newspaper article carried the subtitle: 'Restaurant cars have worked fve years without a legal basis',30 Gone were the days when the Main Administration of Restaurant Cars of the MPS took care of everything, its author regretted. Now the administration, Transrestoranservis, had become a state enterprise of the same name. The once robust administration had become essentially a local enterprise supplying restaurant cars in Moscow with what they needed. This it did well, both in terms of quality and price. At the beginning of 1996 it agreed with the Railways Ministry that certain premium trains would have the price of meals included in the ticket price. But the enterprise could no longer administer restaurant cars in general, the author continued, since the MPS had lost its monopoly over them. The enterprises which did look after them had become share companies, some pri­ vate, or simply 'associations'. That was four years ago, at the peak of privatisations. It could not work out well, the newspaper re­ ported, because the only things that were actually privatised were kitchen utensils and cash registers. The rest, vehicles and offce space, continued to belong to the railways and could only be leased. In the currency of that time, the car leases cost 500 000 roubles per day or more, and at the best of times a restaurant car could hardly serve three daily meals to more than 150 clients. Even if the costs were multiplied in order to arrive at a price, it was impossible to make enough money to cover the leasing fee. The new operators soon realised that their profts would come not from meals but from the sale, at high mark­ups, of packaged items: for example, confectionery and cigarettes. Alcoholic spirits were also very proftable, although hardly any restaurant cars were licensed for their sale. Many restaurant cars at certain hours be­ came simply bars on wheels. At terminal stations, dead drunks fshed out from long­distance trains were loaded for disposal on to bag­ gage trolleys. Although passenger regulations forbade the consumption of spirits on trains, the restaurant cars were simply not operated in accordance with 'railway' regulations. The railways turned a blind eye, anxious to keep the leasing fees in their hands. A few of the restaurant car enterprises provided a good service at a proft (at this time the six vehicles operated by the Tomsk passen­ ger car depot were outstanding, partly because of good management and partly because there were longstanding ties with the local peas­ antry, who supplied good products at low prices). But it was already clear that things were getting so bad that somehow the restaurant

Privatisation

47

car services would have to come back to the supervision of the MPS. In mid­1996, after two years of pleading, the MPS had ob­ tained an agreement from the Monopolies Commission that the restaurant cars could be returned to the passenger departments of the different railways. Some of the latter chose to integrate them into the railway, while others preferred them as share companies. The South Urals Railway managed to be different by having some of the restaurant cars operated by shareholder companies and some by state enterprise. However, the MPS soon began to lay down stan­ dards of service for all, regardless of ownership. In 1999, Transrestoranservis, a unitary state enterprise, was operat­ ing just 23 of the many restaurant cars. The others were a varied lot, with each railway tending to have its own cluster of restaurant car operators in the form of open companies. On the other hand, Transrestoranservis had made a success of lunch boxes and soups dispensed to passengers in 'serviced cars' (whose passengers had the price of en­route sustenance included in the price of their tickets). It served 49 trains in this way, totalling 163 vehicles. In 2000, there were only six privatised restaurant cars still in service whereas the Railways Ministry catering directorate was running 700 (with 1400 cooks).31 Meanwhile, the traditional practice of peasants offer­ ing all kinds of food from station platforms continued to fourish.

Fadeev's last stand Early in March 1996, Fadeev addressed his fellow­ministers, summarising what the railways had done and needed to do. He told them that railway workers were now receiving their wages on time, that the railways would remain centralised so far as operations were concerned, and that they were making their contribution to the state budget. Railway divisions would be consolidated, leading to their elimination; line enterprises would be amalgamated; and rail­ ways would be merged to form bigger units, all within the general frame of the railways remaining state property. After reorganisation, the second main task was maintenance of adequate rolling stock, and in particular becoming independent of foreign suppliers. The railway supply industry would be reorganised, with the participation of the railways and banks, so as to produce a new generation of equipment. Lastly, the coming year would be one of investment (or it ought to be) but because clients were not paying their bills this might not be easy. At this point he singled out the Defence Ministry

48

Soviet Railways to Russian Railways

as a particularly bad example of departments that were bringing the railways, 'the spine of the nation', to their fnancial knees. Fadeev was certainly open, if not defant, at his press conference of 29 April 1996.32 He announced that the prime minister (Cherno­ myrdin) had at his suggestion rejected the draft declaration, put together by the government and the Central Bank, according to which the railways were to be privatised. The declaration had been drawn up, he understood, at the behest of the International Monetary Fund, which was linking it to a 10 billion dollar credit that it was considering. The draft had promised that in 1996, within the MPS, a federal railway administration would be created with strictly delineated tasks, including the putting of the industry on a commercial basis, and that plans for restructuring and privatisation would be worked out. A key part of his speech follows: We can't do a deal with the West for the sake of a credit. We would have to pay for it with a collapse of the railways and of the state. I believe that it is mistaken and dangerous to try for an instant imposition of a western model on Russian railways. It was also contrary to the Railway Law, passed in 1995, he added. A very long document, occupying four pages of Gudok and embody­ ing Fadeev's conception in exhaustive detail, was approved by a conference of railway workers in May.33 The latter was an enormous assembly of about 3500 participants; it was held in the Kremlin, and reminiscent of similar gatherings held in Stalin's day. Meticulously planned, the conference was addressed by notables ranging from Prime Minister Chernomyrdin and Mayor Luzhkov of Moscow to Metro­ politan Pitirim of Volokolamsk (the latter was Russia's nearest equivalent to the British phenomenon of the train­spotting bishop; he had earlier studied to be a railway engineer). There was an enor­ mously long, item­by­item, account by Fadeev, and then the main purpose of the conference, the 4­page document titled 'The Basic Di­ rections of the Development and Social­Economic Policy for Railway Transport for the Period to 2005'. Approved by the conference, and then by the government and President, this gave the Railways Ministry a powerful weapon. It detailed what was going to happen and was evidence that what was going to happen was approved both at the political heights and at the railway grassroots. It was a New Testament which in the following period would be brought out as a trump card whenever the Railways Ministry's basic aims came under attack.

Privatisation

49

This conference can be seen as the capping of Fadeev's achievement. The Soviet­era techniques of getting (or not getting) things done in a bureaucratic, sometimes chaotic, and ideological ambience, which he had learned as he rose in the railway service, had proved perfectly adequate for the bureaucratic, sometimes chaotic and ideological ambience of post­Soviet circumstances. Like others of his generation, he understood the importance of 'commanding heights'. For him, the commanding heights had been a state­owned, fully­integrated railway network and this he had skilfully defended against the 'boys in pink trousers'. (We've already passed through the station named Chubais', Luzhkov exulted at the conference.)34 Not only that, but in the new Railway Law and in the minds of all but the most excited politicians this concept had been accepted as immutable, at least for the foreseeable future. Moreover, from the economic up­ heavals of these frst post­Soviet years, the railways had emerged as apparently the most stable element of the economy. They were con­ tinuing to do their job of serving society, reliably and consistently, and helping to hold that society together at a time when other elements of the economy seemed to be doing the opposite. The Russian Union of Journalists, early in 1996, awarded Fadeev a certifcate honouring his openness with the press. Some journal­ ists suggested that one way of giving more signifcance to railway transport would be to promote the Railways Minister to a vice­ premiership. Fadeev responded, not entirely tactfully, by saying that the agricultural minister Zaveryukha had become a vice­premier and it did not seem to have done agriculture much good. In August, Fadeev ceased to be Railways Minister. But it was an honourable departure, marked by polite notices in the press. He was put in charge of restoring the fortunes of the Trans­Siberian container service. This gave him the opportunity for some foreign travel and, more importantly, gave the Trans­Siberian cause a fgure who would get done some of the things that were needing to be done. Later, after Paristyi's retirement, Fadeev became head of the Moscow Railway and again succeeded in accomplishing some long­ delayed changes.

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4

The Zaitsev Interregnum

The man The new Railway Minister, Russia's 39th, was already a well­known fgure, having made his mark as head of the October Railway. He became minister on 22 August 1996 and was 'transferred to other duties' in 1997. By the standards of previous incumbents, this was a very short period of offce, although in 1999 another minister, Starostenko, would have an even briefer shelf life. It seemed clear at the time, and there has since been no reason to modify this opinion, that Anatolii Zaitsev was promoted to this position because he would be less of an obstacle to change. Fadeev had conducted a successful rearguard action against privatisation and was clearly opposed both to the privatisers in the government and to the foreign bankers who, he believed, were pulling their strings. What his writings, and his actions on the October Railway, had shown, was that Zaitsev was defnitely in favour of change. He was also very sure of what those changes should be, arriving in offce with a clearly thought­out concept of what needed to be done. The brevity of his term of offce resulted from strong opposition to the changes he was introducing and, no doubt, to personality clashes. The qualities that had advanced Zaitsev to the pinnacle of the rail­ way industry were perhaps qualities that were not well suited to his new assignment. Certainly, Zaitsev's character was a key factor in the diffcult months that lay ahead. A mini­personality cult still attached itself to railway ministers, and during his term of offce the railway newspaper printed countless photographs of the minister.1 He differed from his predecessor Fadeev 50

Th�� Z������� I���rr����m

51

and successor Aksenenko in the variety of expressions and attitudes captured in the published pictures. Whereas Fadeev seemed to have just one expression, that of the serious, benign Soviet­era boss, and Aksenenko never seemed to change his expression, Zaitsev's pic­ tures repay attention. On the day of his appointment his press picture showed him in head­and­shoulders formality, dressed in his uni­ form gold braid and looking very serious and determined. The next day he is photographed as he addresses the railway collegium, having been introduced by the prime minister, Chernomyrdin. Overshadowed by the bulk of the latter, and additionally diminished by a huge bouquet he carries across his chest, he wears the expression of a cat who has just swallowed a fshbone. In the following weeks he is pictured visiting various sites and apparently enjoying himself, often looking a bit scruffy. Finally, at the press conference where his successor is introduced, he sits at Boris Nemtsov's right hand, unsmilingly calm. Zaitsev was very much an October Railway man, having no experi­ ence of the other railways. But he did have a close circle of informed and interesting friends. At 18, he was a locomotive freman at Kandalaksha in the Arctic. He soon went on to study at what is now the St Petersburg Transport University. As an electrical engineer, he progressed from electric locomotive second man to locomotive depot head, then head of the Murmansk Division and from 1987 he was the head of the October Railway. Although one of the ��m��k����r�, he was hardly a party man but rather a railwayman with academic leanings. More than one informant has described him as a 'soft' (m���k��) man, and one of them added that he was a man who found it diffcult to say No. His academic leanings led him to part­time graduate studies in St Petersburg, and he fnally achieved his doctorate in 1996, his dis­ sertation being 'Strategy of Railway Administration'. He thus gained the highest offce at the right time, the reorganisation of Russian Railways being a recognised state priority in 1996. He was probably the best­informed Russian on this subject and had defnite ideas which he could defend on grounds of theory, practical experience, and his knowledge of railway history. It may be presumed that this mastery did not make him many friends. He also seemed to have the stereotypical academic's fantasy that people prize truth above all. In his youth he had been keen on skiing and wrestling, and there is a whiff of the symbolic here. Even more of a pattern with his professional career, perhaps, is that in his younger days he fell

52

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into rivers and lakes with alarming regularity, being in danger of drowning about half a dozen times; but he paid his debt, being the recipient of a lifesaving award for rescuing a drowning girl from under the ice. Zaitsev's term of offce as head of the October Railway coincided with the early years of the market economy. That Railway had always been a leader in innovation, so he had ample and unprecedented opportunity for trying out new ideas as well as experiencing prob­ lems common to all the railways. The October Railway was a leader in the formation of separate companies (Tr���k�m for passenger ser­ vices, Zh��k�r�k�r�k������ for freight forwarding) and participation in others (the G�������� private railway, the high­speed train com­ pany and a customs terminal company, not to speak of quarries and rolling stock production). The Railway was also forming 'branch enterprises' for track and rolling stock repair. It was an early en­ trant into banking with its Baltic Bank. It ran a 'commercial' passenger train between the two capitals. It offered its RITM just­in­time freight service. It made an early start in shedding educational institutions. It faced sophisticated highway competition on its international routes which it countered with new container trains. It had a centre for fnancial control. It had merged adjacent divisions, halving their number. It introduced a central train despatching centre. It showed how the inter­capital mainline could be reconstructed without having to close both tracks. It took care to create connections with local governments and in particular with the St Petersburg government on commuter matters. On the other hand, the Railway's proftability in most years was below the network average, and it had not been conspicuously successful in persuading its clients to pay up, although this was partly explained by the high proportion of freight shipped by those notorious defaulters the 'power' ministries.

Zaitsev as Minister Of all the press pictures of Zaitsev, the most cheerful is that accom­ panying his interview by �������k���� ��z��� of mid­November 1996.2 He smiles jovially, his hands loosely clasped, radiating cheerful self­ confdence. He had reason to be cheerful, having passed through a cross­examination by the Duma in which, it seemed, he had soothed critics of the Railways Ministry's policies. The previous day he had met a powerful German delegation and come to an agreement on German technological help in producing new electric locomotives

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and there had even been talk of a German­inspired magnetic levi­ tation line between Moscow and Nizhnii Novgorod. His assistant minister, Aksenenko, who had followed him from the October Rail­ way, was promoted to First Deputy Railways Minister the same day. Not long previously Zaitsev had had a feel­good trip to India for a meeting of Asian transport ministers, where he had amicably dis­ cussed the best route for Indian tea exports to Russia.3 In that Press interview, he was at pains to disassociate himself from any revolutionary mind­set. The changes that he was carrying out, he said, had long been thought about and dated from before his time as minister. It was simply that they could no longer be postponed. (In reality, he must have been somewhat shaken by the opposition stirred up in his frst months of offce, particularly by the proposals to reorganise the administrative structure of the railways.) On this particular day, in a month when things seemed to be going well for him, he quite optimistically sketched out the kind of railway system he was aiming for. He acknowledged that the traffc decline would continue, so it was important to reduce costs, and this would be done largely by administrative restructuring that would eliminate most of the individual railway administrations and all the railway divisions. The traffc reductions of the previous year had resulted in an operating defcit, so tariffs would have to rise simply in order to prevent the railways coming to a standstill. There would have to be some form of government subsidy for passenger services. Nowhere else in the developed world, he said, were pas­ senger losses compensated by freight receipts, and this was driving freight shippers from the railways. There should be a government order covering freight services to the Far North, and departments (defence, other 'power' ministries, agriculture) should not be allo­ cated money to pay for those services; rather the state budget should allocate to the railways the funds necessary to pay for them. Zaitsev was evidently remembering his experiences on the October Rail­ way, where the 'power ministries' held on to the funds that had been intended for payment of their freight bills. A third fnancial relief for the railways would be lightened taxes, embracing at least the removal of railway property taxes, the transport tax, and the forced contribution to the road tax. Finally, the Ministry should have the legal right to close under­used lines; but he pledged that this would not affect the BAM, which though currently loss­making would eventually become a great national asset.

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As to the traffc loss, there was not merely a reduction of total tonnage but a clear fall in the proportion of bulk freight. To capture the corresponding proportionate rise in high­value low­tonnage shipments, an extension of container services was urgently neces­ sary. Passengers also needed to be encouraged, not merely to use the train but to patronise the new premium services. Apart from pursuing the premium train concept, there had been success in re­ ducing the accident rate and a number of city stations were being refurbished. Despite the railways' liberation from the privatisation threat, he felt vigilance was still required. The privatisers were still at it, and the Economics Ministry, in particular, was still dabbling with the idea. They should look back at history, he added. Russia's frst transport minister had resigned when the Moscow-St Petersburg Railway was privatised, and decades later the tsarist government realised the mistake it had made and began to nationalise the railways. What was the point of repeating the experience?4 Signifcantly, the inter­ view had begun with the question of the proposed administrative reorganisation whose self­evident virtues had aroused a hornets' nest that Zaitsev seems not to have foreseen.

Restructuring the railways As head of the October Railway, Zaitsev had already gone on record as favouring the reprofling of railways as share companies. As cur­ rently established, they could not take proper advantage of the market economy. They should have the right to earn money and dispose of that money in the interests of the railway and the railway enter­ prises (it might be noted that despite the trumpeted move to kh�zr��dh�� ('economic accounting') in 1987, the railways still did not have that right, which meant that kh�zr��dh�� remained a term of emo­ tional but insubstantial meaning). Zaitsev's ideal railway would have the right to acquire specialised vehicles (passenger cars, refrigerator and some tank cars) as well as locomotives. Non­specialised cars would remain with the Ministry. The railway would decide its own car­detention norms and fees. Through tariffs would be submitted to the government for approval. If tariffs resulted in loss­making lines, a railway should have the right to close them. Zaitsev's October Railway management had, on a number of occasions, proposed its conversion into a state share company. Initially

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this would have been a closed company to protect against predators who might buy a controlling interest and then turn its activity to more proftable but less useful things. When levers had been devel­ oped to prevent this, it could change to an open­type company, with the state holding 51 per cent. The remaining 49 per cent could be used by the directors to establish affliated companies for special tasks, or simply sold to raise capital. Zaitsev, with his habit - prob­ ably quite irritating - of appealing to history, recalled that such railway companies were not such a novel idea, the Mongolian Rail­ ways having become a closed share company as early as the 1940s, with the shares jointly held by the USSR and the Mongolian Peoples Republic.5 His ideas on this subject do not appear to have raised any hackles initially, possibly because it was obvious that they were in no immediate danger of becoming reality. With his other two lines of attack, railway mergers and abolition of railway divisions, the process had already begun, so resistance was building up. What to do with the individual railway administrations, what to do with the railway divisions, were two separate issues and not necessarily interrelated, although they were naturally portrayed as linked. The existing 4­level administrative structure, ministry-railwaydivision-line enterprise (the latter typically being a station) had existed since 1958. Historically, all the major world railways had developed a hierarchical structure, with one level subordinate to another; nineteenth­century railway technology and the fact that early railways were disproportionately organised by former army men, had ensured that. Whether such a structure was suited to new conditions of competition, faster decision­making, greater transpar­ ency of operation, and the communications revolution, was becoming increasingly doubtful and different countries had been adopting differ­ ent strategies. In Russia, abolition or merging of the railway divisions had been quietly discussed for some time. Operationally, it would improve car fow because the boundaries of divisions were places where trains stopped for checking, record­keeping and inspection. Each division was a train control district (k��r��dh�r�k��� kr��), so the merging of two divisions would eliminate one such district and some of its half­dozen or so sub­districts. By the mid­1990s, the automated despatch centre, controlling and recording the move­ ment of trains over an entire railway, was increasingly a possibility. Making use of contemporary electronic technology, such centres seemed ideally suited to the Russian situation. They were already functioning in North America and some other countries where their

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advantages had become clear and their drawbacks were not yet realised.6 Not only would such centres control train movement, but they would also provide attractive services for shippers, such as tracing the progress of consignments. Finally, the 4­level adminis­ trative hierarchy was, rightly or wrongly, regarded as a dilution of responsibility that discouraged initiative. The division, as an administrative unit, had been aimed at decentralisation, and in the form of specialised offces such as the operations division, had already appeared in tsarist times. Thus in 1906, the Perm Railway had introduced its three Perm, Ekaterinburg and Vyatka operating divisions because business had developed to a size whose details could not be properly handled at railway level. During the 1920s, Soviet railway offcials had wandered all over Europe seeking ideas, and operating districts appeared here and there, only to disappear during the fve­year plan era. But in 1946 chaos and apparent mismanagement suggested that drastic reforms were needed and the railway division appeared, in the guise of a line enterprise, which later became virtually a mini­railway, carrying out the same functions as the railway itself, but at local level.7 Possibly too much enthusiasm had been generated by the success of the battlefront military railway operational divisions, on which the new divisions were partly modelled. But the system did work, and it did make easier the elimination of local bottlenecks by dis­ tributing income among the divisions' enterprises, not in accordance with their work volume but in accordance with their individual circumstances. However, new conditions implied by the market economy, and new technologies such as computer­based centralised train control, emphasised the need to streamline the 4­level admin­ istrative system and elimination of the division seemed the most likely solution. The work done by divisions could just as easily be done by the level immediately above or immediately below. This would entail somewhat more responsibility for line enterprises, particularly stations, but gave the latter closer and faster contact with the railway administration. The elimination of divisions had started before Zaitsev became minister. It was not welcomed by everyone, and indeed there were alternative solutions. Critics pointed out that although eliminating the division would bring stations and other enterprises into closer touch with the railway administration, the latter was unlikely to be so understanding of their needs as the more local division had been. One suggestion was that the existing railways should be

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abolished and replaced by twice the number of new railways which in effect would be enlargements of the old divisions. These new railways would serve individual regions and bring all the benefts of local knowledge and interest. Other critics pointed out that the decision to abolish divisions was one more manifestation of the typical Russian recourse to centralisation as a cure­all.8 Although Zaitsev was not wrong in claiming that the October Railway had played the role of guinea­pig in the process of elimi­ nating divisions, there were other guinea­pigs elsewhere. Mercifully, there was no massive overnight change but instead there was a series of local experiments, one of which took place on the Octo­ ber Railway, where mergings of divisions resulted in their number being reduced from eleven to fve.9 The question had been dis­ cussed repeatedly when Fadeev was head of the Railway, and Zaitsev just one of 11 divisional chiefs. In fact the frst move came as early as 1987, when the Kem' Division was merged into the Petrozavodsk Division. The expectation which eventually developed was that di­ visions would be merged at the same time as computerised despatch centres were set up to help operate them. At the same time line enterprises would be attached to their own functional service (���zhk�) and the services would be administered at network level by direc­ torates (k�r�k����).10 Zaitsev did not regard the abolition of divisions as a key issue; he wanted to marginalise them and accepted that some railways might keep them as regional entities for one purpose or another, and in fact so­called traffc directorates (k�r�k����) were already accepted. These were area­operating authorities and their boundaries could coincide with those of the former divisions. For example, the plan for reorganising a division­less Sverdlov Railway included traffc direc­ torates based on the main freight centres of Perm, Chusovskaya, Tyumen, Surgut, Sverdlovsk, Egorshino, Nizhnii Tagil and Serov.11 Another pioneer was the East Siberian Railway, which abolished all its divisions (see below). The Krasnoyarsk Railway, after at least two years of study, decided to abolish its Krasnoyarsk division in 1996, followed by the Achinsk and Abakan divisions and the con­ current establishment of a centralised despatching centre. Despite, or because of, a new satellite communications system, it apparently eliminated its divisions before it had evolved an effective adminis­ trative system to replace them, a sequence which a neighbouring railway head described as 'silly'.12 The functional departments (���zhk�) would take over much of the work formerly handled by divisions

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and the heads of each would have the rank of deputy head of the railway; this was to give them the authority they needed to estab­ lish tight control.13 On Paristyi's Moscow Railway a similar process was taking place, although it was presented as the Railway's own individual solution. Whereas some railways were abolishing some of their divisions, and others (the Gorkii and Kuibyshev railways) were concentrating on the abolition of their fnancially­independent (kh�zr��h������) enterprises (thereby escaping double taxation), the Moscow Rail­ way management preferred to describe itself as being engaged in a process of enlarging its divisions.14 Possibly this was not just a play on words but was meant to imply that total elimination was not envisaged. By the beginning of 1996 the Tula division had merged with the Novomoskovsk and the Moscow-Yaroslavl with the Moscow-Riga, which among other things eliminated more than 20 fnancially­independent (taxable) enterprises. A further merging, of the Moscow Belt and Kashira divisions, was about to produce the new Moscow-Pavelets Division. This made sense because the Kashira Division did almost three­quarters of its business in Moscow, while the Moscow Belt Division, lacking its own track, signalling and rolling stock departments, borrowed the services of the Kashira Division's departments. It should be added that the Moscow Rail­ way was concurrently pursuing other solutions. It was reducing the number of line enterprises by merging the smaller ones (in particu­ lar, it was concentrating freight operations onto a small number of stations) and it was also eliminating many night shifts. On the network as a whole, many line enterprises had been eliminated, with about one­ffth of locomotive and car depots being downgraded to service points.

The Canadian National model By 1997 it was the East Siberian Railway which seemed to show the way forward.15 Its head at that time was Gennadii Komarov, who faced the fnancial problems caused by a halving of traffc. He had already visited Japanese railways, where he realised that Rus­ sian railway administration was, as he put it, still in the steam age. He despatched his juniors to other Russian railways, to see if there were any good ideas awaiting imitation and fnally settled on the Gorkii and October Railways as instructive. The October Railway's creation of fnancially self­standing affliates in the form of track

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and car repair enterprises was attractive, but continuation of work on these lines was then forbidden by the Railways Ministry (pre­ sumably because of the situation that was developing on the October Railway; see p. 70). But something was also learned from that Railway's experience with automated control of accounting and per­ sonnel. From the Gorkii Railway came the idea of automated (that is, computer­aided) train control. Also imitated was the Gorkii Railway's reduction of the number of enterprises having the status of legal person. Enterprises thus deprived were left with just a basic current account, their fnancial affairs being dealt with at a higher level; no longer would such enterprises be plundered (as they saw it) by the tax authorities. Not entirely satisfed with these ideas, Komarov despatched spe­ cialists abroad. One of them, his chief engineer, spent some time with a Russian delegation to Canadian National Railways (CN) and returned an enthusiast. That company had certain similarities with the East Siberian. The CN faced problems of snow and of perma­ frost, and its gradients were not unlike those of the East Siberian. The latter's headquarters city was Irkutsk, which had much in com­ mon with Winnipeg, although the residents of neither city could be blamed for that. The CN carried bulk traffc over long distances through underpopulated regions, but was also coping successfully with highway competition. What was perhaps more important was that it had reorganised itself and in particular its several hundred freight offces had been replaced by a handful of computerised cen­ tres. At Montreal, a central control centre supervised the movements of CN trains throughout Canada.16 The Canadian National had long since dispensed with anything resembling a division, so the elimination of the East Siberian divi­ sions seemed likely to be a useful frst step. This proposal, however, was not received kindly by the divisional chiefs ('This is not Canada. . . . We're not ready for it . . .'). In what can only be re­ garded as a decision of great wisdom, Komarov thereupon packed off his division chiefs on a visit to Canada. There they evidently had a good time, for they returned, to all appearances, as a Cana­ dian National fan club. In particular, they no longer opposed the elimination of their divisions. Partly, but not entirely, this change of heart may have come from the realisation, developed in Canada, that there would still be prestigious positions for them in the re­ structured railway (which, as things turned out, was the case). It was agreed that division elimination should take place, on the

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basis of computer technology, and that it would be preceded by the creation of a central traffc offce and a centre for transport service. At this point it was realised that the existing headquarters building was not built on seismically­satisfactory foundations so a new building had to be constructed. By 1997 it was fnished and although full electronic control of all activities needed more time, train control was already in the charge of the previous divisional despatchers who now sat side by side at the control panel. Being at each other's elbows rather than separated by hundreds of kilometres of tele­ phone wire, they were able to coordinate their actions faster, which was one of the reasons why, immediately after the changeover to the new system, average freight train speed increased from 44 to 48 km/h. There were corresponding improvements in locomotive and car mileage, while the number of the Railway's train­control staff had been halved (each despatcher in the control room covered their previous control sector of about 300 kilometres, but now there was only one, instead of two, duty controllers per sector). The sec­ tors could be enlarged to 500 km in due course and, said spokespeople for the Railway, there was room to accommodate the adjoining Krasnoyarsk and Transbaikal railways as well; there was a glint of knives here, for the Krasnoyarsk Railway was at that time bitterly resisting its own proposed dissolution. This centre was not simply for controlling train movements. It could allocate and follow locomotive crews, coordinate track repair with train movement and follow the process of car loadings and unloadings. But high­quality data input was essential and computer training courses for staff were organised and appear to have been taken seriously. A problem was the poor quality of cables, and some­ times data from an outlying district arrived physically in the form of a computer disk instead of over the wires. Eventually the laying of optical fbre cable would clear up this problem. Interestingly, in view of what was happening on the October Railway (see p. 71), it was the track department which was failing to play its proper part. Previously, division heads had carefully nursed track brigades, per­ suading them to do their allotted work at the planned time so as not to hold up trains unduly. With the disappearance of divisions, this mothering ceased, and the track workers became completely disorganised. It was found necessary to force discipline on them; if they arrived late for a task their equipment was sidetracked and they were sent away to explain themselves to the management. The centre for transport service, apart from serving as a premium

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freight centre where shippers could arrange their business in a few minutes, either in person or over the wires, also provided an infor­ mation service for management. For example, the new accessibility of updated lists of supplies in stock permitted a complete break with former practice. Hitherto, management had concentrated on acquiring whatever was available, storing it away in case of need. After so many years of this practice, management had little idea of what stocks it actually held and an immense sum of dead capital was represented in these hoards. With the new system, items were acquired only when needed and the stocks were gradually used up. Another aim (in 1997) was a daily updating of the fnancial situa­ tion so that management would no longer be basing decisions on fgures that could be weeks out of date. The same applied to traffc; if traffc in given commodities was falling, prompt announcement of this on the screen could permit remedial measures to be taken in good time. The two­level administrative structure allowed all fnancial re­ sources to be concentrated at railway level. This was an advantage, especially when money was short since it enabled scarce funds to be allocated to their best advantage, or so it was said.17 More bluntly, perhaps, it made it harder for a lower­level unit to preempt funds. The concept of one central despatching centre for an entire rail­ way depended above all on adequate cable provision, something which at frst was not always the case. Other railways favoured the Gor'kii Railway's decision to provide a central despatching centre for each division. On the October Railway it was decided to have a central despatching centre in St Petersburg, but with affliate cen­ tres on the enlarged divisions.18 Although some of the enthusiasm declined after 1997, the real advance represented by the East Siberian transformation was clear, and some other railways planned to follow the same line. But the move towards total elimination of divisions came to a virtual stand­ still after 1997.19 At a conference of division heads in October 1998, Nikolai Aksenenko, the new Railways Minister, reassured his audi­ ence with characteristically carefully­chosen words: Railway divisions are an effcient link in the general administra­ tive system, and they have the right to live on for many years.20 By then about 40 divisions had been eliminated, about one­third of the total.21 Further progress would not be made until, it was said,

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all the prerequisites were there: technological, economic, social; together with the agreement of the political leaders (governors, usually) of the regions.22 This last factor was probably a main reason for the change of policy. Certainly it was 'political chiefs' who above all brought to an end the programme of merging entire railways.

Merging the railways The division of the railway network into individual railways was a natural feature in all but the smallest countries of the world. When the railway nationalisation process was completed in the newly­ formed Soviet Union, the old railways' boundaries were preserved. Over the decades, however, with a re­division here, a transfer there or an amalgamation somewhere else, the railway map changed and the number of railways rose and fell. In the last years of the USSR, there were 56 railways. A dozen or so were lost when the republics separated and by the time Zaitsev came to offce there were 19 in Russia. The Sakhalin and Kaliningrad railways were isolated from the main network as well as being smaller than the average. In many ways a railway was a convenient unit, bringing some degree of local management to a network which tended to be ex­ tremely centralised. Railways did not have much real independence, especially in fnancial matters, and they were required to use stan­ dard all­network procedures and equipment. But they could give concentrated attention to local situations, local people and their own local workers. For this, though, there was a price. They em­ ployed a large number of administrative staff and the boundaries between railways were not unlike international frontiers so far as train movements were concerned; a train was not so much passed, as put through a process, in moving from one railway to another. The electronic revolution seemed to promise an end to what was seen as an excess of railways. A given railway administration, pro­ vided with the latest in information technology, could administer a far wider area. There was talk of a future just around the corner when, for example, a single control centre in Irkutsk could control train movements in Vladivostok. A good deal of armchair map re­ drawing seems to have taken place, together with some serious, detailed studies. However, the frst amalgamation of the post­Soviet railways was a one­off affair when the troubled and incomplete Baikal­Amur mainline was divided between the Far Eastern and East Siberian railways. Although this enhanced the stature of the recipient

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railways, it did nothing for their balance sheets, and could be seen as a clever way of taking care of the BAM fnancial losses. The ultimate aim of the Railways Ministry was a network divided into just six, division­less, railways. As Minister, Zaitsev argued that quite apart from the operating and staff­saving advantages of merg­ ing, there was something fundamentally wrong with the existing situation where one railway could differ so markedly from another. He compared, for example, the October Railway, with its 11 000 kilometres and varied activities, with some of the Trans­Siberian bridge lines with 2000 km but the same size of headquarters' staff. Nobody appears to have raised the possibility that it was the Octo­ ber Railway that was too large, and that it might be better off without the former Murmansk Railway, acquired in 1959. As things have turned out (see pp. 71 and 117), it does seem that the October Railway, as it exists, is very hard to manage. Having achieved the dismemberment of the BAM, the Railways Ministry aimed at three subsequent amalgamations. It did not in­ tend to hurry and other amalgamations would follow only when the time was right. The current menu listed the Kemerovo Railway, which was to be absorbed by the West Siberian; the Krasnoyarsk Railway, to be merged into the East Siberian; and the Northern, intended to make the October Railway even bigger. Merging the Kemerovo Railway into the West Siberian would solve several problems, and it also met the desire to make each new bigger railway a balanced operation, with a mixture of local and transit traffc; the West Siberian fourished on bulk transit freight while the Kemerovo Railway was essentially an originating line, serving the Kuznetsk coal region. Moreover, because of the drastic decline of the Kuznetsk coal industry, the Kemerovo Railway faced great problems which, as a lone and rather small railway, it could hardly be expected to solve. Geographically, too, the merger looked right, the Kemerovo Railway being essentially a north­south route (although including a modest length of the Trans­Siberian) and its partner an east­west main line. Historically, the arguments were sound, because the merger was simply a return to the pre­1979 situation, the Kemerovo Railway having been formed only then; it had been part of the West Siberian until 1979.23 Zaitsev, who by nature felt that convincing arguments were trump cards, was surprised by the opposition that this proposed merger aroused. But his diagnosis of the problem seems largely correct as well as applicable to other proposed mergers. At the top end of the

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scale, political leaders liked to have a railway they could call their own; at its most simple, this enabled them to solve local transport problems merely by lifting the phone and giving orders. It also increased their political leverage and their patronage resources. There was also a fear that the abolition of the local railway would mean the loss of an important taxpayer. On the lower level, employees of the Kemerovo Railway feared for their future. The loss of jobs with the closure of the headquarters was one thing, but the effect on jobs of the greater effciency promised by amalgamation was equally important. In its amalgamation proposals, as with its abolition of divisions, the Railways Ministry did pay great attention to the fate of workers under threat. It undertook to fnd alternative work for those dis­ placed, with limitation of recruitment helping the process. In general it fulflled its promise, although in some cases workers had either to resign or accept a posting elsewhere; in conditions of acute housing shortage such a transfer could be a nightmare so many did choose to leave railway service. As for taxation, the various merger propos­ als emphasised that local tax payments would continue as before and measures were promised that would guarantee this. The government decree merging the Kemerovo Railway into the West Siberian was published 19 December 1996, eliciting what was politely called an 'unambiguous reaction' on the part of local powers. The Kuzbas governor, M. Kislyuk, declared himself categorically against it, and in Moscow the second chamber of parliament advised the Railways Ministry to halt the reorganisation until its economic justifcation became clearer; the Ministry does not appear to have paid much attention to this vague formulation. The State Duma had to be taken more seriously, especially when in February it sent a fact­fnding group of deputies to Kemerovo. The group, which included at least one former railwayman, did in fact approve of the merger, believing it would cut costs and improve service. But it voiced con­ cern over the issue of displaced workers. In reality, the Kemerovo Railway workers for the most part did well. It was they who, for example, benefted from the extended locomotive traction sections resulting from the change. The reduced demand for crews that must have resulted from the longer sections seems to have been borne largely by the West Siberian workforce, but because the latter was larger, the effect was hardly noticeable. The only really diffcult situation seems to have been at Taiga, a junction of the Kemerovo Railway, which lost much of its role as a railway town (four­ffths

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of its population was connected with the railway).24 In the end, this amalgamation settled down and worked well. Governor Kislyuk, who had appeals pending in the Constitutional Court and the Supreme Arbitration Court over the legality of the amalgamation, lost the following election and the new governor was a railwayman, A. Tuleev. In 1997, the Kuzbas coal industry was accorded substantial tariff concessions. 25 The Kemerovo-West Siberian amalgamation was the last such merger. So much opposition was stirring that on a number of occasions the Ministry felt compelled to state that it was not hurrying the issue of amalgamations, and that further amalgamations would depend on current studies, which likewise would not be hurried. Gover­ nors of locations suspected of being the site for the next amalgamation raised opposition. Thus the governor of Yaroslavl wrote to the chair­ man of the Federation Council (the second chamber) saying that the amalgamation of the Northern Railway with the October should only take place in well­thought­out and well­justifed stages, a gentle way of saying 'only over my dead body!'26 Even a G�k�k correspon­ dent complained that out on the line, workers were worried that their railway could disappear at any moment.27 In his November 1996 interview with �������k���� ��z���, Zaitsev was plainly anticipating the impending merger of the Krasnoyarsk Railway. The subsequent failure to amalgamate it was a great disap­ pointment to some senior railwaymen who had long scorned that Railway's right to an independent existence. It had been part of the East Siberian Railway until 1979 when, for the second time, it was detached to form a separate entity. It was believed that this hap­ pened only because Krasnoyarsk leaders had party connections reaching as high as the Politburo. Certainly, from an economic and operating point of view, a separate railway administration seemed to have no justifcation, but it had become a prized asset of Krasnoyarsk governors. When the formidable General Lebed be­ came governor, the future of the Railway seemed assured. Over the next few years, Lebed seemed to take the Railway under his own personal, and assertive, care. In summer 1999 he refused to accept Moscow's dismissal of the Railway's head and, somewhat to the latter's embarrassment, maintained him in offce.28 By the time Zaitsev left offce in mid­1997, it was becoming clear that both the structural reform processes, the elimination of divi­ sions and the merging of railways, had lost impetus. The campaign further lost attention when it was decided to reopen the railway

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question and search for a 'concept' of their future (see p. 82). Re­ ducing the number of railways had aroused very powerful opposition and was part of the tug­of­war between central government and the governors; this was a period when the governors were gaining more power and infuence at the expense of Moscow. In this situation, a Moscow­imposed restructuring of provincial railways would have aroused opposition however good the scheme might have been. The Ministry was also accused of failing to consult the regions before announcing amalgamations. There were those in the Economics Ministry who felt that the Railways Ministry should really make sure that everything would go smoothly before launching amal­ gamation schemes. In the Defence Ministry it was thought that the Railways Ministry should think more deeply about geopolitical matters before taking decisions.29 On a deeper level, the proposed restructuring had implications for Russia's future. There was a current of opinion that favoured more independence, if not independence itself, for certain regions. The Far East, for example, was closer to the prosperous 'Pacifc Rim' than to centralising but distant Moscow. There was an implicit under­ standing that amalgamating railways would tend to discourage such separatism: implicit, because it seemed to be rarely talked about. However, after being needled in his �������k���� ��z��� interview, Zaitsev did let slip that railway amalgamation would '. . . be some kind of barrier for separatist tendencies . . .'. 30 A glance at a map shows how closely, for example, the Far Eastern Railway matches the territory of a possible Far Eastern Republic; joined to the neighbouring railway, the match would disappear. But this fear that railway administrative structures could encourage or discourage sepa­ ratism, could only be speculation.

Zaitsev in retreat Zaitsev was dismissed in mid­April of 1997, being succeeded by his frst deputy, N.E. Aksenenko, who had also been his deputy on the October Railway. He was not given a warm send­off; there was just a short offcial announcement of the change. Later in the year he was attending a cardiac clinic. It is possible to identify a number of factors that must surely have encouraged his dismissal. Firstly, Zaitsev was identifed with the railway reorganisations; it was not he who had decided upon them, but as the minister pushing them through, he aroused animosity,

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particularly on the part of the increasingly powerful administrators in the regions. Although he did have a circle of friends and sup­ porters, these were largely limited to his home ground of St Petersburg and the October Railway. He does not seem to have made visits to outlying regions a priority. In fact, say a number of informants, he preferred to spend his spare time in St Petersburg and never really settled down in Moscow. Although this might seem to be endear­ ing, it did not help his cause. In the natural course of events he would have found himself in disagreement with central government fgures, and his reliance on intellectual argument may not have been an advantage. He was probably a great disappointment to those who still hankered after railway privatisation as, in his own way, he was just as discourag­ ing as his predecessor Fadeev had been. There was a rumour that he fell out with Nemtsov; the latter supported the early end of cross­subsidisation of passengers by freight, with governments di­ rectly subsidising passenger services instead. Zaitsev, however, was convinced that the governments would never pay up and wanted to move slowly. This rumour, if true, seems unlikely to be the com­ plete story. Zaitsev himself confded to the St Petersburg press that he had always known that his term as minister would be short: 'With high­level appointments, subjective factors play a big role'.31 Nemtsov had simply announced to him that he wanted to work with a younger man. Possibly this was Nemtsov's polite way of indicating that he did not like working with Zaitsev. The latter was evidently still popular back home, and he was a member in the Leningrad regional assem­ bly for Lodeinoye Pole, a railway junction on the Murmansk line. He returned to head the October Railway, was sidetracked in a car­ diac clinic for three months, and made a second return in early 1998, an operation not having proved necessary. Soon after, he was the principal victim of the October Railway purge (see p. 70).

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5

Rethinking Restructuring

The new Minister Nikolai Emel'yanovich Aksenenko was born in Siberia in 1949, the thirteenth and fnal child of his parents, who were both old enough to remember tsarist times: Some of his mother's family had sup­ ported the Reds and died; some of his father's family had opposed the Reds and died. He later reminisced that this difference caused absolutely no tension in the family. At school, his favourite subject was history and his favourite authors were Tolstoy and Dostoevsky. But later he was impressed by Bunin and Berdyaev, authors who tended to be absent from Soviet libraries. The philosophical works of Berdyaev, with their analyses of personal freedom, must have been quite exciting for a bright young man living at that time and place. In 1999, Aksenenko declared that Berdyaev was a good guide to the current situation of Russia, showing that destabilisation was the danger and that the Russian character, with its hankerings for one extreme or the other, had to be watched. No doubt his read­ ings helped form his personality, which was or became ascetic and rational. He was a non­smoker and non­drinker, avoided meat, got out of bed at 6.00 am and thought it was unkind to keep pets in apartments - but if other people thought differently, good luck to them. He did not have all that many friends, he said, but he knew he had lots of enemies. Or rather, there were lots of people for whom he was the enemy. He dealt with such people and then moved on, not worrying overmuch.1 The above paragraph is mainly based on Aksenenko's own appre­ ciation of himself. A counter­characterisation had been published a year previously by somebody who undoubtedly counted as an 'en­ emy', and this is discussed below. 68

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After graduating from the Novosibirsk Railway Institute he served at a way­station of the East Siberian Railway and soon became stationmaster. Then he moved to the South Eastern Railway, where he was soon head of the traffc department of the Voronezh division. His fnal railway was the October, where he was assistant head of the Murmansk Division, then head of the Leningrad-Finland Division before moving to the Railway's head offce as chief economist and ending as frst deputy head. He worked with both Fadeev and Zaitsev, each of whom appear to have eased his onward career. He was Zaitsev's frst deputy in Leningrad and then moved to become Zaitsev's deputy railway minister. In 1990 he had completed a course at the Academy of the National Economy, an elite institute of the USSR Council of Ministers. On his appointment as frst deputy minister, G�k�k printed his portrait, a passport­style picture showing a stern, if not sour, face crowned by a post­hippy hairstyle with the rest of the picture occu­ pied by a suit that imparted an air of under­nourishment.2 All subsequent pictures, and they were many, show a genial, impeccably groomed head supported by a well­cut suit enclosing a well­fed frame. This transformation into smart fat­cat image was, perhaps, bold, given the allegations of nest­feathering that were being made (see p. 100). He was a distinctive Railways Minister. Unlike his predecessors, he had never been in charge of a railway, although he did have a widely­spread professional experience. According to one informant, he was remarkable in never shouting at his subordinates. His ap­ pointment while still in his thirties was not unprecedented, but it was rare and appears to have had some connection with merit as well as with Boris Nemtsov's stated preference for a young minister. On taking offce, he immediately began a programme of visits, not so much to the various railways as to the local political leaders whose goodwill was needed by those railways. This was very much a fence­mending campaign, establishing relationships with person­ alities who had becone distrusful of the Railway Ministry and its plans for railway restructuring. Henceforth it became customary, when publicising possible changes, to include the reservation 'with the agreement of the local powers'. It is true, as critics soon pointed out, that these visits strength­ ened Aksenenko's political position, something that was important when, in 1999, he was appointed a deputy prime minister and even began to be spoken of as a future prime minister. But this was un­ likely to have been his motive since better relations with local

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government was an urgent necessity for the railways in 1998 and 1999. On his appointment as deputy prime minister, he relinquished his post as Railways Minister and this was flled by V.I. Starostenko, chief of the West Siberian Railway. But within weeks he was back as Minister, although retaining the deputy premiership. For the frst time in 50 years the railways were led by someone who had polit­ ical weight. In the past this had happened when the railways were seen to be in a critical state; Trotsky and Kaganovich had been ministers in such circumstances. This time there seemed to be no crisis, but some big changes were imminent.

Purge on the October Railway As already described, the October Railway had made exceptional use of the opportunities offered by the post­Soviet liberalisation. It had founded subsidiary companies; it had its own bank and freight forwarder. It had invaded Intourist's former hold over passenger and tourist functions. It had started its private pension fund for employees to supplement the state pension. It participated in the high­speed railway project and in rolling stock construction. There was hardly a pie in which the Railway did not have its fnger. It had also reorganised its divisions, reducing their number by half. Concurrently, it contrived to slip out of the system whereby income from divisions went via the Railway to the Railways Min­ istry, which in turn distributed it back to the railways. To a large degree, the Railway's divisions, and the Railway itself, had control over their money. Because of their high proportion of foreign busi­ ness, they also seemed well­off in terms of foreign exchange. These two advantages would have been envied by other railways, and resented by some of the Railway Ministry's departments which, while accepting the need for decentralisation in the abstract, did not at all like its concrete manifestations. While busying itself with all kinds of reforms and initiatives, the October management also had to cope with the daily workings of an extremely complex railway. No other railway of the network was so varied in its work. It operated the inter­capital passenger service, which included Russia's only high­speed train. In the north it dealt with heavy bulk freight haulage. It had dense commuter services in Petersburg and Moscow. It had international frontiers with four states. It organised regular container trains. It had the

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enormous task of rebuilding the venerable St Petersburg to Moscow line and had adopted new ways of doing this. It was closely involved in projects to build new Baltic ports on Russian territory. Thus it was hardly surprising that this was an extremely diffcult railway to administer, although it is not at all certain that its ad­ ministrators knew this. There were, however, warning signs. Troubles with the taxation authorities, recounted elsewhere, could probably have been avoided if management had shown more alertness. The Railway frequently seemed to be short of money despite its geo­ graphical advantages. In 18 days (31 May to 17 June) in 1997 the October Railway experienced no fewer than fve accidents. In previous years its accident record had been quite good, if not excellent; it boasted that from 1993 to 1996 it had had only four major accidents (major accidents, kr��h�����, were those involving loss of life or write­off of rolling stock). But there was a hint of selectivity in that claim, for in 1992 it had had eight bad accidents, almost twice as many as the second­ worst railway in this respect. One of these 1997 accidents was caused by a yard locomotive that ran into freightcars under repair, killing a ftter. The locomo­ tive had been moving at 6 instead of the permitted 3 km/h. Some play was made of the fact that its rheostatic brake was out of order, but since this fault was known to the driver it was hardly a cause of the accident. However, the locomotive should not have been in service with that defect. It was also revealed that the driver was above pensionable age; the Railway had 136 of such driver pen­ sioners. The question was asked why such drivers were employed since there could not really be a driver shortage with traffc falling so fast (in fact there was a driver shortage, something that was no secret).3 The other four accidents were derailments due to faulty track. In one case the track had been badly maintained (superelevation on a curve had been miscalculated) but it had passed inspection a few days previously. In another case a length of defective track had been revealed by the track­recording car, and the appropriate report made, but nothing had been done. The third derailment occurred during high temperatures. At such times trackworkers (lengthmen) were meant to be out in force to spot any distortions, but the hot weather not unnaturally coincided with a period when almost a third of the lengthmen were on holiday. Trackwork has to be sus­ pended when the temperature is high, but because of a lack of

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radio or mobile telephone provision the message ordering suspen­ sion had not reached a gang that was replacing cross­ties. Track distortion had resulted. The fnal derailment, alarming because it took place on a line where high­speed trains operated, was at Likhoslavl, and involved a switch loosening up while a freight train was passing over it. That design of switch was known to be faulty and had not been produced for some years, but many were still in service. There was a set procedure for periodic examinations to detect incipient fail­ ures. This involved, among other contortions, looking beneath the switch mechanism by means of a hand­mirror, so it was probably not a popular procedure. In fact, the inspections had not been made at the right times and nobody seemed responsible for ensuring that they were. One death and over 60 derailed freightcars resulted from these accidents. All the same, the reaction of the Ministry seems exagger­ ated. The Minister himself and a group of his deputies descended on the October Railway; ' . . . unprecedented in the history of our railways . . . a colossal loss for the Railway and for the State', Aksenenko announced. After a couple of days of investigation, Aksenenko declared that the situation on the October Railway was extremely unsatisfactory, indeed critical, and the problem was the decline of discipline and responsibility brought about by the recent restructuring of the Railway with its down­playing of the division. The October Railway had been the frst to introduce such changes, and they were not paying off. Quite the contrary. Decisive measures were urgently needed. . . . The management of the October Railway did not altogether agree with these opinions and the dispute smouldered on, to burst out again a year later. It is indeed arguable that fve accidents in 18 days was just a coincidence (a couple of years years later the Mos­ cow Railway had a similar cascade of mishaps, but no ministerial delegation turned up on that line). The derelictions of responsibil­ ity, sloppy work and unsatisfactory equipment (such as absence of working radios, defective locomotives and mainline switches) could be found on other railways too. All the same, for a railway that liked to regard itself as elite, the management had a case to answer. In spring 1998 the dispute fared up again. The October Railway management must have been hard­pressed at this time. One of its most urgent tasks was the reconstruction of the inter­capital main line. But most of its track machines were out of use, awaiting spare

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parts; others had been repaired but the repair companies refused to hand them back until the Railway paid its previous year's debts. New ballast, to be supplied by the Ministry's central supply organisation, was not arriving. The Ministry was asking for daily operation of the high­speed train, which would wreck the plan for track renewal.4 According to V. Lobko, a deputy head of the Rail­ way, the Railway was in fnancial trouble because it had contributed some of its cash to help other railways pay their wage bills; the capital account looked bad because it had paid for heavy track equip­ ment which was for the beneft of the network as a whole, and anyway other railways were in the same diffculty but disguised it with smart accounting. In April the Ministry dismissed fve of Zaitsev's deputy heads as well as some specialists. Zaitsev announced, in clear defance of the Ministry, that he was giving them his moral support and consider­ ing legal action in their defence. He stated that the real motivation of the Ministry was that a new policy was being introduced, by which he presumably meant the emerging 'concept' for the future (see p. 84). Lobko, one of those dismissed (he had been responsible for personnel), was accorded a full page of the Railway's newspaper Ok���kr��k���� m�����r��� to unload his bile.5 Aksenenko, he said, had begun to hound Zaitsev as soon as he had become Minister and Zaitsev had returned to head the Railway. A freight train had de­ railed and Zaitsev received a severe reprimand which was represented as the fnal warning; it would be dismissal the next time. Zaitsev was given three months to put everything right. When that quarter passed without further disasters the minister, claimed Lobko, had demanded that Zaitsev write a letter of resignation because he wanted another man in charge of that railway. Zaitsev then went into hos­ pital with heart problems, but he came back after three months and Aksenenko decided to get at him by removing his supporters. Although Aksenenko had worked as Zaitsev's deputy, there was little affnity between the two. On the October Railway, Aksenenko had been deeply involved in commercial operations, conducting barter operations and dealing in bills. It was also noteworthy that after his appointment as Minister Aksenenko had appeared on the television show 'Hero of the Day' and when asked whether he would continue his predecessor's resistance to the attempts of the IMF to dismember the railways he had replied that there was no intention of dismembering the railways, they would simply be divided. To

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Lobko, this sounded sinister, and he added that Iz������� and K�mr����� had published some 'very interesting details' about how the Minis­ ter put his personal interest frst. The truth was, the October Railway was a key railway, and Aksenenko wanted somebody there who would share his own ideas or, better still, have no ideas of his own. That is why Zaitsev had to go. Lobko was feeling sore, and in this recriminatory piece he re­ ferred to the Minister slightingly as 'Mister Aksenenko'. At no point was he willing to give him the beneft of the doubt. Nevertheless, his version of events does not contradict the general belief that, rightly or wrongly, Aksenenko passionately believed that Zaitsev was the wrong man in the wrong place at the wrong time. He might have held that belief for a long time; as Lobko said, he was a man who could disguise his feelings. And as he himself indicated, he had a sensitive nose for enemies. Aksenenko telephoned Lobko to tell him he was being fred, and apparently a long, acerbic conversation ensued, with the Minister detailing the sins of the October Railway and of Lobko's personnel department in particular. At one point the Minister complained that the personnel department had failed to cultivate any high­fyers for the future (this was an unfair accusation, as all railways were hav­ ing the same problem). The conversation went something like this: L�kk�: But our Railway is constantly supplying top quality people for the network. Ak�����k�: Oh, and who do you have in mind? L�kk�: Well, you for one, Nikolai Emelyanovich. Ak�����k� (irritated): I'm not from the October Railway. I was sent there already trained as a top­level leader, to drag the Railway out of the mire. Aksenenko went on to say that Fadeev had brought in many good specialists, mainly from Siberia, to put the Railway right. This was correct, and it touches on a possible deeper current in the October Railway crisis, the development there of a local, tight­knit, manage­ ment team (alternatively describable as an incestuous clique), which Fadeev had sought to shake up by bringing in trusty Siberians. If this was so, he succeeded, for by the end of the century the Minis­ try was headed by a Siberian, and so were the important Moscow and October railways. This telephone conversation moved from an acerbic start to an

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acrimonious conclusion. Of interest to historians, perhaps, is that the Stalinist Terror was invoked for the fnal salvos. Aksenenko accused Lobko of instituting a 1937­style reign of terror on the Railway, to which the deputy chief retorted that only Stalin's Great Purge provided a real analogy with what the Minister was doing. In response, the Ministry's press service asked the Railway's news­ paper to publish the text of a ministerial statement, which it duly did. This related that the 'Balance Commission' of the Ministry had visited nine railways in March, and the October Railway was found to have an enormous debt, exceeding its credits by six times. Its costs, moreover, were growing. Safety was deteriorating because of its ill­thought­out restructuring. Expenditures had passed the limits allowed. Fuel had been used wastefully. Management was unable to deal with its fnancial situation. Neither weak measures nor crying out loud about its troubles would settle anything and did not answer the need of the times.6 Meanwhile, something strange was happening with the Baltic Bank, in which the Railway had a signifcant holding. At a press confer­ ence at which Railway and Bank managers took part, Zaitsev announced that the Railway intended to become a majority share­ holder.7 Yet two weeks later, in what seems to have been a desperate, last­ditch attempt to rescue the Railway from its fnancial misery, Zaitsev agreed to sell the Railway's holdings in the Baltic Bank to another fnancial institution, ��r��k��k. The price was 8 400 000 roubles which, according to some experts (unnamed, possibly prejudiced), was about one­twentieth of their actual value.8 The transaction was in fact unlawful for two reasons: the other shareholders had not been consulted in order to obtain their approval, and Railways Ministry approval was also needed because state property was in­ volved. These illegalities made it relatively easy for Zaitsev's successor to subsequently retrieve the shares. While Zaitsev was selling those shares, a tele­conference of the Ministry's Collegium was taking place, and a brief summary of its report was published in G�k�k.9 The October Railway was named as worst railway in terms of indebtedness and then, in language un­ usually strong, the negligence (kh���������) of the Railway's manage­ ment in the Predportovaya bankruptcy (see p. 117) was condemned. (At this point it might be observed that G�k�k did not really cover these events. It published the above­mentioned report and later it published the government statement announcing Zaitsev's dismissal, but probably only because it was required to. For some, this may

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have aroused nostalgic memories of the Soviet press, which also tended to exclude any really interesting, unpredicted, events. An attentive reader of G�k�k in these weeks might have surmised that Zaitsev was in trouble, but that is all. This does not imply criticism of the newspaper's editorial staff, one of whom at least, in the issue of 28 April, managed at the bottom of the last page to sneak in a headline, 'The Hunt Begins for "Zaitsev!'. The text beneath was about ticketless travellers, for whom the slang term is 'hares' - z������) According to Zaitsev, relations between the Railway and the Min­ istry had deteriorated when new men came into the Ministry in 1997 (presumably that was his way of saying they deteriorated after his own departure from the Ministry). One particularly sharp issue was the Ministry's wish to centralise all the income fows that the railways still possessed. It was because of this, he said, that work on electrifying the Murmansk line had practically come to a stand­ still, while other investments of the Railway were under threat.10 On 19 May, an offcial government announcement of Zaitsev's dismissal was published. He was accused of 'systematic non­execution of his required duties', weak operating work and severe fnancial­ economic defciencies.11 The fnal exit of Zaitsev (not quite fnal, for he began to lecture at the railway­run Transport University in St Petersburg) was probably a turning point. Zaitsev and Aksenenko were not irreconcilably apart in their views of how the railways should develop. But their ap­ proaches were very different. Zaitsev, confdent in his judgements, tended to proceed fast in the expectation that political, fnancial and other obstacles would give way; the ����� �dd�mr�� would triumph. At a time when a united front was important, he may have been regarded as something of a loose cannon by senior railwaymen. Aksenenko preferred to move more slowly, building political and fnancial strength before proceeding. Neither had a monopoly of the truth. In terms of working together, they should have been comple­ mentary but instead were incompatible and this was a great pity. In early 2000, Zaitsev's successor as head of the October Railway was dismissed amid accusations of incompetence. Recourse was again made to Siberia, with the appointment of G. Komarov who had earned a reputation as some kind of wonder­worker as head of the East Siberian Railway. After a year of his management the October Railway was still struggling but there were hopes of better times.

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New pressures for privatisation12 Territorial restructuring of the railways had met opposition that was bringing it to a standstill; attention now shifted to a restructur­ ing of the Railways Ministry itself. During 1997, several rival projects or concepts for restructuring the railways were elaborated by the government's Service for Regulating Natural Monopolies, the Transport Ministry, the European Bank for Reconstruction and Development, and the Railways Ministry. These projects were studied and compared, initially by a committee headed by Chubais, until fnally one (the Railway Ministry's) was adopted by the government. The rejected, rival proposals may have had some infuence insofar as the Railway Ministry's presentation went some way towards satisfying one or other of their demands, displaying a desire for compromise while taking some wind out of the sails of those competing concepts. It used to be a truism among Russian historians that because Rus­ sia did not undergo the intellectual experience of the Reformation and Renaissance it never developed the art of civilised, sophisti­ cated argument. The wrangling that preceded the fnal adoption of the 'concepts' for the radical restructuring of Russian railways both refutes and confrms this theory. The debate was not uncivilised and at times one or other of the protagonists could certainly be described as Jesuitical. On the other hand the intellectual level of the argument was low; it was populistic in the sense that all sides preferred to assert those arguments that seemed most likely to elicit sympathy rather than to go into matters that were deeper but less easily presented. Perhaps there are some exceptions to be made, because in the background serious discussion and study was going on. For example, there were researchers at the Railway Research Institute and the Moscow State Transport University (MGUPS) who from 1993 were formulating models of different structural futures. But even these did not really have all the information the decision­ makers needed, so assumptions had to be made - and when as­ sumptions are made it is hard to avoid the infuence of long­held beliefs. In fact, the arguments that were traded back and forth were only respectable clothing for a simple clash between two philosophies, two beliefs that were deeply held. Simply put, the dispute was between those who believed that the railways should remain as a single, state system and those who were convinced that the breath of competition obtainable by privatisation was essential in order to

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drive the railways towards the lower costs and enhanced service that the economy needed. This was a confict between those who had been brought up in, worked with, and tended to favour, the planned economy and those who were convinced that the Western free market approach was by its very nature superior and therefore essential. As the 'concept' fnally adopted in 2001 covered a long future period it is too early to make a fnal judgement, but at the time it was adopted it would probably have been true to say that neither of the two philosophies had really won out. The Railways Ministry seemed to have conducted another successful strategic re­ treat that offered concessions to the privatisers but yet maintained the centralising potential of the Ministry.

The tariff argument The war of concepts that emerged in 1997 might well be seen as a new chapter in the struggle for and against privatisation. A chance for an attack from a different direction had appeared in the form of a campaign for lower freight tariffs. A cynical view of this is that industry, and those members of the government responsible for in­ dustry, required a plausible excuse for the still­declining production of goods, both for export and for the home market. As in other countries and in other periods, the railways provided a perfect scape­ goat. The argument was that because of high freight rates the transportation component of the fnal price of Russian­made goods was very high and much higher than in other countries. This gave foreign imports a price advantage and Russian exports a disadvan­ tage and resulted in enterprises that had once supplied the whole USSR being restricted to nearby markets. The decisive impulse for the railway restructuring concept, a po­ tentially revolutionary intention, was this quest for lower freight rates. So much so that it formed part of the preamble for the text of the concept that was provisionally accepted and published by the government in 1998. Interestingly, the implications of the alleged high transportation component were hardly mentioned; both sides of the argument preferred to argue on a fairly superfcial level, using factual material that could plausibly be described as both selective and incomplete. Any researcher with minimal competence could have produced fgures in support of either side. It was simply a matter of carefully selecting the period and types of commodity for analysis. In the

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early years of the post­1989 market economy, railway tariff increases usually lagged well behind the infation rate. Subsequently, to avoid the enormous losses that this seemed to threaten, they had been permitted to catch up. It is doubtful whether, over the period 1989-2000, tariff increases were greater than infation, although no doubt there were some shippers who believed this to be so. Given the price increases levied by those two other great 'natural mo­ nopolies', the oil and power industries, it is certainly true that some inputs used by railway transport were subjected to price increases that were greater than the rise in average tariffs. In addition, the railway lobby argued that the 'transportation component' in prices averaged only about 20 per cent (in the case of bulk commodities, which included some which were seeking export markets at that time, the component would have been much higher). The implica­ tion here was that industry would do better to look at itself rather than at the railways if it wanted to make its prices competitive in an extended market. Railway researchers pointed out that the average tariff rate per tonne/km in Western Europe varied from 0.03 ecus in Sweden to 0.10 in France, whereas on Russian railways it was only 0.008. With a careful selection of commodities and routes, this picture could be radically changed; wrangling over numbers, however, only concealed a deeper issue that nobody seemed willing to talk about, the restructuring not of the railways but of Russia itself. The prob­ lem of the transportation component was simply a consequence of the geographic nature of Russia, the union of an enormous territo­ rial expanse into a single economy. Integrating distant industry into the general economy meant that both the tsarist and Soviet regimes manipulated freight rates in favour of the long­distance shipper. The tsarist Chelyabinsk tariff 'break' on the Trans­Siberian had the same purpose as the Canadian Pacifc's Crow's Nest agreement: to give distant shippers of bulk commodities a chance of competing in the national or international market. By 1914 the market for Donetsk coal had widened even as far as the coal­producing Moscow region, thanks to very low railway tariffs. In the Soviet period this process was carried to new lengths. Founding in eastern regions huge in­ dustries that were meant to serve the whole USSR and which might draw their raw materials from the whole USSR could only make accounting sense if railway tariffs were reduced to levels well be­ low railway costs. In the planned economy, loss­making tariffs raised few eyebrows; however, as the market economy emerged they could

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no longer be shrugged off. Naturally enough, as soon as the rail­ ways raised their tariffs to bring price more in line with cost, those industries that had relied on cut­price transportation were discom­ fted. By 1997, therefore, the argument that railway freight tariffs could be brought down by restructuring (shedding the passenger burden and introducing competition) had a strong appeal.

The freightcar issue In discussions about competition, the key issue (as all sides recognised) was who would own the freightcars. Privatisers believed that if they were owned by competing companies which had the right to use the tracks then competition would eventually bring down tariffs and improve service. On the other hand, if cars were not owned by individual companies there could be no competition - apart from a somewhat fraudulent competition in auxilliary services between forwarding agents. Those arguing for the railway interest did not demand that each and every freightcar should belong to a single central organisation such as the Railways Ministry. Since the latter had for some years happily accepted the idea that some industries could own their own specialised cars, often moved by the railways according to agreed, regular timetables (and invariably labelled �r�dh���� ��z�r�� - for immediate return), they could hardly argue otherwise. Indeed, the more cars that were owned by the industries that used them, the more the burden of peak­and­trough demand would be shifted to the industries. In 1998, almost a quarter of the freightcar stock was owned by users, although specialised freightcars represented 40 per cent of the total freightcar stock.13 The railways' defnition of specialised car was wider than in some other countries, including not only obvious items like oil and cement cars, but also open cars (gondolas) used exclusively in coal traffc. What the Railway Minis­ try wanted was that the general­use freightcars should be retained in central ownership. Its main and quite powerful argument was that centralised ownership and control, together with free access to all would­be users, was essential in order to reduce empty running and obtain the most out of a freightcar stock which as a matter of policy had always been kept down in terms of numbers. Most of the arguments against private ownership, including this one, tended to ignore possible ways out of the forecast diffculties. As will be seen, one rival set of proposals envisaged that with

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developed information technology it would be possible to have pri­ vate ownership with maximal utilisation. Nor were the railway interest's arguments always quite fair. It was true that specialised cars had a 'coeffcient of empty running' of about 0.5 compared with 0.3 for general­use vehicles like boxcars and fats, but this had little to do with ownership. Another argument that was valid yet hardly unanswerable was that transfer to private ownership of the entire car stock would be an administrative nightmare. Private­owner cars were numbered in a series with the prefx '5', and this was the rule throughout not only Russian railways, but also those of the former soviet republics. Wholesale transfers to private ownership would mean that all available numbers starting with '5' would be used up, so there would have to be a complete renumbering scheme in 15 countries. Far more likely to strike sympathetic chords was the fear, often unspoken but implied, that the freightcar stock would fall into the wrong hands. That is, the hands of fy­by­night operators who would run their freightcars intensively, not troubling too much about maintaining them, before fnally selling them off for scrap and, in­ stead of buying new ones, investing the money in something more proftable. There had been enough analogous cases in Russia during recent years for this sequence to be regarded as a syndrome rather than a phenomenon. Even the more reputable owners would minimise repair and maintenance expenses, if only to enable them to com­ pete with less conscientious operators. Freightyards would eventually be clogged up with bad­order cars whose owners were not keen on paying for their repair. The likelihood that private ownership would lead to more bad­order freightcars entering circulation also raised the spectre of more accidents and greater damage to the track. But all this anxiety might have been more of a nightmare than a real­ ity, since nothing could be proven, and critics of the Railway Ministry's view could argue that the state of its existing freightcar stock was hardly standard­setting. Each side supported its case with US examples, and each side accused the other that in so doing it was comparing apples with oranges. The railway interest could point to the fact that US rail­ road companies had their own freightcar feets. Their opponents argued that, yes, so they did, but their tracks were also used by freightcars belonging to big and proftable car­leasing companies which often introduced the very latest designs of vehicle (to this the railway interest response was that in the USA the car­leasing

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companies were run on long­term principles, but there was no guar­ antee that Russian leasing companies would stay in business very long).

Competing proposals The restructuring proposals of the Transport Ministry appear to have been given short shrift. It proposed that the operating functions of the Railways Ministry would be transferred to new private com­ panies while remaining services would be absorbed by the Transport Ministry. It had long had ambitions to absorb the railway business and relations between it and the Railways Ministry had been tense for some years. This tension developed into tangible hostility in 1997 when the various concepts were under discussion.14 The Trans­ port Ministry had been formed in the heady days of the early liberalisations, taking under its wing aviation, water and road trans­ port. It was an unwieldy ministry and it was not long before it gathered an unenviable reputation that was not entirely deserved. Civil aviation was divided into hundreds of small companies, few of which, even if they could get a plane into the air, seemed likely to keep it there. Ocean shipping underwent a parallel experience until it could be said, with some exaggeration, that the only Rus­ sian ships in distant waters were those that were interned in foreign ports as security for unpaid bills. As for highway transport, foreign truckers were steadily driving out Russian competition from the lucrative import/export service. Eventually, new federal services took over the airlines as well as road construction and maintenance, leaving the Ministry initially only with what was left of water trans­ port and supervision of highway operators. Small wonder that this Ministry was anxious to take over railway business, if only to jus­ tify its existence. With its poor public reputation, its proposals for railway restructuring did not make much impact. The proposals of the European Bank for Reconstruction and Development also sug­ gested placing what was left of the future Railways Ministry in the Transport Ministry. However, its suggestions were less radical than either those of the Transport Ministry or of the Federal Service for Regulating Natural Monopolies.

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The natural monopolies service proposal These recommendations were the last to be tabled, in October. Press comment was not generally favourable.15 Like competing proposals, this concept accepted that ending the cross­subsidisation of passen­ ger by freight traffc was the most important measure (it was generally agreed that a total end to cross­subsidisation would permit a 20 per cent freight tariff reduction). But the essence of this proposal was that railway tariffs would be adequately lowered only if competi­ tion was introduced in those parts of the railway process that were not a natural monopoly. That is, in all items of the transportation process except that of the track itself. At the same time, the two functions of the Railways Ministry should be separated: it could not be both a state regulating organ as well as a railway operator. The authors found the existing fnancial arrangements to be odious. This referred to the practice of railways transmitting their incomes to the common pool held at the Ministry and receiving in return not their real costs but costs calculated by applying a coeffcient that took account of a railway's situation. (The Ministry's case was that since some railways were naturally costly to operate, and since the tariff was standardised over all railways, this was a fair way of doing things.) The Ministry's critics pointed out, quite correctly, that in these conditions it was fraudulent to claim that the indi­ vidual railways were independent enterprises (and hence the cost accounting - kh�zr��hdh�� - regime applied to the railways in Soviet times was simply window dressing). Moreover, the costs attributed to the different railways made no distinction between fxed and variable costs, so there could hardly be any stimulus for cost cut­ ting on the railways' part. The fundamental issue was that the MPS offcials who decided how the money fows should be divided were not answerable to anyone; there was no 'civil responsibility'. The solution was to remove the Ministry from the fnancial side of things, allowing free competition to make proft and loss a meaningful con­ cept. Tariffs would be divided into two components. The frst part, payment for work done, would cover the variable costs of an op­ eration and would be part of a railway's income. The second component would be to pay for railways' fxed costs; this would be centralised and allocated to individual railways in accordance with their situation. But although handled centrally, these fxed cost al­ locations should not be handled by the Railways Ministry, since it was an organ of state power. They would have to be managed by a

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genuine enterprise. The Ministry need not necessarily disappear, because there had to be some body that was able to carry out the state's role of overall regulation, especially in the felds of technical standards and safety as well as licensing. This reorganisation would also deal justly with the railways' auxilliary services, something the authors regarded simply as a way of getting money for services that the railways should have been providing in any case. The reference by railway interests to the USA was not valid claimed a spokesman for the Monopolies Service proposals. In the frst place, America was not Russia. Secondly, and more importantly, it would be quite possible to oblige freightcar owners (that is, freight railway companies) to allow anyone to use their empty cars if they had no immediate need for them. Modern information technology systems could handle this problem and also sort out the payments for track use on the one hand and car use on the other (in addition, car owners would not demand excessive rentals because that could lead only to high and unproftable empty mileages). Investment in IT systems would be needed, and it would not be cheap, but it was badly needed by the railways in any case. The proponents of the Federal Monopoly Service concept believed that a six­month initial period would be suffcient for the separa­ tion of the day­to­day management function from the state supervisory function and for the formation of companies. The railways would become affliate enterprises. After this initial period the further necess­ ary changes would be fairly easy to introduce. One member of the commission authoring this proposal later wrote that the Railway Ministry's own concept was simply cosmetic and would not lead to competition. He also commented: All the economic pursuits of our MPS colleagues revolve around internal cost accounting. We were very astonished to fnd that what for us was a half­forgotten yesterday was for them the bril­ liant future.16

The Railways Ministry's concept That the government fnally chose the recommendations of the Railways Ministry was probably in some part due to the skilful ac­ tivity of new men at the top of that Ministry as well as the infuence of the deputy prime minister, Boris Nemtsov. Apparently the prime minister, Chernomyrdin, did not favour the MPS proposals.17

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The Railways Ministry did have a trump card, however, in that it could claim that an integrated, centralised, state railway system was not only necessary for the economy but was also vital for the country's defence. Just as in tsarist times, when the War Ministry had a dominant voice in railway questions, the Defence Ministry may well have been an unseen infuence. Its spokesman had al­ ready expressed its views about railway amalgamation so it could be expected to have a view about restructuring. Interestingly, at this period, the one­time Railways Minister N.S. Konarev even recom­ mended that the railways should be left as they were but transferred to the so­called defence industry complex. 18 The MPS would also have earned some credit for the tariff reduc­ tions it introduced in July. These averaged 5 per cent, but were concentrated on long­distance mass freight, which benefted to the extent of 30-50 per cent (see p. 177). This move seemed to show that the Ministry was ready to listen to suggestions. Curiously, when the Ministry decided on a further 5 per cent cut in October, the Federal Service for Regulating Natural Monopolies, among others, insisted that it should be spread evenly, thereby ensuring that it had no noticeable effect. Other cuts followed, and in 2001 the Rail­ ways Ministry would be claiming that the average transportation coeffcient had been reduced by 50 per cent. V. Kovalev, frst deputy Railways Minister, characterised the pro­ posal of the Natural Monopolies Service as simply the 'British Model' (of which few Railways Ministry specialists had anything good to say). All that had happened in England, he said, was that small companies had been set up, only to be gobbled up by the most powerful companies so that in the end only two were left, one American­owned and one Canadian­owned. These then turned round to their public and said 'Forget about your competition. This is what you're going to pay'.19 (Although this analysis might surprise some British readers, it had some arguable resemblance to the truth so far as freight companies were concerned. The British franchise approach to the passenger service problem aroused no great interest.)20 In its turn, the Railways Ministry's victorious concept was re­ garded by some as a copy of the 'Swedish Model', a model that had earlier been rejected by the researchers of the Moscow State Trans­ port University and Railway Research Institute because it was likely to lead to higher tariffs. There was indeed a certain resemblance but the two were not at all identical. The main features of the Railway Ministry's concept were then

86

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presented.21 The process of structural reform was to be carried out by the Railways Ministry itself, with the participation of other in­ terested state organs. The Ministry was creating a Department of Railway Reform for this purpose. Also within the Ministry there would be a separation of state from managerial functions. The div­ ision of functions, work and property between the existing railways and the companies being formed within the Ministry, was some­ thing that was being worked on. The reform would have three stages. In 1998 and 1999, com­ panies would be formed for handling passengers and a start made in forming freight companies (independent freight operators were already appearing, and operating companies created under the auspices of the Ministry were envisaged). Action would be taken towards ending cross­subsidisation of passenger by freight traffc. All this would involve much work of a legal nature, including revision of the Federal Railway Law, the Railways Charter and other key docu­ ments. Solutions of the problem of obtaining federal and local funds for passenger work would be sought. In the same period the shed­ ding of non­transportation activities would continue, with housing being transferred to local governments and construction organisations, factories and trade and catering establishments being sold off and privatised. Measures towards obtaining more transparency in the railways' fnancial transactions would be taken. New tariffs would be worked out. As passenger and freight companies were created, local competition between them would develop, all under the super­ vision of the Ministry. In the second stage, lasting 4-5 years, the mutual relationships between the new companies, the railways and the clients would be worked out and evaluated. The process of shedding non­transportation assets would be completed. Loss­making or under­utilised lines would be closed or sources found for making up their losses. In the third and fnal stage, depending on the results of previous changes, the question of dividing the railway infrastructure into repair and operating segments, and the possibility of privatising the railways' freight and passenger companies, would be studied. Also to be studied in this period (a period of indeterminate length) would be the practicability of separating the state from the managerial functions of the Railways Ministry. As outraged critics pointed out, these proposals did not promise any real competition. In addition, two main demands, full priva­ tisation and the separation of the MPS state and managerial functions,

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had been reduced to blurs on a distant horizon. But the MPS could claim that it had not rejected privatisation; in addition, it had agreed to divest itself of its non­transportation functions. No doubt there were those within the Ministry who privately hoped that eventu­ ally when the time came to consider privatisation, the political atmosphere would have changed. On the other hand, the Ministry's public argument that a long timescale was needed to get things right and to avoid the mistakes that other countries had made, was a strong one. As Nemtsov put it when introducing the concept in the Duma on 13 February 1998, there was to be no shock therapy. The example of the electric power industry was in many minds, where the break­up of the state monopoly had resulted in a prolif­ eration of local monopolies that often seemed both ill­run and grasping. The Railways Ministry concept was also criticised by those who thought that it had made too many concessions to uninformed opinion. These critics continued to ridicule the apparent belief that the reform would bring lower tariffs and that lower tariffs would solve general economic problems. They had ready ammunition in the emerging, if premature, claim that the heavy tariff reductions on long­distance freight seemed to be bringing loss to the railways but no noticeable improvement in industrial output; that is, the railways were simply carrying at lower tariffs a traffc that at best was constant and in many cases was still falling. Critics feared that the railways would fall into the same hole as had civil aviation, road transport and shipping. They also argued that since costs at­ tributable to freightcar usage amounted to only 12-20 per cent of transportation costs, there would be very little scope for cost­cutting if freightcar stock was transferred to private ownership. The ending of the railways' non­transportation businesses raised many hackles. In the beginning, wrote one critic, the railways followed the bid­ ding of reformers and seriously got on with developing ancillary activities, especially the production of foodstuffs. But now, 'follow­ ing the destructive recommendations of the European Bank for Reconstruction and Development', the reformers were telling the railways that they should stop all that. In the meantime, meat, grain and dairy production on the railways' farms had shown itself to be more effcient than on the farms supervised by the Ministry of Agriculture. The Gorkii Railway, for example, was obtaining 24 centners (2400 kg) of grain per hectare. The likely privatisation of railway supply organisations, on which railway families, especially

88

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at remote stations, relied for the supply of everyday needs, also raised considerable anxiety. There had been too many examples already of privatisation bringing higher prices and unimproved service. 22 The precise status of the individual railways was not entirely clear, but there were suspicions that the centralising tendency noted since about 1997 (when the Ministry began to take a closer grip of the railways in order to impose order on the chaos of indebtedness and bartering) would be perpetuated as a result of restructuring. It seemed likely, for example, that the individual railways would not be legal persons, something which would severely circumscribe their functions.23 In many minds there was the suspicion that foreign bankers were behind the urge for reform. This was not simply because foreign bankers wanted to impose their own ideology, but because privatisation would open the way for foreign investors to buy into the Russian railway system just as they had bought themselves into other key Russian industries.

Finalising the reform It was not until 2000 that the fnally accepted concept went for­ ward into the enactment process. It was discussed by the Council of Ministers in November 2000; the exchange of opinions was said to be 'more lively' than was usual in that forum. It was resolved that the various ministries and departments should have a fnal plan ready for enactment by 1 April 2001. In May, the government would approve the timescale for the establishment of the new Rus­ sian Railways, expected to take place in 2002. Meanwhile, the Duma's committee for energy, transport and communications examined the question and the Duma was expected to vote on the proposals in mid­March 2001.24 In fact, these approvals and the President's as­ sent were obtained in April 2001. In the two years separating the acceptance of the Railways Ministry's concept and the start of its enactment process, there had been a subtle strengthening of the Ministry's position. In 2000 there were clear signs that the decline of railway traffc had come to a halt and that the future trend would be upward. This, together with the con­ tinuing operating proft, emphasised the Ministry's view that, unlike the situation in other countries, Russia's railway reform was not an urgent measure taken to stem fnancial loss or to end mismanagement, but was primarily a means of raising the capital that rail transport

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so badly needed. The original idea, that restructuring was a way of eliminating cross­subsidisation, was important but no longer domi­ nant. Whether private capital would in fact be forthcoming on the hoped­for scale remained to be seen (although, apart from sale of shares in affliate companies, capital was also expected to be ob­ tained from the sale of bonds - either state­guaranteed or backed by railway assets - bank credits and government assistance in new construction). In September 2000, Ek�r�r �, a monthly, and the Ministry jointly organised a conference to discuss railway reform. Ek�r�r�'s editor, as chairman, proposed that the discussion should question why rail­ way reform was necessary, given that the railways were doing alright as they were. A deputy Railway Minister duly explained that when Russian Railways hived off its 'daughter companies' the result would be an infow of funds that could be used for investment. Among other contributors, a deputy minister from the Ministry of Anti­ Monopoly Policy complained that the reform would not end monopoly, and quoted the case of points­and­switches manufacture, where there were two producers, the privatised Murom Works and the railway­owned Novosibirsk Works; who would get the orders? he asked, but was there any need to ask? A British participant, representing the Gibb railway consultancy, bravely recommended that Russian Railways should follow the British example.25 By the end of 2000 there were already 15 freight operating com­ panies, including, notably, B���Tr�����r���, ����r������r���, ����k���M�r and L��k���� �Pk. They owned 5500 freightcars, a fgure that was expected to rise.26 However, they did not own their own locomotives. Almost all of the manufacturing enterprises that produced both for the market and for the railways had been disposed of. However, the delay in fnalising the reform gave the railways time to strengthen their position in some issues. There was, for example, greater accep­ tance that repair depots were part of the transportation process and should not be privatised. The Railways Ministry's insistence that the reform process should be unhurried was self­sustaining: the longer the process took, the easier it was to think up more reasons for a cautious approach. This was a positive trend and critics of the haste in which, for example, the Russian electric power industry had been restructured, welcomed it. The timetable for the reform, as it emerged in early 2001, was that the second stage should cover 2002-04, during which the freight and passenger accounts would be separated, with the establishment

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of a federal long­distance passenger directorate and of separate car and infrastructure components. Separation of infrastructure and train operating accounts would enable tariffs to be clearly formed from infrastructure and operating components. In the third stage, from 2005, share packets of the future 'daughter companies' would be sold. Provided statutory compensation for passenger losses had been obtained, fnally putting an end to cross­subsidisation of passengers by freight, these affliates could include a passenger company. Russian Railways (RZhD) would be totally state owned, with its president chosen by the government. Heads of railways would be vice­presidents. RZhD would have a central despatching establish­ ment that would integrate operations all over the system, realising substantial economies, with gains in car and locomotive utilisation. In 2001 there were already moves towards the elimination of loco­ motive changes at inter­railway frontiers; the establishment of a central despatching regime would depend on further investment in telecommunications. The Railways Ministry would look after the state's interest (in­ cluding the mobilisation plan and maintenance of state secrets), ensure that general guidelines and accepted procedures were fol­ lowed, especially in the matter of standards and safety, and be responsible for general planning. RZhD, the Russian Railways state company, would be responsible for railway operation. The indi­ vidual railways would be affliates of RZhD. In the second stage of the reform might study the RZhD workshops with a view to their separation as, or in, 'daughter companies'. RZhD itself was to provide infrastructure services to the operating companies. Interestingly, by 'infrastructure' was meant not only track, stations, depots, signalling, electricity supply and communications, but also locomotives. RZhD's premium freight system (�FTO) would look after marketing, the provision of auxilliary services and general forwarding services - it could be used by both the RZhD companies and, when advantageous, by independent operating companies. Operating income would be centralised in a RZhD account, which would also distribute funds, but the individual railways and div­ isions could have their own accounts for receipts from auxilliary services. Long­distance passenger services, initially to be in the charge of the directorate of passenger services and its regional affliates, could eventually be divided into companies, not only for the proftable routes, but also for ticket service, catering, tourism, and so on. In

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the meantime, the directorate could become a daughter company of RZhD. Commuter passenger services, being essentially regional, would be the responsibility of regional directorates of railways or railway divisions, or even sometimes of RZhD. Regional companies could be created from some of these, with local administrations and RZhD among their backers.

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Part II

Operating the New Railway

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6

Freight� in� the� Market� Economy

Traffc Refecting� trends� in� the� Russian� economy,� railway� traffc� declined drastically� up� to� 1998,� when� it� was� 40� per� cent� of� the� 1990� fgure (Table� 6.1). Table 6.1

Russian� Railways� freight� traffc�( billion� tonne/km)

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2523

2326

1967

1608

1196

1214

1125

1096

1006

1205

1373

NB:� all�f gures� are� from� the� Railways� Ministry� annual� abstract.

The� recovery� from� 1999� coincided� with� the� improvement� in� the general� economy� that� was� attributed� to� the� bracing� effect� of� the 1998� fnancial� crisis.� However,� the� railways� could� not� anticipate� an inevitable� upward� curve.� Highways� could� be� expected� to� improve, and� this� would� bring� stronger� competition.� In� 2000,� the� railways handled� 40� per� cent� of� Russian� freight� tonnage,� highways� 23� per cent.� These� are� Railways� Ministry�f gures.1� In� terms� of� tonne/km, the� railways'� share� was� bigger,� as� much� as� four-ffths� by� some� calculations,� but� long-distance� trucking� operations,� especially� international movements,� were� increasing,� and� the� rule� of� thumb� that� trucks� were only� competitive� up� to� about� 200 km� was� losing� its� validity. The� railways'� share� of� traffc� had� diminished� over� the� decades largely� because� of� pipeline� expansion.� But� highway� competition was� already� strong� in� those� regions� where� the� roads� were� relatively� good.� The� Northern� Railway� was� threatened� by� a� furry� of highway� projects;� it� lost� much� of� the� frozen�f sh� shipments� from 95

96

Soviet Railways to Russian Railways

Murmansk,� and� in� its� region� accounted� for� only� 30� per� cent� of� the total� traffc� volume� in� 2000,� with� highways� carrying� 33� per� cent. The� October� Railway� was� losing� much� of� its� refrigerated� traffc,� largely because� the� refrigerator� service,� Refservis,� was� unable� to� cope� with competition.� Because� of� car� shortages,� much� timber� traffc� was� also being� lost.� Shippers� of� paper� discovered� that� highway� haulage� was cheaper� and� faster� than� rail.� One-man� or� small� highway� operators, more� fexible� in� meeting� clients'� requirements� than� the� larger� highway� enterprises,� seemed� to� be� the� main� threat,� but� the� October Railway � was � expecting � to � feel � the � effect � of � tax� concessions � for highway� operators� due� to� come� into� effect� in� 2001.� In� the� Moscow region� the� railways'� share� was� higher� (53� per� cent),� with� the� roads taking� 43� per� cent,� pipelines�3 � per� cent,� and� waterways� less� than 1� per� cent.

1995: a key year In� 1994,� railway� traffc� was� continuing� to� fall� and� fewer� managers believed� that� this� fall� was� simply� a� short-term� blip� that� would correct � itself � when,� inevitably,� the� economy� sprang� back� to� its previous� levels.� For� 1995,� the� experts� at� the� Finance� Ministry� forecast� a� 17� per� cent� annual� decline� of� rail� freight,� to� which� the� Railways Ministry�(more� formally,� its� Collegium)� responded� by� declaring� that the� railways� would� not� concede� such� a� fall:� 12� per� cent,� yes;� 17� per cent,� no. This,� superfcially,� bore� all� the� signs� of� a� Canute-like� gesture,� with the� railways� defying� the� tide� of� industrial� decline.� But� it� had� a deeper� signifcance,� because� it� was� a� rejection� of� that� fatalism� which, on� the� testimony� not� only� of� conventional� wisdom,� has� stifed� so many� Russian� potentialities. That� defant� 12� per� cent� became� a� target� in� an� industry� which was� well-used� to� the� targeting� method� of� management.� In� seeking ways� of� attaining� it,� railway� managers� had�f nally� to� accept� that traffc� was� something� to� be� struggled� for,� and� that� a� successful manager � had � to � produce � new � traffc;� it � was � no � longer � enough to� defend� incomes� and� labour� forces� by� ingenious� diversions� into non-railway� business. Traffc� could � be� gained� in� two � ways:� (1)� by� winning�( increasingly, by� winning � back)� traffc� carried� by� other� transport� modes;� and � (2) by� encouraging � industries � to� produce � more � by� helping � them � gain access� to� more� extended� markets.� In� many� cases,� and� notably� by

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tariff-juggling,� one� initiative� could� achieve� success� by� both� routes. 1995� did� in� fact� show� a� marked,� if� short-lived,� recovery� of� railway� freight� traffc,� and� although� the� 1996� railway� workers'� conference (see� p.� 48)� is� generally� regarded� as� the� turning� point� of� the� 1990s, in� terms� of� attitude� and� approach,� 1995� was� probably� the� key� year.

A new Railway Charter Charters� and� codes� were� a� feature� of� tsarist� times,� and� even� more so� of� the� Soviet� period.� Having� the� force� of� law,� they�f lled� gaps that� in� other� countries� tended� to� be� covered� by� general� laws� such as� laws� of� contract.� They� were� the� handiwork,� usually,� of� government� departments� seeking� to� put� in� documentary� form� the� behaviour they� required� from� those� engaged� in� a� given� type� of� activity.� They thus� tended� to� be� highly� departmentalised,� often� imposing� rules that� gratifed� the� self-importance� of� their� promulgators� but� which were� not� in� the� general� state� interest.� Customs� regulations� and� highway� vehicle� licensing� were� two�felds� where� the� departmental� norms sometimes� came� into� confict� with� railway� transport.� The� railways had� their� own� charter,� but� it� was� incompatible� with� the� market economy� despite� a� patch-and-mend� process� in� the� early� 1990s.2 For� most� of� the� 1990s,� the� railways� were� operating� under� the Soviet� Railway� Charter�( Ustav)� of� 1964.� Railway� charters,� which had� their� antecedents� in� the� bridge� regulations� of� ancient� Rus',� were intended� to� regulate� mainly� the� relationships� between� transport� facilities� and� their� users�� � as� distinct� from� railway� laws,� which� were concerned� more� with� the� relationship� between� railways� and� state authorities.� In� the� upheavals� of� the� Soviet� years,� there� were� half� a dozen� successive� railway� charters.� The� 1935� Charter,� for� example, was� introduced� to� give� emphasis� to� the� railways'� obligations� towards the�f ve-year� plans,� and� was� notable� for� the� 11� articles�( a� tenth� of the� total)� which� specifed� dire� consequences� under� criminal� law� for failures� to� observe� the� rules.� It� also� mentioned� on� almost� every page� the� right� of� the� Peoples'� Commissariat� to� change� those� rules ('conditions� of� carriage').3� That� charter� lasted� out� the� Stalinist� years, and� was� replaced� by� a� new� charter� in� 1955� that� deleted� warnings of� criminal� liability� and� emphasised� the� railways'� responsibility towards� their� users.� It� also� mentioned� the� need� to� establish� mutual relationships� with� other� forms� of� transport,� a� refection� of� the� new emphasis� on� coordination� of� transport.� The� next� charter,� that� of 1964,� brought� the� rules� into� line� with� the� recent� liberalisation� of

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laws� throughout� the� economy� and� again� emphasised� transport� coordination.� It� also� marked� a� certain� decentralisation,� with� more� rights granted� to� railway� heads,� railway� division� heads� and� stationmasters. However,� it� was� still� based� on� the� presentation� of� shipments� according� to� plans,� and� the� centralised� supply,� through� the� Ministry, of� materials� and� equipment� needed� by� the� lower� administrations. This� attitude,� and� the� change� of� atmosphere� brought� by� the� developing� market� economy,� required� a� radically� different� set� of� rules and� it� is� remarkable� that� these� did� not� appear� until� 1998;� much� of the� delay,� however,� was� a� consequence� of� the� very� long� and� detailed� study� of� the� proposals� and� the� natural� opposition� of� the� many interests� which� felt� threatened� by� them.� The� new� draft� had� to� pass through� the�D uma's� Industry,� Construction,� Transport� and� Power Committee,� and� several� legal� institutions� to� ensure,� among� other things,� that� it� was� fair� and� did� not� confict� with� recent� anti-monopoly legislation. The� 1998� Railway� Charter� did� move� towards� user-friendliness. Responsibility� was� placed� on� the� railways� for� both� late� arrival�( and departure)� of� passenger� trains� and� late� baggage� delivery.� The� penalties� that� previous� charters� had� imposed� on� shippers� for� under-use of� a� freightcar's� or� container's� capacity� were� lifted.� 'Marchrout'�( by through� train)� shipment� was� no� longer� compulsory.� A� railway's� right to� refuse� a� shipment� was� narrowly� defned.� Detention� of� freightcars and� containers� was� no� longer� to� result� in� a�f ne� laid� on� the� shipper but� would� be� covered� by� a� user-payment.� The� old� system� of� annual, quarterly� and� monthly� plans� for� shipments� was� abandoned;� shippers� henceforth� were� expected� to� put� in� requests.� Restrictions� on the� readdressing� of� shipments� were� lifted.� On� the� other� hand,� the charter� strengthened� the� railways'� hand� in� dealing� with� reluctant payers.� It � specifed � that � payments � should � be � made � before � the despatch� of� consignments,� and� that� if� previous� consignments� from a� shipper� had� not� been� paid� for,� a� railway� could� refuse� subsequent shipments.� Moreover,� if� a� railway� held� back� delivery� of� a� freightcar to� a� recalcitrant� payer,� it� could� no� longer� be�f ned� for� late� delivery of� that� car.4 The� new� 1998� Railway� Charter� offered� more� fexibility� in� planning �( in � this � case,� it � formalised � something � that � was � already happening).� The� old� charter� required� shippers� to� present� their� monthly requirement� 14� days� before� the� start� of� the� month,� whereas� the new� charter� specifed� that� requests� should� be� made� at� least� 10� days before� loading�( through� freight),� or� 15� days�( export� and� intermodal

Freight in the Market Economy

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through� freight)� and� the� client� was� asked� for� some� detailed� information� about� the� shipments.� The� new� charter� allowed� shipper� and railway� to� agree� about� volume,� time� and� date,� and� payment� method. They� could� come� to� long-term� agreements� that� gave� both� a� possibility of� strategic� planning.5 By� the� time� it� was� signed� by� President��eltsin� on�8��anuary� 1998, the� charter� had� 148� articles.� The� biggest� chapter� (37� articles)� covered freight� transport,� detailing� procedures,� obligations� and� penalties.� The thorny�q uestion� of� industrial� feeder� lines� had� a� chapter� to� itself, consisting� of� 14� articles,� and�' mixed'� traffc�( that� is,� inter-modal) had� a� chapter� of� 17� articles.� The� chapter� devoted� to� mutual� responsibilities� was� mainly� concerned� with� compensation� payments� between shippers� and� railways� but� article� 130� secured� compensation� for� delayed� passengers�(commuter� passengers� were� excluded;� others� could get� back�3 � per� cent� of� the� fare� for� every� hour� of� delay,� if� the� railway was� to� blame,� and� if�� � not� likely�� � they� knew� their� rights). As� with� so� many� legal� acts,� ratifcation� did� not� necessarily� imply conformity.6� Breaches� of� the� railway� charters� had,� almost� of� necessity,� been� a� feature� of� previous� decades;� sometimes� it� had� been impossible� to� fulfl� planned� shipments� without� breaking� the� rules. To� some� extent� this� was� repeated� with� the� 1998� Charter� but,� as previously,� the� existence� of� a� written,� legalised� text� was� a� foundation.� Both� shippers� and� carriers� knew,� or� at� least� had� no� excuse� not to� know,� what� their� duty� was,� the� risk� they� were� taking� if� they broke� the� rules,� the� rights� they� might� enforce� against� their� client, and� the� legal� steps� that� were� open� to� them.� Thus� there� was� a� constant� pressure� to� obey� the� rules� and� this,� in� time,� made� the� charter effective.7

Freight forwarders Russia's�f rst� mainline� railway� from� St� Petersburg� to� Moscow� was staffed� mainly� by� military� and� ex-military� men.� These� soon� showed their� limitations� as� seekers� of� freight� traffc� so� an� outside� company was� called� in;� it� had� some� success� with,� for� example,� transferring river� traffc� to� the� railway� at� rail/river� intersections.� Thus� this� early agency� was� also� an� early� practitioner� of� intermodal� transportation. However,� the� role� of� freight� agents�( who� sought� traffc� for� the� railway)� and� freight� forwarders�( who� helped� shippers� deal� with� the railways)� was� very� limited� in� tsarist� times� and� disappeared� in� the Soviet� years.� But� with� the� emergence� of� the� market� economy,� and

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the� need� to� actually� attract� shippers� by� presenting� a� friendly� face and� convenient� procedures,� the� freight� forwarder� had� a� useful� role to� play. The� term� ekspeditor� covers� a� variety� of� enterprises�( some� Russian commentators� would� say� it� covers� a� variety� of� sins).� In�� estern terms,� 'forwarder'� is� the� best� translation� since� much� of� the� ekspeditor business� consists� in� acting� as� an� intermediary� between� the� wouldbe� freight� shipper� and� the� provider� of� transportation,� and� in� being roughly� the� freight� equivalent� of� a� passenger� travel� agency.� Russian forwarders� also� acted� sometimes� as� pool-car� operators�(concentrating small� shipments� so� as� to�q ualify� for� bulk� tariffs),� as� rolling� stock leasing� companies,� and�fnally,� towards� the� end� of� the� 1990s,� almost as� train� operating� companies. N.I.� Konarev,� the � former � Railways � Minister � who � subsequently headed� the� Intertrans� forwarding� company,� was� accorded� a�q uarterpage� interview� in� Gudok� to� explain� what� his� company� did,� but preferred� to� gripe� about� the� state� of� the� country,� and� when� pressed described� Intertrans� as� a� charitable� enterprise�( it� gave� grants � to� two schools,� apparently),� as � a � publisher �( it � sponsored � a � railway encyclopdia)� and� as� a� bridge-builder�(it� was�fnancing� two� bridges).8 It� was� this� kind� of� obfuscation,� among� other� things,� which� fuelled distrust� of� the� forwarding� companies.� The� alleged� misdoings� of another� forwarder,� Transreil,� are� detailed� below.� Rumours� about� the future� Railway� Minister� Aksenenko� and� his� enrichment� while� dealing with� the� affairs� of� the� Evro-Sib� forwarder� might� have� seemed� very plausible� to� some� people,� even� though� at� the� time� of� writing� no acceptable� evidence� of� his� misbehaviour,� apart� perhaps� from� an expanding� waistline,� seems� to� have� emerged.� All� the� same,� big� profts were� certainly� made� by� some� forwarders,� and� much� of� it� was� hard currency,� and� although� Transreil� emerged� relatively� unscathed� from its� public� exposure,� that� affair� did� at� least� show� that� in� the� world� of freight� forwarding� there� were� plenty� of� opportunities� for� belowboard� activities. In� the� early� 1990s� anybody� could� set� up� as� a� freight� forwarder, and� thousands� did� so.� An� accurate� count� was� probably� impossible, but� in� early� 1998� there� were� said� to� be� about� 17 000.9� At� that� time no� license� or� certifcation� was� required,� just� observance� of� the� Civil Code� when� making� and� keeping� agreements�(highway� transport� was already� better� organised,� with� licensing� for� forwarders).� However, the� Railways� Ministry� saw� the� need� to� change� this,� and� introduced a� system� of� certifcation� which� demanded� certain� standards� of� ser-

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vice,� qualifed� personnel,� and� physical� facilities.� This� was� expected to� weed� out� the� small� operators.� Nevertheless,� the� number� of� forwarders� was� expected� to� remain� high.� Towards� the� end� of� 1998� that part� of� the� industry� which� worked� internationally� and� in� agreement� with� the� Railways� Ministry� numbered� 94� operators,� all� of which� could� be� expected� to� survive� the� licensing� process.10� In�� une 1998,� the� Ministry� organised� a� competitive� selection� of� forwarders with� which� it� would� deal� for� Trans-Siberian� container� traffc.� It� chose fve,� all� of� which� seemed� able� to� handle� all� the� stages� of� a� service.11 To� establish� common� standards� and� also� a� degree� of� integration� in a� scattered� industry,� the� Guild� of� Forwarders� was� established� in 1999.12� Its� board� of� trustees� included� a� deputy� Railways� Minister and� several� other� railway� managers.� Forwarders� were� clearly� regarded� as� an� arm� of� the� railway� business� and� some� of� them� were� a step� in� the� direction� of� independent� operating� companies� as� envisaged� in� the�'concept'� for� restructuring� the� railways�(see� p.� 84).� Indeed, because� so� many� of� the� original� functions� of� forwarders�(presenting a� user-friendly� face� towards� shippers;� fnding� the� best� possible� way of� handling� a� given� shipment;� looking� after� its� progress;� performimg documentary� operations;� smoothing� the� way� through� customs;� negotiating� favourable� rates,� arranging� pick-up� and� delivery;� handling rail/water� transhipments,� and� so� on)� were� also� performed� by� the railways'� own�'premium� freight� centres'�(see� p.� 105),� the� forwarding companies,� in� order� to� survive,� needed� to�f nd� new� lines� of� business.� Some� of� them,� especially� those� that� originated� in� the� Railways Ministry,� seemed� to� mix� the� role� of� freight� agents� with� that� of� forwarders;� shippers� were� right� to� sometimes� wonder� whose� side� they were� on,� the� shipper's� or� the� railway's�( in� most� cases� they� were nobly� trying� to� help� both,� and� themselves,� at� the� same� time). Many� forwarders� were� not� so� much� forwarders� as� specialists� in one�f eld� or� type� of� operation.� Most� money� was� to� be� made� in international � traffc � and � that � was � where � shippers � typically � were in � most� need� of� help.� Some� forwarders� were� founded� by� individual railways,� under� the� name� Zheldorekspeditsiya.� The� October� Railway's Zheldorekspeditsiya� was� one� of� the�f rst� of� these,� while� the� Sverdlov Railway's� was� apparently� the�frst� to� offer� help� with� customs,� in� this and� other� ways� anticipating� the� premium� freight� centres.13� Several concentrated� on� the� Trans-Siberian� international� service;� one� such was� Transsibirskii ekspress-servis,� which� handled� container� traffc� and had� its� own� fatcars.� Others� concentrated� on� a� particular� traffc� such as� grain,� oils� or� chemicals.� LUKoil-trans� was� occupied� with� running

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trains� of� tankcars� for� that� oil� company.� Another� large� specialised company� was� Russkiii Mir,� which� operated� a� feet� of� over� four� thousand� tankcars� in� Russia� and� most� of� the� former� Soviet� republics. It� had� its� own� control� centre� whose� computers� were� linked� with those� of� the� Railways� Ministry� and� it� was� a� Ministry-recognised forwarder � with � its � own � code.� It � also � had � close � relations � with Russian� railways� and� those� of� the�' near-abroad'� countries,� which made� 22� car� depots� available� to� repair� any� of� its� cars� that� came to� grief.� It� did� not� operate� its� own� locomotives,� but� otherwise� it was� almost� a� train� operating� company.� An� example� of� a� smaller, niche � operator � was � Ekspress-Del'ta,� which � was � headquartered � at Mit'kovo� freight� station� in� Moscow.� In� 1997� this� was� helping� to ameliorate� the� container� shortage� by� arranging� for� incoming� foreign 44 ft� containers� to� be� hired� for� ex-Moscow� shipments� instead� of being� returned� empty.14 Transreil� aroused� suspicions� for� a� number� of� reasons.� It� was� a Railways� Ministry� creation,� with� antecedents� from� Soviet� times,� and seemed� deliberately� to� make� a� mystery� of� itself.15� It� had� its� beginning� in� Zheldoreksport,� founded� by� the� Ministry� in� 1989� to� attract international� traffc.� The� Ministry� decided� that Zheldoreksport� should create� a�j oint� enterprise� with� foreign� forwarders� and� by� this� means Transrail� AG� was� formed� in� Switzerland,� half� owned� by� the� Ministry� and� half� by� a� Swiss� forwarding� company.� It� soon� founded� a branch� in� Germany� and� had� an� affliated� company,� Transreil-Tsentr, in� Moscow.� �hat� seemed� apparent� in� the� early� 1990s� was� that� it was� highly� successful� in�f nding� customers� and� that� it� took� great care� in� concealing� its� connection� with� the� Russian� Railways� Ministry.� Its� ministerial� spokesman� in� 1998� explained� that� at� the� time the�� SSR� was� dissolving� it� was� thought� that� the� new� states� would reject� contacts� with� a� forwarder� known� to� be� Russian;� this� seems unconvincing,� although� that� does� not� automatically� imply� wrongdoing.� At� that� time,� hard� currency� was� seen� as� a� means� of� survival, and� any� device� that� could� maximise� its� infow,� even� a� device� involving � deception,� might � well � have � been � acceptable.� Those international� shipments� that� were� handled� by� Transreil� could� be relied� on� to� yield� the� maximum� possible� hard� currency� and� the prompt� receipt� thereof.� �hat� the� mechanisms� were� that� controlled this� fow� of� hard� currency� are� unclear;� again,� the� explanations� offered� seem� unconvincing.� It� is� likely� to� be� true,� though,� that� transfers from� Switzerland� to� Moscow� took� the� form� of� investments� because that� would� have� avoided� taxation.� One� of� these� investments� was

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claimed� to� be� in� the�' Lokomotiv'� football� club,� another� in� a� tankcar cleaning� plant� and,� in� the� early� years,� in� building� a� smart� new offce� for� Transreil-Tsentr;� there� is� no� reason� to� doubt� these� claims, but� the�question�'where� else?'� might� be� raised.� At� that� time� amateur and� offcial� investigators� would� surely� have� been� interested� not� so much� in� how� funds� were� transferred� into� Russia,� but� in� funds� not so� transferred. However,� like� so� many� dark� rumours� at� this� time,� especially� when hard � currency � fows � were � concerned,� there � may � have � been overreadiness� to� believe� the� worst.� Nothing� more� mischievous� than tax� avoidance� may� have� been� involved.� But� there� is� one� accusation that� was� valid,� which� is� that� the� Railways� Ministry,� in � order� to smooth� the � way � for � its � own � international � forwarder,� granted � the latter� substantial� discounts� on� its� tariffs.� These � were � later � admitted to � be�' up � to� 30� per� cent',� but� some� commentators� alleged� that� 50 per� cent� was� more� likely.� Concessions� of� this� scale� could� ensure that� Transreil� would� have� no� effective� competitors�(although� it� made a � point � of � not � competing � with � some � forwarders �� � Transsibirskii Ekspress-servis� was� one� of� these�� � especially� those� with� a� railway affliation).� Petra� was� a� large� forwarder� that� seems� to� have� succumbed to� Transreil's� competition.� But� in� summer� 1997� the� Ministry� placed its� representatives� on� the� board� of� directors,� began� to� withdraw tariff� concessions,� and� deprived� Transreil� of� its� right� to� deduct�5 � per cent� from� payments� received� from� shippers.� Henceforth� Transreil was� to� compete� on� equal� terms,� but� by� then� there� could� hardly� be any� equal� terms� because� it� was� far� bigger,� far� more � experienced, and � far � better � provided � with � contacts � than � its � potential � competitors.� Shippers � continued � to � use � it � simply � because � it � was � the � best. It � is � too � early � to � attempt � a�f nal � elucidation � of � the Transreil� affair, and � indeed � such � an � elucidation � may � not � be � worth � attempting.� A tentative � and � incomplete � interpretation � might � be � that � in � its � early years � the � Railways � Ministry � valued � the � hard � currency � fow � that Transreil� achieved � and � sailed � rather � close � to � the � wind � in � matters � of regulation� and� supervision.� �hen� Aksenenko� became� Minister,� already having� a� good� understanding� of� the� temptations� offered� by� agencies dealing � in � foreign � currency � fows,� he � probably � saw � the � perils � and made � changes.� In � May � 1997,� hard-currency � agreements � for international � transits � between � the � railways � and � forwarders � were � discontinued�(the� occasion,� or� excuse,� being� that� a� new� central� automatic payment � system � was � being � introduced).� At � about � the � same � time � the deputy� Railways� Minister� Kovalev� began� to� end� the� special� discounts

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that� the� railways� offered� to� Transreil.� It� was� Kovalev� who� in� November� was�' unmasked,'� rather� feebly,� by� some� newspapers.� Press suspicion� of� Transreil's� activities� seemed� to� peak� in� 1997.� �hat� was perhaps� a� culmination� was� an� article� in� the� 22� November� issue� of Novyie Izvestiya,� which� claimed� that� the� deputy� Railways� Minister Kovalev,� who� had� been� charged� with� the� affairs� of� this� forwarder, had� given� his� son� a�j ob� in� Transreil,� and� had� contrived� a� pyramid of� forwarding� and� charter� companies� that� had� deprived� the� economy of� billions� of� dollars.� The� article� had� so� many� inaccuracies� and inconsistences� that� it� was� retracted� and� apologies� given.16

Marketing The� Gorkii� Railway,� situated� in� a� region� which� was� pioneering�' the move� towards� the� market',� was� one� of� the�f rst� to� see� the� need� for new� sources� of� traffc� and� the� fact� that� the� railway� could� no� longer act� like� a� monopolist.� In� 1992� a� marketing� department� was� created in� the� freight� and� commercial� service� with� the� aim� of� acting� as� a kind� of� forwarding� agent� for� transit� and� import/export� of� freight. Then,� in� February� 1994,� the� head� of� the� Gorkii� Railway� expressed dissatisfaction� with� the� traffc� organisation,� which� evidently� was unable� to� respond� to� clients'� urgent,� unplanned� requirements� and thereby � was� losing� potential� traffc.� A� traffc� planning� department was � thereupon � established � in � the � freight � and � commercial � service and � was � combined � with � the � marketing � department.� The � result � of this � restructuring � was � the � department � of � traffc � planning � and � tariff policy. 17� This� department� made� life� easier� for� shippers,� being� very much� a�' one-stop'� offce� where� one� formal� request� was� all� that� was needed� to� ensure� the� execution� of� the� separate� operations� involved in� getting� a� consignment� from� one� place� to� another.� It� involved itself� not� only� with� traffc� organisation,� including� the� arrangement of� urgent� shipments,� but� also� the� forwarding� of� international� freight, the� application� of� fexible� tariffs� and� the� new� contract� system� between railway� and� client.� To� smooth� the� way� on� the� forwarding� side,� a contract� was� made� with� the� Ministry's� own� forwarding� company, Transzheldorekspeditsiya.� Marketing� sectors� were� set� up� on� each� division� and� big� station.� These� provided� local� points� of� contact� with shippers� and� gave� the� chance� to� offer� new� optional� services.� Clients could� request� monitoring� of� their� shipments� en� route.� The� Railway acquired� more� than� a� hundred� motor-trucks� so� that� it� could� offer� to pick� up� and� deliver� at� clients'� premises.

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The� contract� system� that� the� Railway� introduced� in� 1994� in� its dealings� with� big� shippers� was� aimed� at� creating�f rm� relationships with� regular� customers.� The� client� would� agree� to� ship,� at� least monthly,� a� fxed� volume� of� goods,� with� payment� in� advance.� The Railway� contracted� to� deliver� the� goods� in� their� full� amount� to� the destination� and� if� the� client� wished� to� send� more� than� the� stated quantity� the� Railway� would� cooperate� and� could� offer� a� reduced rate� for� local� shipments�( that� is,� shipments� starting� and� ending� on the� Gorkii� Railway). The� marketing� department� conducted� surveys� from� time� to� time, mainly� through�q uestionnaires.� In�� anuary� 1995� it� asked� shippers what� they� disliked� about� using� the� Railway� and� what� tariff� reduction� would� persuade� them� to� transfer� freight� from� highway� to� railway (in� answer� to� the� last,� for� what� it� is� worth,� 22� per� cent� said� that� a 10� per� cent� reduction� would� be� enough;� 15� per� cent� would� have required� 30� per� cent;� and� 25� per� cent� said� 50� per� cent). The� Railway� claimed� that� its� marketing� structure� brought� in� 1.8 billion� roubles� of� traffc� in� 1994� and� that� delegates� from� the� October,� Kuibyshev,� Moscow,� Northern,� Sverdlov� and �� est� Siberian Railways� had� visited� the� Railway� and� taken� away� valuable� insights to� help� them� set� up� their� own� structures.� The� only� problem,� as� a kindly� critic� in� the� Ministry's� Traffc� Administration� pointed� out, was� that� the� Gorkii� Railway� was� losing� traffc� far� faster� than� the network� average,� that� its� success� in� getting� payments� out� of� shippers� was� also� below� average,� and� that� it� paid� a� good� deal� in�f nes for� late� or� non-delivery.18� The� weak� point,� said� this� observer,� was that� the� various� departments� of� the� Gorkii� Railway� were� not� properly � integrated.� �hat � was � needed � was � the � unifcation � of � traffc departments� with� the� freight� and� commercial,� including� the� latter's marketing� and� tariff� branches.� Only� thus� could� clients� be� totally assured� of� all� services� at� one� selling� point.19

Premium freight centres At� the� end� of� 1994,� the� Railways� Ministry� announced� its� policy� of establishing� premium� freight� centres� throughout� the� network.� This strategy� was� based� on� the� success� of� the� premium� freight� services offered� by� various� railways� in� previous� years.� It� seemed� a� compelling way� to� attract� shippers�(and� forwarders)� and� hence� shipments.� These centres� in� effect� represented� a� restructuring� of� the� existing� administration.20� An� alternative� solution� proposed� was� the� establishment� of

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commercial� centres,� at� railway� division� level,� which� would� have their� representatives� dealing� with� clients� at� stations.� But� this� would be� a� new,� parallel� structure,� requiring� recruitment� at� a� time� when traffc� was� falling.� This� would� be� true� even� if� the� representatives displaced� conventional� stationmasters.� The� experience� with� the� container� agency� Dortranskonteiner� a� few� years� back� had� shown� how much� antagonism� was� aroused� by� having� people� at� stations� who were� not� under� the� authority� of� the� stationmasters.� Dortranskonteiner had� not� lasted� long.21 Logunov,� head� of� the� Ministry's� freight� administration,� felt� that the� new� centres� should� be� based� on� the� latter's� divisional� departments.� Prototype� centres� existed� already� on� a� handful� of� railways. In� late� 1994� delegates� to� a� conference� on� the� North� Caucasus� Railway� had� been� very� impressed� with� the� freight� offce� at� Skachki, which� had� been� transformed� into� a� freight� service� centre.� A� bright, light� building� had� been� allocated� and� the� clerks� were� no� longer half-buried� in� documents� and� tariff� manuals;� each� had� a� personal computer� on� which� reference� material� could� be� displayed.� This material� was� not� simply� rates� and� regulations,� but� also� had� details about� the� clients� and� in� particular� how� solvent� they� were� and� whether they� already� owed� money� to� the� Railway.� �ith� these� electronic aids� it� was� also� possible� to� handle� customs� matters,� offering� clients help� with� declarations� and� storage� space� when� needed.� All� these services� would� bring� in� extra� money� at� the� same� time� as� making the� railways� more� attractive� to� existing� and� potential� users.� On� the network� as� a� whole,� the� computerisation� of� freight� stations� was already� progressing.� ARM�(automaticised� worker� locations)� had� been provided� for� the� freight� cashiers� of� 850� freight� stations� in� 1993�94, and� another� 750� stations� would� be� so� equipped� in� 1995;� in� effect, this� meant� that� 90� per� cent� of� the� freight� volume� would� pass� through this� process,� because� 90� per� cent� of� traffc� was� dealt� with� by� the�35 per� cent� of� the� freight� stations� that� would� be� computerised� by� the end� of� 1995. Questioned� by� the� interviewer� about� how� he� regarded� the� example� of,� among� others,� Orsk,� where� the� local� managers� of� loading/ unloading� work� had� provided� themselves� with� their� own� trucks� for pick-up� and� delivery,� Logunov� made� no� response� and� he� was� not pressed� on� this.� He� did,� however,� volunteer� a� picture� of� how� the future� freight� service� centres� would� be� organised.� Their� directors would� have� the� status� of�f rst� deputy� stationmaster,� and� other� staff would� include� an� economist� and� specialists� for� marketing,� for� transport

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services,� for� originating� traffc� documentation� and� for� customs� formalities.� Converting� existing� freight� offces� to� such� centres� would require� staff� changes.� In� particular,� to� allow� the� new� technology� to provide� the� maximum� beneft,� highly�q ualifed� workers� would� need to� be� hired.� Stationmasters� would� need� to� have� more� authority� so that� they� could,� for� example,� make� an� immediate� response� should� a shipper� require� extra� empties� at� short� notice. The� Ministry's� Centre� for� Premium� Transport� Service�( TsFTO)� was duly� established� in�� anuary� 1996.� Its� role� was� to� coordinate� the subsidiary� centres� at� railway� level� and� to� work� on� basic�q uestions, usually� of� a� legal� and� technical� nature.� It� also� took� charge� of� large projects� and� arranged� the� government-inspired� traffc� agreements with� the� Kuzbass� and��orkuta� coal� industries�( where� a� 50� per� cent discount� was� granted� in� 1996),� fxed� seasonal� discounts� on� fertilisers and� made� efforts� to� rehabilitate� the� Trans-Siberian� container� service. In� 1997� the� new� Centre� was� busy� inspecting� and� certifying� the subordinate� railway� centres� for� premium� transport� services�(DTsFTO); by� 1998,� 16� of� the� 17� railways� had� their� DTsFTO,� the� exception being� the� Moscow� Railway,� whose� chief,� Paristyi,� preferred� to� go his� own� way� by� letting� the� existing� freight� and� commercial� department� perform� the� new� functions.� Subordinate� to� the� DTsFTO� were the� regional� and� line� agencies;� there� was� nothing� at� the� divisional level,� because� divisions� were� disappearing,� or� so� it� was� thought.� But the� agencies� provided� the� local� coverage;� in� early� 1998� there� were already� 40� regional,� 412� line� and� 924� station� agencies.� The� regional agencies� in� fact� paralleled� the� railway� divisions,� but� were� not� formally attached� to� them.� The� agencies,� being� the� bottom� tier,� were� relied on� to� maintain� relationships� with� shippers� and� also� to� gather� the information� needed� by� the� marketing� side.� Shippers� could� place their� requests� for� transport� with� the� agencies,� but� if� preferred� they could� equally� well� fax� or� e-mail� them� to� the� DTsFTO.� The� agencies in� any� case� had� to� confrm� arrangements� with� their� DTsFTO.� The fundamental� concept,� which� was� not� always� observed� because� it was� not� always� grasped,� was� that� the� centres� were� meant� to� represent� the� clients� in� dealings� with� the� other� railway� departments. �ndoubtedly� the� freight� centres,� more� often� than� not,� made� life easier� for� shippers� and� were� therefore� a� key� element� in� gaining� or keeping� traffc.� Some� hardened� shippers,� having� spent� years� dealing with� user-unfriendly� railway� organisations,� could� hardly� believe� their senses:

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I� never� thought� it� would� be� possible� to� settle� the� whole� business in�f fteen� minutes.� Previously� you� had� to� go� around� offces� for� a week� with� your� papers,� begging� here,� buttering� there. . . .22 On� the� other� hand,� a� few� observers� had� their� reservations.� One problem,� as� in� so� many� other� Russian� situations,� was� overenthusiasm, the� belief� that� there� could� never� be� too� much� of� a� good� thing,� and it� could� never� happen� too�quickly.� Sometimes� a� freight� centre� added nothing� to� what� had� been� offered� before.� It� might� be� headed� or entirely� populated� by� overkeen,� overambitious� climbers� who� were more� interested� in� producing� good� statistics� than� good� relationships,� or� it� might� not� have� the� liaisons� it� needed�� � see� the� example below: Hour-long�queues� at� one� window;� that's� what� they� mean� by�'onestop� service!'. . . .� Today� a� businessman� from� Tashkent� comes� to Nizhnekamsk� to� buy� tyres� and� parts� for� KamAZ� trucks.� He� must collect� them� from� the� seller� today,� and� no� later.� He� comes� along to� the� station� and� asks� for� a� freightcar� or� container.� I� reply� that I've� got� everything,� but� he� will� have� to� go� to� Samara� and� pay� a forwarder� for� the� transit� through� Kazakhstan.� There's� nobody� here who� can� take� the� money.� And� what's� the� client� going� to� say� to that?! 23 Nizhnekamsk,� the� location� of� this� drama,� is� a� small� town� with� a minor�( three� trucks� in� 1999)� container� terminal� serving� Tatarstan. Problems� with� payments� were� reported� elsewhere� on� the� network, although� not� necessarily� connected� with� the� centres.� In� the� case� of Nizhnekamsk,� restructuring� meant� that� the� freight� station� had� recently� been� detached� from� its� division,� and� at� the� same� time� had lost� its� status� as� a� legal� person.� Down� at� Tikhoretskaya,� on� the� North Caucasus� Railway,� according� to� one� account,� shippers� of� fruit� paid for� their� consignments� and� then� had� to� wait� while� the� money� went up� to� Moscow,� was� recorded,� and� then� sent� back� to� the � Caucasus. Only� when� it� was� received� back� there� could� the� freightcar� doors� be opened,� by� which� time� the� apples� had� turned� brown.24 On� the� whole,� though,� offcial� satisfaction� with� the� work� of� the DTsFTO� was�j ustifed.� Nevertheless,� fgures� displaying� how� much traffc� and� proft� they� contributed� have� to� be� taken� with� some� salt, simply� because� it� is� not� possible� to� distinguish� transformations� for which� they� were� responsible� from� those� that� would� have� taken

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place� in� any� case.� In� 1998� the� head� of� the� October� Railway's� DTsFTO wrote� an� article� in� which� everything� that� moved� seemed� to� be attributed� to� the� DTsFTO.� Nevertheless,� a� selective� summary� of� the article� will� give� a� good� overview� of� how� these� offces� worked. 25 Four-ffths� of� the� October� Railway's� freight� traffc� originated� locally, but� there� was� also� some� interregional� traffc� between� the� rest� of Russia� and� the� Baltic� ports,� as� well� as� a� container� fow� to� and� from the� Trans-Siberian.� In� the� years� immediately� preceding� the� establishment� of� the� DTsFTO � in��uly� 1996,� there� had� been� a� sharp� fall� of traffc,� as � elsewhere � in � Russia.� There � had � also � been � a � loss � of � traffc to � the � highway � operators,� perhaps � more � pronounced � than � in � other regions � because � there � were � a � number � of � traffc � fows�( especially � to Finland � and � to � the � frontier � crossings � for � Latvia � and � Estonia)� which consisted � of � high-value � products � moving � in � directions � that � were paralleled � by � viable � highways. The � main � tasks � of � the � DTsFTO � were � listed:� obtaining � high-quality service � for � shippers;� studying � and � attracting � additional � traffc;� marketing � activity � to � attract � international,� long-distance,� local � and intermodal� freight;� monitoring� price� relationships� in � the� region� and working � out � fexible � tariffs;� broadening � the � range� of� services� offered; advertising;� representing � the � interests � of � shippers � before � Railway departments,� the� Zheldorekspeditsiya� forwarder,� and� the� Oktransveshneterminal � Railway/Customs � clearing � terminal,� and � hence � playing � the role� of� general� client.� The� Railway's� divisions� had� their� own� affliated centres,� known � as � regional � agencies.� The � regional � agencies � carried out � market � research � into � medium � and � large � businesses � and � originated � requests � for � extra-plan � rolling � stock.� They � also � checked fulflment� of� planned� loadings� and� extra-plan� requests.� �p� to� a� certain size � of � enterprise�( in � 1997� having � a � monthly � account � of � up � to � one billion � roubles),� the � regional � centres � could � make � agreements � and check� their� fulfllment.� In� three� towns�(Bologoye,� Rzhev� and � Pskov) there� were� line� agencies,� concerned� mainly� with� small� and� mediumsized � clients � and � also � occupied � with � loading � and � unloading � work � as well � as � pick-up � and � delivery. In� the�frst� months� of� its� work,� the� article� continued,� the � DTsFTO was � mainly � occupied � with�q uality � of � service � and � the � widening � of the � market � for � supplementary � services.� It � had � departments � for � marketing�(with� a� planning� sector),� traffc� coordination� and� organisation, contracts,� tariffs� and� also� a� department� for� checking� how� the� contract conditions � were � fulflled.� It � claimed � credit � for � slowing � down � the traffc � decline � in � 1997,� and � for � enhancing � the � prospects � of � several

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large� mining� enterprises� and� of� the� Murmansk,� Kandalaksha� and �ysotsk� ports� by� means� of� concessional� tariffs.� Its� specialists� spent much� energy� in� reviewing� the� current� routines� and� rates� for� handling freight� from� the� major� industries.� Monitoring,� questionnaires� and personal� interviews� were� all� used� to� obtain� data� which,� although� it may� not� have� been� perfect,� was� better� than� no� data� at� all.� The Centre� put� its� weight� behind� a� series� of� improvements,� such� as refurbishing� the� October� Railway's� Moscow� freight� station�( Russia's oldest),� and� the� introduction� of� a� fast� St� Petersburg�Moscow� freight service� with� next-morning� delivery.� It� had� arranged� the� Railway's own� pick-up� and� delivery� service,� undercutting� outside� truckers� by 25� per� cent.� It� also� had� a� hand� in� developing� container� services between�H elsinki,� St� Petersburg� and� Moscow.� Soon,� however,� the need� for� better� information� technology� became� apparent.� �hat� was needed� was� a� system� covering� operations� over� the� whole� network. The� DTsFTO� was� already� served� with� a� computer� system� embracing railway,� divisional� and� agency� centres;� this� was� thanks� to� computer equipment� received� from� the� Ministry� in� 1997� through� the� centralised supply� system.� Programs� available� included� two� for� calculating� freight rates,� one� detailing� the�f nancial� status� of� clients,� another� covering the� current� freight� operations� of� the� Railway,� while� in� 1998� the marketing� department� was� compiling� a�' client� passport'� program. The� general� aim� was� to� have� a� system� which� enabled� station� workers to � deal � with � clients � on� technical� amd� operational� matters� but directed� commercial� and� other�questions� to� those� properly� equipped to� handle� them;� that� is,� to� the� premium� centres� and� their� information� networks. Similar� success� stories� were� reported� from� elsewhere,� although� it is� not� always� clear� whether� they� resulted� simply� from� the� centres or� would� have� happened� in� any� case� with� the� exploitation� of� information� technology.� The� centres� in� most� cases� could� sum� up� the requirements� and� capacities� of� their� clients� more� effectively� than in� the� past.� On� the� Northern� Railway,� for� example,� when� timber shipments� fell,� the� DTsFTO� soon� established� that� the� industry� was approaching� bankruptcy.� So� with� local� timber� shipments�( where� it was� easy� for� a� railway� to� make� adjustments),� payment� of� the� tariffs was� shifted� from� the� shipper� to� the� receiver,� and� a�5 � per� cent� reduction� was� also� offered.� Thus� payment� of� the� freight-bill� coincided with� payment� for� the� timber,� which� helped� the� liquidity� of� the timber� enterprises,� while� the� tariff� reduction� widened� their� markets (and� also� induced� them� to� transfer� to� rail� some� timber� previously

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foated� down� the� rivers).� �ithin� a� few� months� the� timber� industry was� paying� 63� per� cent� of� its� rail� tariffs� in� the� form� of� real� money, which� was� an� improvement.� By� that� time�( late� 1999)� 109� Northern Railway� stations� were� served� by� freight� offces� that� were� electronically� linked� with� the� centre,� enabling� clients� to� make� use� of� the popular� automaticised� documentation.26

The railway banks Railways,� railway� divisions,� and� sometimes� even� line� enterprises� in the� early� 1990s� provided� founding� capital� for� hundreds� of� banks. This� seems� to� have� been� a�q uite� spontaneous� initiative;� if� it� had been� guided� by� the� Railways� Ministry� it� would� surely� have� taken� a different� direction,� towards� a� few� big� banks� or� even�just� one� central railway� bank.� A� similar� process� was� taking� place� in� the� country� as a� whole.� Although� almost� all� of� those� original� banks� soon� disappeared� from� view,� not� always� painlessly,� for� the� railways� the� move was� useful,� sensible� and� probably� necessary. In� 1992,� the� Ministry� cautiously� encouraged� the� establishment� of railway � banks.27� This � was � in � response � to � the � weakening � of � the country's� integrated� banking� system,� the� depreciation� of� railway enterprises'� liquid� funds,� the� slowing� down� of�fnancial� transactions, and� the� upsurge� in� indebtedness.� As� unpaid� debts� grew,� and� as� barter deals� replaced� ready� money,� railways� had� great� diffculty� in�f nding the� liquidity� to� pay� their� own� suppliers� and,� in� particular,� their workers.� In� this� situation� the� tendency� of� banks� to� delay� clearing balances� was� costly� and� embarrassing.� Some� railways� could� not� pay their� wage-bills� simply� because� banks� had� waited� a� week� or� two� to enter� credits� into� their� accounts.� This,� of� course,� was� advantageous for� the� banks� and� was� probably� not,� therefore,� due� to� ineffciency. Additionally,� banks� sometimes� seemed� to� lose� money� belonging� to the� railways.� The� October� Railway,� for� one,� took� its� bank� to� court in� one� such� case.� Another� railway,� the� North� Caucasus,� found� that its� bank� balance� had� been�'lost'.� The� bank�fnally� confessed� that� the Railway's� money� had� been� invested� in� a� brickworks� that� had� since burned� down.� �hen� the� Railway� tried� to� take� this� matter� to� law� it found� that� prosecutors� were� not� very� interested.28 �ith� investment� funds� from� the� state� budget� already� disappearing,� railways� had� to� secure� their� own� capital,� and� having� their� own banks� would� aid� this� process.� Banks� known� to� have� railway� backing� would� inspire� confdence� among� depositors,� while� the� railways'

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own� current� funds� lodged� in� such� banks� would� provide� backing� for additional� lending.� Furthermore,� railway� participation� in� the� banks could� infuence� credit� policy� and� hence� the� direction� of� economic development� in� a� bank's� catchment� area;� a� share� in� the� charter capital� of� a� bank� ensured� railway� representation� in� its� highest� councils. For� example,� the� head� of� the� October� Railway� was� the� chairman� of the � Baltic � Bank's � steering � council. 29 All� kinds� of� bills� of� exchange� and� other� credit� instruments� were being� issued� by� railways� that� were� suffering� from� liquidity� problems,� and� handling� such� paper� was� a� natural� function� for� railway banks.� A� very� important� goal� was� to� pay� wages� through� the� banks, with� workers� having� their� personal� accounts.� This� practice� was� started here� and� there� but� workers� were� slow� to� appreciate� it� and� to� open accounts.� In�D ecember� 1994,� the� Ministry's� Collegium� decided� to take� steps� to� popularise� this,� citing� the� advantage� to� be� gained� from thus� concentrating� a�'credit� resource'� and� also� protecting� wages� from infation�( railway� banks� paid� interest� on� current� accounts,� and� this method� of� payment� would� enable� wages� to� be� paid� promptly,� which was� certainly� important� at� this� period� of� high� infation).30� Since 1994,� the� Baltic� Bank� had� been� issuing� plastic� bank� cards� for� workers whose� wages� were� paid� via� the� Bank,� and� by� 1997� several� other banks� had� done� the� same.� But� the� proportion� of� workers� embraced by� these� systems� was� still� modest.� Possibly� the� best� scores� were those� of� the� Baltic� Bank� with� 34 000� railway� worker� accounts� and the� Dorozhnik� Bank,� with� 21 000.31 Railway� banks� emerged� in� different� ways.� The� successful� Dorozhnik Bank� of� the� South�� rals� Railway,� for� example,� already� existed� in Chelyabinsk� as� a� small� non-railway� bank.� It� had� been� founded� in 1990� and� it� apparently� only� had� ten� borrowers� when� its� saviour, the� South�� rals� Railway,� contributed� capital� and� became� its� most important� client,� after� which� its� borrowers� multiplied.� Like� other railway� banks,� it� extended� credit� at� interest� rates� somewhat � less than� the� Central� Bank's� rate,� and� it� offered� depositors� a� return� somewhat� greater� than� that� of� the� Savings� Bank;� but� neither� rate� went� to the � extremes � offered � by � some � of � the � new�( usually� shorter-lived) banks.� It� was� usual� for� railway� banks� to� offer� railway� clients� slightly better� rates� than� those� offered� to� ordinary� depositors� or� borrowers.32 Meanwhile,� the� East� Siberian� Railway� simultaneously� provided� founding � capital � for � three � banks�( the � East � Siberian,� Railway � and � Asiatic banks)� which� was� probably� a� less� good� idea� than� that� of� the� Kuibyshev Railway,� where � three � railway � divisions � initiated � the � Kommercheskii

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Zheldorbank.� On� the� former� railway,� the� East� Siberian� Transport� Bank soon� dominated.33� In� Moscow,� the� Zheldorbank� was� the� Railway Ministry's� banking� arm� and� became� a� truly� major� bank,� acting� as central� clearing� bank� for� the� other� railway� banks.� By� 1995� it� had 25� correspondent� banks� and� a� presence� in� most� of� the� Russian industrial� and� commercial� cities.34� Its� emulator,� TransKreditBank, claimed� representation� in� 40� cities� in� 2000,� having�j oined� forces with� four� big� regional� banks,� including� the� South� Eastern� Railway's Yugo-Vostok� and� the� North� Caucasus� Railway's� MeTraKomBank.� The October� Railway,� along� with� the� October� electric� train� repair� works and� the� north-western� branch� of� Transtroi� and� others,� founded� the Baltic� Bank,� another� very� large� establishment. In� 1994,� the� Association� of� Transport� Banks� was� established� to coordinate� the� railway� banks� and� to� gain� the� collective� strength that� numbers� should� give.� A� number� of� banks,� including� the� Baltic, did� not�j oin� at� that� stage.� In� 1995,� the� Railways� Ministry� decided to� favour� a� policy� of� step-by-step� centralisation� of� railway� banking, but� this� was� less� infuential� than� the� action� of� the� Central� Bank which� in�� anuary� 1996,� faced� with� a� succession� of� bank� failures� in the� economy� at� large,� began� a� campaign� against� small� banks;� about half� the� railway� banks� disappeared� after� this,� typically� by� merger. Signifcantly,� in� the� general�f nancial� crisis� of� summer� 1998,� the railway� banks� performed� relatively� well.� From� various� cities� there were� reports� of� runs� on� all� the� banks� except� the� railway� bank.� On the� one� hand,� railway� banks� had� been� conservative� in� their� lending� policies,� perhaps� because� railway� managers� were� conservative by� nature;� on� the� other� hand,� people� seemed� to� appreciate� that� a railway's� association� with� a� bank� could� only� be� a� stabilising� factor, as� the� following� example� shows: Another� week� of� confusion� outside� the� doors� of� most� of� the� Samara banks,� especially� the� local� branches� of� Moscow�fnancial� institutions. People� are� hurrying� to� withdraw� their� money.� But� at� the� counters of� the�� olga-Credit� transport� bank� there� is� no� speculation� and no�q ueuing.35 By� the� end� of� the� decade,� the� Railways� Ministry� was� clearly� envisaging� a� centralisation� of� railway� banking,� based� on� its� Zheldorbank, with� which� the� other� banks� would� merge.� However,� this� idea� was meeting� some� resistance� on� the� part� of� the� railways,� although� there was� general� agreement� that� within� a� railway� it� would� be� a� good

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idea� to� merge� all� the� transport� banks� where� that� had� not� already occurred.36 Another�f nancial� activity� of� the� railways� was� insurance.� It� had long� been� the� practice� to� incorporate� a� compulsory� personal� accident� insurance� premium� in� the� price� of� rail� tickets;� this� was� good business,� because� railway� accidents� rarely� resulted� in� bloodshed�(and when� they� did,� the� insurance� pay-off� was� not� very� big).� In� the� 1990s several � railways � obtained � licenses � to � deal � in � insurance,� not�j ust � of railway � passengers,� but � also � of � freight,� health � and � general � safety. Six� of� the� new� companies� had� the� right� to� insure� carriers'� liabilities. The � railways' � share � of � the � founding � capital � of � these � companies could � range � from � 25� to � 99� per � cent.� Their � investment � was � typically paid � back � within � a � year � or � two,� after � which � the � companies � were � a source � of � extra � income,� of � which � half � was � said � to � be � spent � on safety � measures. 37

The Refservis failure Refservis� was� one� of� the�frst� railway� subsidiary� companies,� its� business being� the� operation� of� the� refrigerator� car� services� that� had� developed so� notably� in� Soviet� times. The� transport� of� perishable� foodstuffs� is� an� important� service� in large� countries� with� big� climatic� variations.� In� Russia� the� movement of� fruit,� fsh� and� vegetables� from� their� production� regions� to� the northern� cities� required� refrigeration,� while� in� winter� the� vegetables and� fruit� required� protection� from� the� cold.� In� some� cases� insulated box-cars� were� suffcient,� but� refrigerator� cars� were� also� built� in� large numbers.� Traditionally,� these� were� American-style,� with� ice� compartments� replenished� through� hatches� in� the� roof.� They� were� single units,� ideal� for� small� consignments,� but� except� in� short-distance work,� small� consignments� were� fairly� rare. After�� orld�� ar� 2,� with� help� from� the� German�D emocratic� Republic,� a� new� technology� was� introduced,� consisting� of� self-contained refrigerator� trains� provided� with� their� own� cooling� equipment� and diesel-generators.� There� were� some� entire� trains� of� this� type,� but eventually� self-contained� sections� of� three� or� more� cars� became standard,� and� one� or� more� of� such� sections� could� move� in� mixed freight� trains� or� make� up� a� block� refrigerator� train.� A� 3-car� set carried� a� 160 hp� diesel� generator,� freon� refrigerating� equipment, electric� air-warmers� and� a� compartment� for� the� crew.� Not� surprisingly,� the� tare� to� load� ratio� was� 111:115,� and� a� crew� of� two� or� three

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persons� travelled� with� each� set,� guarding� the� contents,� caring� for the� engine,� and� maintaining� the� correct� temperature�(there� were� no thermostats).� �ith� these� features,� it� is� evident� that� this� was� a� highcost� operation. Moreover,� the� sets� tended� to� operate� over� long� distances� and, naturally,� half� their� mileage� was� empty� mileage.� But� they� enabled Muscovites� to� eat� tomatoes� from� Astrakhan,� lemons� from� the� Caucasus, fsh� from� the� Pacifc,� and� melons� from�� zbekistan.� The� economics of� the� technology� had� not� seemed� important� in� Soviet� times.� The railway� tariffs� for� these� traffcs� had� no� relationship� to� costs,� and� the prices� of� the� fruit� when� sold� in� the� state� stores� was� also� determined without� any� help� from� the� law� of� supply� and� demand.38� Operationally,� the� integrated� cooling� plant� had� one� great� advantage;� so� long as� the� crew� did� its�j ob� and� the� fuel� did� not� run� out,� the� load� was safe� no� matter� how� slow,� or� how� long� delayed,� was� the� train�( with traditional� cars,� a� load� of�f sh� from�� ladivostok� to� Moscow� might need� re-icing� 20� times). 5-car� sets� were� slightly� more� economic,� and� by� the� 1990s� they dominated� the� scene.� Such� train� sections� were� unwieldy,� however, when� it� was� no� longer� big� organisations,� but� individual� traders, who� determined� the� fow� of� produce.� Shipments� became� smaller and� more� suited� to� a� motor-truck.� In� the�f rst� half� of� the� 1990s, annual� railway� perishable� traffc� fell� to� a�q uarter� of� its� previous level�(from� 20� to� 5.2� million� tonnes),� and� on� the� Caucasus�Moscow run,� highway� operators� were� offering� tariffs� considerably� lower� than those� of� the� railways.39 Possibly� the� moment� of� truth� had� come� in�� uly� 1991,� in� the� last months� of� the��SSR,� but� had� not� been� seen� as� such.� Tomatoes� arrived from�Dagestan� at� Moscow's� Kursk� freight� station� in� the� old� style,� by the� trainload,� at� a� time� when� the� state� distribution� service� was� being broken � up.� An � old-style � wholesale � combine,� recently � become � a dubious� cooperative,� had� ordered� the� tomatoes,� but� refused� to� honour the� contract� when� the� railway� delivered� them� late.� Meanwhile,� the state� stores� had� largely� been� replaced� by� small� new� enterprises.� The result� was� that� the� railway� could� not� locate� any� consignees� and eventually� had� to� attempt� a� station� sell-off,� even� advertising� tomatoes� on� television�(after� all,� it� had� 98� carloads� of� them).� There� followed scenes� described� as� resembling� a�f lm� about� the� Civil�� ar,� with people� scurrying� off� with� loaded� baskets,� 'conspiratorial� gentlemen with� southern� faces'� looking� conspicuous,� and� freightcars� running red� with� tomato�j uice.40

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In� the� early� 1990s,� the� immediate� aim� was� to� cut� costs� and� maintain� business� in� the� new� circumstances.� Single-unit� refrigerator� cars began� to� supply� the� new� need� for� long-distance� small-consignment vehicles.� Cost� cutting� was� achieved� by� selling� off� some� cars� for scrap� and� putting� several� thousand� others� into� reserve.� Putting� cars into� reserve� decreased� the� tax� burden� and� in� reality� amounted� to� a withdrawal� of� cars;� the� refrigeration� equipment� was� removed� from some� of� them�( converting� them� into� insulated� cars)� and� those� reserve� cars� which� offcially� kept� their� equipment� soon� lost� it� to� thieves. In� 1995� 13 000� cars� were� in� reserve� (65� per� cent� of� the� total).� Costs were� also� to� be� reduced� by� transferring� cars� from� those� railways that� did� not� have� repair� facilities� for� them.� They� were� to� go� to� the better-equipped� lines.� This� infuriated� Paristyi.� At� a� meeting� of� railway heads,� he� said� that� his� Moscow� Railway� was� already� choc-a-bloc with� unwanted� refrigerator� cars� and� he� did� not� want� any� more� of them.� It� would� be� better� to� reduce� tariffs,� even� by� 50� per� cent, simply� to� win� back� the� traffc� from� the� highways.41 For� the� refrigerator� car,� the� unit� of� administration� was� the� car depot�� � virtually� a� freightcar� depot�� � which� was� responsible� for repair� and� maintenance,� with� a� few� add-on� functions� of� which� the most� important� was� the� organisation� of� crews.� This� was� perhaps not� so� inappropriate� a� structure� as� it� might� seem,� given� the� nature of� the� Soviet� economy.� But� it� must� have� been� obvious� to� everybody (although� within� that�'everybody'� there� were� big� differences� in� speed of� perception)� that� in� the� market� economy� the� refrigerator� car� service would�f nd� itself� in� deep� trouble.� Probably� there� was� an� underlying worry� about� the� technology� itself,� an� unacknowledged� fear� that� there could� be� no� economic�j ustifcation� for� the� status quo.� These� deep feelings� might� explain� why� over� the� years� of� deepening� crisis� discussions� had� a� high� polemical� content.42 In� the� early� 1990s� the� refrigerator� car� stock� was� divided� between the� new� republics.� Russia� received� the� greatest� number,� but� substantial� numbers� went� to� southern� republics.� Perishable� traffc� fell,� while the� general� physical� state� of� the� equipment� deteriorated� to� such� an extent� that� in� 1996� the� Russian� railways� had� to� hire� cars� from� the other� republics,� including� the� Baltic� republics�( according� to� Zaitsev, 13� million� Swiss� francs� were� paid� out).43� In� 1997� the� service� was reorganised� into� a� wholly-owned� state� subsidiary� company.� This may� have� seemed� a� good� way� of� cutting� free� from� a� huge� lossmaker,� but� it� was� also� in� tune� with� the� prevailing� ideology;� left� to itself,� it� could� be� hoped,� the� service� would� pull� itself� together� and

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eventually� make� a� proft.� At� that� time� there� were� 14� depots� but� two (the� Predportovaya� and� the�� ssuriisk),� became� subsidiaries� of� the October� and� Far� Eastern� railways.� The� others� became� affliates� of the� new� company,� Refservis.� They� were� no� longer� legal� persons; Refservis� was� to� play� that� role.� Of� the� depots,� only� the� one� at Cherepanovo� on� the�� est� Siberian� Railway� seemed� likely� to� keep its� head� above� water� in� the� short� term. Meanwhile,� income� did� not� increase.� At� the� depots� they� attributed� this� to� the� introduction� of� unwanted� levels� of� administration: Refservis � itself � and � the � forwarders � it � chose � to � employ � to � seek traffc.� More� serious� in� the� short� run� was� that� the� railways,� apart from� taking� their� cut� of� the� revenue,� failed�( more� precisely,� refused)� to� pass� on� money� to� the� depots,� which� found� themselves,� if they� were� lucky,� with�j ust� enough� cash� to� pay� the� wage-bill.� Many workers � wanted � to � dissolve � Refservis � and � go � back � to � the � old organisation. It� was� the� Predportovaya� depot� which� collapsed� amid� a� fog� of mutually� confusing� recriminations� in� 1998.� In� October� 1997� this depot� had� been� formally� removed� from� the� October� Railway� and transferred� to� Refservis.� However,� the� October� Railway� refused� responsibility� for� its� debts�( money� was� owed� to� the� local� and� federal tax� authorties)� and� Refservis� likewise� refused.� For� a� time� the� Railway received� the� income� earned� by� the� depot� but� paid� nothing� to� the latter,� with� the� result� that,� among� other� things,� wages� could� not� be paid.� In� April� 1998� the� local� arbitration� court� declared� the� depot bankrupt.� The� management� of� the� October� Railway� was� blamed� for all� this� and� the� events� formed� part� of� the� drama� of� the� October Railway� purge�( see� p.� 70).� It� was� said� that� the� bankruptcy� of� the company� should� have� been� foreseen� by� the� Railway,� and� that� it was� the� Railway's� fault� anyway�( because� the� money� that� the� Railway� owed� the� company� exceeded� that� which� the� company� owed the� tax� authorities�� � at� least� until� the� addition� of�f nes� for� nonpayment).� The� Railway� was� also� blamed� for� not� keeping� the� Ministry informed,� and� of� not� ensuring� observation� of� the� agreement� on procedures� in� such� cases� between� the� Ministry� and� the� state� bankruptcy� administration.44 In� the� run-up� to� the�fnal� crisis,� property� belonging� to� the� company had� been� seized� six� times,� said� the� Ministry,� and� the� only� reaction of� the� October� Railway's� management� was� to� assert� that� the� property was� the� Railway's,� not� the� company's,� and� therefore� was� not� liable to� seizure.

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There� are� several� possible� interpretations� of� the� October� Railway management's� behaviour.� It� seems� likely� that� it� had� come� to� the conclusion� that� the� refrigerator� car� service� as� developed� in� Soviet times� was� a� costly� anachronism� in� the� 1990s,� and� the� sooner� it disappeared� the� better,� especially� as� the� refrigerated� container� could perform� the� same� function.� �ithholding� funds� that� it� owed� the company � and � which � could � have � saved� the� latter� from� receivership might� simply� have� been� a� consequence� of� its� own� liquidity� problem, but� probably� there� were� unworthy� thoughts,� too,� like� '�hy� throw good � money � after � bad?'

The mail service competes In� retaining� much� of� their� Soviet� ambience,� the� railways� were� not alone.� The� old� Soviet� mail� service� had� not� changed� much� either, but� the� consequences� were� less� than� happy.� For� one� reason� or� another, it� did� not� rise� to� the� post-Soviet� occasion� and� the� postal� service remained� slow� and� unhelpful. Its� relationship� with� the� Railways� Ministry� deteriorated� because it� repeatedly� failed� to� pay� its� bills� for� the� use� of� railway� vehicles. Then� it� was� discovered� that,� in� order� to� raise� income,� the� postal operatives� were� loading� into� their� railway� cars� traffc� which� by� no stretch� of� imagination� could� be� described� as� mail.� In� one� reported case� an� automobile� was� revealed� travelling� as� a�' parcel'� in� a� mail car� of� the� Moscow��ladivostok� postal/baggage� train,� a� clear� case� of poaching� railway� business,� and� also� a� danger,� because� postal� cars did� not� have� the� required� tie-down�fttings.� The� Ministry's� passenger department� and� the� individual� railways� seemed� unable� to� agree� on a� response� to� this� trend.45� The� most� sensible� action� would� have been� for� the� railways� to� offer� a� better� service� for� less-than-carload freight,� because� when� an� enterprise� wanted� to� send� a� smallish� shipment� by� postal/baggage� train� it� needed� to� hire� an� entire� vehicle.� In a� sense,� what� the� postal� service� was� doing,� with� its� undercover shipments� of� barrels� of�f sh� or� cartons� of�j am,� was� providing� an unadvertised� pool-car� service,� concentrating� shipments� to�q ualify for� a� lower� rate;� this� is� something� that� the� railways� could� have organised� for� themselves. And� that,� in� a� limited� way,� was� what� they� did.� Earlier,� the� railway� newspaper� Gudok,� hitherto� distributed� like� other� publications by� the� postal� service,� had� been� removed� from� the� latter's� care� on the� grounds� of� excessive� charges� and� delayed� deliveries.� It� was� carried

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instead� in� the� car� attendants'� compartments� of� long-distance� trains and� distributed� at� the� stations.46� From� this� small� beginning� eventually� emerged� a� new� state� subsidiary� company� within� the� Railways Ministry.� This� was� Ekspress-pochta MPS Rossii,� which� publishers� used to� carry� periodicals� and� books� all� over� Russia,� thereby� abstracting� a good� deal� of� traffc� from� the� state� postal� service.47

Intermodal services One� casualty� of� the� move� to� the� market� economy� was� the� concept of� transport� coordination,� although� this� loss� was� more� apparent than� real.� In� the� last� Soviet� decades� the� government� had� placed much� emphasis� on� what� was� termed�'The��nifed� Transport� System', the� laudable� idea� being� that� if� the� various� modes� of� transport� could be� persuaded� to� integrate� their� activities,� shippers� would� beneft from� a� better� overall� service� and� costs� would� be� reduced.� In� a� planned economy,� it� was� thought,� coordination� would� be� easier� to� obtain than� in� a� capitalist,� competitive� environment.� A� number� of� studies were� made,� with� Gosplan's� Institute� of� Complex� Transport� Problems playing� a� leading� role.� Investments� were� made� in� transhipment� facilities,� the� ruling� concept� at� that� time� being� that� the� over-burdened railways� should� transfer� some� of� their� traffc� to� the� highways� and waterways.� However,� many,� if� not� most,� of� the� schemes� devised� did not� enthuse� the� shippers� or,� more� usually,� the� carriers.� The� existence of� separate� ministries� for� the� different� transport� modes� discouraged coordination.� A� glaring� defect� was� the� inability� of� rail� and� water� to deliver� freight� to� transhipment� points� on� agreed� dates,� leading� to port� congestion� and� excessive� idling� times.� A� fundamental� problem was� that� the� railways� were� all-weather,� all-season,� carriers� whereas the� same� was� not� true� of� the� roads� and� rivers;� thus � a � shipper � using a � combined � rail/water � transit � would � have � to � change � his � routines � at the � beginning � and � end � of � winter.� An� example� of� the� gap� between high� hopes� on� the� planners'� side� and� the� realities� as� seen� by� the clients� were� the� transport� arrangements� of� the� Cherepovets� metallurgical� industry,� described� below.

Cherepovets: plans and realities At� its� peak,� the� Cherepovets� Metallurgical�� orks,� situated� west� of �ologda,� was� one� of� the� world's� biggest� steel� producers,� and� even when� it� fell� on� hard� times� in� the� early� 1990s,� it� was� still� among

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Russia's� great� industrial� centres.� Located� on� the� Rybinsk� Reservoir, part� of� the��olga� system,� it� could� draw� its� raw� materials� and� despatch its�f nished� products� using� either� water� or� rail� transport,� or� a� combination� of� both.� A� combination� seemed� very� attractive� to� planners in� the� last� Soviet� decades,� for� it� seemed� a� superb� opportunity� to demonstrate� the� possibilities� of� transport� coordination.� Of� the� two main� materials,� coal� came� from��orkuta,� and� ore� from� Olenegorsk, just� south� of� Murmansk. The� coal� shipments� did� not� present� a� plausible� opportunity� for non-rail� movement,� but� there� were� several� possible� permutations for� moving� the� Olenegorsk� iron� ore.� One� possible� rail� route� was from� Olenegorsk� down� to�� olkhovstroi� in� the� Leningrad� Region and� then� a� sharp� easterly� turn� to� Cherepovets.� The� distance� was 1557 km,� mostly� over� a� high-class� main� line,� and� the� entire� trip was� over� one� railway,� the� October.� However,� it� was� not� the� preferred� route,� which� passed� the� trains� over� the� secondary� line� linking the� Murmansk� and� Archangel� routes� along� the�� hite� Sea� coastline; this� was� 20 km� shorter� than� the� other� routing,� but� had� the� disadvantage� of� a� considerable� mileage� over� secondary� line� and� the time-consuming� handover� procedure� where� the� October� met� the Northern� Railway. There� were� several� possible� combined� water/rail� routings,� but� the one� which� was� adopted� involved� rail� transport� as� far� as� the�� hite Sea� port� of� Kandalaksha,� then� by� boat� through� Belomorsk,� the� Baltic�hite� Sea� Canal,� lakes� Onega� and� Beloe� to� Cherepovets.� Route� mileage was� 1244 km� by� water� and� 165 km� by� rail,� but� for� the� Cherepovets Combine� that� was� not� the� end� of� the� story.� The� works� had� a� very large� (440 km,� over� 100� locomotives� and� 1400� freightcars)� industrial� railway� of� its� own� and� to� get� the� ore� out� of� the� boats� into� the �orks� required� transhipment� into� trains,� a� costly�(but� probably� not costed)� procedure. To� support� this� exemplar� of� transport� coordination� considerable investment� was� made� in� transhipment� facilities� at� Kandalaksha,� and a� heavy� proportion� of� the� traffc� was� transferred� to� the� new� routing. Tariffs� (7.35� roubles� per� tonne� in� 1990)� were� kept� the� same� for� both combined� and� all-rail� routings�( an� all-water� route� was� also� possible at� 5.54� roubles� but� does� not� seem� to� have� been� popular).� But� all-rail shipment� was� three� days� faster� than� by� combined� rail/water� movement� and� moreover� did� not� present� the� need� for� a�fnal� transhipment for� the� last� few� kilometres� at� Cherepovets.� Not� surprisingly,� the� allrailway� route� was� preferred,� although� for� many� years� much� of� the

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traffc� was� dutifully� sent� by� the� rail/water� route�( in� the� mid-1960s, when � enthusiasm � for � transport � coordination � was � at � its � height, 1 367 000� tonnes� of� ore� was� carried� by� the� combined� route,� falling to� 866 000� tonnes� in� 1989).� The� irrationalities� of� the� Cherepovets situation� was� one� of� the� bees� buzzing� in� Zaitsev's� bonnet� when� he headed� the� Murmansk�Division.� The� foregoing� paragraphs� are� largely based� on� two� of� his� expositions� on� this� theme.48 In� the� winter� months,� only� the� all-rail� route� was� available�(making the� railway,� here� as� elsewhere,� a� seasonal� monopoly).� This� natural impediment� was� felt� everywhere� where� rail/water� routes� were� established.� Shippers� like� to� have�q uiet� lives;� once� a� transportation arrangement� is� working� well� they� do� not� relish� its� disturbance.� As soon� as� water� carriage� is� introduced� into� a� transportation� scheme, a� bi-annual� upheaval� is� inevitable.� In� some� situations,� notably in� northern� Siberia,� a� combined� railway/river� system� is� the� only means� possible,� but� wherever� there� was� a� choice� shippers� preferred an� all-rail� route. �ith� the� tariffs�fxed� by� government,� the�question� of� whether� the ore� was� carried� at� a� loss� or� a� proft� has� little� relevance,� but� with� the coming� of� the� market� economy� comparative� costs� did� become� important.� In� 1998,� the� management� of� the� newly-private� Cherepovets �orks� decided� that� they� would� be� better� off� to� found� their� own train� operating� company�( see� p.� 33).

Container traffc Soviet� Railways� had� been� big� users� of� containers;� these� took� the form� of� sturdy�3-tonne� and�5-tonne� boxes� that� could� be� handled� at medium� as� well� as� large� stations� since� they� only� required� a� simple hoist.� For� protecting� manufactured� goods� from� damage� and� speeding terminal� operations,� they� were� a� success,� but� they� probably� did little� to� reduce� costs.� The� introduction� of� larger� containers� was� only just� beginning� in� the� last� Soviet� decade� and� by� the� end� of� the century� much� freight� that� could� have� been� better� sent� by� container was� still� handled� conventionally. That� transport� coordination� does� not� necessarily� require� a� state planning� system� was� one� of� those� latent� ideas� that� began� to� bloom in� the� perestroika� period,� following� the� advent� of� the�' international' container.� �ith� high-capacity� boxes,� the� transhipment� costs� between ships,� highway� trucks� and� railway� fatcars� could� be� spread� over larger� consignments.

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All� things� being� equal,� container� traffc� can� be� expected� to� move by� the� mode� most� advantageous� for� the� shipper�(or� rather,� the� mode the� shipper� thinks� most� advantageous),� but� the�question� of� all� things being� equal� is� not� easily� resolved.� In� particular,� the� railways'� complaint� that� highway� operators� do� not� pay� the� full� cost� of� infrastructure and� accidents� has� some� force�( and� in� Russia� not� only� force,� but venom,� because� the� railways'� obligatory� contributions� to� the� Road Fund� are� seen� only� to� compound� the� unfairness). Throughout� the� 1990s� the� railway� press� bewailed� the� low� proportion� of� Russian� railway� freight� that� was� handled� in� containers.� This proportion� was� variously� described� as� less� than�1 � per� cent� or� more than�1 � per� cent,� whereas� the� general� view� was� that� with� existing traffc� more� than�2 � per� cent� of� the� tonnage� could� be� advantageously containerised.� The� examples� of� other� countries� were�q uoted.� �apanese� railways,� it� was� said,� used� containers� for� half� their� freight, Germany� for� 13� per� cent,� and� so� on.49� On� the� other� hand,� the diffculty� experienced� by� American� and� some� European� railways� in actually� making� much� money� from� container� and� piggyback� traffc seemed� to� escape� the� commentators,� although� this� might� have� been because� conditions� seemed� more� favourable� for� proftable� container business� in� Russia. It� is� not� always� clear� whether� those� commentators�( or� the� statistics,� either)� always� took� into� account� the� shipments� that� were� sent in� small� 3-� and� 5-tonne� containers.� These� were� visibly� numerous both� on� Soviet� and� post-Soviet� railways.� Their� economic� advantages� may� have� been� small,� but� they� had� considerable� operating advantages� which,� because� they� were� hard� to� put� into�f gures,� may have� been� ignored� by� transport� economists.� In� particular,� these� boxes were� typically� loaded� in� ordinary� open� cars;� they� did� not� need specially-ftted� fatcars,� which� in� conditions� of� acute� car� shortage was� an� enormous� advantage. �hen� the� international�44 ft� container� came� on� the� scene,� Russian Railways� found� themselves� unprepared.� Such� containers� made� all the� difference� to� the� economics� of� international� container� traffc and� could� not,� therefore,� be� rejected.� But� most� Russian� container transhipment� stations� were� equipped� to� handle� the�20 ft� containers. In� 1999� only� a� handful� were� equipped� for� the� 44-footers,� all� of which� were� confned� to� international� traffc.� Russian� Railways� did not� use� them� for� internal� traffc;� indeed,� Russian� Railways� did� not possess� any. The� railway� press� in� the� late� 1990s� seemed� to� ascribe� the� absence of� substantial� container� business� to� lack� of� zest� on� the� part� of� railway

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managers�(which� could� be� remedied� by� placing� container� traffc� into one� specialised� department),� and� to� the� shortage� of� containers.� These were� valid�judgements,� but� there� were� also� a� few� matters� that� should have� been� obvious� to� anyone� familiar� with� the� daily� life� of� a� Russian railway.� Firstly,� Russian� railway� containers� resemble��estern� supermarket� trolleys� in� that� they� have� a� defnite� sphere� of� activity� yet can� be� found� anywhere.� All� over� the� landscape� of� the� former�� SSR are� to� be� found� these� metal� boxes� that� once� proudly� rode� the� rails. Sometimes� the� new� owner�( more� correctly,� new� user)� has� repainted them,� before� putting� them� into� service� as� store-shed,� garage,� mushroom plantation,� bath-house,� pig-sty,� summerhouse,� father-in-law� depository or� other� function,� but� usually� the� old� paintwork,� including� the� railway� identifcation� number,� is� untouched� except� by� the� weather.� The price� of� similar� imported� containers� would� be� about� two� or� three thousand� dollars.� It� would� be� accurate,� but� a� little� unfair,� to� say� that these� containers� are� stolen� property.� �hat� seems� closer� to� the� truth is� that� after� these� containers� were� unloaded� no� effort� was� made� to send� them� back� and� the� railway� never� bothered� to� ask� for� their return.� The� multiplication� of� fy-by-night� forwarding� agencies� at� this time,� using,� but� not� answering� for,� railway� containers,� would� have been� an� aggravating� factor.� Containers� had� always� been� treated� like freightcars� in� terms� of� ownership;� that� is,� they� were�'orphans'.� After the� dissolution� of� the �� SSR,� freightcars � had � been � counted � and allocated�(see� p.� 26),� and� containers� followed,� with� a� container� census in� late� 1998.� The� latter� revealed� that� there� were� about� 185 000� containers� in� use,� of� which� about� 150 000� were� small;� according� to� the records,� however,� there� should� have� been� around� 700 000,� including 130 000� large� units.50� It� is� doubtful� if� many� of� those� containers� that had� gone� astray� were� reported� or� regained� at� this� time,� but� the closer� attention� to� record-keeping,� with� computerisation,� plus� the advent� of� a� Russian� Railways� enterprise� specifcally� to� handle� container� business,� can� be� expected� to� minimise� this� kind� of� wastage. In� the� meantime,� some� shippers� who� request� container� service� do not� get� it� because� of� container� shortage.� One� forwarder� said� in� 1999 that� only� about� 70� per� cent� of� such� requests� could� be� satisfed. A� second,� under-publicised,� reason� for� the� lack� of� container� traffc is� that� most� shippers� did� not� see� its� advantage� for� themselves,� especially� as� the� rate� for� a� container� tonne/km� was� usually� higher� than that� for� an� ordinary� shipment.� Some� clients� could� beneft� by� easier packing� and� enhanced� protection,� but� so� long� as� most� containers were� sent� by� ordinary� train� there� was� no� speed� advantage. However,� the� value� of� speed� to� shippers� was� certainly� recognised.

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A� container-load� of� electronic� goods� could� be� worth� 100 000� dollars or� more,� so� in� terms� of� interest� on� capital,� insurance� term,� and container� hire� period,� an� acceleration� of� a� day� or� two� could� save the� shipper� a� lot� of� money. So� a� few� fast� container� services� were� introduced.� On� the� Sverdlov Railway,� which� had� taken� the� initiative� of� founding� a� specialised container� enterprise�(Ural-Konteiner,� a� closed� company� with� the� Railway� having� a� controlling� share),� there� was� a� Moscow�Ekaterinburg service� with� door-to-door� service� offered� in� Moscow� and� St� Petersburg� at� the� one� end� and� at� Ekaterinburg,� Chelyabinsk,� Tyumen, Omsk,� Irkutsk� and� Khabarovsk� in� the� east.� Coupling� and� uncoupling� of� container� fats� at� Perm� was� a� feature� of� this� operation,� but from� Perm� eastwards� a� detached� fatcar� might� lose� its� impetus.� In addition,� Moscow�Ekaterinburg� could� be� achieved� in� two� days,� but a� fatcar� detached� at� Ekaterinburg� might� spend� an� additional� day being� shunted� around� the� yard,� which� was� not� the� way� to� attract business.51� A� highway� operator� can� do� the� Moscow�Ekaterinburg trip� in� two� days,� so� the� railway� has� to� count� the� minutes,� even though� it� might� have� a� cost� advantage.� Ordinary� freight� trains,� whose rates� are� well� below� highway� rates,� may� take� seven� days� between Moscow� and� Ekaterinburg�( about� 1820 km). In� Moscow,� the� Pavelets� freight� terminal,� with� its� premium� freight service� centre,� initiated� several� container� ventures� and� was� an� important� part� of� the� Trans-Siberian� service.� In� 1998� it� despatched 70-car� fast� trains� to� the� east� on�f ve� days� each� week�( although� in September� 1998,� following� the�f nancial� crisis,� this� fell� to�f ve� a month).52� Late� the� same� year� it� sent� an� experimental� container� train to� Murmansk,� covering� the� distance� in� 52� hours,� in� contrast� to consignments� by� ordinary� freight� train� which� took� ten� days. Two� international� container� trains� that� established� themselves� were the�' East�� ind',� between� Berlin� and� Moscow� and� the� Chardash, between� Moscow� and� Budapest.� These� could� hardly� be� described� as regular� services;� it� remained� customary� to� boast� of� the� number� of times� they� were� operated� per� month� or� per� year.� In� 1998,� the� Chardash ran� 41� times,� while� between� its� establishment� in� October� 1995� and the� end� of� 1998� the�' East�� ind'� ran� about� 500� times.� In� 1998,� the latter � train � carried � 7989� containers � from � Berlin � but,� worryingly, only � 2549� went � on � from � Brest � to � Moscow � by � train.� Some � of � the missing � majority � would � have � been � destined � for � places � better � served by � highway,� but � others � must � have � been � transferred � to � the � highways to� avoid� the� delays� at� Brest�(notably� change-of-gauge� transhipment).

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The� timing� of� the� train� from� Brest� to� Moscow� was�31 h�42 min,� but delays� at� Brest� made� this� fairly� irrelevant.53 At� this� time,� the� October� Railway� was� involved� in� several� ventures, of� which� the� most� promising� was� a� nightly� container� train� to� Moscow which� started� in� May� 1996.� This� left� St� Petersburg� at� 19.03� and arrived� at� the� Moscow� terminal� at� 06.53,� with� two� short� stops� at Bologoye� and� Tver'� to� pick� up� or� drop� cars.� The� aim� of� this� was� to gain� from� the� highways� some� of� the� international� containers� arriving at� St� Petersburg� by� sea.� Containers� from�H elsinki� were� also� handled by� another� service.� In� 1997,� a� thrice-weekly� service� for� refrigeratorcontainers� was� also� offered� between� the� two� capitals.� This� was� to draw� from� highway� transport� some� of� the� growing� fow� of� imported dairy� and� meat� products.� The� railway-owned� Trans Sibirskii Ekspress Servis� forwarding� service� handled� this� traffc,� using� its� own� rolling stock.� This� followed� a� recommendation� originating� in� a� conference of� participants� in� the� European� Transport� Corridors� project.54� A� year later� there� was� a� nightly� refrigerator� service� included� in� the� regular train.� Flatcars� had� been� modifed� and� organised� into� links� of� 10 vehicles,� with�f ve� such� links� included� in� the� train.� A� diesel� electric generating� car� was� included� and� technicians� accompanied� the� train.55 Much� experience� with� refrigerator� containers� had� been� amassed� by the�� ssuriisk� refrigerator� car� depot� in� the� early� 1990s.� This� depot, perhaps� seeing� the� writing� on� the� wall� for� the� conventional� refrigerator� train� sections,� had� begun� to� run� four� container� trains� using fatcars,� each� of� which� accommodated� one� 20 ft� and� one� 40 ft� container;� main� traffc� was�f sh� to� Krasnoyarsk� and� the�� rals� cities.� In 1993,� the� depot� ran� a� demonstration� refrigerated� container� train between� Krasnodar� and� the� Far� North,� carrying� fruit.� Another� demonstration� was� made� by� a� Belgian� company� between� Krasnodar� and �akutsk,� and� both� seemed� successful,� although� there� seemed� to� be an� obsessive� need � on� the� Russian� side � to� regard� these� two� trials� as a � competition.� The � transits� involved� sectors� handled� by� highway and � water � transport � as � well � as � by � rail.56 � That� refrigerator� containers did� not� develop� very� fast� after� these� trials� was� mainly� explicable,� it was � said,� by� the � failure� of� the� market� to� develop.� The � diffculty � of arriving � at � a � tariff � that � would � attract � traffc � but � yet � make � a � proft may� well� have� been� another � element.� In� the� case� of� Pacifc�f sh� at least,� highway� competition� remained� strong� over� the� medium� haul. In� the� Baltic� import� trade,� competition� was� not� simply� between rail� and� highway,� but� also� between� St� Petersburg� and� competing ports� in� Finland� and� the� Baltic� states.� The� latter,� for� example,� by

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streamlining� customs� procedures,� could� compensate� for� the� extra frontier� crossing� entailed� by� the� use� of� a� non-Russian� port.� Russian customs� procedures� tended� to� be� burdensome� and� unpredictable. For� example,� at� the� Buslovaya� crossing� of� the� Finnish/Russian� frontier,� railway� vehicles� might,� or� might� not,� be� uncoupled� for� inspection. �npredictability� made� it� diffcult� to� guarantee� transit� times;� a� train that� fell� behind� its� schedule� at� the� frontier� might� have� diffculty� in fnding� an� alternative� path� in� the� timetable.� However,� towards� the end� of� the� decade,� many� of� the� more� damaging� customs� sequences were� being� modifed. The� October� Railway� contrived� to� get� its� share� of� the� Baltic� ports traffc,� too.� In� 1997� it� introduced� a� container� train� between� Tallinn in� Estonia� and� Moscow.� The� outward� trip� left� Moscow-Khovrino� at 18.37� and� arrived� in� Tallinn� at� 09.28,� two� days� later.� This� was� not a� brilliant� performance� for� 1012 km,� but� the� schedule� included� 140 min� in� St� Petersburg� Sorting�� ard� and�4 h� 21 min� at� the� Russo/ Estonian� frontier.� The� 208 km� Estonian� segment� was� scheduled� at 33 km/h,� which� no� doubt� included� a� recovery� margin� in� case� departure� from� the� frontier� station� was� delayed. In� most� cases,� fast� container� services� seemed� to� be� a� response� to competitive� pressures.� The� October� Railway,� which� sponsored� several� such� ventures,� faced� highway� competition� on� the� heavy�( and potentially� rewarding)� import/export� routes.� The� Trans� Siberian� route was� in� competition� with� shipowners,� but� at� the� same� time� its� development � seemed � likely � to � offer � fast � container � transport � to intermediate� cities� like� Krasnoyarsk� which� otherwise� were� dependent � on � ordinary � freight � trains.� �sually,� where � there � was � no competition,� railways� saw� little� point� in� introducing� specialised� container� trains.� However,� towards� the� end� of� the� decade� there� was� a tendency� to� organise�' grouped'� container� trains,� which� would� depart� with� containers� for� several� domestic� destinations� but� also� include some � destined � for � the � ports.� Moscow�Irkutsk � and � Moscow� Krasnoyarsk� were� two� such� routes.� By� 1998,� most� container� trains on� the� Trans-Siberian� route� were� grouped;� there� were� 129� of� them in� that� year � (47� westward � and � 82� eastward). But � there � was � not � much � point � in � fast � container � trains � either,� if such � trains � only � ran � once-weekly.� �et � railways � were � reluctant � to provide � under-used � daily � trains � to � build � up � a � clientele � for � such services.� Moreover,� since � such � services � only � seemed � worthwhile � in order � to � gain � or � regain � traffc � from � the � highways,� there � was � a� limit on� the� rates� that� could� be� charged.� Running� a� train� as� a�'loss-leader'

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over� a� period� of� time� was� unattractive� when� money� was� short,� and moreover� would� surely� attract� the� attention� of� the� anti-monopoly authority.� �et� it� was� clear� to� all� that,� because� of� the� neglected� state of� the� national� road� system,� the� railways� had� a� breathing� space which� they� should� use� to� strengthen� their� position� for� future� competition.� It� was� strongly� argued� that� the� container� business� should no� longer� be� a� shared� business� between� freight,� freightcar� and� marketing� departments� but� should� be� an� integrated,� focused� organisation. In� 1998,� the� Ministry� formulated� a� 7-year� programme� for� container� traffc� and� in� November� placed� responsibility� for� container operations� on� its� Central� Premium� Traffc� Organisation�(TsFTO).� The latter� soon� began� to� work� with� forwarders� in� marketing� container services.� However,� the� results� of� this� endeavour� were� disappointing; the� European� model� of� a� fully-owned� subsidiary� was� therefore� explored,� resulting� in� the� establishment� of� a� state� subsidiary� company (Gosudarstvennoye unitarnoye predpriyatiye),� generally� known� as� GUPKonteiner.� It� was� hoped� that� this� would� stem� the� loss� of� container traffc� to� foreign� companies.� During� 2000� a� structure� was� set� up, with� GUP-Konteiner� at� the� top� and� its� affliated� enterprise� Dor-Konteiner on� each� railway� having� representatives� and� agencies� acting� under the� name� of� AP-Konteiner.� This� appears� to� be� a� useful� move,� likely to� get� the� container� business� energised,� but� past� history� suggests that� there� may� well� be� a� problem� at� line-enterprise� level� over� the allocation� of� rights,� duties�( and� incomes)� between� AP-Konteiner� and the� already� existing� station� services� and� between� Dor-Konteiner� and the� railway� premium� freight� centres.57� The� sad� record� of� Refservis, another� state� subsidiary�( see� p.� 114),� also� casts� some� doubt� on� the prospects� of� the� new� company. Some� railwaymen� think� that� the� opportunity� should� be� taken� to bring� the� highway� movement� of� containers� between� railway� yard and� client� completely� back� into� railway� hands�( as� it� was� until� 1986 when� the� railways� were� divested� of� that� particular� service).� Bringing � the � entire � container-trip � under � the � control � of � the � one carrier� would� certainly� simplify� matters;� on� the� other� hand� there are� strong� marketing� arguments� in� favour� of� encouraging� highway operators� to� bring� their� containers� to� and� from� railway� container terminals.

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The rolling highway Highway/railway� intermodal� transport� can� take� the� form� of� transferable� containers,� 'piggyback'�(semi-trailers� carried� on� fatcars),� and 'rolling� highway'�( kontreilernyi),� where� high-capacity� motor� trucks� as well� as� semi-trailers� still� connected� to� their� tractors� are� carried,� with the� drivers� travelling� in� an� accommodation� car.� Piggyback� involves the� carriage� of� idle� wheels,� adding� to� the� non-revenue� load,� but� only requires� ramps� for� transfer� between� road� and� rail,� and� its� total� transport� costs� are� about� a� third� less� than� by�' rolling� highway'.58� The latter� involves� the� carriage� of� an� idle� traction� unit,� taking� up� space and� needing� extra� horsepower,� and� therefore� tends� to� be� used� in special� circumstances,� such� as� the� passage� of� the� Swiss� Alps. In� Russia� in� the� 1990s� there� was� a� furry� of� interest� in�' rolling highway'� transport.� Lacking� modern� high-capacity� trucks,� Russian highway� operators� were� being� pushed� out� of� the� growing� international� highway� transport� business,� to� the� extent� that� nine-tenths of� the� traffc� was� handled� by� foreign� operators.� Even� in� Soviet� times the� Railway� Research� Institute� had� recommended� initiatives,� but� at that� time� Soviet� international� highway� transport� was� in� the� hands of� the� Sovtransavto� state� monopoly,� which� was� reluctant� to� cooperate.� The� Railway� Research� Institute� continued� its� studies� into� the 1990s,� and� was� attracted� by� the� 1600 km� Novorossiisk�Moscow� route, partly� because� the� motorway� was� said� to� be� in� a� bad� state� for� at least� 70� per� cent� of� its� length�(it� had� not� been� designed� for� a� stream of� heavy� trucks).� One� study� in� the� later� 1990s� envisaged� trains carrying� 40� tractor-and-trailer� rigs� at� a� rate� of� $1548.� The� results� of �krainian� studies� were� also�q uoted;� these� had� shown� that� moving highway� trains� would� be� economically� effective� over� 350 km� or more.59� In� the� 1990s,� the� October� Railway� modifed� some� fatcars, and� runs� were� made� between� Finland� and� Moscow� and� between the� western� frontier� and� Moscow.� Meanwhile� the� North� Caucasus Railway,� faced� with� traffc� losses� because� of� the� successive� conficts in� its� hinterland� and� seeking� new� outlets,� devised� a� scheme� for tapping� the� fow� of� Turkish-owned� motor� trucks� plying� between� the Black� Sea� and� Moscow.� These� came� by� sea� to� Novorossiisk� and� thence by� highway.� A� trial� train� was� run,� and� Turkish� drivers� seemed�q uite enthusiastic�(not� surprisingly,� since� they� were� charged� nothing:� there do� not� appear� to� have� been� any� Russian� drivers� on� this� trip).� The train � ran � at � passenger-train � speeds �( it � was � claimed),� doing � the Novorossiisk�Moscow� run� in� two� days.

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The� North� Caucasus� Railway,� and� some� parts� of� the� Railways Ministry� apparatus,� were� enthused� by� this� project,� but� there� were also� critics,� and� an� interesting� debate� ensued. 60� Those� against� the idea� simply� pointed� out� that� the� tariff� that� was� intended� to� govern this� service� (1000� dollars� for� the� loaded�j ourney� and� 400� dollars for� the� return� empty)� was� considerably� higher� than� what� the� railway� would� receive� for� an� equivalent� container � transit � (866� dollars for � the� loaded� trip� using� a� 20 ft� container).61� Since� the� discussion was� not� about� containers,� this� was� interesting� but� hardly� relevant. Critics� were� on�f rmer� ground,� however,� when� they� compared� tare/ payload� ratios� although,� even� here,� the� argument� assumed� that economic� reality� would� dominate� decision-making.� But� what� would seem� to� be� a� decisive� argument� was� the�question� of� why� should� the highway� operators� pay� 1400� dollars� to� go� by� rail� when� they� had� the gratuitous� use� of� Russian� roads?� (They� did� not� pay� Russian� road� tax.) The� arguments� in� favour� depended� on� a� number� of� assumptions: that� shippers� currently� using� containers� would� change� to� highway transport� once� the� railway� service� was� in� place� simply� because� containers� took� up� to� two� weeks� to� clear� customs� whereas� trucks� more or� less� drove� through� customs� in� an� hour� or� so;� that� the� procession of� trucks� up� the� main� road� to� Moscow� would� be� subject� at� some point� in� the� future� to� the� attention� of� Greenpeace,� which� would assuredly� seek� to� put� an� end� to� the� dirty� fumes� emitted� by� Turkish trucks;� that� drivers� would� think� that� riding� in� a� passenger� car� instead of� driving� was� well� worth� the� money;� that,� one� day,� rest-period regulations� would� be� enforced,� so�' rolling� highway'� mode� would obtain� far� lower� labour� costs� and/or� would� reduce� transit� time� with consequent� economic� benefts� for� the� highway� operator. Further� runs� were� made� and� it� was� claimed,� quite� legitimately, that� there� was� enough� potential� traffc� for� a� daily� train.� And� the Turks� did� turn� up� even� when� they� had� to� pay�( these� initial� rates, though,� were� discounted).� The� reason� Russian� drivers� did� not� like the� service,� said� its� protagonists,� was� that� they� feared� it� would� complicate� their� personal� contraband� arrangements. �hat� was� perhaps� the� most� powerful� argument� swaying� the� Turks does� not� appear� to� have� been� made.� Along� the� highway�j oining Novorossiisk� and� Moscow� there� are� almost� 50� posts� of� the� state highway� inspectorate.� These� posts,� as� most� foreign� drivers� have� come to� know,� are� assiduous� in� their� discovery� of� defects� and� also� in their� collection� of� monetary� penance� for� them.� Nor� does� it� require a� great� leap� of� the� imagination� to� wonder� whether,� perhaps,� highway

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inspectors� would� come� down� hard� on� Turkish� drivers.� If� this� was the� case,� the� proposed� rail� tariff� for� the�' rolling� highway'� might well� be� less� than� the� total� costs� imposed� by� the� all-highway� alternative,� and� the� state� highway� inspectorate,� in� its� own� way,� could be� likened� to� the� Swiss� Alps.

Trans-Sib In� the�frst� post-Soviet� decade� there� were� several� routes� inside� Russia carrying� international� shipments� in� international-size� containers and� on� some� there� was� competition.� The� most� rewarding� route� should have� been� the� east-west� fow� to� and� from� East� Asia,� because�� apan and� Korea,� and� also� China,� were� marketing� manufactured� goods� in Europe� and� were� geographically� not� far� from� the� Trans-Siberian� line. The� traditional� sea� route� from� the� Far� East� to� Europe� was� slow. In� the� 1980s� the� so-called� Siberian�'Land� Bridge'� was� indeed� handling� ever-increasing� container� fows� between� Russia's� Pacifc� port� of �ostochnyi-Nakhodka� and� the� European� population� centres.� �nfortunately,� with� the� healthy� growth� of� traffc� there� was� little� incentive to� eliminate� circumstances� that� were� clearly� not� to� the� liking� of clients.� First� among� these� was� a� surge� in� theft,� which� the� authorities seemed � unable � to � curb.� Then � there � were � the � delays � caused � by customs� clearance� at��ostochnyi,� which� could� cost� a� week� or� more. There� was� also� a� port� rule� introduced� to� protect� the� local� Soviet shipping� company,� the�' one� company-one� ship-twice� weekly'� limitation� which,� designed� to� prevent� bigger� shipping� companies� taking a� correspondingly� large� share� of� the� traffc,� had� the� effect� of� reducing the� attraction� of� the� route.� Finally,� the� railways,� which� hitherto had� performed� their� part� of� the� operation� with� a� certain� punctuality and � despatch,� had � found � themselves � in � the � 1990s � invaded � by protesters� in� the�' rail� wars'�( see� p.� 211),� and� container� trains� were among� those� delayed.� �hereas� in� the� mid-1980s� around� 125 000 containers� were� shipped� west� through��ostochnyi� annually�(measured in�20 ft� containers� and� not� all� moved� in� specialised� container� trains), by� 1998� this� had� fallen� to� around� 50 000.62� It� was� hardly� surprising that� in� the� early� 1990s� the� sea� route� won� back� traffc.� Shippers� and shipping� companies� orientated� themselves� to� the� new� conditions and,� in� particular,� new� ships,� faster� and� cheaper� to� operate,� were ordered.� These� investments� made� it� more� diffcult� to� draw� the� traffc back� to� the� Siberian� routing� when� conditions� improved.� Meanwhile a� rival� route,� TRASEKA,� was� emerging.� This� ran� through� China,

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Kazakhstan,� Turkmenistan,� the� Caspian,� the� Transcaucasus,� the� Black Sea� and�� kraine.� It� was� supported� by� European� interests,� which evidently� wanted� an� alternative� east-west� route� that� did� not� pass through� Russia.� Its� economic� advantages� seemed� tenuous;� it� involved not� only� a� number� of� frontier� crossings� but� also� two� sea� segments. Because� of� these� drawbacks� the� Railways� Ministry� did� not� regard the� TRASEKA� scheme� as� a� potential� catastrophe� for� the� Trans-Sib.� It was� simply� a� nuisance. 63 That� conditions� on� the� Trans-Sib� did� improve� owed� something� to the� passage� of� time� but� also,� most� likely,� to� the� appointment� of� the former� Railways� Minister� G.M.� Fadeev� to� head� an�' International Coordinating� Council� for� Trans-Siberian� Transportation'.� The� aim was� to� radically� restore� and� improve� the� service� offered,� a� task� that seemed� to� swell� in� importance� as� the� likelihood� of� the� rival� TRASEKA trans-Asian� route� emerged.� One � thing� achieved,� probably � owing � to Fadeev's� persistence,� was� the� abolition� of� the� one� company-one� shiptwice� weekly� rule.64� Also� remarkable� was� the� streamlining� of� customs procedures;� for� transit� freight�( that� destined� for� a� third� country), detailed� description� and� valuation� was� no� longer� required.� A� sixhour� passage� through� customs� was� now� possible� for� this,� although containers� for� Russian� destinations� still� faced� a� delay� of� one� or� two weeks.� Better� protection� of� shipments� was� already� achieved;� according� to� one� spokesman� there� had� not� been� a� single� case� of� theft� in 1997� and� 1998.65� Computerisation� and� gradual� uprating� of� cable capacity� promised� better� monitoring� of� shipments� en� route.� Some preferential� rates� were� also� on� offer� in� 1999;� a� single� container� was charged� at� the� same� rate� as� a� multi-container� shipment.� A� Russian importer,� it� was� said,� bringing� a� container� of� goods� from��okohama to� Moscow� would�f nd� the� Trans-Siberian� route� about� 600� dollars cheaper� than� the� sea� route� via�H elsinki. By� early� 1999� a� container� sent� from� a�� apanese� port� to� Germany would� most� likely� make� the� trip� in� 477� hours,� of� which� 292� hours would� be� taken� by� the� rail� transit� over� Russian� and� Belarussian railways� to� Brest� (10 390 km,� of� which� 623 km� were� over� Belarussian tracks).� The� standard� all-inclusive� rate� would� be� between� 1580� and 1880� dollars,� although� if� the� container� went�j ust� as� far� as� Brest� it would� cost� only� 1080� dollars.� At� this� time� the� competing� all-sea rate� via� Rotterdam� would� have� been� between� 1550� and� 1750� dollars; that� is,� probably� cheaper� than� the� Trans-Siberian� route.66� For� the broad-gauge� railway� segment,� Russian� Railways� received� 239� dollars and� Belarussian� Railways� 57� dollars�( or� 120� dollars� according� to

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Fadeev).� Onward� from� Brest� the� railway� rate,� including� the� forwarders'� cut,� was� 500� dollars� or� more.� Russian� commentators� felt that� if� there� were� any� rate� cuts,� they� should� bear� on� the� west-ofBrest� sector,� although� given� prevailing� exchange� rates� and� actual costs� the� disparity� between� the� Russian� container/km� rate� and� the �est� European� was� not�q uite� as� shocking� as� it� seemed.67� But� rate reductions� to� and� from�� apan� were� not� necessarily� effective;� the �apanese� forwarders,� which� had� close� connections� with� shipping companies,� would� simply� not� pass� on� the� reductions. At� the� 1998� tariff� conference� it� was� pointed� out� that� a� container sent� from� Moscow� to�� apan� would� be� charged� 740� dollars� for� the rail� transit,� but� for� the� much� shorter� sea� sector� 770� dollars.� �et� it was� the� railways� which� were� pressurised� to� reduce� their� rate.� This was� ascribed� to� the� circumstance� that� the� shipping� companies� were foreign,� and� therefore� less� of� a� sitting� target. In� 1999,� a� publicity� trip� was� made� with� a� container� train� from �ostochnyi� to� Brest,� covering� the� distance� at� an� average� of� 1150 km per� day� or�48 km/h� compared� to� the� normal�854 km/day� or� 35.6 km/h. If� fatcars� had� been�ftted� with� passenger� car� suspension,� the� schedule could� have� been� accelerated� even� more. 68� But� as� there� was� in� any case� a� signifcant� speed� advantage� over� the� all-sea� route� such� accelerations� were� unlikely� in� the� short� term.� A� greater� problem� was frequency,� for� with� the� traffc� level� existing� in� 2000� a�� ostochnyi� Brest� container� train� ran� only� every� 10� days� for�� apanese� traffc� and every� seven� days� for� Korean� traffc,� the� transit� to� Brest� taking� 12.5 days� and� to� Berlin� 14.5.� It� seemed� likely� that� the� Ministry� would� be able� to� guarantee� a� 10-day� transit� to� Brest.� But� containers� might need� to� wait� several� days� in��ostochnyi� for� a� container-train� departure,� which� would� reduce� the� speed� advantage� over� the� all-sea� route. Ideally,� with� the� trains� taking� a� maximum� of� 100� 20-ft� container equivalents,� the� container� ships� should� be� small� and� frequent�( the route� could� if� necessary� take� three� container� trains� daily).� �nfortunately,� the� container� ships� in� use� by� the� Far� Eastern� Shipping Company� carried� 1600� containers.� As� that� Company� was� privatised, and� apparently� owned� by� American� interests,� one� commentator� darkly observed� that� it� was� unlikely� that� this� would� change� in� Russia's favour, 69� which� meant� that� the� last� container� from� an� incoming ship� could� wait�f ve� days�� � and� longer� if� there� was� no� train� about to� depart.� In� fact,� this� was� too� pessimistic;� ships� did� not� unload 1600� containers.� In� 1999,� customs� and� rail� authorities� sat� down� to think� out� their� problems� and� decided� to� pre-arrange� the� departure

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of� fast� container� trains� in� conformity� with� the� advance� schedule� of container� ships,� the� aim� being� to� despatch� transit� containers� from the� port�j ust� one� day� after� the� unloading� of� the� container� ship.� A proportion� of� containers� would� go� by� ordinary� train. In� 1999,� a� new,� accelerated� pair� of� freight� trains,� Nos� 1235/1236, was� introduced.� These� carried� both� containers� and� ordinary� freightcars and� ran� from� Moscow� to�� ladivostok� (9290 km)� in� 250� hours,� stopping� at�just� six� intermediate� points� for� picking� up� and� setting� down. But� they� only� ran� weekly.� Infrequency� of� service� meant� that� while intermediate� points� might� be� favoured� with� a� container� service,� a shipper� would� not� necessarily�f nd� container� transit� of� good� value unless� he� could� be� sure� that� his� consignment� would� not� need� to wait� too� long� for� a� train.� For� example,� in� 1999,� a� Krasnoyarsk� shipper� with� a� consignment� for��estern� Europe� had� the� choice� of� using an� ordinary� service� (19� days� to� the� Belorussian� frontier� at� Krasnoye) or� a� container� train�( eight� days);� but� there� was� normally� a� container� train� only� twice� a� week.

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7

Passenger Service in the Market Economy

Traffc T�k��� 7.1

Russian Railways passenger traffc (billion passenger/km)

1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

274

253

272

228

192

169

170

152

141

169

255

N.B: fgures are from the Railways Ministry statistical abstract, except that for 2000, which is provisional.

Passenger traffc declined in the 1990s (Table 7.1), though not as consistently as freight. The salient facts, apart from the traffc trend, were a growing defcit and a general deterioration, although with improvements in some premium trains. Passenger service losses were cross­subsidised by freight profts, a situation which was arousing some public disquiet ('Why should starving Kuzbas miners subsidise Moscow offce workers?'). The Railway Ministry's hope was to cut costs and to replace cross­subsidisation by compensatory payments from local governments that benefted from the existence of com­ muter services. Meanwhile, rolling stock was ageing and the trickle of new trains was not enough to replace the over­age and hence high­cost trains inherited from Soviet Railways. Passenger fgures for commuter services are compromised by the large number of passengers who do not buy tickets, either because they belong to one of the privileged groups that enjoy free travel, or because they belong to the mass of 'hares': those who evade payment. Connoisseurs of statistical misapprehension will appreciate the quoted fgures for commuter traffc in 1991 and 1996, which show a reduc­ tion of commuter passengers by 45 per cent with a corresponding reduction of passenger/kilometres of only 5 per cent. These fgures 134

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argue that the number of longer­distance journeys held up or actually increased while short­distance traffc fell markedly. However, a much more likely interpretation is that, while there was probably an in­ crease of weekend k�dh� traffc, the main reason for this radical change was that passengers making short journeys to and from city terminals were less likely to purchase tickets than the longer dis­ tance travellers because they were less likely to be caught (peak­hour trains were so crowded at the city end of their journeys that ticket­ inspection was impracticable). The beauty of this situation is that the more the trains were crowded, the less likely was the purchase of tickets so, in terms of statistical returns, an increase of passengers could result in a reduction of their recorded number. However, the ticketless phenomenon did not entirely vitiate the fgures (although the argument that this is proved by the traffc drops after fare increases suffers from a similar statistical problem). The general picture is clear enough. Passenger traffc fell fast but not steadily. In 1991, the Moscow and October railways were clear leaders in commuter traffc, with 42 and 21 per cent respectively of total pas­ senger/kilometres. (These railways do not handle just Moscow and St Petersburg services, but also operate commuter services in some smaller cities. The Moscow Railway, for example, handles Smolensk's services, a high­cost operation with substantial use of diesel trains.) Third and fourth places were occupied by the Sverdlov and Gorkii railways with 5 per cent each. By 1996, the share of the October and Moscow railways had declined to 13 and 29 per cent, while the Sverdlov and Gorkii railways had climbed to 7 per cent. Apart from the big two, and the Sakhalin and BAM lines, all railways showed an absolute increase in passenger/kilometres over this period. The more than average decline of Moscow and October railway commuter traffc may owe something to the circumstance that these two saw the biggest tariff increases over this infationary period (3297 times on the former; 2612 times on the latter).1

Fares and fare collection One of the frst signs of the market economy on the railways was the decentralisation of responsibility for commuter fare changes. The head of the railway, with the agreement of the local govern­ ment, was given this authority; subsequently, local authorities would change the fares at the request of the railways. By the end of the

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decade the local authorities, in effect, were deciding fare levels. The federal government, in approving these transfers of power, assumed that commuter services would break even fnancially, which was somewhat optimistic in view of other countries' experience. 2 Commuter fares come in fve varieties: season ticket, zonal, ordi­ nary, kilometric and holiday. In April 1991, for the frst time in decades, fares were raised, although not evenly, the season tickets (period tickets) more than quadrupling but the zonal tickets only doubling. The increases were not enough to eliminate losses and most railways made further increases later, but these were not enough to catch up with costs. Then came a period of wild infation; during much of this period fares were frozen until 1993. After that, there was, on average, a rise, but different railways pursued different courses; some actually reduced rates on some kinds of tickets (notably, with the introduction of concessionary weekend fares for citizens going out to dig their allotments). Then, from 1994, fares began to rise again as part of the attempt to reduce commuter losses. Almost all tickets sold were seasons or zonals. The former, on average, were about one­third cheaper than the latter (depending on the number of trips made). Since the season­ticket holders tended to travel at peak hours, off­peak trains could produce as much revenue as crammed peak­hour trains, although in 1991-94, season ticket rates increased more than zonals. Different railways at different times had very different zonal rates. In 1993, for example, there was a 12­times difference between the cheapest and dearest fare in the 21-80 km zone.3 In 2001, the Moscow Railway was planning to replace zonal by kilometric fares, on the grounds, it said, of fairness.4 In 1999 it was said that the railways were still carrying 75 million ticketless passengers.5 No less serious a problem was the fact that there were over 160 categories of passenger who were entitled to discounts. A few of these were 100 per cent discounts but most were half­price concessions. The list tended to grow, possibly under the infuence of democratic politics. Not that the benefciaries were undeserving; participants in World War 2, victims of Stalinist re­ pression, participants in the Chernobyl rescue operation, were among them. So were school children, although the railways had no accu­ rate fgures as to how many children used the trains. In addition to legitimate discount holders, thousands of passengers used false papers to obtain the same privileges, and the 'grey­haired student' was a familiar traveller. One way of evading the carriage of concessionary fare passengers

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was developing in the late 1990s. This was the introduction of high­ class short­distance 'express' trains which offered three classes (in effect, therefore, they were supplementary­fare trains) and which did not offer travellers their habitual discounts (on the Moscow Railway, pensioners could still get a discount, however, provided they remembered to take the correct documents along). As for the ticketless, the traditional way of dealing with these was the 'raid'. Masses of inspectors would be drafted to a particular route and on­train inspectors would make thorough checks, while at stations, all possible exits would be covered. The ticketless would then be made to buy tickets and pay an on­the­spot fne. Those who had no money would be handled at the stations; a few of these were simply released. But such tactics had only short­term and localised effect. The situation changed for the better with the long­delayed introduction in 1999 of automatic gates based on barcode or smart­card technology. Moscow's Kiev Station was the frst in the capital. Not unexpectedly, ticket sales in this case doubled immediately. Fadeev, head of the Moscow Railway, began to talk of a break­even commuter service.6 In February 2000 there was another increase of Moscow com­ muter fares, by as much as 50 per cent between stations within the city. This was said to be a response to rising power prices and to the rather low level of compensation received from local authori­ ties in 1999 (Moscow had given only 15 per cent of the promised sum, Moscow Region less than 1 per cent. Kursk stood out as a shining example; in 1997 it agreed to pay full compensation in exchange for reduced tariffs on enriched ore from a local producer, and it met its obligation in full.)7 Both the Kursk and Smolensk governments also relieved the local commuter services of their local tax burdens.8 In 2000 other administrations were also seeking fare increases. In early 2000, at Krasnoyarsk, the local government imposed a 10.5 per cent rise. This was not much, but the local governor, General Lebed, also allocated funds for refurbishing some of the trains. At that time, of the 35 electric trains in service, 31 had exceeded their 28­year depreciation life and, offcially, should not have been in service. This Railway had peak traffc problems; the weekend trains for allotment­holders were double length (20 cars).9

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Commuter subsidies These were rarely called subsidies. 'Compensation for losses' was the favoured term. The argument (and few disagreed) was that in operating commuter services that could never meet their costs, the railways were providing a service that was enjoyed either by a particular region or by one or more industrial enterprises. There was therefore a case for requesting fnancial assistance from local governments or from large industries whose workers came and went by train. This was a continuing refrain throughout the decade and agreements were indeed made, usually with both sides giving under­ takings. Typically, a local authority would promise certain sums and the railway would undertake to spend part of the money on new trains for that service, or maybe to improve train frequencies. Sometimes a local authority would be the buyer of new trains; it would then present these to the railway. The sums promised varied from region to region. They were rarely enough to cover the whole defcit as calculated by the railway. The agreements were not kept. The promised sums rarely seemed to arrive and those authorities that did meet their side of the bar­ gain were likely to fnd that their money was not spent on new trains (in 1998 the railways spent only 8 per cent of their compen­ sation payments on new trains).10 But in the early years there was some degree of mutual understanding and some useful things were done. The Balakovo chemical works hired a daily train from the Volga Railway to take its workers to and from the plant. The Bashkorostan administration bought fve electric and three diesel trains for the Kuibyshev Railway. At Samara, the local authority arranged a discount on electric power supplied to the railway, and the Gorkii Railway benefted in the same way. Both the Moscow and St Petersburg governments made contributions, although these were much less than the defcit. In 1998, Vladimir lost many of its commuter trains because the local administration did not hand over any of the money it prom­ ised. Determination by the Gorkii Railway in due course persuaded the authorities to relent to the extent of giving the Railway permis­ sion to increase tariffs. As Vladimir was not a prosperous area the Railway did not accept this offer, claiming that it would simply penalise the poorest section of the community. The Moscow Rail­ way, which operated trains from Vladimir to Moscow, did accept the proposal, with the result that its Vladimir-Moscow commuter

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fare was higher than the fare by fast train. But both fares were higher than those offered by the buses that parked themselves in anticipation outside Vladimir station,11 refecting the confrontational rather than coordinated interface between rail and bus. The Moscow Railway, like others, was not very interested in passenger transport coordination. Easing the lot of intermodal passengers by making rail-bus interchange easy seemed to be excluded from the general notion of customer­friendly service. When Paristyi was head of the Railway, an opportunity occurred to rebuild Sergiev Posada station as a combined railway and bus facility, but despite local appeals the Railway successfully opposed that idea.12 One obstacle to greater local support was the absence of a con­ vincing statistical basis, and this lack also inhibited efforts to cut costs and raise revenues. For example, there was no data on traffc intensity variations over hour of the day or day of the week. As a result, there was no statistical data on the degree of overcrowding in the various trains. One way of obtaining some, albeit imperfect, information would be records obtainable from automatic ticket machines; in the Soviet years, almost every zonal ticket was sold by such machines at the main terminals. But coin shortage and repeated infation of fares meant that these machines were usually out of action throughout the decade. There was also the thorny question of how infrastructure costs should be shared between com­ muter and other trains. Other countries had faced the same problem and some solution could be found in separating commuter services into their own self­standing companies with their own accounts. Russia had made some progress in this direction by the end of the century (see p. 142). As for obtaining really signifcant fnancial support, Aksenenko in his repeated peregrinations through regional capitals did have some success. He recognised the problems of some of the more recalcitrant administrations and did not attempt to employ polemics. In 1999 he could claim that 37 per cent of commuter losses were compensated; this was not enough, but it was better than the 12 per cent of 1995. Moscow and St Petersburg were where the biggest losses were made, and they did contribute something, although in 1999 the response of the Moscow regional governor, Anatolii Tyazkov, was not encouraging: 'I'm prepared to carry everybody by bus', he said.13 In April 2000 the head of the Moscow Railway, Fadeev, announced that the regions and municipalities served by his Railway had promised to compensate losses fully (Moscow city was fairly

140

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generous in this undertaking, but Moscow Region's contribution was tiny). In early 2001, Leningrad Region agreed to fully compensate losses, while the South Urals Railway, still negotiating compensation, managed to impose a one­third fare increase.

Cost reduction The operating costs of commuter trains were presented by their operating units, which were the train depots. The pattern of costs could vary quite widely between routes. For example, on a roubles per 10 pass/km basis, the Moscow-Kursk route and the MoscowRyazan route, which produced an almost identical number of passenger/kilometres in 1996, provided 78 and 37 roubles respec­ tively for depreciation, and their total operating costs were 504r and 317r per 10 pass/km respectively. Taking the Moscow Railway as a whole, depreciation accounted for 55 roubles, traincrew and maintenance workers' wagebill for 41 roubles, and traction electric­ ity (the biggest item) for 160 roubles per 10 pass/km. Total operating expenses were 411 roubles.14 Thus any change in power prices had an enormous effect on costs (this was less true of long­distance passenger trains because of their higher labour costs and less frequent starts­from­rest). That is why successive railway ministers spent so much time arguing about the iniquity of power company charging schemes. A cost reduction, at least on paper, was obtained in 1996 by call­ ing in independent consultants who decided depreciation valuations were too high, so the latter were allowed to lag behind infation. Reorganising schedules so that a smaller number of trains would perform the same mileage, was another device that had some rel­ evance. To reduce power costs, the easiest way was continued pressure at the political level for fairer tariffs. In the longer term, it was hoped that new trains would be capable of division into two halves, so it would no longer be necessary to operate 10­car trains off­peak, when fve­car trains would be quite suffcient. The biggest saving would result from re­equipment with new trains. Not only were the existing commuter trains over­age, but their speci­ fcations were also out of date. New trains would reduce repair costs while having inherent economies built into them (an example was lower power consumption; even the trains delivered in 1999 consumed about 20 per cent more than analogous Western trains). In 1996 the railways had 15 120 electric train vehicles and in 1996-2000 it

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was planned to acquire 5706 new ones.15 These targets were not met, although production was building up at the end of the century; 423 passenger train cars were acquired in 1998 and 607 in 1999.16

Commuter services Although commuter services were loss­makers, competition from bus services was not welcomed. Bus companies did abstract some rail commuter traffc and when this occurred at outlying stations outside peak hours it did represent a loss of useful income. Bus fares usually but not always tended to be higher, but despite poor roads the bus quite often was faster than the train. Moreover, thought the fearful, the bus was less likely to be the scene of a mugging. Russian commuter trains are slow. In the 1990s this traditional slowness was perpetuated by the existence of age­expired trains for which accelerated schedules would only have brought more break­ downs. On the Gorkii Railway, for example, it was said that the average speed of commuter trains had dropped from 46 to 32 km/h in the few years leading to 1999.17 A general acceleration of com­ muter trains seemed unlikely for some years. Nevertheless, the concept of the 'express' electric train provided a partial solution. Such trains provided three classes of service, with refreshment facilities, guaran­ teed seat and various minor luxuries chosen by the different railways. Carpeting, closed­cycle toilets, refrigerators, and video screenings were some such luxuries. They were also well­staffed and carried security guards (three of the latter, according to personal observation). New trains were used. By 2000, two railways, the North Caucasus and Moscow, and to a lesser extent the October, had accumulated considerable and positive experience with these trains. They were primarily used on services between the big city and towns situated two to fve hours distant. Sometimes, notably at weekends, the trains were sold­out well before departure. They were said to be proftable. The Moscow Railway's ED4MK trains were built by Demikhovo Works (the Russian replacement for the Latvian Riga Works which had supplied electric trains to Soviet Railways), and the frst ran to Tula, Ryazan and Kaluga, the latter destination having two rather than one round­trip daily. The fares were comparable to those of long­distance trains; over short distances they could be higher than the bus fare, which presumably discouraged short­distance passen­ gers taking seats that might be occupied by longer­distance clients. The Moscow Railway's frst Ek�rr��� was to Tula, and the fare structure

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was somewhat eccentric, with First Class being 35.40 roubles and Third 32.50 roubles. This was a trifing difference, especially as First was defnitely deluxe whereas Third, in its furnishings, did not dif­ fer much from ordinary electric trains. The result was that First flled up while Third was mainly the last resort of late­comers. When the Moscow-Ryazan service was introduced, this mistake was cor­ rected; for almost the same distance, First was 48 and Third 35 roubles. In their frst year, 1999, these trains were already returning over 75 per cent of their operating costs, and further fare adjust­ ments could improve on this. First Class fares were lower than corresponding bus fares, even though the train was faster and more comfortable. The Ministry was anxious to achieve full pay­back, if only to convince local governors that a serious effort was being made to reduce the commuter defcit.18 Given the high manning level, this was a good result (the 650­seat trains carried 16 staff, including the security staff). The October Railway bought trains from Torzhok (the other post­ Soviet electric train supplier). These ET2L trains (the 'L' stood for 'luxury') were designed expressly for non­stop services over about 200 km. Their seats were provided by the Ulyanovsk aircraft works. The frst such service ran to Novgorod, and it was emphasised that 'there is no place for holders of the various discounts, because you have to pay for comfort'.19 The North Caucasus Railway, whose ordinary commuter trains were old, decrepit and uninviting, no doubt regained some self­ respect from its 'D��-Ek�rr���' and 'K�k���-Ek�rr���'. These were not the same in their internal arrangements as the Moscow trains. They had cars with 60 seats, aircraft­style with reclining backs, a bar car and video car, a mothers' room and a microwave oven. Their fares were not particularly high, and less than those of competing buses. The latter needed 5 h 30 min to do the Rostov-Krasnodar run whereas these trains covered the 287 km in four hours, averaging about 70 km/h or 45 mph.20

Passenger companies The desirability of establishing free­standing passenger service com­ panies was acknowledged throughout the 1990s, but progress was not fast.21 The October Railway was tinkering with transformations from 1994, but it was only in 1998 that its two passenger subsidiary companies Tr�����r ��� (long­distance) and Tr���k�m (commuter

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services) were frmly established. Moreover, Tr�����r ��� was hardly independent, with its receipts disappearing into the October Railway's account (thereby depriving it, critics said, of freedom to allocate resources). The October Railway for its part allocated funds (that is, subsidised) Tr�����r��� from the Railway's account. Tr���k�m, according to its head, speaking at a passenger service conference in 1998, had had many problems and he recommended that future companies pay particular attention to the qualifcations of staff working in the planning and economic department. This seems to have been an oblique way of saying that avoidable wrong decisions had been made at the start. He also said that good communications were necessary if companies were to manage resources effectively. It was no use having traffc information coming in after a two­ or three­week delay. More lines of communication, linked to computers, were needed so that management could react in time to developing situations. By 1999, the West Siberian Railway also had a long­distance pas­ senger train company operating. It was a so­called unitary enterprise, known as the Passenger Service Direction (D�r�k�����). It was differ­ ent in that all sub­departments of the passenger service (car depots, stations, divisional k�r�k����) were embodied in it. This enabled things to be done faster, as was noticeable in the large number of inter­ mediate stations that were put under repair. This particular structure also enabled economies to be made (as it was expressed; more pre­ cisely, the need to justify all expenditures made the release of 2500 under­employed workers inevitable).22 The North Caucasus Railway had independent commuter enter­ prises at Rostov and Mineral'nyie Vody and the Samara Commuter Company (��m�r��r���rr���r�k) of the Kuibyshev Railway appeared to be fourishing. In summer 2000, the Moscow Railway established its long­distance passenger service D�r�k����� . This operated all the Moscow station buildings (apart from the October Railway's proper­ ties) as well as the passenger car depots.23 Somewhat different was the Novosibirsk company Ek�rr���-rr���r�k, which was an open share company. It began in 1998, its foundation having been delayed by misgivings in the Railway Ministry, existing passenger companies being state enterprises belonging to railways. Ek�rr���-rr���r�k began with four shareholders, each with an equal share: the West Siberian Railway, the Novosibirsk Region Property Fund, the Novosibirsk City Property Commission and the regional Fuel Association (a trans­ port company). The local authorities had long believed that the West Siberian Railway was exaggerating its commuter losses so as

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to attract more compensation, and the foundation of the new com­ pany, with its accounts separate from those of the Railway, was intended to clarify that situation. The company had at its disposal stations and rolling stock for which it paid a rental. The expecta­ tion was that it would endeavour to obtain the most proftable use from these assets by, for example, campaigning against the ticketless, developing retail services at Novosibirsk Station, improving sched­ ules, and so on. In some ways it approached the British passenger franchise system. Local authorities promised tax concessions and the Fuel Association, having obtained a privileged position in fuel transport in the region, in return promised fnancial support. But the fact remained that a ffth of passengers had free or half­fare tickets. It was thought that, this being a private company, it would have a better chance of persuading the state to recompense it for fare privileges granted by the state for social purposes, such as free travel for soldiers. The choice between the Samara and Novosibirsk models for future companies was still open in 2000, although the state, Samara, example seemed to exert most attraction. Critics re­ garded Ek�rr���-rr���r�k as a half­cock concept; they claimed that the company would merely collect money for the Railway's input, and it was unlikely that much of that money would be directed towards developing the commuter network.24 Some critics called it a Potemkin Village, which would take the income but let the West Siberian Railway bear the losses.25 Formation of passenger train companies was not only to provide 'transparency' of accounts as was currently recommended in West­ ern Europe. It was also expected to release a good deal of initiative.26 How far it did achieve this is hard to judge, because an unknown proportion of the initiatives that did occur would have occurred under the old structure. Intuition suggests that indeed things were done, experiments entered into, which would not have been under­ taken by play­safe passenger departments of the railways. Tr�����r��� is the best example to take, since it was the earliest of the long­ distance passenger companies. Among its decisions in its early years were the scrapping of 189 old passenger cars (thereby reducing prop­ erty tax), and organising retail and other services at large stations (something that was done all over the network, in line with the drive to earn money from 'auxilliary services'). It also began a programme of refurbishing or reconstructing main stations. Some of this was long overdue ('unproductive' investment had a low priority in Soviet times). At Volkhovstroi, refurbished to 'European standards',

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a few more years' delay would have seen the station collapse under the pressures of its own decay. It could be argued that station improvements were taking place all over the system, irrespective of whether or not there was a passenger company involved. Thus Vladivostok was refurbished by an Italian company and Sochi by a Turkish. Such developments, by adding to a station's value, could result in a tax increase. And there could be other nasty surprises. At Sochi, the old station, built in Stalinist times, was discovered to be shoddily built, so what was intended as a refurbishment became almost a reconstruction. Tr�����r��� also had a weakness for foreign architects and designers and tended to choose Finnish companies. One Tr�����r ��� innovation that surely is evidence of a high de­ gree of initiative was the decision to include a sleeping car in the fast 'A�r�r�' day train between St Petersburg and Moscow. This seems at frst sight to be an absurdity, but the facility did become ex­ tremely popular. Perhaps this was because the vehicle was of the high­price SV category, and provided a degree of luxury hitherto obtainable only on a night train. Less unorthodox, but useful, was the provision of restaurant cars on night trains over this route. This enabled passengers to order breakfast which was then delivered to their compartments.27 The Samara commuter company seemed to do well in its frst years. It, too, took vehicles (75 cars) out of service. Being fnancially independent, it proceeded on the basis that every kopek counts, so removing the tax burden of those cars was an obvious step. It also looked at train schedules and made some changes that would allow fewer trains to perform the same number of trips. The company was based on the Bezymyanka train depot and the latter was especially well­equipped. Unusually for such depots, it could undertake capital repairs and it had a high­capacity wheel­profler. It was therefore able to keep the somewhat elderly trains in good repair. This in turn enabled them to run faster, thereby improving schedules. This was quite important, for most of the commuter lines centred at Samara are paralleled by highways and hence competing bus services. On the run between Samara and Syzran', it was possible to cut schedules by over 20 minutes. The improvements thus made, and the new transparency of costs and revenues, were infuential in maintaining good relations with regional governments. It became possible to sign more realistic agreements about fnancial compen­ sation and reduction of electricity charges. If these agreements were

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not always carried out to the fullest extent, a spirit of partnership nevertheless persisted.28 At the beginning of 2000 all the railways except the Sakhalin Railway had, or were preparing, passenger companies (k�r�k����). There were 12 passenger companies in operation of which six were long­ distance (but with four handling commuters as well) and six for commuters only.29

�ong-distance passenger services In Soviet times, the fares offered by the national airline, A�r����, had been competitive with railway fares, and often lower. In the wave of post­Soviet liberalisation, civil aviation was split into myriad smaller organisations, converting the industry to a structure rather like that of the British double­glazing business. With no big airline, with fares multiplied in order to match costs, former air travellers migrated to the railways.30 Despite this, in the 1990s, there was a decline in long­distance rail passenger travel, something that was slowly refected in shorter and less frequent trains. According to Ministry fgures in 1996, while commuter services recovered 28 per cent of their costs, long­distance services recovered 48 per cent. Again according to Ministry fgures, concessional fares cost the long­distance services a sum equal to 48 per cent of the loss. The Ministry went on to claim that if concessional fares were abolished the long­distance services would break even. This seems to stretch reality, especially as the Ministry's statistics were not unarguable. It might be true, though, that without some abolition of concessional fares there would be no possibility of breaking even. With their abolition, and the introduction of lower electricity prices, the long­distance services might indeed be within reach of solvency.31 The run­of­the­mill long­distance train was a shabby affair by 1992, which may have been the trough year in this respect. Rolling stock was dirty, windows might be missing, bedding was unappetising. With the reduction of services, the worst vehicles could be put into reserve (where they still could attract tax) to await restoration. In the meantime, the spirit of the market economy found expression in several ways. A variety of kiosks appeared at stations, both railway­ sponsored and the result of private enterprise. Indeed, the latter became so numerous that access to stations was sometimes blocked by the density of private stalls. Pay waiting rooms were established for those who could afford a little luxury.

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Of more substantial interest was the popularisation of the frm����� train, a premium­service named train for which supplementary fares were charged (usually adding 50 per cent to the standard fare). These tended to be scheduled at times suitable to the potential user rather than, as previously, to the railway operators. Only youthful rolling stock in good condition could be used. Train staff were carefully chosen and the whole idea was to create a customer­friendly ambi­ ence. Some trains were organised by regional railways and carried regional features, as well as appropriate names ('B��k��', 'Om�dh', 'Ur��', and so on). Premium trains that failed to pass their inspections could be demoted to ordinary services. This happened to the 'Y�����' day train between Moscow and St Petersburg which for a time lost its name, its schedule having become slower due to track works, and its vehicles below­standard. In 1999, there were 96 of these premium trains in operation, their number declining to 83 in 2000; this required 207 train sets and re­expansion of the concept was limited by the non­availability of suitable vehicles. In 2000, the railways were allowed to set sleeping car and com­ partment fares on premium trains without government approval and in January 2001 long­distance fares were generally increased by one­third. Compared to the 1987/88 timetable, the main change by 1999/ 2000 was the large number of formerly daily, all­year­round trains that had become non­daily and/or seasonal. Thus, on the smartest route, Moscow-St Petersburg, the 1987/88 timetable offered 16 daily all­year services and just three which were either seasonal or non­ daily, but by 1999 these fgures had changed to nine and ten respectively. In both years there were three day trains (the daily 'A�r�r�� and 'Y������ and the weekly ER­200), the remainder being night trains, the 'Red Arrow' and its unnamed second section being a cut above the rest. With the acquisition of a new ER­200 train, the once­weekly high­ speed day service became thrice­weekly, although it later reverted to bi­weekly. The new unit should, of course, have been quite enough for a thrice­weekly service and the low utilisation of the ER­200 trains is remarkable. The original unit only made one return trip a week, it was said, because line congestion was such that its disturbance to traffc fow could only be tolerated at that frequency. With the recon­ struction of the line that was in progress in 1999, it is possible that the congestion argument was still valid. Nevertheless, some strange ideas were persisting. When the tri­weekly service was introduced,

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the October Railway's newspaper, which surely should have known better, referred to 'The introduction of such an intensive service . . .'.32 In December 2000, the ER­200 service became twice­daily (except Wednesdays), but by January 2001 there was a reversion to a once­ weekly service, allegedly (and implausibly) because the rolling stock was wearing out.33 For the less smart diesel main lines, the Samara to Orenburg line can be taken as an example. In 1988, there were ten daily trains and three seasonal or non­daily, but by 1999 the daily all­year trains had dwindled to three while the number of non­daily runs had grown to eight. On the Trans­Siberian, the Moscow-Vladivostok service in 1988 had comprised the daily '�������' and a daily parcels­ baggage service plus a seasonal train (one of the many Soviet long­distance services that ran daily in the summer but as­required in the other nine months). But by 1999 this service had diminished to an alternate­day '�������' and a daily parcels that was considerably slower (42 km/h average speed against 60 km/h). On the Moscow-Kursk segment of the main line to the south (traditionally the country's busiest route for long­distance passenger trains), the 46 daily year­round trains of 1988 had dwindled to 13 by 1999, but in the latter year there were 32 non­daily/seasonal services against the 13 of 1988. Some of the trains that had disap­ peared from this route had been diverted to the main line situated to the east so as to avoid crossing through Ukraine. This marked tendency to degrade regular trains to an as­required status was a sensible reaction to the shortage of suitable rolling stock. Old and unkempt passenger vehicles were used only at times of high demand. This did mean that passenger complaints about such features as glassless windows, unopenable doors, leaky roofs and unimpressive car attendants were quite numerous in the sum­ mer months, but it was held that low­quality trains were better than no trains. In summer 1999, however, there was a minor crisis when passenger fows exceeded forecasts. On many lines the as­ required services were all needed at the same time, resulting in rolling stock shortages that could only be partly alleviated by draft­ ing vehicles from the reserves of certain less hard­pressed railways. In the end, there appears to have been a failure to meet demand at this point, insofar as some passengers abandoned their travel plans. According to eye­witness reports, the situation in summer 2000 was even worse, with some routes sold out weeks in advance. The general picture, then, was of a marked diminution of off­peak

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Fastest train schedules (h/min)

Moscow-Kiev St Petersburg-Brest St Petersburg-Rostov

1905

1959

1988

2000

24.50 28.50 42.00

16.02 31.35 42.44

11.26 19.45 29.39

13.42 19.59 36.32

services and a small reduction of services offered at peak seasons. Since more of the off­peak services operated only when the railway authorities decided that they were needed, there should have been a reduction of unused space - and this probably roughly matched the diminution of would­be travellers over the decade. Schedules deteriorated only marginally, despite the increasing number of speed restrictions (Table 7.2). On the densely­used Moscow-Kursk line, the fastest schedule (7 h 29 min for the 537 km) remained unchanged over the decade. Over the Samara-Orenburg section, the fastest train, the Moscow-Tashkent 'Uzk�k�����', was given only 5 minutes more in 1999 than in 1988, so the speed remained virtually the same (55 km/h). Between Moscow and St Petersburg the fast day train 'A�r�r� ' had 25 minutes added to its schedule, bringing it down from an overall 112 km/h to 104 km/h, while the high­speed ER­200 train saw its schedule relaxed from 4 h 30 min to 5 h 12 min (from 144 km/h to 125 km/h). But in December 2000, 4 h 30 min schedules were reintroduced, and when the line reconstruc­ tion was fnished, 3 h 40 min was anticipated. Over the Trans­Siberian, the Moscow-Vladivostok '�������' had its schedule extended from 142 h 35 min to 154 h 65 min.

The Passenger Time Book Passenger timetables are one of those places where a railway meets the outside world. They can be a market stall or a battleground, depending on how they are presented. After a decade of market conditions the Russian passenger timetable, the Passenger Time Book, might be expected to have become more user­friendly than its Soviet predecessors, so a physical comparison between the last timetable of the century and that of 1987-88, which was perhaps the peak year for Soviet Railways, could carry the dignity of a case­study. In terms of consumer friendliness, the 1999 timetable (Ministerstvo Putei Soobshcheniya Rossiiskoi Federatsii, ���r�������� k��zh������ r����zh�r�k�kh� r��zk��,� 30� M���� 1999 � -� 27� M���� 2000, M. 1999) wins

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hands­down on the physical side in a comparison with the Soviet timetable (Izdatel'stvo Transport, ���r�������� k��zh������ r����zh�r�k�kh r��zk��� �kr��k���)���� 1987-1988��, M, 1987). The 1999 book comes in a glossy soft cover that looks as though it has actually been designed, with fve­colour pictures of stations, and its pages are white. The 1987 book has a hard cover, decorated with a subdued black and white picture of a train and its pages are browny­white with this difference being made worse by print which all­too­often is less than black. Thus the 1999 timetable scores higher for legibility. The typeface used in the tables for station names is a little smaller than in the 1988 book but has the clarity of computer­generated type. In the introductory pages, the 1999 book provides a specimen sample of a schedule, annotated to show how the various symbols should be interpreted. But it provides only two lines about the different time­zones whereas the 1987 book deals with these at length, fnding space for exceptions to the general rules. Neither book solves the problem that so many passenger train routes are very long indeed, requiring several pages of timetable to contain their schedules. For example, in the 1987 book, Train No. 2 '�������' leaves Moscow on page 77 of the timetable and arrives at Vladivostok on page 92. The 1999 timetable has attempted to solve this and similar problems by subdividing a route into separately­ numbered timetables. So for the same Moscow-Vladivostok service the reader follows ten separate timetables, each for a given segment. But this makes things worse, for these timetables do not follow one another; they have to be searched for. What is needed, but not provided, are summary tables for the longer routes. The 1987 timetable also gives more information about the signif­ cance of train numbers, but neither book is completely satisfactory. The 1999 book completely ignores train numbers above 700, in­ cluding the fact that trains numbered above 900 are either mixed trains or passenger­carrying postal­baggage trains. What is particularly lacking in the 1999 table, however, are signs to indicate which days of the week a train may run. In addition, the 1987-88 book has tables at the end showing the various fares payable for a given distance, enabling would­be passengers to total the outlay needed (kilometres were given for all stations in 1987-88, but only for main stations in the 1999 schedules). The 1987 timetable listed the trains whose schedules were set out in the tables below at the head of each page in the main schedules section. The train number was the link between these notes and

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the schedules. Class of train (named, fast, ordinary, mail/baggage) was indicated, as well as the frequency of each train (all­year daily trains had no qualifying signs, but trains running alternate days, trains running daily in the three summer months and more rarely throughout the rest of the year, trains running in August only, and trains running in the three summer months only, were thereby indicated). By this period, the old 'running by appointment' that is, when the operators thought it necessary, had disappeared from the timetable. The 1999 timetable does not make these fne distinctions (which, incidentally, were not so fne that a client could always discover if a train was running on a particular day). In the 1999 timetable the head of the page is not occupied by a list of trains, but by a simple schematic map, not unhelpful, of the section of line covered in the tables on the lower part of the page. Also lack­ ing in the 1999 book but offered in 1987 was a table of departures from Moscow, indicating among other things what kind of accom­ modation was offered by each train listed. As so many main line services all over the country were trains originating in Moscow, this information was useful outside the capital (however, in the 2000-01 book, a summary table at the front does give this informa­ tion for all trains, and not just those from Moscow). Another table listed the through cars that were shifted from train to train to pro­ vide a no­change trip to places that did not have enough traffc to justify a whole train. This, too, was useful for the 1987 passenger. The 1999 table gives this information only for international trains (but in the 2000-01 book it was extended to domestic services). The 1987 book, at the end, provided four pages of small print about terms and conditions of carriage, including baggage regulations. This, too, is lacking in 1999. In short, the 1987 book, though described as the kr��k��� (short) version, provided much more detailed information. However, it did not present it as clearly as the 1999 book presents its smaller volume of information. As elsewhere in the world, the would­be passenger is given less information, but that information is in a more easily accessible form. Prophets of 'dumbing­down' will no doubt fnd this familiar. Apart from its legibility, the 1999 timetable is arguably no more user­friendly than its Soviet predecessors, although it could be claimed that by providing less but more legible information it makes things easier for many people, especially for those suffering from mild forms of innumeracy, illiteracy and failing eyesight.

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8

The High­Speed Railway

First thoughts In November 1990 about 500 guests assembled for a 3­day confer­ ence on high­speed railways at the Pulkovo hotel complex at Leningrad. This was the second such conference; the frst had been a year earlier and merely set out a few inviting concepts, whereas this second meeting was to hear proposals and discuss plans. Pho­ tographs taken of the crowd of participants show many a glinting eye, mostly belonging, in all probability, to foreign salesmen and local politicians. The importance, if not the glamour, of the occa­ sion was confrmed by a greeting from the Chairman of the Supreme Soviet of the Russian Republic, B. Yeltsin. High­speed transport, he said, was 'the inevitable road for the development of civilisation, an indicator of the quality of life of a nation'. Other countries had built high­speed railways as national endeavours, and so would Russia, which would bring the great potentials of a market economy to bear on the task.1 This optimistic union of national endeavour with free enterprise accorded well with the spirit of this transitional time. While in all countries, arguments in favour of the HST (High Speed Train) fol­ low similar patterns, each period and place imposes its own priorities. In 1991 Leningrad, the environmental impact was evidently re­ garded as a trump card. Exhaust flth per passenger/km of a high­speed train was said to be a hundredth that of an airliner and maybe 20 times less than an automobile. Energy requirement was correspond­ ingly less. Pushing such comparisons rather far, it was also said that for the same traffc capacity the land required by an HST route was 'comparable' with that of an airport. The HST, it was claimed, 152

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produced less noise than an automobile or an aircraft.2 More tellingly, if only because this was a statistical claim that could easily be checked, the world's high­speed trains had not killed a single passenger in the frst 25 years of their existence; possibly the delegates' minds at this point turned uneasily to Aerofot. In Soviet conditions, it was said, a high­speed line was advanta­ geous in terms of transit time up to 1000 km, and roughly equal to air transit from 1000 to 1500 km. With sleeping accommodation, the HST would also be competitive with air in the 2000-2500 km range.3 The frst plan for the 'North­South' high­speed railway had in fact been composed by the Railways Research Institute in 1989 un­ der the cover of an offcial state programme for 'High­speed Ecologically Clean Transport'. This proposed line, from Leningrad through Moscow and Kharkov to two or three terminals in the Caucasus (Sochi and Mineral'nyie Vody) and Crimea, was still the basic concept of the 1990 conference. Measuring almost 3000 km, carrying trains at 300-350 km/h, it was costed at from 14.9 to 18 billion roubles, although the authors were honest enough to de­ scribe this as an 'orientation' fgure. By the time of this second conference, a second line was under study. This was to run from Moscow to the western frontiers where it would join the European HST network. HSTs plying between Mos­ cow and Western capitals, connecting with the North­South line serving southern resorts as well as Leningrad and, probably, Helsinki, presented a seductive image of German tourists being whisked to Black Sea beaches, and of French tourists to Leningrad's cultural honeypots. The dividing line between image and mirage can be narrow. In this case it was 85 mm, the difference between the Russian and European track gauges. In 1990 the proposal was that the North­ South line would be of Russian gauge, while the Moscow­West line would be standard gauge. This, perhaps, was the best compromise, but it was a compromise none the less and one which would subse­ quently be questioned. Another compromise concerned the route of the East­West line; should it follow the existing international route through Minsk, Brest and Warsaw, or should it be laid via Kiev and Chop into Hungary? The latter route would be longer and more expensive as it would have to tackle the Carpathians, but it seemed to promise a greater traffc potential and would therefore pay for itself earlier.

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However, for the time being the Leningrad-Moscow line was the prime candidate. The railway already accounted for nine­tenths of the passenger traffc on that route and there was a forecast that this traffc would be one­third larger by 2005. This was only a forecast, and in retrospect has to be reviewed alongside the other forecast of that time, that freight traffc over the route would grow by 40 per cent in the same period. Given that some economists had already gone into print to warn that Soviet Railways freight traffc faced a structural decline, this claim for future freight seems over­enthusiastic. But it did seem to imply that the existing Leningrad-Moscow line would soon be swamped, and if it was not relieved by a high­speed line there would need to be massive investment in relief measures. Thus, claimed proponents of the HST line, their scheme would save more than 800 million roubles of investment. The Leningrad-Moscow high­speed mainline (V�M) was conceived as a 645.4 km route (the existing line is 650 km) of which 56.7 km (Moscow-Kryukovo and Leningrad-Obukhovo) would use the old route. Trains were to be doubledeck, and consist of four motored vehicles with twelve trailers (in fact the precise nature of the trains had not been determined. Some specialists were still recommend­ ing a train with a power unit at each end. Others thought that it was not a good policy to have dual­voltage trains to ft the 25 kV new line and existing 3 kV at each end). Perhaps to glamourise the trains, the future passenger was promised not only air­conditioning and radio broadcasts, but also cable television. At peak periods (06000900 and 1800-2100) trains were to leave the termini at 15­ or 20­minute intervals, and in off­peak hours at one­ or two­hourly intervals. The off­peak trains would stop at 'all' stations and might take four hours for the trip. From midnight to 0600 the line would be unused, providing a window for maintenance and also eliminat­ ing nocturnal noise pollution. Transit time for the faster trains would be 2 h 30 min, making business or tourist round­trips possible. Attractive spots like Novgorod and the Zavidovo nature reserve would be brought within an hour of the big cities. This, among other things, would bring more for­ eign tourists (at this period the acquisition of hard currency vied with ecology as a selling point for one innovation after another). Three variants of the new route had emerged: Western, Novgorod and Combined, the latter said to be a compromise between the frst two, even though it was to the east of both of them and the west­ ern route was to the east of the Novgorod route. There were echoes

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of the 1840s (when the Tsar allegedly crippled Novgorod by decid­ ing that the Moscow-St Petersburg route would be shorter without it), for while one choice passed through Novgorod the western route passed it at 30 km, although with a proposed bus or maybe fast trolley­bus connection. Whichever route was chosen, there would be new tracks, capable of 200 km/h operation, laid alongside the existing tracks leading into the two termini, which would be close to Tsar Nicholas l's old stations.4 The required investment was estimated at between 2.1 and 3.3 billion roubles, a range which optimists might have thought offered good retrospective protection, but leaves the impression of that same old story, that nobody really knew what the cost would be. Even more nebulous was the 100 million roubles estimated as necessary to set up the industrial base. Who precisely would supply the roll­ ing stock had not been decided, but the 72 foreign delegates to the conference had not come to Leningrad just for the ballet. In fact a large part of the conference was given over to foreign presentations. A high­level representation from German Railways, Siemens, Knorr­Bremse and ABB made a brave effort to outshine the French and dangled the possibility of German government fnan­ cial support. The German group also offered to take part in a joint investigation to decide on the choice of equipment (and also, per­ haps sensing a Soviet defciency, to forecast passenger demand). The French had the advantage of great experience in actually building and operating high­speed railways, and moreover there was already in being a Franco­Russian working party on the subject. The French delegation offered to make a more detailed study of the North­South line. The US delegation had nothing to sell. Nor could it point to any American success in building high­speed railways. But the Ameri­ cans could say a lot about the need and technique for winning public opinion. They also admitted their cardinal error in relying on home industry for new technology. This, surely, was in the spirit of the conference which, if it did nothing else, certainly emphasised that the V�M was an international affair in its signifcance, fnanc­ ing and technology. The chief designer of the V�M project, E.A. Sotnikov, proposed a schedule with preliminary studies to be fnished in 1991, and an experimental section of line for testing the trains to be fnished in 1995. Completion of the project and introduction of commercial services was to begin in 1999.5

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A few months later, the author of this book was listening glumly to Professor Sotnikov and other supporters of the V�M as they ex­ plained the project's advantages to a European Commission delegation seeking useful ways of spending know­how money. Glumly, because their presentation was being made at the wrong time to the wrong people. At a time when the Russian transport system could not even bring fresh cucumbers into Moscow, when the railway track was threadbare, when motor transport had trucks of the wrong sizes, Soviet Railways were unlikely to attract European funds for luxu­ ries like high­speed trains. And so it turned out; the delegation offered no money to the railways, preferring to support motor trans­ port and the shipping industry. Soon after, the political upheaval of August 1991 meant that even these allocations came to nothing. But one of Sotnikov's requests, for help in establishing a traffc fore­ casting service, was surely deserving of support. The whole concept of the V�M projects depended upon assumptions of passenger fgures that were, as the saying goes, plucked almost from thin air. Financing the line, in the optimistic days of 1990, was not re­ garded as an obstacle, although sometimes described as a 'complex task'. As the state had been willing to throw money at the Baikal Amur Mainline, there seemed no reason to doubt that fnance for this railway, benefting so many segments of Soviet society, would also be regarded as an all­state matter. But it was also argued that, apart from the state budget, the republican budgets of Russia and Ukraine should make a contribution, while the Caucasian republics ought to invest in the North­South line since it would beneft them. Industry, including the defence industry, could be expected to in­ vest in research connected with the new line, while the general public might contribute through the issue of long­term bonds and shares.6 The so­called western route (645 km) became the front runner. A hard­surfaced Class 5 road would be built alongside the route to assist construction, but it would not include bridges over the bigger rivers; it might be handed back for common usage after the line was built. The trains' timetable remained to be confrmed; having extra trains in the peaks and fewer in the off­peak would require two extra trains compared to even spacing of departures, but it gave maintenance windows in daylight hours and therefore would al­ low, if necessary, fast freight trains to use the line during the night.

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The October Railway and the HST The October Railway's main line between Moscow and Leningrad had always been a standard­setter in terms of speed. The ruling grade was only 0.6 per cent and curves were gentle, of 8000 to 12 000 metre radius. The roadbed was generally sound, although in the catchment area of the Volkhov River there were wetness problems. In 1938, a streamlined Hudson­type locomotive had undergone high­speed trials with the 'Red Arrow', and reached 176 km/h. The war interrupted these developments. After 1955, with the introduc­ tion of the new P36 locomotives and on the medium­weight R43 rails with sand ballast, the maximum speed was raised from 70 to 100 km/h. The 'Red Arrow' was the fastest train, taking 9 h 30 min, an average speed of 69 km/h. From 1958, with the frst diesels, the 'Red Arrow' schedule was cut to 7 h 55 min, the maximum permit­ ted speed being 120 km/h on line, 100 km/h through stations. In the early 1960s, with electrifcation and R50 rails, a summer day express taking 6 h 20 min was introduced and maximum speed was 140 km/h. In 1963, with most of the line renewed with concrete sleepers and welded rails, the 'A�r�r�' day train was introduced with a maximum permitted speed of 160 km/h (140 km/h through sta­ tions) and taking 4 h 59 min. Between 1963 and 1979 there were plans and trials for 200 km/h running. From 1973 there were ef­ forts to introduce high­speed switches. Lengthy trials of domestic and Czech locomotives took place. In 1973, RT­200 passenger cars arrived to form the '����k���� Tr��k�', later the V­200. In December 1975, the ER­200 high­speed train was delivered from Riga, and from February 1976 the small batch of ChS200­type fast locomo­ tives arrived from Skoda. In the 1970s, along with switches better able to handle fast trains, heavy R65 rails were laid. With stone ballast, 200 km/h was al­ lowed. But there were swaying problems with Czech locomotives, and the 'Avrora' brake discs tended to disintegrate at low tempera­ tures. The line was not ready for a regular ER­200 service until 1984, when the Ministry decided to run it among normal trains. ER­200 was the sole example of its kind. Outside the Soviet bloc, when noticed at all, it had been regarded as simply one more ex­ ample of the Soviet obsession with keeping up with the West. That it ran only once a week in each direction seemed to confrm its lack of serious purpose. Consisting of powered cars and trailers, it allegedly (but unsurprisingly) had a 99 per cent load factor. 7 On

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some busy sections of line, 12 trains had to be sidetracked to let it pass. Even so, it was able to travel at its 200 km/h speed only over 10 per cent of the route. (In 1992 it was given an additional week­ end run to Novgorod and back, where it was presumably regarded as part of the tourist, maybe hard­currency, effort.) The experience of the October Railway did seem to show that it was possible to run HSTs without their own special track, but only up to 200 km/h and with limited frequency.8 In 1990, the Railway's chief engineer, V.M. Savvov, came out strongly in favour of a really high­speed railway. 9 He dismissed the idea of simply reconstructing the existing line to solve its problems. To modernise the line, he said, would cost two billion roubles and moreover would require the closure of the line for some years. It is hard to accept, without copious pinches of salt, this last claim, but it was undoubtedly true that to solve the capacity problems the high­speed line would have been vastly more effective (and therefore more of a permanent cure) than a mere reconstruction of the existing line. Transfer of passen­ ger trains would have certainly improved the speed and punctuality of freight traffc, quite an important gain at a time when the market economy was beginning to require client­friendly services and when international container trains were beginning to use the route. According to Savvov, the initial study by L����r��r��� looked at 14 alternatives for the Moscow-Leningrad problem. A magnetic levi­ tation train was soon dismissed on grounds of cost, and transfer of all passengers to air was also found to be impracticable. Reconstruc­ tion of the existing line to make practical a serious deployment of ER­200 trains was more plausible; it involved diversion of some freight trains to the two other lines which, albeit longer and more primitive, did exist (via Dno and Sonkovo respectively - the Sonkovo route already had through Moscow-Leningrad passenger trains, but they were exceptionally uninviting). But diverting freight traffc would have embarrassed many on­line enterprises, and in any case this scheme would have raised top speeds to only 200 km/h and only a ffth of passengers would be accommodated by the fast trains, with the rest continuing to use 8­hour schedules. In fact not all passengers would have agreed that the overnight 8­hour schedules were a burden. For many, the overnight trip was highly convenient. As will be seen, the October Railway's dismissal of the potentialities of the existing main line would soon be overruled.

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High speed, snail's pace In September 1991, in the interregnum between the attempted Au­ gust coup and the dissolution of the USSR, the Russian Republic's president, Yeltsin, issued Proclamation No. 120, approving the con­ struction of a high­speed railway between Leningrad and Moscow. In 1997, the same President would sign a declaration withdrawing approval of the high­speed line. One feature that the two proclama­ tions had in common was that neither changed very much; the frst merely acknowledged an existing situation while the second decla­ ration was soon reversed (see below). In the wake of the 1991 proclamation a high­speed railway com­ pany was formed, RAO ('Russian Share Company') VSM (High Speed Mainline). RAO VSM's joint founders were the VSM Construction Direction (founded concurrently), the October Railway, Leningrad and Moscow cities, and Leningrad Region. In 1992 another presi­ dential decree established that the government's investment in the project would be at least 51 per cent. In reality, depending on how assets are valued, the government's contribution was probably around 85 per cent. It took the form, mainly, of land required for the line and controlling shares of state enterprises in course of privatisation. There were many such enterprises included in the packets of shares handed over, and notably a number of companies that would be useful for supplying equipment for the new railway. Among them was the Torzhok car works, which was soon building its suburban electric trains (the ET2 or 'B����� '). There was also the Tr���m��h railway engineering works at Tikhvin, which was destined to pro­ duce the '��k�� ' high­speed electric train, the St Petersburg ���� electrical engineering works, which had some interest in asynchro­ nous motors, and the Volkhov aluminium plant. These assets did not pay for the actual construction and it was expected that foreign investment would play a major role here. For its part, the govern­ ment guaranteed the interest and redemption of bonds to be sold by the company. This government guarantee was obtained in 1994, at about the same time as the leading light of the company, Aleksei Bolshakov, became a vice­premier (later frst vice­premier) in the Russian government. Leading offcials of the company, in due course, became possessors of shares. 1994 was perhaps the best year for the company in terms of its public acceptance. But there had always been opponents, and highly­ placed opponents at that. Among them, it is now clear, was the

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Railways Minister Fadeev. In the early 1990s he was expressing his opinions quite delicately, or possibly his opinions changed when the traffc decline of the early 1990s removed one of the main arguments in support of the V�M project, its relief of the existing, congested Moscow-St Petersburg line. Nevertheless, it was clear at an early stage that he favoured the reconstruction of the existing route. Later, in an interview after his retirement as Minister, he dealt scathingly with the arguments of the V�M proponents. The hundred million tonnes of annual freight they had foreseen pass­ ing through St Petersburg and congesting the line southwards he dismissed with the comment that such a tonnage was about four times the traffc of all Russian ports combined, and in any case the port of St Petersburg had costs much higher than competing Baltic ports. As for the line congestion in general, the peak had been 1988, when the line only just managed to deal with the load; since then (to 1997) passenger traffc had fallen by half and freight traffc by more than half, and it would be decades before the 1988 level was regained, if ever: I always said that it will not be built. It's a pity that well­known people have been dragged into it.10 As Minister, in November 1995, Fadeev had sponsored a resolu­ tion of the Railway Ministry Collegium whose title left no doubt of its intentions: 'On the Complex Reconstruction of the St Peters­ burg-Moscow railway and the organisation on it of high­speed train operation with the diversion of freight traffc to parallel routes'. This decision, which in effect marked the adoption of a policy and programme that was an alternative to the V�M, envisaged the most thorough reconstruction of the line since its construction in the 1840s, and was to enable 200 km/h trains to be operated. A reduc­ tion of staff by about 500 was also attainable with reconstruction and, even without any radical change in signalling, there could be a small increase in train capacity. The programme was due to be completed in 2000 and, by and large, it was. Aksenenko, then frst deputy railways minister, was in charge of a committee of experts that carried out this massive re­ construction, a project which was destined to become the guide for future line reconstruction. The Baltic Construction Company (which was already involved with the V�M project) was chosen as the main contractor, and payments were worked out not by the old negotiat­

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ing methods, but by the design institutes involved in the planning. The reconstruction involved the entire infrastructure, not just bal­ last and rails. Many structures dating from the time of Nicholas 1 were replaced; embankments and bridges were strengthened; im­ proved rails laid; switches suitable for the highest speeds installed; new electric catenary [the suspended conductor wiring], likewise designed for high speeds, replaced the original catenary; some level crossings were replaced by bridges or tunnels; protection of the line against straying animals (and humans) was improved.11 New methods of track renewal, largely made possible by the import of foreign track machinery, allowed one track of the line to be treated without closing the other track. By 2000 plans were well in hand for the provision of a new generation of high­speed trains for this route.12 One candidate was the ��k�� train, built by the RAO VSM in its own workshops. There was no great paradox here; RAO VSM was a business whose interests extended further than the high­speed line itself. In 2001, an inter­capital schedule of 3 h 40 min was anticipated, only an hour longer than the schedule promised by the V�M project. How far Fadeev's opposition to the VSM led to his retirement as minister is unclear. After all, he had also had some unkind words to say about the International Monetary Fund. But his successor Zaitsev was certainly an enthusiastic supporter of the project and indeed, as head of the October Railway, one of its originators (he became chairman of its board of directors). Paradoxically, for a few months before his promotion to Railways Minister he was oversee­ ing the frst stages of reconstruction of the October Railway's St Petersburg-Moscow line, which was not entirely in the interests of RAO VSM. His support of the V�M at a time when it was losing popularity at the political level might possibly have been a factor in his dismissal. His successor, Aksenenko, was not in favour of the high­speed line, although he expressed himself quite moderately. It was premature, he said, in existing conditions. They must avoid the habitual Russian failing of over­excitement about a project. They should wait until the state was economically strong enough to take up the idea and then present an already­prepared, detailed plan. 13 Among railway specialists there were as many opponents as pro­ tagonists (although fence­sitters probably outnumbered both). A professor at the Institute of Complex Transport Problems (founded as a Soviet­era affliate of G��r���) who had been involved in high­ speed railway researches in the 1980s wrote an article in 1996 that

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recalled the conclusions drawn then: that a longer route, of 10001500 km, was the best application for a high­speed railway. Moscow-St Petersburg was too short. Moscow to the Crimea or Caucasus would be better. 14 Other opponents of the V�M were the ecologists. The company did appear to take some care in appeasing the green lobby, at the same time fnding experts who could declare that the project was ecologically sound. Opponents, naturally enough, found ex­ perts who declared the contrary. It does appear that at one point existing laws were broken, in that approval of the proposed route was given by the government before it had been declared ecologi­ cally acceptable. This realisation was behind the government's withdrawal of approval in 1997.15 But more ecological expertise was subsequently enlisted on the V�M�s side, ecological respectabil­ ity was won, and in 1999 the Supreme Court declared the project had been lawfully conducted. Valerii Savvov, by then deputy man­ aging director of RAO VSM, announced that construction might start in 2001 or 2002. Finance was the problem, he said, but hopes were placed in Spanish investors.16

The author as primary source The European Commission's fact­fnding group, to which I belonged for a week in 1991, heard submissions from different Soviet depart­ ments that were seeking European funds for relatively small, but useful, transportation projects. Soviet Railways, in asking help for an immensely large project in the form of the high­speed railway, wisely formulated its request as a group of quite small projects, a suspicious number of which seemed to require Russians visiting the West. The EC group consisted of a permanent offcial, two French businessmen well­known in their own country and having little love for railways, myself in the spirit of ������ k�� m����, and two railway managers from Spanish National Railways. The latter had some language problems, although they could nod or shake their heads when so invited. They spent much of their time chomping the toffees and chocolates that the hosts had thoughtfully distrib­ uted around the conference table. This was a pity, because Spanish Railways at that time was itself planning the building of high­speed railways and they probably understood the subject better than other members of the delegation. I did not see then, and do not see now, how the St PetersburgMoscow high­speed project could justify itself in economic terms.

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The fgures quoted then for projected traffc, and subsequent modifed fgures presented in later years, seem unconvincing. In 1991, before the traffc decline became a mass phenomenon, the annual railway passenger traffc of the St Petersburg-Moscow service was about two million. The railways had the bulk of the traffc although there were about ten daily return air fights between the two capitals. The V�M proposal of that period envisaged 5.5 million annual passen­ gers. Even if the railway captured the entire air traffc it would not reach this fgure. Reliance had to be placed on the acquisition of an entirely new group of passengers, those who had not travelled be­ fore because it was too much of a hassle. There was also a certain amount of private car travel, but users of this did so for particular reasons that would be unaffected by the availability of a high­speed train. Allied to this was the problem of fare levels. What, in the end, the fare by high­speed train would be was anybody's guess. Without subsidies, it would be certainly more than the air fare. In the mid­1990s, the fgure thrown about was 14 million passengers annually, paying 40-60 dollars for their ticket. That would have meant adding 12 million passengers to the existing number.17 Mean­ while, the Railways Ministry and the Ministry of Economics decided that far from attracting the 5.5 million passengers originally as­ sumed, the V�M might possibly obtain three million. Such a number, if the railway was to eventually pay for itself, suggested a fare of around 100 dollars. The question that needed to be asked was, how many Russians could pay that? In 1994, yet another study had found that the V�M would pay back its cost after seven years if 27 million passengers travelled per year.18 Such fgures have always seemed optimistic at best and absurd at worst. On the other hand, the Japa­ nese 'bullet trains' had achieved even greater traffc fgures (the frst such route, the Tokaido Line, was carrying 30 million passengers in its second year, although it started from a higher base line). I concluded that the West European taxpayer should not be ex­ pected to contribute to a grandiose project at a time when the transport system had other, more basic, needs. But later I had some second thoughts. I did regret that I had not supported a request for help in training Russians in traffc forecasting. At the time, I was infuenced by my belief that traffc forecasting methodology, however clever it might look in the academic journals, fell far behind weather fore­ casting in its reliability. Secondly, over­infuenced perhaps by my own experience as a transport economist, I had a feeling that how­ ever well­trained Russian forecasters might be, they would most

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likely produce the answers that were desired by their masters. The fact remained, however, that the thick fog which surrounded the likely demand for a high­speed service was the basic obstacle to reaching a properly­considered decision. My second thoughts also included the possibility that even an economically unjustifed high­speed line might be worthwhile as a morale­booster. Having such a top­of­the­range creation, Russian railway people would regain confdence, take a renewed pride in their profession, and prove that good things lay ahead. This, of course, is the Moscow Metro syndrome (or, worse, the BAM syn­ drome). I believe, though, that many proponents of the V�M consciously or unconsciously harboured the same feelings, and were infuenced by them. They could have been right, if only the gov­ ernment could have been relied on to make up the losses many years ahead. Finally, my third thoughts. I had used the St Petersburg-Moscow trains since my frst trip in 1954 on the 'Red Arrow', then steam­ hauled and containing vehicles handed down, involuntarily, by Wagon­Lits. I had travelled by night train and by day train and it had always seemed to me that the best way was by night train. That way, you lose no time, and you can have a 16­hour day in either capital without needing to stay overnight. Proponents of the V�M argued that with their scheme you could make a day trip to the other capital and return the same day. True, but you would need to get up early in the morning and you would have maybe nine or ten hours at destination. I wondered how many Russians would actually want to pay a premium rate to go by high­speed day train in preference to a cheaper, placid night train. Would Russian publicists be as good as their Western counterparts at persuading people that the second­best was best? Much more could be written about the V�M project, and no doubt will be. In the decade of the 1990s it sturdily maintained its place as an object of public interest and argument. The company was remarkable, too, for existing without actually building the line that, ostensibly, it was all about. True, British contractors benefting from a British loan were already at the close of the decade building the V�M terminus complex in St Petersburg. True, some surveys had been made. But that was not much for a decade of endeavour. By the end of the decade the government was already eyeing bits and pieces of the company's property to be taken in lieu of the due redemption payments that the company seemed unable to make.

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Yet all the signs are that the company does not need the high­ speed line in order to survive. The thought also emerges that it might be better­off without the line. Its controlling share of poten­ tially valuable industries, and its landed property, are potential money­makers. Critics have long termed the V�M a fantasy. Possi­ bly its value lies precisely there. It might never exist, but the vision alone is enough to set other things going.

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9

Money Problems

Ingoings and outgoings In a market economy, the railways' proft and loss statements can mean more than they did in Soviet times. To the extent that inputs are acquired and output sold at realistic prices, net operating rev­ enues show whether the railways are prospering or foundering. However, railway fnances have many complexities, and a bare fgure usually needs to be accompanied by explanation and interpreta­ tion. In the 1990s, infation was another complicating factor. On the whole, therefore, in studying the railways' performance during this period, physical units such as tonnes, kilometres and hours are more likely than roubles to present a clear picture. But for the rail­ way administration, rouble fgures have been very necessary both as a performance indicator and as part of a case for fnancial help in the form of compensation for loss­making services and of tariff adjustments. In the 1990s an operating proft was claimed for all years except 1996, and although there could be some quibbles over how depre­ ciation should be treated this claim is valid. However, an operating proft is not a fnal indicator of proftabiity, and when non­operating expenses are taken into account, especially taxes and the railways' social provisions, the position can be very different. In the 1990s, four major factors determined real operating profts: volume of traffc (which fell), unit costs of operation (which fuctu­ ated, although infation sometimes confused this), tariff levels and the trend of bad debts. Whether the railways made an overall loss depended to some extent on accounting practice, but was heavily affected by taxation and the social burden of providing housing, 166

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hospitals and schools. Tariffs, indebtedness, and taxes are covered in later sections of this chapter. Social services, of which the provi­ sion of dwellings was the most onerous, were to some extent transferred to local authorities, usually after tough negotiations; agree­ ment to take over housing blocks was in exchange for various favours offered by the railways. Some success was achieved; in 1990 the railways had 52 million square metres of housing, and this had diminished to 22 million in 1997, close to the basic provision which the railways wished to retain. A somewhat similar picture was pre­ sented by schools, despite the wish of teachers to remain with the Railways Ministry. The Railways Ministry at this period had an interest in painting a gloomy picture while protecting itself from presumptions of poor management. It soon settled on a narrative that seemed to achieve these two ends and, in addition, was not far from the truth. Mean­ while, it achieved a certain transparency in its passenger service accounts that helped it to obtain partial compensation from local governments for commuter­service losses. Although in the late 1990s, especially in 1997, the railways on several occasions introduced tariff cuts, in general over the decade there was an increase, but the Railways Ministry contrived to sug­ gest that this rise was less than infation. It did this by comparing tariff increases with the rises imposed on two of its main inputs. For example, in 1998, it was claiming that although in 1991-98 railway tariffs had increased by 7000 times, the electricity it used had risen by 11 000 times and diesel fuel by 9000 times. This ap­ pears to have been a convincing argument, even though it left out of the equation the biggest item of expenditure, wages, which al­ though indexed certainly did not overtake the general price increases. In 1996 the railways made an operating loss, but then recovered steadily. In 1999 income from freight was 139 734 million roubles against costs of 91 229 million. However, passenger income at 16 435 million roubles was not enough to cover costs of 35 400 million, the 17 629 million passenger loss having to be covered out of the freight balance. Explanation for the fnancial turnround centred round cost­cutting measures, especially those embarked upon after some decisions taken in December 1997 (in particular there were some staunch reductions of personnel). 1999 produced a sizable traffc gain, with an improved operating proft, and 2000 was expected to be even better.1 At 1997 prices, capital investment in 1997 was 16 trillion roubles

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against 45 trillion in 1992, in which year the federal budget had contributed 16.7 per cent of investment. By 1998 the federal contri­ bution amounted to 2.3 per cent, the state being responsible only for fnishing the last tunnel of the BAM line. By 1997, the percentage distribution of the railways' income and expenditure had taken the following shape:2 T�k��� 9.1

Russian railways income and expenditure, 1997 E�r��k���r�

I�d�m�

Operating costs

50

To federal budget To regional budgets Capital investment VAT to suppliers, etc Other expenditure

6.4 7.4 9.3 7.8 19.1

Total

100

Traffc income (incl. VAT) Non­traffc income (incl.VAT) From federal budget From regional budgets

83 14.7 2 0.3

100

Operating costs consisted of wages (25 per cent), social contribu­ tions (9 per cent), electricity (9 per cent), fuel (5 per cent), materials (6.8 per cent), miscellaneous (45 per cent; this heading also in­ cludes allocations to the provision for capital repair).3 Russian Railways inherited an internal fnancial redistribution system which, by and large, remained unchanged from Soviet times despite criticism. Individual railways were allowed to keep income from local freight, as well as from terminal operations involving longer­distance shipments. Income from non­local transportation was received (electronically in recent years) and divided by the Ministry between the participating railways, based on accounting prices for tonne/km, car/km for empties, and car/days of availabil­ ity for refrigerator cars. With non­local passenger services, income from the sale of reservations stayed with the issuing railway, but the rest of the fare was divided between participating railways pro­ portionately to distance. Railways did not receive back exactly what they put in. The Min­ istry had a long list of its centralised charges: it made total provision for freightcar and container maintenance, and for 49 per cent of the depreciation funds for basic assets. Up to 1.5 per cent of the total operating expenses went to fnance research and design work; 1.5 per cent of the balance sheet proft of the railways and other

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enterprises was taken for education services; another 1 per cent for health services; and fnally 1.5 per cent for the Ministry's reserve. 1 per cent of the railways' hard currency earnings were taken to fnance international cooperation and advertising. In 1996, an additional central fund appeared in the form of a social assistance fund for the Ministry's own central staff, amounting to 0.1 per cent of the railways' income.4 From a different angle, redistributions by the Ministry amounted to about 3 per cent of the Gross Domestic Prod­ uct, quite high in relation even to the Finance Ministry, which redistributed about 15 per cent of GDP. The aim of the Ministry's accounting prices (or, rather, of the way they were applied) was to smooth out differences between the proft­ ability of the different railways; in other words, to cross­subsidise. This was necessary, it was argued, to make possible system­wide tariffs when there could be a double or threefold difference be­ tween the average costs of the various railways. On the other hand, it was argued, railways had no incentive to reduce their costs under this system. Whereas in 1991 it had been necessary to use only 7 per cent of freight revenue to cover passenger losses, this had risen to 15 per cent in 1997.5 By 1998 new accounting defnitions had been worked out which would allow passenger and freight costs to be separated, at least broadly:6 T�k��� 9.2 roubles)

Russian railways operating income and expenditure (million 1998

1999

Traffc income, freight passenger

84406.9 12999.7

139734.5 16435.7

Traffc expenses, freight passenger

57210.2 22220.8

91229.0 35400.0

Traffc proft, freight passenger

27348.9 -8234.6

48511.4 -17629.1

Total traffc proft

19114.3

30882.3

At the end of 1996, the railways' indebtedness to the federal bud­ get was 1.81 trillion roubles, while the indebtedness of the federal government to the railways was 786 billion. In June an agreement was reached on how these debts should be liquidated and well

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before the beginning of 1998 the balance was reversed, with fed­ eral debts to the railways exceeding the railways' debts to the federal budget. Progress with the debt to the pension fund was also re­ corded in 1997, its total declining from 2.5 trillion to about 1.5 trillion roubles, and eventually disappearing.7

Tariffs The tsarist prime minister, Witte, frst came to political attention thanks to his knowledge of railway tariffs. Having escaped addic­ tion, he did well. Others have been less fortunate; once a person has penetrated into the tariff maze it is not only hard to get out, but the overwhelming desire is to stay in and go deeper. Tariffs can be juggled in endless permutations, and each change can affect an industry, a community, or a whole country. In the Soviet Union, A.V. Kreinin spent a lifetime in the study of railway tariffs and his views were respected even during r�r���r��k�. In 1991 he acknowl­ edged that tariffs were very low, both compared to foreign rates and to domestic retail prices. He thought that an interim solution would be for central and republican governments to offer subsidies until a better system, ideally based on territorial differentiations, could be established.8 With hindsight, it can be seen that he was pleading a lost cause; subsidies from state budgets were one of those features of Soviet policy that the new brooms were seeking to sweep out. But his underlying theme, that railway tariffs were in urgent need of re­ form, was fully justifed and would have been justifed even if there had been no r�r���r��k�. There seemed no end to the absurdities caused by the Soviet­era tariffs, and especially by their cheapness. The Tula power station, sited alongside the Tula coalfeld, used coal from deep Siberia. Lipetsk, south of Moscow, sent sugar beet to Krasnoyarsk for processing. There was no incentive for producers to make their shipments more transportable; ores and coal were not enriched on site; a timber enterprise might despatch tree trunks rather than saw them on site. But no tariff pleases everybody. The Soviet tariff policy did have its supporters. Like so much else in Soviet life, it embodied respectable ideas carried too far. Up to r�r���r��k� (that is, up to January 1988), under the fve­year plan system, the State Planning Commission issued to the Railways Ministry volume indicators for traffc despatch, broken down into categories, with tonne/km and pass/km indicators for freight and

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passenger traffc in general. The corresponding income and expen­ diture, with the wage fund having a separate indicator, were also specifed. The Ministry divided and allocated these fgures to the different railways, having inserted its qualitative and quantitative indices for rolling stock utilisation. This programme was handed down by the railways in the form of plans or tasks to the railway divisions, which fnally subdivided their tasks into programmes for their sub­units. Low, unchanging tariffs provided the stability that this system needed. Annual plans, modifed in line with the previ­ ous year's performance, allowed targets to move forward during the actual course of a fve­year plan. These plans were very much a background feature; most railway managers were more concerned with their monthly plan. From October 1977 the railways had been subsidised by the state and were a 'budget branch' of the national economy; subsidy was mainly in terms of investment funds. In January 1988 there came a change. Railway transport was put on full kh�zr��dh�� (economic accounting). This was not as signifcant as was portrayed at the time, but it did mean that matters of proft and loss became more worthy of attention. Indeed, some tariffs were changed at this time. A new indicator was introduced to replace the previous volume indicator. This was the 'state order' for freight and passenger work which was a compulsory but not all­exclusive target. So long as they took care of the state order, railways were free to pursue other traffc. But things were still managed by negotiations between min­ istries. (In the 1990s, when so much industry was transferred from the state to private companies, the 'state order' progressively lost importance.) The railways were still required to satisfy demands for transporta­ tion irrespective of technical problems or possible fnancial loss. Not only could the railways not decline traffc, but they had little means of persuading clients to meet them halfway by, for example, using freightcars effciently. Despite some tariff changes, rates did not provide enough proft to cover capital expenditure. The inabil­ ity of revenue to provide for capital expenditure had been particularly marked in commuter passenger services, where fares had remained unchanged since 1948 and would not be altered until 1991, until which time a passenger could travel 10 km for one kopek and fare evasion, like fare collection, was hardly worth the trouble. The changes introduced in 1988 did provide one important loop­ hole: agreed tariffs were permitted (although the state in theory still

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regulated tariffs where the freight had a key infuence on the price of other commodities and where a transport monopoly could be said to exist). Over the next decade this was exploited so as to enable the railways, in effect, to increase their income by the added­ value route. Railway managers had no experience of this kind of negotiation, so the Railway Ministry, prompted by the Railway Research Institute, distributed a 'methodological recommendation'.9 At frst, 'just­in­time' services on the Western model were regarded as excellent possibilities for extracting a higher price, and indeed selected shippers were soon able to send their freight by a faster train, or by a specifcally scheduled train, for an extra payment incorporated in the agreed tariff.10 Shippers using their own freightcars would also be expected to pay extra via an agreed tariff because, it was claimed, those cars would probably be old and therefore require movement at slower speeds (even if they were not old, the argu­ ment went, they would attract a premium rate because they would for various reasons form shorter trains). Handling containers at times not at the railway's convenience, and providing specialised cars, were also services that at this time were regarded as suitable candi­ dates for extra payment. The dreams of some enthusiasts were only limited by the rule that railway profts should not exceed 35 per cent of direct costs (a self­defeating rule since it discouraged cost reduction on the part of the railways). In actuality, the premium had to be related to the fnancial advantages gained by the client (which in these early days of the market economy were quite hard to calculate). It was anticipated that apart from obvious gains, the client would need to spend less on insurance because just­in­time deliveries meant shipments spent less time in storage, and faster­ moving shipments additionally would be less subject to pilferage and decay. There was a revision of freight tariffs in January 1990, with costs and proftability taken into account to some degree and supple­ ments for speed and specialised cars becoming accepted. Agreed tariffs were permitted for extra traffc not specifed in the monthly plan. Just­in­time shipments were making an appearance under the �ITM (rhythm) technology. But all freight still had just two container rates (up to 2400 kg and over 2400 kg). This no doubt accommo­ dated the continuing large­scale use of the 3­tonne container but a more refned system was needed. The standardised rate did not encourage those shippers who would most beneft from containerisation; a producer of bottled jams, for example, would

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fnd containers a blessing because of the simplifed packaging, whereas a metals producer would be indifferent to containerisation, yet both were offered the same tariff. In 1991, most traffc was still moving under the conventional general tariffs, based on system­wide average costs even though costs on a diffcult route like the Trans­Caucasus Railway were three times higher than the network average, while the easily aligned bridge route operated by the West Siberian Railway had less than half the average cost. Territorially differentiated tariffs seemed the obvious answer to many, but these might have provoked unwelcome geopol­ itical thoughts (if territorial tariff division, why not territorial political division?). Although there was a 25 per cent general rate increase in 1991, products used by the railways had doubled or tripled in price, so it could be argued that in real terms freight rates had decreased. Zaitsev, head of the October Railway and future Railways Minister, com­ plained that the state still wanted to keep the railways under strong central control while no longer being able to subsidise them. The railways needed their rights, he wrote, their right to work without losses. He was looking forward to a time when railways would become transportation frms and engage in competition.11 The agreed tariffs were not without their problems. Being, in es­ sence, bargains, they required that both parties fulfl their side of that bargain. In the Russia of that time this was not a likely pros­ pect. One example of failure on the part of the railways was the agreed tariff between the Sverdlov Railway and the Ur��k����� enter­ prise, governing fertiliser shipments for export through Kandalaksha and Ilichevsk. The Railway had extracted a high price, almost con­ verting the term 'agreed tariff' into a euphemism for coercion. The client agreed to pay double­rate for transportation and car lease, with extra for the movement of empties, to give the Railway 2 per cent of the shipment value in hard currency, and to share with the Railway the imported consumer goods that it expected to gain in its transactions. For this bag of goodies the Railway merely promised to provide a fast and punctual service to ft in with ship departures. It could be argued that the Railway was merely promising to pro­ vide a service that should have been expected in any case. But it did not even achieve that, for it failed to keep its bargain. Half of the freightcars destined for this traffc were used for other freight and thereby delayed, and some never turned up at all.12 Another feature of this period was that small enterprises,

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cooperatives and even individuals appeared on the scene to act as freight forwarders. They often did not know their business, although some did help enterprises to obtain the best possible deal from the railways. The Council of Ministers' order 'On the Transfer to a New System of Retail Prices and Tariffs', which produced the nationwide com­ mercial upheaval of January 1992, provided the opportunity, perhaps necessity, for a move to a system of four tariff groups. There were through tariffs, regulated by the state committee on prices; inter­ commonwealth tariffs covering shipments between former members of the USSR, regulated by the various state committees and with advice from the Railway Transport Council; through less­than­carload tariffs set by the Railways Ministry; and local tariffs, within the territory of a single railway, where rates were fxed by the railway subject to a maximum proft of 35 per cent of costs. (System­wide, local freight amounted to almost exactly one­half of total freight.) Agreed, or free, tariffs were additional, and like other tariffs had as their starting point the base tariffs in the Tariff Guide No. 01. Base tariffs were founded on network average costs and could be periodi­ cally changed by applying a coeffcient. Changes of coeffcient was the chosen method for periodically adjusting for infation, and also for favouring one class of goods over another.13 By 1993, infation, and the growing debt problem, led to all kinds of diversions from the normal. The October Railway's agreed tariff with the Myshinsk chicken enterprise, which specifed user­friendly times for loading and unloading, provided for some of the payment to take the form of chicken, which must have been a delight for some and no doubt added interest to the work of the tax authorities.14 V. Logunov, then the head of the Ministry's freight and com­ merce administration, was asked in a 1995 interview15 how much importance he attached to the process whereby railways were ac­ quiring their own pick­up and delivery trucks so as to offer a door­to­door service. He replied that this was a useful process, but no initiative would be of much value unless tariffs could be brought down. Tariffs were too high, he said, and because they were in­ dexed would remain high in this period of infation. What he was saying seemed to be in contradiction with what MPS spokespeople had said in previous years - and it was not altogether consistent with what they would say in future years. This was a time when the concept of the 'transportation coeff­ cient' of prices was migrating from the minds of research economists

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to the stage of public discussion. Different commodities had different coeffcients. In general, low­value goods had a high coeffcient, and this was built into the prices of such commodities as coal and building materials. Manufactured goods, such as machinery, and even non­ ferrous metals, had a lower coeffcient, maybe as low as 1 per cent. Logunov argued that raising tariffs by 10 per cent on high­value freight would have little effect on their fnal prices (and hence on their competitiveness), whereas lowering tariffs on freight with high transportation coeffcients would enable them to improve their com­ petitiveness through lower fnal price; this would mean that such products would enlarge their markets and thereby offer increased traffc to the railways. In 1995, the MPS had a working commission on tariffs and the separate railways had similar commissions. The need for change was realised but its precise nature was not yet determined. A frst step, almost dictated by the current problem of indebtedness, was to offer a discount to clients using extra services and punctually paying for them (with advance payment where relevant). There was also a 10 per cent reduction from January 1995 on through ship­ ments ('m�r�hr��', with little or no sorting en route); this discount benefted shippers of bulk freight, which accounted for about 60 per cent of traffc by weight. Reducing tariffs on the bulk low­value goods did make them a little more competitive on the overseas market, so a result of the railways' concession was that Russia was brought even closer to the status of a raw material supplier to the rest of the world, a situation that patriotic Russians resented. But nobody seems to have com­ plained about these tariff reductions on those grounds. In terms of transportation coeffcients, across­the­board rate re­ ductions were not altogether effective. As was pointed out,16 under the existing system of dividing freight into a few broad classifcations, the range of transport coeffcients was from .05 to 499 per cent. This meant that a general lowering of tariffs would only really ben­ eft a small number of clients. If rates were reduced equally, some freight would be carried at a rate far below what its shippers could afford. There was therefore a need to break away from the practice of basing tariffs on costs. This discussion was pursued at various levels and was virtually a repetition of arguments that in other countries had smouldered since the 1830s. That is, it was simply about the old 'what the traffc will bear' concept of rate­fxing. It was clear by 1995 that rates paid by private owners of freightcars

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also needed to be revised; shippers owning their own freightcars were actually not using them, preferring to send ther freight by Ministry­owned vehicles. The fact was that the rates charged by the railways for technical services and for repairs en route were simply too high. In 1997, new tariffs for the use of the infrastructure were introduced for refrigerator, container, truck­and­trailer, and out­of­ gauge traffc. At the same time, new lower rates were brought in for private­owner oil and gas tank­cars (in early 1998 half the tank­car stock was owned by shippers and operators). Private owners also benefted from reductions for returning empties after unloading of building materials, provided they were in closed roundabout (shuttle) workings using unperforated­foor open cars. But because tariffs were low, the difference between general and private­owner rates could only be small, whereas car acquisition costs were high. Thus the fnancial incentive for private ownership would remain unattractive. Shippers did not always welcome agreed or free tariffs. Freedom for whom? they might have asked. In private moments they no doubt used terms like blackmail and bribery, because it often seemed that they were being forced to pay for 'added value' that they did not want. There are, of course, Western parallels to this situation, and indeed there are echoes, too, of the bad side of tsarist bureau­ cracy as depicted in memoirs and fction. The offcial who would stamp personal documents but might make diffculties if a small bribe was not slipped in is not all that remote from a railway man­ ager who offers an all­inclusive tariff and tells the shipper that if he just wants basic transportation at a basic price then of course he can have it, but there just might be problems with the availability of freightcars, and trains do sometimes spend long periods in sid­ ings waiting for a locomotive. . . . The Railways Ministry would have known of these complaints. If it had not, it would have been enlightened by G. Davydov, the representative of the Association of Transport Users who took part in the Ministry's deliberations over the new Railway Law that was submitted to the Duma in 1995. 17 He wanted tariffs to be fxed on legislated principles. Since the Railways Ministry took the role of managing the whole system, tariffs should be unifed over that sys­ tem for all railways. And it should be the state that fxes them (whether by 'state' he meant the Railways Ministry or the govern­ ment was not clear). Signifcantly, he wanted rates for auxilliary services (and, even more signifcantly, the way they were applied) to be established in accordance with the Civil Code and other

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legislation regulating market relationships. Railways that caused f­ nancial loss by failing to carry out their obligations, like punctual and safe delivery, were currently not required to compensate for the full value of the loss so caused; they paid penalties which some­ times were so small that a railway found it preferable to pay the fne rather than to carry out its task in a proper manner. He also pointed out that many shippers had diffculty fnding the money for transportation alone, not to speak of extra services. Nor did Davydov think that shippers should pay in advance. Many of them simply did not have enough working capital to do so; they had to sell the products, get paid for them, and then pay their bills. Labouring an already sore point, Davydov said that this situation, which favoured those who had ready cash, enabled Western companies to buy out native enterprises and reap where Russians had sown. He also raised the question of shipments that at each end of the trip were handled by enterprises' own railways; the mainline rail­ way did not perform these functions, but a fee for doing so was included in the freight­rate. Apart from pointing out the sinister side of agreed tariffs and auxilliary services, Davydov, in his presentations to the legal ad­ ministration of the Ministry, also questioned the conventions of rate fxing. Shippers agreed, he said, that tariffs should cover the costs of moving freight and allow for infation. But when they talked of costs they meant just the operating costs, and that distinction should be clearly made in the forthcoming Railway Law. All other costs should be fnanced not by shippers but by 'other sources'. And what were those other sources? his interviewer asked. 'Proft, depreciation, credits, budget assignments', he answered airily. It was a pity that he could not suggest a more acceptable source of fnance because in essence he was supporting the railways' own developing view, that it was wrong for railway tariffs to be swollen by infra­ structure costs when competing forms of transport had their infrastructures provided entirely or partly free. In May 1998, the Railways Minister summarised the tariff trends of the preceding decade.18 There had been a 35 per cent increase in 1990. In 1991, with retail prices more than doubling, the railways were allowed to raise tariffs by only two­thirds. By the end of 1992, with intensifed infation, tariffs were 43 times higher than in 1990, yet over that period diesel fuel had risen by 155 times and electric power by 76 times. Nevertheless, from August 1995, there had been differential tariff

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cuts according to category of freight and by 1997 this process had led to considerable reductions. Here, the Minister was referring to differential reductions on basic fuels and raw materials in June 1997, including a special reduction of coal tariffs over 3000 km, a general 5 per cent reduction in October 1997, bringing that year's reduc­ tions to an average 10 per cent over the whole range. There was also - for the frst time in six years - a passenger tariff reduction in December 1997 covering trips over 5000 km and amounting to a 30 per cent reduction for the longest­distance clients.19 Further reductions depended on a lowering of prices by suppliers to the railways. The electricity industry was a particularly sore point. This was a 'natural monopoly', too, but the fxing of electricity tar­ iffs was done not at federal level but by regional commissions, many of which chose to solve their problems at the railways' expense. They charged the railways more than other consumers (in the case of Novgorod, Orel, Voronezh and Stavropol, by 60-70 per cent) even though the railways were good customers because they took power 24 hours a day. The Minister claimed that if railways paid the standard power tariff they could reduce their own tariffs by at least 4 per cent, and he urged that the electricity tariff for railways should be regulated at federal, not local, level. In 1998 state regulation of tariffs was clearly, by market economy standards, too clumsy and undiscriminating. Treating the whole network as a 'natural monopoly' was unhelpful. The Ministry claimed that 70 per cent of railway routes were paralleled by highways (probably an exaggeration; it depended on how highway and paral­ lel were defned. The proposition, as usual, ignored the phenomenon of seasonal monopoly). Pipelines and waterways also provided com­ petition. Therefore, in the Ministry's view, state regulation in its current form should be applied only to those routes where there was no competition. Elsewhere, the railways should fx rates with the same freedom as other transport modes and be freed from the need to incorporate infrastructure costs in their tariffs. By 1998, the Railway Ministry was realising the virtues of trans­ parency. Having been accused of giving favoured clients (like its own forwarder, I���r���) secret discounts, it was realising that if the tariffs of all carriers were open to inspection it would have a more sensitive feel for the competitive situation. As for import/export traffc, rates were a blend of the general tariff and the desire to foster exports, but there was a tendency to move towards the gen­ eral fxed tariff since this was thought to bring them closer to costs.

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Whether costs should be the basis of the tariff, however, was dis­ putable, and there were voices recommending that various coeffcients be applied to the general tariff so as to enhance the competitiveness of exports. However, in summer 2001, equalisation of domestic and export tariffs was announced. On the whole, the railways' willingness to reduce the transporta­ tion coeffcient of goods was tempered by the knowledge that there were far more important factors in play. For example, there was little point in lowering tariffs to Russian ports whose deplorable state of repair limited the size of ships that could use them; such disabilities only raised fnal costs, and shippers realised that they would do better by using the well­equipped ports of the Baltic states.20 As for tariff concessions to bulk shippers, here again the railways' sacrifce of revenue would be in vain if other measures were not taken. Kuzbas coal cost 20 dollars a tonne to mine whereas in the West coal was mined for 15 dollars or less, so reduced railway tariffs would do nothing to increase competitiveness. In tsarist times the acerbity of the relationships between railways and shippers was moderated by regular tariff conferences bringing together railways and railway­users. This practice was discontinued in the 1920s but in 1998 it was revived, and usefully so. From conference discussions it became clear that both shippers and rail­ ways were aware that tariffs had to be restructured, but also understood that this could not be an overnight transformation.21 It was ac­ knowledged that things were no longer quite so simple. The so­called directive method of tariffcation was no longer as applicable as it had been in the early 1990s. Then, because of the general dis­ organisation of the economy, the only way to cope seemed to be the periodic indexation of tariffs. But in 1996, when tariffs were indexed no fewer than 13 times to produce a year­on­year increase of 30 per cent, freight traffc nevertheless made a loss. Conversely, in 1997 tariffs were twice reduced, and freight traffc became proftable. It was clear that much more discrimination was called for: in terms of freight categories and values; of distances; and of competing means of transport. The general manager of the Trans­Siberian Express Service com­ pany pointed out that railway tariffs could make or break that container route. He also urged that competition between forwarders should be service­based, and not depend on different base­tariffs or discounts. That tariff base had to be constructed on real costs and reasonable proft. It had to be unique, transparent, easily understood

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and stable in at least annual terms. With a unique base tariff, fair for all, there could coexist exclusive tariffs, but these had to be concrete contracts with a concrete forwarder and have a technical or economic justifcation. Most shippers who spoke at this conference had complaints about tariffs, as was only to be expected. Most vocal of all, it seemed, were representatives from the extractive industries. Coal producers said that it was hardly worth producing more coal, with the rail­ ways demanding ready cash which they did not have. With the Tula coal producers settling their accounts with 0.5 per cent cash (Rostov was not much better at 5 per cent, and the average for the coal industry was 18 per cent in cash), reducing the tariff by itself did not help. Some coal representatives favoured making coal con­ sumers, like the electric power industry, pay the transportation costs of the coal they used. If nothing else, this proposal was an interest­ ing way of setting the cat among the pigeons, but subsequently some power companies did invest in coal­carrying freightcars. The assistant director of the Ministry's premium transport service centre said afterwards that the conference had been a sad business; it was meant to be a discussion about tariff principles, but every­ body seemed to be interested only in their own particular grievances and in the excessive charges which, they claimed, their particular business had to pay.22 There was no need, he added, to call a con­ ference with such a membership. It would have been better to establish a working group with railway, shipper, and local administration membership together with Finance Ministry and FSEMT (Federal Service for Regulating Natural Monopolies in Transport) representa­ tion, which could meet monthly or quarterly. The FSEMT delegates had been on their best behaviour, he added, only because they were preparing to jump on the railways in the near future. General Lebed, who attended the conference not only as gover­ nor of Krasnoyarsk but also as chairman of the temporary Tariff Commission of the Federal Council, did not improve the reputation of his commission at this conference; his apparent desire was to knock everything down and then start again. Tackled later about his 'warlike tone,' Lebed back­pedalled, saying he wanted to create conditions in which everybody would beneft and that it was the local administration, not Moscow, which should look after this. Asked how he took the Railway Minister's complaints about re­ gional electricity companies overcharging the railways, Lebed said he would make sure that his own regional supplier would not raise prices charged to the railways.23

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The means by which the government regulated tariffs and the role of the FSEMT invited comment, but little comment was forth­ coming. It was clear that state supervision, which really amounted to state control, of tariffs, would continue. To this end a special commission had been formed; it contained representatives of the Railway, Finance and Economic ministries, the State Anti­Monopoly Committee, and FSEMT, although after the conference one delegate, the chairwoman of the prices commission in Novosibirsk Region, said they had no use for the FSEMT in Novosibirsk, where they could regulate prices without any help. Why the railways should be subject to FSEMT supervision she could not understand, since railways set their prices just like any industry.24 Boris Nemtsov, Russian Vice­Premier, was asked a similar question: �: Why have railway tariffs become the object of state regulation? N�m���� : Well, tariffs can vary. They can be up or they can be down. But you must understand, railways are a monopoly and need state regulation . . . �: And what about the other monopolies, the oil and gas complex, electric power . . .? N�m����: The other monopolies' turn will come. �: So why is railway transport the frst . . . is it because it is the most 'obedient'? N�m���� : Because it's the most disciplined, best organised and most successful of them all.25 One way forward, at least in terms of improving mutual relation­ ships, involved the agreements the Ministry made with local authorities. One of the pioneering efforts in this regard was with the Kemerovo region in July 1997, by which the railways intro­ duced discounts (15 per cent in the case of local shipments) for bulk traffcs. There had been some discussion in the railway press about these, the general conclusion being that the railways were not receiving the benefts that had been promised. But at this con­ ference the deputy head of the West Siberian Railway did report that following the agreement there had been a traffc rise of almost 6 per cent.26 Elsewhere in Siberia, governors had been talking of reducing railway tariffs to zero, and there were non­political fgures who had been airily suggesting a fvefold reduction. There seemed little chance of such desires being taken seriously, but in terms of maintaining all of Russia as a single integrated market they did have some respectability.

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Finely­tuned geographical discrimination, to equalise very remote regions with the merely remote, was something desired by the East Siberian Railway, especially for its timber traffc. According to that Railway's premium freight service centre, with transits of over 4000 km, the transportation coeffcient for timber was from 60 to 80 per cent. Its timber clients did not particularly beneft from a general rate reduction, because they were always at a disadvantage compared to the timber enterprises on the West Siberian and Far Eastern railways; the latter were closer to the Pacifc ports and the former were closer to the Baltic ports. The big Finnish timber com­ pany (and shipowner) that had been a dominant market for the East Siberian timber enterprises had transferred its orders to timber companies served by the Far Eastern Railway for just that reason. That was why the East Siberian Railway repeatedly lobbied the Ministry on the virtues of even more discrimination. Meanwhile, with timber movements inside its own territory, it did introduce reductions through agreed tariffs that were carefully individualised for each client. Such reductions could be of 30 per cent, but were not available to those enterprises that would not pay in real money.27 The East Siberian's neighbour, the Krasnoyarsk Railway, was also interested in timber traffc and took the initiative of proposing agreed rates calculated to lower shipping costs to the level where timber companies would send their traffc by rail instead of foating it down the Yenesei and thence, with the help of icebreakers, to its external markets. In 1997, the Railway was claiming to have won substan­ tial timber traffc in this way. Encouraged by this, the Railway offered its coal­mining clients reduced rates and this, it claimed, enabled them to increase their exports by 80 per cent. This brought more coal traffc to the Railway, but as the coal industry was a notori­ ously frail payer, this may not have been an improvement in the short term. The Railway found itself the possessor of thousands of tonnes of coal which it had received as payment in kind. Some of this it managed to unload on regional and city governments in payment of its own debts, and some went to another creditor, the Trans­Baikal Railway.28 For much of 1999, the Railways Minister was addressing different audiences about the need for tariff increases, but did not seem alto­ gether certain about what those increases should be. In newspaper interviews29 he spoke of three possible forms of increase. 'Indexations' was the term he used, because indexations were permissible for matching infation, and at that time, because of the preceding tariff

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reductions, tariffs were well behind infation. (According to Aksenenko, over the previous 18 months, tariffs had been reduced by more than 40 per cent.) But now an increase was necessary. There could be a 'weak indexation' of 20 per cent over the year, or an average one of 50 per cent, or a 'third variant' of over 50 per cent. At that time, according to fgures produced by the rival Transport Ministry, a 20 per cent general rise in railway rates would manifest itself in a 5-7 per cent general price rise, while a 50 per cent tariff increase would produce a 15-20 per cent price rise. The interviewer suggested that maybe the closure of the BAM line would produce a fnancial improvement, to which the Minister gave the standard response that foreign investors were willing to invest in the BAM's natural resources; they were just waiting for some new laws to give them some encouragement, he said. There was to be an enlarged meeting of the Railway Collegium to which gover­ nors and other regional politicians had been invited. Closure of little­used lines, as well as compensation for passenger losses, would be discussed, as well as tariffs. 'And suppose the governors can't agree about anything at this meeting?' asked the interviewer. 'Are you expecting a nuclear war?' was the response. 'Nobody's expect­ ing it, nobody wants suicide . . . and nobody wants suicide when the future of our railways is being decided'. The Minister might have been right about nuclear war, but that did not exclude conventional warfare, of which there was an abun­ dance at this April tariff conference of transportation users and providers. At the conference there was support for a speaker who resented the Minister's August 1998 decision to move from the regular Tariff Price List 10-01 to the so­called Tariff Policy Rates (����k� T�r������ r�����k�) for import/export transits. (This in fact had been countermanded by the former Anti­monopoly Committee after a deluge of complaints, but reinstated when the Ministry appealed to the Arbitration Court.) This move to a different tariff had followed the collapse of the rouble in August/September 1998, a collapse which would have enabled forwarders and middlemen to have made big gains because delivery contracts of import/export goods were expressed in dollars. The railways claimed that the Ministry's ac­ tion had prevented these unseemly gains being made and pointed out that the complaints came from precisely those people who had suffered from this considered and appropriate measure.30 As for the suggestion of a permanent working committee to examine tariff matters, it was argued that there were enough committees already.

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G�k�k's commentary was that many of the participants seemed intent on profting as much as possible at the expense of the railways. Of course, if the railways carried freight to the ports at less than cost, exporters would gain, but why should the railways suffer? Interest­ ingly, this article offered (although only in passing) a judgement which neither hitherto nor subsequently received much attention: If the MPS tariff policy blocks the senseless cut­price sell­off of the country's wealth, it should be praised and honoured. 31 All the same, some of the criticisms directed against the railways had to be taken seriously. Clients who had their own rolling stock complained that although they had benefted from reductions, these were outweighed by the charge levied for return of empties; this made use of Railways Ministry freightcars 15 per cent cheaper than their own, they said. There was some resentment at charges made for extra services. Some delegates could not accept that while pay­ ing 25 roubles for a 400 km transit they then had to pay an extra 7 roubles for moving the freight from arrival station to the river port just a kilometre or so further on. An impartial observer might wonder why this particular example was chosen, since transhipment and delivery might indeed cost a quarter of the entire transit expense; but probably the writers of this particular commentary, representing as they did the railway interest, deliberately chose the least telling example. There was a good deal of resentment at some of the extra charges (or as the railways preferred to call them, extra services) that were on offer. While many were genuine enhancements, they could still be re­ garded as a device to extract extra revenue from shippers while still applying the current, maybe low, tariffs. Finally (as one delegate pointed out) the Railway Ministry could hardly complain about the lack of discussion about basic tariff prin­ ciples when, in the bundle of documents handed to delegates, there were no papers relating to how tariffs were constructed and regu­ lated by government organs. During the 1990s, there was, on the whole, no new tariff policy. But there was no lack of understanding of the need for one and of how important this question was.

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The debt problem Throughout the 1990s, the biggest commercial problem facing the railway industry was that of its clients' pecuniary frailty, expressed in non­payment of debts. It was so dominant a problem, so general a cause of sleepless nights, that it deserves a book to itself. But one sentence might be enough: the railways' clients could not afford to pay their bills (largely because their own debtors could not pay up either). However, the railways needed that missing in­ come to meet demands that were unpostponable (taxes) and risky­to­postpone (electricity bills, for example), as well as undesir­ able­to­postpone (like wages). An extra complication for much of the 1990s was infation. Both tariffs and wages came to be index­linked, but that only systematised the problem. Sometimes the effect should have been positive: cli­ ents could see the advantage of paying freight bills in advance, but that perception was compromised by the sheer inability to pay. Meanwhile, workers who were not paid on time worried how much their wages would be able to buy when, or if, they were paid. For most of the 1990s, the railways seem to have done what they could to help illiquid clients. They had, after all, an interest in keeping industries going. They increasingly accepted payment in kind and set up their own mechanisms to deal in these goods. They also accepted various forms of promises to pay. To alleviate infa­ tion, at one stage they made pacts with some of their big suppliers who were also clients (electric, oil and timber companies among others), in which both parties agreed to trade with each other at constant prices. Indebtedness was not just a railway problem, but was distorting all parts of the economy. The failure of the federal government to actually release budgeted state outlays was one of its causes. The Defence Ministry, one of the railways' biggest clients, was also their biggest defaulter, and part of the reason was that it was not receiv­ ing money expected from the federal budget. The other important reason was that the Defence Ministry was a law unto itself; it was an all­powerful ministry, as it had been in tsarist times. Occasion­ ally the Railways Ministry tried to take a strong line. Once, in protest at the Defence Ministry's debts, it threatened to refuse service to military personnel, choosing one of the weeks in the year when conscripts were released from service. Another clash came in 1998, when a soldier claimed civil damages in a Rybinsk

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court, after he had been refused passage in a commuter train be­ cause he lacked a ticket. There was a confict here between the Law on Military Personnel Status - which gave military personnel free railway travel - and the Railway Charter - which laid down that all passengers must have a ticket. The court ordered the railway to pay back the 12 roubles that the soldier had spent on buying a ticket; it also valued his moral damage at 300 roubles but this was not enforced because the respondent, the train conductor, was not rich. The Defence Ministry's practice at this time was to require personnel to carry free tickets for long­distance travel but merely present military identity documents to conductors on commuter services. In 1998-99 there was an experiment, agreed by the Defence Ministry, in which personnel would take a military form to ticket offces and in exchange acquire a free commuter ticket. This bureau­ cratic process did not please soldiers going out of camp for a night's entertainment in the nearest town, and the problem persisted. Both ministries knew that only by issuing an actual ticket for free travel could the number of military passenger/kms be ascertained and an accurate bill presented to the Defence Ministry. The military bureaucracy said that the railways, being state, could and should act in the interests of the state in this matter (this was an indirect criticism of the airlines which, when privatised, did not offer free military travel). As one journalist put it: this was a classic vicious circle, with the state unable to properly fnance the army, the army then being unable to pay the railways, and the railways not having enough money to punctually pay their taxes, part of which would have been used by the state to fnance the army.32 Further down the bureaucratic pecking order was the postal ser­ vice. The practice here had been for the railways to haul postal cars in regular passenger or mail/baggage trains. The postal authori­ ties began to lag behind in their payments, despite strong reminders from the Railways Ministry (the government was concurrently re­ jecting proposals to raise postage rates). The railways responded by refusing to haul the postal cars, uncoupling them where necessary.33 These tactics seemed to work, because an agreement for a staged payment of the backlog was reached. But the problem soon reap­ peared, part of the trouble being that postal traffc had fallen sharply. At one point the Railways Ministry recommended that because of the smaller volumes of both mail and passenger traffc it would be sensible for the postal service to withdraw some of its mail cars

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and instead hire one or two compartments of ordinary passenger cars. But this was not taken up, and in September 1998, eight rail­ ways, led by the Moscow and Far Eastern, once more refused to handle postal cars until debts were paid.34 Those two ministries were among the big clients, but there were thousands of small and medium businesses whose debts, though smaller, added up to a considerable sum. Over almost the whole decade the railway press carried a succession of sob­and­tell stories. For example, on the South Eastern Railway at Bobrov there is a cannery that in the old days used to despatch several carloads of produce monthly to Siberia and the Far East, promptly paying its bills. Then this state enterprise became a joint­stock company and the new owners, not doing very well, lagged behind with their payments. When this debt to the railway reached 18 000 roubles the company somehow evaded the debt by a restructuring and a name­change.35 Shippers had several strategies for evading their debts. Usually these were not subtle and could easily be countered if only the railway staff had the will and the opportunity to spend time on them. The premium freight service centres could play a role here, with their accumulated data about individual clients. For example, if a struggling enterprise began to receive carloads of raw materials or components, it could be surmised that an important order had been received and that it was a suitable moment to re­present the railway's bills. As the output would have to be shipped out the railway was in a strong position. Some losses were inficted by indebted enterprises that changed their name, sometimes several times in succession, with the new company denying its indebtedness. Here again, vigilance was the best weapon. Another ploy used by insolvent shippers was to send consignments with the transport charge payable by the receiver. The latter might then refuse to pay up. In such circumstances the best remedy was to uncouple the freightcar and put it under guard, refusing to release it until the bill was paid. Apparently this usually worked, although it was not used in the case of perishables or ex­ plosives. At frst it had the disadvantage that it could be challenged as unlawful, but the new Railway Charter came to the rescue by allowing railways to delay deliveries of freightcars until the agreed payments had been made.36 Sometimes, when the railways were themselves unable to fnd the cash to pay their suppliers, they were not treated generously.

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The Trans­Baikal Railway, for example, was unable to pay its elec­ tricity bill on several occasions and the local power company decided to concentrate railway minds by switching off the power, thereby bringing several hundred kilometres of the Trans Siberian to a stand­ still. Interestingly, not far from the Trans Siberian, an electricity offcial, to speed payment of debts, switched off the power to a TV transmitter; he got two months hard labour for violating citizens' rights.37 The railways were bitter about the power industry, which charged them elevated rates. The Railways Ministry asked for gov­ ernment permission to enter the wholesale electricity business itself, in the hope of improving matters. Permission was refused after the power industry raised strong objections, but as a consolation the industry agreed to henceforth charge the railways no more than the industrial tariff.38 As elsewhere in the economy, bills of exchange were introduced to alleviate the ready­cash shortage. These took several forms, but a typical sequence would begin with a railway paying a power com­ pany by means of a bill. The power company would use it to pay one of its suppliers, and so it would pass on until presented to a railway in payment for some service. The railway would send it on to the Railways Ministry, which would settle with the issuing rail­ way. In due course smaller railway enterprises issued their own bills; these were sometimes sold at a discount outright by the issuer, thus raising immediate money for, say, the wagebill. 39 In 1996, as one way of securing payment in advance of 'live' money, the Min­ istry introduced a bill of exchange taking the form of guaranteed transport vouchers. A bill would be denominated in terms of ship­ ment weight and distance. Once bought by a shipper, presentation by its owner to a railway would guarantee prompt, even overnight, supply of rolling stock and the carriage of a shipment. If there had been a tariff increase since the bill was purchased, it would not be applied to that shipment. Essentially, this type of bill was meant to encourage shippers to pay in advance.40 According to one source, bartering operations and the several costs associated with bills took about a third off the initial value. This was probably a worst­case estimate masquerading as an average, but it does at least indicate why the situation was unsatisfactory. Barter­ ing on this scale was turning Marxism back­to­front, achieving a transition from socialism via capitalism to a primitive barter economy. In 1997 the Railways Ministry was urging that railways bring the proportion of live money in their receipts up to 60 per cent.41

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In his address to the Railway Ministry's Collegium in October 1997, vice­premier Boris Nemtsov congratulated the railways for having made up the backlog on their wage payments and praised them also for setting the lead in demanding live money from their clients. Although this might be diffcult, it would help the economy in the long run, he said. It would be in line with the government's fght against infation, and would keep money in the 'real' sector of the economy. 42 This was praise indeed, especially as at the time the railways were taking just 54 per cent of their receipts in the form of real money. 54 per cent was not impressive, when the wagebill had to be paid and when the tax authorities levied their percentage on total revenue due, irrespective of whether it was actually re­ ceived. Often, of course, part of a railway's wagebill would be paid from supplies that had formed clients' payments in kind. There was an odd­man­out in all this. Unsurprisingly, it was Paristyi, head of the Moscow Railway. Whereas in 1995 the network as a whole received 48 per cent of revenue in the form of live money, the Moscow Railway achieved 83 per cent. Paristyi, it will be re­ called, had resisted the enthusiasm for premium freight centres, preferring to rely on the traditional structure of freight stations and offces. But those offces were well equipped with computers and Paristyi made good use of them. When the payments problems were just appearing on the horizon, he had taken steps to avert a crisis. All levels of the administration collected data about clients, and clients' accounts were checked daily. Any failure to pay up was quickly observed and attended to. If a big client fell behind, its manager would be invited to have a quiet talk with Paristyi. The latter was not easily overawed, and the manager would fnd himself signing an agreement specifying deadlines for liquidating the debt with the railway, in return for which the railway would (in Paristyi's words) 'accept the unlimited obligation to present freightcars for loading'. Expressed differently, this meant 'No cash, no empties'. With small enterprises falling into debt, similar procedures would be staged at division or station level. If an enterprise was really in trouble, then the possibility of accepting its products as part­payment could be discussed, but they needed to be products that the Moscow Railway could use. The Railway as a matter of policy accepted bills of exchange or other mutual arrangements only to a limited extent, never to exceed 20-25 per cent of the bill. 43 The difference between Paristyi's railway and the others was glar­ ing, and pointed the way forward. Other railways did adopt, or

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were encouraged by, the Moscow Railway's example, although much time had already been lost, and many bad habits entrenched. In the late 1990s things did improve, partly because the railways took a harder line. While discounts were offered for pre­payment, shippers who could not pay a high percentage of the tariff in cash were refused service. This aroused much animosity, and different railways made different compromises, but it slowly persuaded ship­ pers (the Defence Ministry excluded) that the railways were no longer a soft touch. Even before 1997 there were occasions when one railway or an­ other decided to take a strong line. For example, in September 1995, the Tobolsk petrochemical works came to a standstill when the Sverdlov Railway refused to move tank­cars until debts were paid. The quarrel, just as in Soviet times, went up to Moscow for ministries to fght it out. Eventually the Railway was advised to accept the plant's bills of exchange to the extent of one daily train despatch, and demand pre­payment for the others. By that time about 600 tank­cars had accumulated on the plant's tracks.44 The situation had been particularly bad on the Kemerovo Rail­ way, which served the ailing industries of the Kuznetsk Basin. In 1996, in the wake of a serious accident to an electric passenger train, V. Starostenko was appointed to head it, only to discover that indebtedness was so heavy that the Railway was two months over­ due with wage payments, despite bank loans. At the weekly meeting of top management, he exhorted his subordinates to withhold emp­ ties from shippers who would not make an advance payment. This aroused great anger among local industries, expressed colourfully in the press, which wrote of the Railway's 'blockade'. Starostenko was summoned to spend some disagreeable minutes with the Governor, but appears to have held his ground.45 Things did not improve im­ mediately, but by 2000 the indebtedness was being reduced. The improvement was variously explained. One factor was that the poisoned relationship between railway and industry had greatly im­ proved; the absorption of the Kemerovo Railway by the West Siberian (see p. 64) had been followed by staff transfers that more or less removed the previous railway managers from the scene (Starostenko, when he became head of the new enlarged West Siberian Railway, moved out of the area to Novosibirsk). The Railway management had also helped industries by some judicious tariff concessions and the Railway had decided to attach its local station freight cashiers to the premium freight centres, giving closer local supervision.

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A main problem continued to be the industrial railways, serving but by then largely independent of the coal industry. These also served as intermediaries, and if they held back payments the usual sanction of the Railway, refusing to supply empties, was not imme­ diately effective because it was the coal mine itself, not the industrial railway, which would suffer most from that.46 On the other hand, the industrialists had a strong argument when they pointed out that the tariffs included a charge for terminal operations (equal to 40 per cent of their tariffs, they claimed) even though it was the industrial railways, not the Ministry's railways, that actually per­ formed this service in the metallurgical enterprises.47 But in this region, as elsewhere on the network, the main hope in 2000 for clearing the backlog of debts was the revival of the economy and the infow of funds that that would bring. The net­ work wagebill lag had long since been made up, and the pension fund defcit had been flled in 1998.

Taxation In 1998, the head of the South Urals Railway complained that be­ cause the federal budget had failed to pay up, the Railway had diffculty in paying taxes and had been terrorised by the taxation service, which blocked the Railway's bank account and confscated prop­ erty, including computers which it sold off at half­price. 48 These particular excitements were caused by over­enthusiasm on the part of local agents, an aspect of Russian tradition. In such cases the over­hasty action is usually corrected by higher levels, but requires managements to devote time and effort that might have been better employed elsewhere. In the case of the activities of the tax police, however, there was usually no correction because it had two strengths, the Taxation Code and its automatic weapons. The exploits of the taxation police recur in the pages of the railway press over the 1990s, and some of them will be described in a more appropriate chapter of this book, that devoted to crime. However, while the railway press quite enjoyed itself in retailing horror stories of the taxation police, it tended to underplay the concessions and compromises which the federal taxation service, and some local government taxation services, conceded. In particu­ lar, the federal taxation service tolerated the railways' failure to pay up in full, and eventually settled for a phased pay­off of the backlog over 10 years.

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Tax collection in 1990s Russia was obstructed and evaded as a matter of course, so every year there was a massive shortfall. Some people and some enterprises were well placed to escape payment, while others were sitting ducks. The railways were in the latter category, being state organisations with fxed procedures and elab­ orate book­keeping. By the mid­1990s they were the second biggest taxpayer (after G�zrr�m), so their contribution to the state budget was very important indeed. In late 1997, the head of the State Taxation Service declared him­ self satisfed with the railways' efforts to pay their dues, though he pointedly excluded the October Railway from this appreciation. This praise was given not because the railways were paying their taxes in full, but because they were increasing the proportion of the dues that they paid. He ascribed this to the growing share of real cash in the railways' receipts. He also commended G�zrr�m's establishment of a tax­planning department, which had not only improved the fow of taxation transfers but enabled the G�zrr�m management to get a better view of their fnancial situation. Quite what the Rail­ way Ministry's fnancial specialists made of this recommendation was not printed.49 Between 1991 and 1997 contributions by the federal budget to railway transport fell by about nine­tenths, while contributions by the railways to the budget tripled. On account of basic activity, payments to budgets in 1997 were 19.2 trillion roubles, of which the federal budget received 9.1 trillion. In the frst nine months of 1997 the railways received from local budgets 388 billion roubles in compensation for commuter losses and from local budgets in total (including tax relief and some payments to acquire new roll­ ing stock), it was 820 billion, which represented 17 per cent of commuter losses.50 Another set of fgures, relating to 1997,51 has the railway contri­ bution to the budgets of all authorities at 21 per cent of received income, and if non­budget payments are included this would rise to 34 per cent. By the end of 1997 the backlog of payments to the federal budget had eased somewhat. The government had agreed to the Ministry's suggestion of a 10­year phased pay­off of the debt, and the debt to the pension fund at the end of that year had fallen from 3.9 trillion to 1 trillion roubles.52 At the same time, debts of government ministries and departments to the railways stood at around 3 trillion. The complaints of the railways could be divided into the habitual

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grouses of any taxpayer and railway­specifc grievances. Among the former could be included resentment of the actual level of taxation, the number of different taxes that had to be paid, and their unpredictability, particularly of local taxes. It was not only the South Urals Railway which found itself facing unexpected taxes, although it might be argued that a little foresight, or pessimism, could have predicted many of them. Perhaps the advice to set up tax planning departments was sensible. The October Railway did indeed estab­ lish its Centre for Financial Control, which almost immediately detected and retrieved a tax over­payment. The North Caucasus, Kuibyshev and Far Eastern railways were preparing in 1999 to fol­ low this example.53 Another example of unpredictability, perhaps not typical in its scale, befell the troubled Kemerovo Division in 1998. This Div­ ision, when it was the Kemerovo Railway, had by 1996 accumulated a backlog of debt to the regional administration. This backlog was not so much of taxes, but of accumulated penalties for late pay­ ments. The regional governor agreed to waive these debts if the Railway paid its 1996 taxes in full. This the Railway did, and in February its old debts were forgiven by a governor's ordinance. Relations between the Railway and the region then proceeded smoothly, with taxes being paid promptly and the Railways Minis­ ter, Aksenenko, allotting a contribution of money and food to the local children's charity. Behind the scenes, however, the Kemerovo deputy­procurator was declaring that the governor had no right to interfere with taxes; only a federal law could do that. This back­ ground quarrel proceeded without, apparently, the Railway being aware of it. Meanwhile the Kemerovo Railway became part of the West Sibe­ rian, and there was a change of governor. One fne day the head of the Division, going to work early as usual, found he could not get into his offce; the building had been sealed by the local procuracy. He was hauled off for a recriminatory, fulminatory interview with the governor. According to eyewitnesses, he emerged quite shaken, having been presented with a bill for 306 million roubles, a sum just about equal to six months of the Division's wagebill. The governor threatened to sell off, foor by foor if appropriate, the Division's pride and joy, the recently completed nine­storey train despatching centre. The local newspapers praised the governor's action, whereas the rail­ way newspaper G�k�k pointed out that the best way for the Division to fnd the money would be to refuse service to the local mining,

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metallurgical and chemical plants until they paid their debts to the Railway, although it added that such an action would surely risk social consequences. The 'rail war' in which discontented miners had blocked the railway tracks (see p. 211), was still in people's minds.54 One of the most unusual cases of unexpected taxation arose at Khabarovsk on the Far Eastern Railway. The long railway bridge over the Amur at this point was always one of the most impressive engineering features of Russian railways, but it was not generally known that in anticipation of possible bombing by the Japanese it was decided in 1936 to build a parallel tunnel. Built secretly under the supervision of Lazar Kaganovich, this 7­kilometre work was fnished in 1941 and had a purely strategic purpose. In the 1990s it was decided that moth­balling it would cost just as much as keep­ ing it in operation, so it was used for a few trains and the Khabarovsk Division took charge of it, even though maintaining it was quite expensive and, traffc­wise, purposeless. It was not long before the local taxation offce heard of it and, presumably aware that the Railway Law accords the railways free use of the land over which they run, invoked another law. This was the federal Z�k��� �� ��kr�kh ('Womb of the Earth Law') which, relating mainly to mining, speci­ fed that exploitation of the earth's depths was taxable. Moreover, the tax people were smart enough to realise that any tax based on the tunnel's profts would be unproductive, so the tax was levied on its expenses instead. At the close of 1999, legal and fnancial special­ ists of the Far Eastern Transport University were helping the Far Eastern Railway to seek a way out of this situation.55 Turning to the railway­specifc objections to taxation, an early grievance was the frequency of double taxation, especially where the value­added tax was concerned. This unwelcome phenomenon persuaded the railways, in the various restructurings, to reduce the number of organisations that were legal persons, even though the 1996 Railway Law provided that the profts tax and value­added tax of enterprises engaged in transportation activities would be the re­ sponsibility of the individual railways. From a purely commercial point of view this may not have been advisable, since it could limit the facilities offered by local railway offces and agents. The profts tax reduced the ability of the railways to fnance in­ vestment at the very time that the federal budget was in the process of eliminating its contributions to railway investment. The tax on incomes meant, in effect, that railway tariffs were higher than necess­ ary at a time when the railways were facing demands to reduce

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tariffs. Objections to local taxes centred on the fact that the railway in a given locality was providing housing and medical facilities yet was required to pay local taxes which to a large extent were spent on municipal housing and medical facilities. To this was added the complaint that the very authorities that demanded taxes from the railways were simultaneously dragging their feet in the matter of providing compensation for loss­making commuter services. The tax that provoked most resentment was the compulsory con­ tribution to the local road fund, which was seen as a compulsory subsidy to the railways' competitor which did not pay for its own infrastructure. The October Railway, soon to be imitated by other railways, blunted this particular thorn by obtaining agreements that half its contributions to the regional road funds would be spent on level crossings, either by enhancing their safety or by replacing them with bridges.56 As for the land tax, this was a minor affair, except when local authorities overreached themselves. It was not levied on land occupied by track, signalling or electricty facilities and where it was applied it was at only 25 per cent of the rate payable in country areas. The tax on increases of the wage fund, which had been intended to curb the growth of an excessive labour force on the railways, was a short­term measure that ended in 1995.

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10

Crime and Violence

Bribery and fraud This chapter unavoidably deals in cases more than in statistics, because the former are abundantly published whereas the latter tend to be patchy, subject to changing defnitions, and in many cases imposs­ ible to obtain anyway. Accident fgures are not quite so unsatisfactory, but are not perfect either. Newspaper reports do give a good quali­ tative picture as well as a cross­section of the various types of misbehaviour and the people who tended to perpetrate them. A pensioner couple living on the West Siberian Railway near Omsk decided to spend their declining years near their son at Severobaikalsk, on the former BAM. Because their pension was paid late they could not set out until the autumn but, despite the chill in the air, they decided to travel in an unheated freightcar. After all, they had not only their furniture and chattels to take with them, but also an ancient N��� automobile and an equally old and beloved dog. Trav­ elling in the freightcar with their belongings would enable them to keep an eye on things. At Omsk they applied for a freightcar, de­ clared its contents and destination, and paid the bill. The boxcar which the railway provided was not one of the best. It was a bit smelly inside and a bit dishevelled outside. There were a few holes, and the doors would not open properly. But they made the best of things and repaired the doors. And so they set off, coupled in a freight train, and things went as well as could be expected until they reached Bogotol on the Krasnoyarsk Railway. Here the transport police claimed that they had breached some regulation but, having already in their lives made a similar boxcar trip out of Estonia, they knew what was 196

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what and the police retired proftless. But then came the 'men in orange vests', the train examiners who were much more direct: 'Give us some vodka, and we'll let you go within an hour'. A little further along the line, in Krasnoyarsk, the armed militia managed to get ten roubles out of them, as they were unable to show that they had permission to carry a dog in the boxcar. Then came the car inspectors, who discovered some fault and demanded vodka in exchange for not setting out the car for repair. But the old couple, who were evidently more d�mr��� m����� than their inter­ locutors expected, simply refused to pay up and the car proceeded, defective or not. Another little adventure befell the couple at Taishet, junction for the BAM line. Their decrepit boxcar was clearly not a m�r�hr�� ship­ ment, so they found themselves in the gravity sorting yard, being pushed over the hump. Hump yards are the site for much of the damage suffered by Russian freight cars, and little imagination is required to visualise the scene inside the lonely boxcar as it rolled with its load of tables, chairs, crockery, saucepans, old car, old dog and old people towards its impact with the train being assembled. They had packed their belongings well; the car did not take off; no crockery seems to have been damaged. But it must have been a fairly heavy impact because one of the doors disintegrated, leaving an aperture through which in due course appeared the head of an armed militiaman. He was interested less in the door and more in their documents which, he soon discovered, did not mention the automobile. That was 'criminal', so he asked for 50 roubles. They gave him 25, and he gave them a tattered receipt which had been made out for 250. The rest of their trip appears to have been uneventful. After some rumination, the old couple decided to write to the railway news­ paper, in the belief that they had not been well­treated, and to warn others who might be thinking of travelling by freightcar that they should frst lay in a stock of cash and vodka.1 This fairly insignifcant event in the life of the railways has been given full treatment here because, although it is intended to open a section on bribery, it says a lot of other things as well. For example, this happened in 1998 at a time when the Russian Federal Railways were undergoing their electronic revolution, their containerisation, their passage into the market economy; in such times it is easy to forget that most things are slow to change. In addition, it is hard to think of any other railway where clients

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and their dog may be processed in a hump marshalling yard. Bribery is one of those phenomena that may be seen to exist, but not measured. In the 1990s the Russian press, and daily conversa­ tions, provided suffcient evidence for the belief that it was widespread, but the frequency of press references, or indeed of court proceed­ ings, provides no guide to trends; sometimes it was a fashionable target, sometimes not. One feature that the voyage of those two senior citizens emphasises is that bribery, its half­brother extortion, and no doubt theft too, were practised to best effect by those workers whose job it was to protect the public. It will also be noted that some of those sinners were doing no more than trying it on; when bribes were refused they simply shrugged their shoulders and got on with the job. In other words, although they did not want to forego an opportunity, they were in no sense professional wrong­ doers. It might further be argued that, given the low wages, the memories of wages not paid, and the opportunities on offer, bribery and extortion were hardly surprising. It might also be observed (not for the frst time in Russian history) that every rule and regu­ lation provides an opportunity for the bribetaker, and the more detailed the rules, the easier the extractions. And not only regulations; providers of essential services also found their opportunities. Again, the press provided many examples but one will be enough: namely, a letter from the conductor of a sec­ tion of refrigerator cars. It is not without literary merit, possibly because the job provided many hours of on­duty leisure time. The writer begins by retailing the tedious details of working life: Things went on as usual. I went to the train despatcher. A bottle. I went to the technical offce. After the frst question, 'What have you brought?' it was chocolate and a box of sweets. And then at Kinel' sorting yard something strange happened. Climb­ ing down to take tribute to the despatcher, the writer saw a yard locomotive already bearing down on his section. The foreman asked where he wanted to go, which was to the fuelling point, and the set was taken there. There, he was surprised to be asked how much fuel he wanted for his generator, and got it without question and without any hint of how a little something might facilitate matters. Finally he went to the despatcher, who said his section would be promptly attached to a train about to leave. In all, the stop at Kinel' had taken just four hours, and no gifts had been solicited.

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I got suspicious. Is this really Russia? Maybe Kinel' has quietly declared independence? . . . These can't be our people. 2 So much for bribery at the grassroots. But it could be found all the way up the administrative tree, where it was more usually de­ scribed not as bribery, but as corruption. In Russia, as elsewhere, the distinction between corruption and good etiquette is not always clear. In daily, personal life it is quite normal, when requesting a special service, to expect respondents to place their own requests in return; one good turn deserves another is not a mere expression, but part of etiquette. Exchanges of favours are very much part of Russian life, and of work. So when somebody in an offcial capacity is seen to receive a favour (for example, when a stationmaster is given a house by one of his industrialist clients) it is not irrational to suspect that somewhere, in the opposite direction, another favour has passed or is about to pass. A stationmaster who lives in a house provided by a client has broken no law, and corruption is hard to prove. Fortunately for state prosecutors, many corruptors and corruptees lack that spirit of pessimism that would encourage them to cover their tracks and thus are easily caught. At the same time, it should be remembered that accusations of corruption are part of Russian society and are quite often devoid of any substance. The Railways Minister, Aksenenko, was the object of a series of press allegations in spring 1999. At that particular time he had just been appointed frst deputy premier and (temporarily) had relin­ quished his railway appointment. He was summoned to explain himself to the Duma. The deputy who thus summoned him, Aleksandr Vengerovskii, explained to the railway newspaper that he had been motivated by the wish to fnd out how long a high political fgure could listen to allegations concerning his honour and dignity with­ out saying anything in his defence; judging from material in the newspaper ����r�h����� ��kr����, and material seen on the Internet, there was a case to answer. The fact that he had no documents supporting the allegations was not important, said the deputy, es­ pecially as the federal audit offce was also interested in Aksenenko's doings. When the time came for Aksenenko to attend the Duma, he did not turn up,3 and on June 19 it was announced that Aksenenko was preparing to take his accusers to court. After this, it seems, the allegations took early retirement.4 On the other hand, when state property disappears it is reasonable

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to assume a crime has taken place. Such was the case at the Voronezh diesel locomotive works in 1998. This was the works that had been threatened with bankruptcy and privatisation back in 1994 (see p. 36) and its director then was the same director in whom the transport procuracy took an interest in 1998. It seemed that much money had been paid out for doubtful purposes. In particular for concreting roads; not only did the concreting seem to be much less than the paid bills would have indicated, there was also a legiti­ mate question about the concreters, who were a local society of invalids, not the kind of people who would engage in heavy labour. In payment of these and other bills, the mobilisation reserve of the works had been ransacked to provide payments­in­kind. Meanwhile the workers were not being paid and threatened to go on strike. The Railways Ministry scraped together some money to pay the wages, and decided to look more closely at the affairs of the works, which in turn led to the investigation.5 Other major frauds were revealed from time to time, but minor frauds were an everyday event and sometimes not particularly sin­ ister. In Soviet times, the cunning evasion of laws and regulations made people happier and may even have kept the economy going. One neat trick was to exchange locomotive numberplates to cover up an accident; if a locomotive was damaged, why not change its numberplates with a locomotive about to be scrapped, then send the old locomotive with the new numberplates for repair and scrap the damaged newer locomotive? How often this happened cannot be known; it is only the failed attempt that is recorded. One in­ stance was revealed after an unwitting locomotive crew had complained that a locomotive back from capital repairs was per­ forming badly. 6 Fraud and cheating in transport can come from several directions and defraud in several directions. Transport workers can cheat their employer and their clients, and the clients and employers can cheat back in their turn. The numerous rules about penalties for freightcar misuse, and the even more numerous details found in the tariff manuals, often provide opportunities for the sharp­witted. For a long period the discriminatory tariffs on export freight were manoeuvred by shippers or, more frequently, by forwarders. One particular gambit had the merit of not being necessarily unlawful. When rates for export freight were priced so much higher than domestic rates a forwarder would send freight by domestic tariff to the Russian port, then relabel it for export. This was something that a forwarding

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agency could easily do if it had its own premises at the port.7 Only the eventual lowering of export tariffs could remove this irritation which, it might be argued, the railways had brought on their own head. Some railways set up specialised anti­fraud teams. The Gorkii Rail­ way, for example, established its 'Control­Inspection Service' in 1997. Its salient feature, and virtue, was that it concentrated on fraud and nothing else. With some expertise in accountancy and documenta­ tion this service ranged widely, investigating the managerial and fnancial functions of many departments and sub­departments. In its frst year it claimed to have recovered millions of roubles. Among its catches was a trusted bookkeeper who, disposing of blank forms and issuing false payment slips, managed to acquire for herself a considerable quantity of electronic equipment and also a car. Then there was a company established under the roof of the Railway's press and advertising offce which had nothing to do with railways or advertising but was in the refrigerator repair business. Some senior personnel of a big chemical works were acquiring discount tickets and giving away some of their products in exchange. There were strange goings­on in the Railway's ticket offces, too. The service claimed to have saved, or regained, 300 000 roubles from these nests of sin alone.8

Theft Theft, like fraud, could be an everyday phenomenon in the form of petty pilferage, or it could occur on a large scale and involve experi­ enced criminals. Railway personnel, having plentiful opportunities for theft, were frequent participants, either on their own initiative or as technical consultants for criminal groups. Railway workers in positions of authority had exceptional opportunities, and those who were unmasked were normally given a paragraph or two in the railway newspaper. Theft and embezzlement were common enough in the late Soviet period, and armed guards (sometimes called rifemen, sometimes armed militia) were placed on trains carrying valuable merchan­ dise. But there were never enough such guards. In the 1970s there were cases of new automobiles losing components every time the train spent a few hours in a sorting yard. If it was a long trip, only the picked carcasses of the cars would arrive at destination. P�r���r��k� seemed to bring a deepening crisis. On the October

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Railway, it was reported, embezzlement of freight increased by eight times between 1988 and 1990 while direct theft from freightcars doubled. The faster increase of embezzlement, which usually im­ plied falsifcation of documents, is notable and suggests that the more responsible ranks of the railway service were being drawn into crime. Over that period, every third person caught was a rail­ way worker. At the time, the Soviet 'Byelorussian Method' was the scapegoat (this was a campaign to reduce the workforce), because it meant that there were fewer workers around to deter criminals - or so it was said.9 In August 1993, in response to the intensifed crime level, the categories of freight requiring armed guards was widened from 14 to 53. But as the number of guards available was already insuffcient this did little to improve the situation. Recruitment of guards was not easy. It was a job of some danger and considerable discomfort (guards had to ride on freightcars in all seasons; there was no ac­ commodation for them). They normally worked in teams of three and, on the Kuibyshev Railway for example, they could cover only a tenth of those trains carrying the 53 categories. Even if all those trains had been covered, there would still have been a problem because robbers were also stealing low­value freight; even table salt, complained one offcial.10 But armed guards were not the only rem­ edy, it was pointed out. If freight yards were better disciplined, tidier, and if workers were more careful and more vigilant, the situ­ ation could change so far as freightyard theft was concerned. In the meantime, some railways were coupling high­value freightcars at the head of the train, where the proximity of the enginemen would deter thieves. The Moscow Railway (which accounted for 15 per cent of the total network crime) was doing no better than the October and Kuibyshev railways. In the frst nine months of 1991 crime was 35 per cent higher than in the corresponding period of 1990. Moving to 10­month periods, the frst 10 months of 1991 on the Moscow Railway witnessed 101 300 arrests, of which almost half (52 400) were mere drunks, 2800 were tramps, 4100 under­age 'hooligans' and 1590 criminals. To some extent, it was said, the Railway was itself to blame; sending freight in decrepit freightcars was simply a temptation, and the involvement of railwaymen in most of the crimes was also signifcant. Like the October Railway, the Moscow Railway needed more railway police, but low pay and the unavailability of housing to attract them deterred new entrants. Only a tenth of the

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commuter train peak departures could carry a militiaman (these trains were ideal settings for picked pockets in peak hours and muggings in the late hours).11 Ports and frontier crossings, where imported goods could be held for weeks, were attractive targets for large­scale theft. The scale was due not so much to big gangs in operation, but to the sheer number of small operators. Often the thieves were not professionals, but workers who saw an opportunity and took it. In 1993 'decisive measures' were needed to combat massive thefts at Zabaikalsk, on the frontier with China. Here there were not only pilferers from yards, but more professional groups who might waylay a train on open line (short­circuiting the track circuits could change a signal to red, halting the train, which could then be smartly broken into, the perpetrators driving off over the steppe in their motor truck). In early 1993, the Railways Ministry released funds for the Trans­Baikal Railway to hire a helicopter to help its transport militia solve this problem. Making impossible the quick escape through the deserted steppe, this innovation worked so well that it was said that the cost of the helicopter hire was repaid several times over by the reduc­ tion of loss and damage claims.12 In late 1991, to cope with the gathering momentum of transport crime, the Interior Ministry's GUVDT was formed. Usually known as the transport militia, it at frst settled uneasily among existing organisations such as the armed militia and the sundry protective groups established by various railways. But it was not long before cooperation between the transport militia and others developed, at frst at railway boundaries (the yards where trains were handed over from one railway to another and which were a favourite thieving ground). It founded a sub­division, BPPG ('Struggle Against Crimi­ nal Activities On Freight') to concentrate efforts on this. By 1995 the transport militia was also providing squads for accompanying passenger trains (it had 154 such squads in late 1995, enabling it to provide protection for 480 pairs of trains, of which 329 were covered from start to fnish of their trips). At that time it was paying particular attention to trains going to or from Central Asia. The latter carried small traders who would import, as personal baggage, consumer goods of eastern manufacture, selling the items off at station stops, with any residue put up for sale in terminal cities. This was proftable business, and baggage regulations were ignored to such an extent that passenger compartments were sometimes chock­full of sacks, parcels, boxes and bundles. These trains of imported goodies were

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naturally a promising scene for thieves. Normal passengers had a hard time, although the majority of them who did not possess tick­ ets could hardly complain. Train staff were bribed or threatened. On a smaller scale, traders also tended to dominate some of the trains crossing the western frontiers. Imposing law and order on trains such as these was one of the frst cares of the transport militia, and it seems to have succeeded, although there is an echo of old practices in its methods. The head of the federal transport militia boasted that in 1994 his men had dealt with 1 700 000 lawbreakers, that they had gone from prophy­ lactic to active measures, and as a result crime in 1995 had fallen by 15 per cent.13 But questionable methods could lead to worse. In 1995 a group of transport militia at the Moscow Station in St Petersburg were stopping men with dark skins, searching them, and returning their documents but not the contents of their wallets.14 From time to time, similar abuses were reported elsewhere.15 But whatever their methods, the situation, on passenger trains and stations at least, was a stimulus. On commuter trains, particu­ larly on late­night services, muggings were common. On the October Railway, the Gr�m organisation was formed in 1994 as a closed share company. It recruited solely from ex­army men, had its own uniform, and carried arms (although frearms were not taken on to trains). It provided, among other services, patrols for a handful of long­distance trains.16 By 1999 the October Railway was paying for 472 militiamen, of whom 110 belonged to the Gr�m enterprise, which was by then closely coordinated with the regular militia and whose on­train detachments, or some of them, wore plain clothes.17 The escort of St Petersburg-Moscow trains was within the care of three organisations. The October Railway's own Gr�m detachments covered one or two trains. They also kept order on station plat­ forms, clearing out squatters, the ticketless and what were ominously described as 'potential hooligans'.18 Other premium trains were cov­ ered by the North Western and Moscow transport militias, Bologoye being the changeover point. However, because the Moscow militia were even more short of men than the North Western militia, some trains were only protected in their northern sector. On unprotected trains, the compartments of sleeping passengers were very much a sitting target. Locking compartment doors se­ curely from the inside was impracticable, so door­blocking devices were put on the market. But so long as a thief was undisturbed, no door was secure for long. By the late 1990s some of the more pro­

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fessional thieves had developed a new technology, the piping of soporifc gas through the ventilator of the compartment door; this ensured that however much noise thieves made, the occupants would sleep soundly. A parallel approach was for thieves to socialise with passengers before bedtime, in due course sharing drinks. The drinks offered to the victims would be drugged so effectively that when the time came to rob the compartment of the unconscious victims, even their silk pyjamas might be removed. This method was especially employed against foreigners. One party of German tourists woke up completely naked. By the late 1990s foreigners were advised to travel only on a limited number of trains that carried escorts. One who ignored this advice, and woke up in the morning somewhat short of clothes and baggage, reported to the author that for the railway police on the Moscow-St Petersburg line his predicament was sim­ ply routine. And what was the car attendant doing through the night? Prob­ ably playing safe; there had been enough beatings­up and threats by revolver and knife, to deter intervention. It is surprising that so many did in fact patrol the train corridor from time to time. How many were armed with the aerosol pistols that were advertised in the railway newspaper is unknown, but probably not many. 19 Such pistols may have been more widespread among drivers and assist­ ants, who were subject to assaults, occasionally fatal, and in 1993 were wondering whether they should ask for frearms.20 Embezzlement is theft at a higher intellectual level, and cases were frequent on Russian railways. The following case is one of many featured in the press. The crook was none other than the head of a division (in theory, therefore, he was two steps from the rank of Railways Minister). He was a popular man, having done a lot to provide decent housing for his workers. He struck up a re­ lationship with a deputy stationmaster at Magnitogorsk and with a Magnitogorsk businessman to whom he diverted fve freightcars loaded with metal and ten 'Volga' automobiles. In his position, this could be covered up by interfering with documents. But, perhaps after a tip­off, a checking commission arrived, and to the disbelief of the locals their divisional head was taken off to the police station. Ap­ parently he spent several months in an isolation cell, being interrogated from time to time. This was evidently not good for his health and he was released on bail. He then stood as candidate for head of the district local government and was easily voted in. As

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mayor, he soon got rid of his deputies and replaced other managers. But soon his court case came up. He assured his electors that he was being persecuted for speaking his mind, but that did not save him from fve years imprisonment and confscation of property.21 That case occurred in 1998, by which time the high prices ob­ tainable for scrap metal were infuencing the pattern of theft. The odd theft from a warehouse or freightcar continued, although se­ curity in these areas had been tightened, while thefts of rails, wires and spare parts were multiplying. In the case of the October Rail­ way, such material thefts more than doubled over 1997-98. Apart from outsiders who would pounce wherever they saw an oppor­ tunity, there were track foremen who would sell new rails to scrap merchants, and car­repair people who would send trucks, wheelsets, and fatcars to the scrap dealer, for a price. By 1999, thieves, who had long specialised in removing small items of electrical equip­ ment, turned their attention to the copper conductor wires, having learned a relatively safe way of extracting live wires. Thefts such as these not only cost the railways money for replacement materials, but could also interrupt train services. In the frst half of 1999 more than 12 000 pieces of equipment were put out of action by removal of metal components. When those components formed parts of pointwork, derailments could, and sometimes were, the result. In 1998 the Moscow-Kislovodsk train hit a stolen rail that thieves had been attempting to drag over the track, and several passengers were injured. It was impossible to guard every kilometre of railway route. An alternative strategy was to enforce the inspection and licensing of scrap metal dealers; since this was something beyond the railways' own powers, it required political action. By 2000, scrap metal dealers located close to railway routes in areas where thefts were common had, apparently, diminished in number. Moreover, an order signed by President Putin strictly limited the types and origins of scrap that dealers could accept. Many such dealers had been one­man affairs which allegedly had come into being solely for the reception of stolen materials.22 Over the years, some success was claimed in the struggle against pilferage. In the last years of the Soviet regime the Northern Rail­ way at Yaroslav was succesfully experimenting with countermeasures, and in the 1990s some of the people involved in these experiments were transferred to the Volga Railway. There, by the end of the decade, they were claiming a 90 per cent clear­up rate for theft cases. The secret of their success seems to have been reliance on

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regular railway staff, notably stationmasters, for the routine chores related to crime (receiving reports, writing reports and ordering investigations, all of which took time). In the meantime, the militiamen would be at the potential scenes of crime, ready to act immediately on suspicion. These militiamen excelled in anticipat­ ing the most likely scene of the next crime, relying heavily on computerised information about the movement of valuable ship­ ments and the presence or absence of guards for the latter. The Volga Railway serves several automobile plants, and it was claimed that the step­by­step dismantlement of automobiles in transit had ceased, the thieves having decided to concentrate on the cars before or after their rail movement.23

Smash and grab Although pilferage was a big problem for Russian railways, armed violence has been relatively rare,24 the most notable practitioner being the taxation police. These offcial warriors were empowered to carry arms, and their duty was the collection of unpaid taxes. Some of their smaller operations were too routine to be reported, but there were occasions when one or another railway was so out­ raged that an event was publicised in the railway press. An early incident in 1995 was headlined 'To the Cash Offce with Automatics', and began 'Never before has there been such an out­ rage . . .'. Eight of the police, wearing combat dress and carrying automatic weapons, arrested the booking clerks at Pskov Station and then proceeded to rob the tills. They had chosen the day care­ fully, the morning of pay­day, so there was a large amount of cash to carry off. The police explained that the Pskov Division had lagged behind with its local tax payments. In the Pskov procuracy, they were not sure whether the police had acted lawfully or not. . . . 25 In early 1998, the locomotive depot of the October Railway at Rzhev suffered a depredation. The police came on the eve of pay­ day and went off with 30 million roubles. This was not a quiet affair, the depot managers taking part in the confict. The cash had been delivered from St Petersburg, and the incident led to a re­ think of banking arrangements. If the cash had been sent to the local bank it could not have been touched, but that bank (the local savings bank) took a 3-5 per cent commission, which was why its services had not hitherto been used. Since so many other railway enterprises were behind with their tax, it was argued, it would be a

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good idea to establish more branches of the railway­affliated Baltic Bank in their localities.26 Later in 1998 the tax police raided the ticket offce at Astrakhan Station. The sudden appearance of armed men in camoufage dress scared the staff out of their wits and the police had no trouble getting inside. They found the day's takings, 62 000 roubles, which was not much, and they promised to make another call later. The stationmaster prepared for this. The wooden booking offce doors were replaced with metal doors and video cameras were fxed to record events. When the police came back the staff refused to let them in. The police then threatened to arrest the stationmaster and blow open the door anyway. The stationmaster informed them that he was not responsible for any debts of the Volga Railway. Various unpleasantnesses were then visited upon him. He was arrested and threatened with personal responsibility for the money demanded while his assistant was threatened with confscation of property. But still the stationmaster refused to open the ticket offce door and moreover presented the police with a copy of Chapter 4 of the Railway Law (which states that all takings from ticket sales are the property of the Railways Ministry). The police then departed empty­ handed and the railway legal department, in its turn, was half­ heartedly contemplating court proceedings against them. 27 Dramatic confrontations such as these were outnumbered by peace­ ful, if resented, sequestrations of railway property. The Moskovka locomotive depot in St Petersburg went through a not untypical process. Earlier, when it had problems paying its taxes, the railway division helped out. But with the structural transformation of the October Railway this was no longer possible and the depot was unable to convince the tax authorities that it was not a legal per­ son. The frst time round, they took away some vehicles and cranes to auction off. The next time, the depot offered to do some highway repairs as a substitute payment (payment in kind was sometimes acceptable to the authorities) but this offer was refused and some electric locomotives were put under arrest.28

IA real Russian mess' Long­distance passenger travel declined in the 1990s, so obtaining reservations was no longer the problem it had once been. However, at certain times and places, demand still exceeded supply. For decade after decade there had been a problem with fraud

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among passenger­train staff. At its simplest and perhaps least blame­ worthy level, a passenger might board a train without tickets. Then, instead of issuing a ticket and collecting the penalty, the train staff might pocket cash offered by the passenger. This required some col­ lusion among the train staff and especially on the part of the 'brigadier' (chief conductor) although the latter might be lax by nature, not requiring any pecuniary incentive. Solidarity of the staff rendered such rackets hard to uncover. They could become even more remuner­ ative if the ticket offce staff cooperated by telling would­be passengers that all tickets were sold­out, but that if they waited for the train there might possibly be some no­shows. From time to time one group or another would be unmasked, publicised in the press, dismissed and maybe taken to court. The adoption of computerised reservations systems probably helped to restrain this type of corruption, and the opening of off­station city ticket offces could be expected to have the same effect. At the end of the century, Internet displays of ticket availabilities were also beginning to appear. 'A real Russian mess', the heading chosen for this section, comes from a passenger comment on the events of the frst week of July 1995, when the Railways Ministry reintroduced named long­distance tickets. That is, would­be passengers were required to present iden­ tity documents when buying tickets, enabling their names to be written on the tickets themselves. The aim was to confound 'the young men in leather jackets' who hung around ticket offces. They usually worked in groups and typi­ cally started in business by buying advance tickets for trains that were expected to be sell­outs. They would then offer the tickets, with a hefty mark­up, to would­be passengers who simply could not delay departure. Soon this speculative trade took on a massive scale; its practitioners would buy up all the places of departing trains and an hour or so before departure would take up their posi­ tions near the ticket offce or at the platform, waving their wads of tickets, which they sold at double or treble the issue price. Not everybody could or wished to make these transactions, so often the train departed with vacant places. The speculators would then go to the returns window and cash in their surplus tickets. It seems the October Railway was frst in introducing a new pro­ cedure of inscribing passengers' names on their tickets before issue; this was in time for the summer peak of 1992. The Railways Ministry then ordered it to be generally applied in January 1993. It does not

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appear to have been an unqualifed success, with different train staff and offcials interpreting it with various degrees of liberalism. One problem would have been that, with the end of the previous re­ gime, citizens no longer automatically carried their identifcation documents. Also, at this time of free enterprise, there were few laws that could be brought to bear on speculative activities.29 In summer 1995, the Railways Ministry had another go. 30 It announced that long­distance passengers would be required to show their identifcation documents (passports or birth certifcates) before buying a ticket. The ticket would be named and the car attendants would ask to see the supporting identity documents. By previous Russian standards, good notice was given (a few days), and the requirement well displayed (a handful of newspaper and television notices). For some reason, an attempt was made to explain the new regime in terms of passenger insurance requirements as well as the struggle against speculators. On 1 July, the frst day of the new rules, passenger stations all over the country were awash with indignant, panicky, stranded passengers. Somehow, nobody had thought of the masses of city dwellers who had gone to spend the summer in the distant coun­ tryside or seaside. Many habitually went away for 45 days and they did not usually buy return tickets. If they did not have their pass­ port (identifcation booklet) they could not buy a ticket. Those who had both return tickets and passports were often accompanied by children, and very few had brought their birth certifcates with them. From all over the country came tales of tearful train atten­ dants telling mothers and grandparents they could only travel if they left the children behind. Teachers with school parties were often in the same predicament. Apart from these, there were masses of individual passengers who had simply not heard of the new regulations until they turned up at the station. In Moscow, it was reported that passengers 'stormily expressed their dissatisfaction'. One Moscow stationmaster recounted that in the frst couple of days 'it was simply impossible to work because of the various mis­ understandings'. From the South Urals Railway a frustrated passenger complained that he had lost his passport weeks ago and the Interior Ministry was unlikely to issue a new one for months. What was he expected to do? At Chelyabinsk there was a long line of passengers leading to the stationmaster's offce, each passenger about to explain why his or her dilemma was a special case. The stationmaster com­ mented: 'I've never had such a food of visitors. And in most cases

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I can't do a thing for them'. From Nizhnii Novgorod came com­ plaints that even for clients with the right documentation, ticket issue now took more time, so ticket queues were getting longer. From the October Railway came an eyewitness account of a father, with his large stranded family behind him, imploring a transport police offcer to help him. 'It's just not possible', replies this guard­ ian of law and order, 'The militia have no right to deal with such matters'. After a few days of all this the Ministry sent out a fresh instruc­ tion, giving a month's grace to undocumented transit passengers. And so ended one of those episodes that the railways tended to forget more readily than the public, possibly because it raised awk­ ward questions about local initiative, managerial centralisation and authoritarianism.

The Irail war' Blocking railway tracks with human bodies as a means of exerting political pressure was a phenomenon that reached its peak in May 1998 when miners all over Russia used this technique to obtain satisfaction in the matter of their months of unpaid wages. But there had been similar events, on a smaller scale, earlier than that. Nor were blockades exclusively used by miners. In March 1997 the main Moscow-St Petersburg line was blocked for six hours by citizens of Tver, angry at the non­payment of their pensions, supplements and wages. In the aftermath of the summer 1998 blockades, refugees from the Asian republics were threatening to block the tracks at Novgorod in support of their demand for better accommodation and for compensation payments.31 Miners all over Russia had not received their wages for months; for this the federal and local governments were mainly blamed, the former for not releasing funds from the budget and the latter for not paying out whatever federal money did come in. Miners' plac­ ards proclaiming 'We want to eat!' were not mere dramatisations of a passing inconvenience. Earlier, Fadeev, the former Railways Min­ ister, had refused to blame the miners for the losses they had caused the railways in a previous blockade. It was government's fault for pushing the miners too far, he declared in an interview. 32 The frst miners' pickets of the 1998 'rail war' seem to have been those at Inta on the Northern Railway, who appeared on 12 May; all trains, including passenger trains, were thereby blocked on the

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Vorkuta line. Within a couple of days the action had spread to all mining regions, and notably to Shakhtnaya in the Don Basin and Anzherskaya on the Trans­Siberian line. A long detour over the Central Siberian line enabled the more important Trans­Siberian trains to keep going, although towards the end of the two­week­ long action miners were beginning to block the alternative route as well. The Railways Ministry later claimed that the action had set back the effort to convince international shippers to use the Trans Siberian container route. This was no doubt true, but there seems to be no record of any container train failing to get through at this time. Eventually the miners retired from the tracks, feeling victorious. At the local level, funds had been patched together (the railways contributing 70 million roubles) to enable the currently­due wage to be paid, and arrangements made to pay off the backlog over a longish period. The railways brought forward by a few weeks the planned 25 per cent reduction on coal tariffs. Passenger trains started to run again. On the Vorkuta line, 50 trains of coal and 56 of empties resumed their journeys. In the aftermath, there was anxiety that, the miners having been victorious at least in the short term, the same method of struggle would become widespread and drag the economy down even fur­ ther. Industries that had been forced to close, and the railways themselves, began to count their losses which, in the nature of things, presented a blacker picture than was actually warranted be­ cause lost production could usually be made up at this period of industrial stagnation. Governments, just as much as the miners, were popularly regarded as being responsible for the situation. The pessimists were not wrong. In July the miners were again blocking the tracks at Anzherskaya. The Kemerovo regional assem­ bly supported the picketing but the governor did not (Governor Tuleev was a former railwayman, and as early as 1990 he had been condemning railway blockades). Public opinion was mixed; one comment was that the workers' committees were really setting worker against worker because, while most industries closed down, the 'Stakhanovite miners' themselves went on producing coal during this protest.33 In August it was the turn of the South Urals Railway to be block­ aded once more, this time for two weeks. Again the Trans Siberian was closed, at Potanino, and again a way round was found. By this time the miners were widening their demands. No longer was it just unpaid wages, it was also demand for the resignation of the

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government and of the general manager of the Chelyabinsk coal company. Attempts to block commuter trains led to some physical conficts between protesters and passengers. By this time (perhaps because of the political demands) authorities were more willing to enforce the law, and criminal proceedings were threatened. Half­ way through the protest, government promises of a grant to the region to help pay the wages, and another undertaking by debtors of the coal company to fnd 15 million roubles for an immediate pay­out, persuaded the miners' council to lift the blockage. But this lasted only three hours; the miners soon returned with additional demands, notably for pay to cover the hours spent demonstrating.34 While all this was going on, the narrow­gauge tracks of the Sakhalin Railway were also being blocked, this time by miners protesting against the local power company, which had been buying Australian instead of the more expensive local coal. Once again, the railways were being dragged into disputes quite unconnected with themselves.35 The South Urals and Sakhalin protests petered out at around the same time, in mid­August. The South Urals miners signed a protocol with the regional governor and the head of Chelyabinsk Coal, ex­ changing release of the railway for a scheduled payment of back­pay. The miners removed their pickets from Dubrovka, and at Potapino they removed the picket from the tracks but reinstalled it at the lineside, just in case.36 In future months there would be further outbreaks, but none took the form of the May blockades, none were network­wide, and none became a national crisis.

Accidents Russian railways recognise four classes of accident. The worst is the smash (kr��h�����), which is a train collision or derailment with fatalities or serious injuries, or with rolling stock so damaged that it has to be written off. Then comes the more numerous accident type, ���r��� , which mainly includes derailments and collisions in­ volving passenger trains where Class TR­2 repairs are needed, and derailments and collisions of freight trains where capital repairs result. Collisions and derailments during non­train movements are also included in this classifcation when they result in death, serious injury or withdrawal of damaged equipment. Far more numerous is the serious mishap (���k��� ���dh��� kr�k�), which includes a long list of mishaps, some of which do not necessarily involve a physical accident (accepting a train into an occupied section, passing a signal

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at danger, failure of a passenger train locomotive). Finally comes the mere mishap (kr�k), which includes broken couplings and hot boxes, and the setting out of a dangerously defective car at an intermediate station. A given event can therefore fall under more than one classifca­ tion. Moreover, the two lesser kinds of classifed accident lend themselves to patchy reporting. The most serious classifcation, kr��h�����, is likely to be accurately reported but, as such accidents are fairly rare, changes of frequency from one year to another may not refect changing standards of operation, but simply the work­ ings of chance. In the frst year of Russian Federal Railways (1992), smashes, ac­ cidents and total mishaps declined respectively by 9, 12 and 11 per cent. Since traffc fell by 19 per cent this decline was not an im­ provement. In that year the October Railway headed the list with eight of the total 42 smashes, and four of the 30 accidents. It also registered the most serious smash of the year, at Podsosenka. Here, though, allowance must be made for the fact that this Railway was one of the busiest in terms of train­kilometres. The network fgures could be broken down in several ways.37 For example, of the smashes and accidents, 43 per cent were ascribed to defective track, 12 per cent to signals passed at danger, 12 per cent to defective wheels and 12 per cent to other car defects. In 1999, track defects seem to have played a greater role, being blamed for 62 per cent of freight train smashes, 83 per cent of passenger train derailments and 40 per cent of freight train derailments.38 Another breakdown of the 1992 fgures, with rather more fnger­ pointing, ascribed 69 per cent of the smashes and accidents to faulty repair and maintenance and 31 per cent to rule­breaking. Of the ten smashes and accidents ascribed to passing signals at danger, only two involved simply a failure to properly observe the signals. Two involved drunkenness, three involved sleeping on duty and two arose from late or ineffective braking. The ALSN locomotive advance warning system, designed to avoid passed signals, was less effective than it might have been because so many of the locomo­ tive sets were switched out of use because of defects (the Ministry had frm rules governing the use of locomotives in such condition, but how far these rules were observed is not clear). The scissors­ pedal vigilance device was by no means perfect. Only the SAUT system, which was not widely in use, seemed an effective device, together with the other minority choice, the D�z�r system.

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However, perhaps the most signifcant feature of the records was that more than half the smashes and accidents involved crews who had exceeded the 120 hours­per­annum limit on overtime. As to the mishaps, in 1992 there were more than 19 000 of these, mostly trivial. Over 200 were broken couplings (nine­tenths of these occurred in cold weather with trains driven by inexperienced Class 3 and Class 4 - drivers). Just one train, the Trans­Siberian '�������', was held up 119 times because of technical defects (most likely, these were largely changes of brake­shoe en route). There were 357 collisions with automobiles on level crossings and 43 of these occurred on protected crossings (only a few of these were recorded as mishaps in the accident record, just those caused by railway failings). Accident rates had been deteriorating in the last Soviet years, and the 1992 fgures were not encouraging. During that year the govern­ ment approved a new instruction ( r���zh�����) on railway worker discipline and also a state programme for improving railway safety 1n 1993-2000.39 Halfway through that programme, in 1998, the accident rate was very much reduced, despite the poor state of much railway equipment. This success was attributed to the government programme, although the government made no fnancial contribution to it. Among other things the programme sought to ft about 4500 locomotives with the SAUTTs advance warning and braking device (similar to the preceding SAUT, but produced by a former defence industry works at Kamensk­Ural'skii); by 1998 this particular target was almost fulflled. Meanwhile the use of centralised despatching aided by microprocessors was expected to raise the safety of about 20 000 kilometres of main line. More safety inspections and checks were instituted, with enterprise directors being required to fulfl specifc requirements. The railway ZHA�O agency, which handled the compulsory insurance of railway passengers, devoted 80 per cent of its income to railway safety measures, and this amounted to about a third of the total expenditure on safety. Its publication P� ���k�m� kr��h���� examined serious accidents in some depth. The accident fgures for 1998 showed eight smashes (one of which involved a passenger train), one accident, and 7276 mishaps. One passenger and fve railway workers were killed in the year (in 1992, 34 passengers and 22 railway workers had died). One locomotive and 80 cars had been written off (8 and about 500 respectively in 1992), and the total hours of post­accident line closures were 120 (630 in 1992). The improvement was undeniable.40

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The railway newspaper reported at length on some accidents, and it tended to take the pilot­error route. That is, there were guilty people and they would be those directly involved in the event. 'Blame the switchman!' was an old Russian saying, dating from 19th century railway accidents when it was convenient to blame the person closest to the scene. Usually, indeed, there was some der­ eliction of duty on the part of a driver, despatcher or inspector, but that was unlikely to be the full story. Working conditions could be expected to be an important infuence in accidents, but these were far from stressed in accident reports. Sometimes the newspapers would take a great deal of interest in railways that experienced a spate of accidents. As already noted (see p. 71), a succession of accidents on the October Railway was held to be evidence of bad management, although coincidence seems just as likely. In 1998-99, the Moscow Railway had a sequence of misfortunes. In 1998, six of its electric commuter trains derailed, and in 1999 the tally continued to rise. One driver even managed to mount his train onto the passenger concourse of the Yaroslavskii terminus in Moscow. But G�k�k was more interested in a collision that took place outside the Kazan Station in Moscow, perhaps be­ cause lack of personal responsibility was so clearly the cause. In this accident, the duty­offcial at the Kazan Station gave the right­of­ way to an electric train when the section ahead was already occupied. It later transpired that the duty­offcial had been drinking. The driver of the ill­fated train should have seen the stationary train ahead of him but for some reason was not vigilant and braked too late. As for the train whose tail­end was smashed, this had been standing at the red light controlling entry to the next station. Apparently it had been standing there for at least quarter­of­an­hour without its driver getting in touch with the despatchers because the duty offcial at that station was absent for 18 minutes; she was satisfying her personal needs, she later said, and therefore was not in a position to clear the line. G�k�k concluded sadly that things were not like they used to be; railway workers were no longer strictly following the rules; people were too easy­going. More usefully perhaps, G�k�k pointed out that the Kazan Station had had fve stationmasters in as many years. In fact, for one year it did not have a stationmaster at all, only a temporary fll­in. The inebriated duty­offcial had come to railway operating work from some commercial organisation and had been shifted around since then; in addition, he had not worked at Kazan Station for very long.41

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217

The large number of grade crossing accidents was unlikely to improve until some of the busiest crossings were transformed into bridges or tunnels, something which would be a long process, even though some railways were asking that their contributions to the Road Fund should be used for such improvements. Increasing the proportion of crossings that were protected by red lights or, better, barriers, was also expected to make a difference.42 But the increasing number of private automobiles on the road was expected to bring additional casualties. In the seven years 1992-98 there were about 2700 grade crossing accidents, of which 79 involved buses. There were 940 deaths. The North Caucasus Railway experienced a pecu­ liarly nasty level crossing accident in 1996 when a school bus, in misty weather, ignored the automatic red signals and the horn of an approaching train, and failed to stop, causing 27 deaths. The driver was taken to court and given six years imprisonment. The driver of the train, that is; the bus driver was freed. Apparently, under the infuence of their lawyers, bereaved famiies had been trying to ex­ tract high compensation, more likely to come from the railway than from the bus operator. Experts were summoned who showed that had the train been travelling at no more than 17 km/h the accident would not have occurred. So the train driver was to blame.43

Sinking the IAvrora' There were a number of train explosions in the 1990s, especially on passenger trains of the North Caucasus Railway. But possibly the most serious was that in the 'Y������ day train between Moscow and St Petersburg. The explosion here resulted in fve dead and 14 injured. The explosion appeared to have originated on the person of a man carrying a false passport issued to somebody from Dagestan.44 Everything seemed to point to the accidental detona­ tion of an explosive device, so this was not really a case of sabotage. Probably some of the North Caucasus explosions had similar histories. A handful of sabotage cases were reported in the press but in all probability most were not even noticed, being simply the result of bloody­mindedness or couldn't­care­less attitudes on the part of depressed railway workers who did not bother to avert impending accidents. Deliberate wrecking of passenger trains with the aim of robbing their stricken passengers was not unknown in tsarist times. An at­ tempt on the 'V���k� ' Moscow-Kirov train may have belonged to

218

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this genre, although the subsequent court proceedings threw no light on this. It happened in 1994 and tragedy was averted when a pensioner, who formerly had been one of the railway armed mili­ tia, saw persons unknown removing spikes, nuts and then a rail. They disappeared into the bushes as the old man ran down the tracks, silent­flm style, to stop the oncoming train which, had it not halted in time, would have rolled down the embankment.45 Train wrecking with intent to rob is clearly the correct descrip­ tion for the attack on the 'A�r�r�' Moscow-St Petersburg day train in 1997. This was not the frst time that this train, the fastest daily train on the inter­capital route, had come to grief. In late Soviet times it had catastrophically hurtled into a bog. This second inci­ dent might have been even more lethal, for the planned derailment was on an embankment. The perpetrators were two unemployed young men. The 18­year­ old was evidently the brains of the operation. He seems to have thought of the idea and was presumably the author of the detailed document in the style of a plan. The 19­year­old provided the killer instinct. He had already been in trouble for the attempted murder of a taxi driver while seeking to solve a personal liquidity crisis. After a frst failed attempt, when they tried to wedge a brake­shoe in a switch, the pair spent some time in familiarising themselves with the site of their crime and found the shortest possible rail to loosen (it was a 9­metre insert, or patch). Realising that they would need the right tools, they went to the living quarters of the section track gang, where they found that the track spanners were not kept under lock and key as they were meant to be. In fact, they made several visits to this tool­shed, until they found the right size of spanner. They did not return the wrong­size ones, but left them on the track. After all these exertions they did not have time to loosen the rail that day, so they rested overnight in a nearby wood and descended the following afternoon. They needed several hours and would have been disturbed by passing trains. But fnally they managed to loosen the rail a few minutes before the 'A�r�r�' was due. The piquant element of the story is this: the track gang that had been so delinquent in leaving its tools unguarded had been equally sloppy when it inserted that 9­metre rail, and that sloppiness saved lives. The set procedure when replacing rails is to also replace the copper loop that carries the track circuit across the rail joint. This loop should be welded on to the two rail ends. Instead, an easier

Cr�m�� ��k� V�����d��

219

way was taken, a piece of copper wire being pressed under the tightened nuts at each side of the joint. So when the nuts were loosened, the wire fell out, thereby breaking the track circuit and causing the block section entry signal to change to red. The on­ coming train halted and in due course its driver telephoned for advice. He was told that the section was clear so, in accordance with the rules, he proceeded at reduced speed (18 km/h, it was later said). When the train came to the disturbed track it simply came to a sudden halt, the locomotive sinking gently into the ballast. The two young men got 10 and 8 years respectively. The incident was one of the frst to be used as evidence of deteriorating stan­ dards on the October Railway (see p. 71).46

�andalism Spray­paint excepted, vandalism lacks the imagination of sabotage, and is as tedious to relate as it is to encounter. Spray­painted graftti did not become a problem for Russian railways in the 1990s, but sheer destruction for the hell of it was perhaps only to be expected in a society undergoing such upheavals. In eight months of 1995 the commuter trains based on the October Railway's depot in Mos­ cow (that is, the commuter trains serving just one of the Moscow terminals) required 6093 new seats, 1970 new upper windows, and 5240 new glass panels for the automatic doors. Repairs were needed on 5147 seats, 2320 seat backs, 4800 windows, and 1093 interior doors. That is an impressive toll, giving the lie to popular beliefs about Russian lethargy. Personal observation suggests that vandalism was somewhat worse in 1992, and very much better in 1999. Railway workers almost unanimously ascribed vandalism to people working off their anger at the state of society. A G�k�k correspondent in 1995 could not resist bringing in the culpability of the 'reformers', with their 'just do what you want' advice to the population. Other damage, not ill­natured, resulted from the use of trains as nocturnal resting places by the homeless. Eventually guards had to be hired for patrolling the train storage sidings.47 As the level of vandalism gradually declined and converged with that of, say, Brit­ ish railways, there were other convergences to be observed. In April 1999, at the urging of the populist politician V. Zhirinovskii, the Moscow Railway organised a football special for the Moscow D���m� versus Volgograd ����r match:

220

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An immaculately clean train was sent out. It arrived back look­ ing as if it had been in one of the roughest spots of the planet. 'In the spare vestibule, side and end windows broken. Seats and foam rubber in pieces. Toilet lock torn out. Compartment ceiling and partition broken'. That is how each of the ten cars is de­ scribed in the investigation report. . . . People were jumping out of the train in all directions while it was moving. At almost every line station the militia were called in, but they could not do anything.48

11

The New Century

Restructuring in retrospect At the beginning of the new century it seemed that the 'concepts' of railway restructuring adopted in 1998 would hold fast. Incor­ porating the views of railway managers as expressed through the Railways Ministry, the somewhat vague intentions and vague timescale for a move towards meaningful privatisation were diff­ cult to oppose except on the grounds of vagueness itself. For the time being (which also in this context means the foreseeable future), the spirit of Soviet Railways would live on. In 2001, the railway newspaper Gudok and the monthly Zheleznodorozhnyi transport still included the Soviet Railways' hammer­and­sickle crest on their mastheads, and this was something more than nostalgia. It was a statement, maybe a challenge, sometimes a provocation, but its es­ sential message was, 'If it ain't broke, don't fx it!' Railway managers the world over have always tended to be con­ servative, as befts an activity dependent on a complex interraction of assets and personnel whose schedules mean, and demand, that tomorrow should unfold exactly the same as yesterday. The endless question of state versus private ownership could be hotly debated at the political level but did not greatly move railwaymen, because the form of ownership did not threaten the accepted patterns of operation. However, in the 1990s, Russian Railways faced some­ thing much greater than a mere change of ownership, and responded to the challenge with a series of well­ordered retreats to prepared positions. The 'concepts' of railway restructuring originated by, and then entrusted to, the Railways Ministry, represented a last line of defence. 221

222

Soviet Railways to Russian Railways

Conservatism and nostalgia must have been strong infuences on policy­making, and were also binding forces imparting a remark­ able solidarity among railway managers. Nevertheless, for the railways, defence of commanding heights was also quite rational and, during the 1990s, in the national interest as well. The frst commanding height was the integrity of the Soviet Railways network; that is, the preservation of a single railway system serving the independent republics that once composed the USSR. That height has been only partially surrendered. While each republic now has its own railway organisation, trains still cross the frontiers, being still timetabled by a central offce and their cars monitored by linked computer facilities. This preservation of unity was not as inevitable as it might seem. The Baltic republics withdrew as far as they could from coop­ eration, although they never cut the ties completely; while refusing to join the Commonwealth's Railway Transport Council, they never­ theless participated in its work. A second commanding height was unifed operation of the Rus­ sian Federal Railways, to be achieved by maintaining it as a state enterprise. This was a complex issue, and the battle might well have been lost in the early 1990s when liberalisation and its stepchild privatisation were not merely current policies, but current obsessions. Ideology apart, however, there were good arguments for restruc­ turing, especially when the railways had to make their way in an economy where market forces were beginning to prevail. The ambi­ tion of the Railways Ministry has been to maintain the essence of a state monopoly while adapting to an economy in which competi­ tion is meant to determine outcomes. Unsurprisingly, there have been others who see the abolition of the Railways Ministry as an essential step for the advancement of the Russian transport system. Strong emotions are involved in this debate. The Ministry's building on Novo­Basmannaya Street does, architecturally, have some fortress­like features and these are wholly appropriate. The community inside those walls is just that, a com­ munity with its peculiar inner strength bonded by tradition, respect for public service, and awareness of hostile external forces. There are less worthy emotions, too. Undoubtedly the Ministry represents for its incumbents the foundation of decent personal lives or, put simply, a good job, and defence of the Ministry is therefore a mat­ ter of self­interest. Conversely, covetousness can sometimes be discerned among the motives of those who advocate the reduction

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223

of the Railways Ministry. At one period the rival Transport Minis­ try was clearly licking its lips at the prospect of taking over the railways. It was evident, though, that the Railways Ministry that was in­ herited from Soviet times could not go on unchanged. Its two roles, that of railway operator and that of state supervising agent, were maybe not quite so incompatible as they at frst sight appeared (nuclear power had a similar dual­role ministry), but they were certainly unacceptable to a wide range of opinion and did not ensure proper public accountability. The case for retaining a scaled­down Rail­ ways Ministry for the purpose of state supervision while entrusting the operating functions to independent companies did have its attractions. This case was not directly resisted by the Railways Ministry. In its 'concepts', the limitation of the Ministry to state supervision and standard setting, with Russian Railways established as an inde­ pendent but state­owned operating company, was accepted. But the degree, if any, of the privatisation of the specialist affliated compa­ nies of Russian Railways was left undefned (see p. 86). Moreover, hard decisions about who should own what and who should oper­ ate what, were postponed to a time in the future when, most likely, the vulgar liberalisation that dominated the political scene in the 1990s would have given way to a reaction more congenial to railway managerial minds. In the meantime, there were other commanding heights to be defended (such as ownership of common­ use freightcars), and there was the overwhelming need to make a good job of the transformations that the railways conceded in their 'concepts'. According to the 'concepts', as fnally tabled in 2001, 2002 was to mark the transition between the short­term and medium­term phases of the reform. How far had the railways got by 2001? Certainly, the Ministry's Department of Railway Reform was functioning, super­ vising, monitoring and initiating in line with the 'concepts' and at the same time keeping an eye on the Ministry's interests. Behind the scenes, hard work was being devoted to legal matters, including the rights and duties of the new companies, as well as the settlement of the debts of existing enterprises facing transformation. A dozen passenger operating companies had so far been formed under the Ministry's supervision (see p. 89). These were in separate regions and did not compete with each other, but they were a step in the direction of independent passenger operation, the ultimate

224

Soviet Railways to Russian Railways

and all­important goal being the end of cross­subsidization of pas­ sengers by freight shippers. These passenger companies were handling about a third of the traffc but so far had little impact on the cross­ subsidisation problem. Being separate entities they could provide fairly convincing balance sheets, and this was important for pre­ senting the case for subsidisation by central, regional or urban governments. But that subsidisation was slow in coming. For the year 2000, the Ministry requested 18.1 billion and 12.3 billion roubles, for long­distance and commuter services respectively, from central and regional budgets. Probably it did not expect to get all those roubles (it didn't), but at least it had illuminated and quanti­ fed the problem. The Ministry waited hopefully for new legislation to regulate railway relationships with local governments, and in particular the existing situation in which regional governments could determine commuter tariffs but were not formally obliged to compensate for commuter operating losses. Meanwhile cross­subsidisation had to continue and the Ministry was turning to working out a central (that is, ministe­ rial) fund to fnance commuter services. This would make use of resources obtained from cross­subsidisation plus those contributions that governments did make. The fund would also take care to give most support to the most needy commuter operators. This was an echo of the Ministry's long­standing role as central collector and redistributor of railways' incomes. The reluctance of regional governments to support their com­ muter services to the required extent was obviously largely a consequence of the general shortage of available funds. But it was not unconstructive, insofar as it forced the railways to take certain initiatives to stem the losses. In 1999 the frst installations of barcode and smart­card turnstyles at main commuter stations promised re­ ally substantial increases of ticket sales. So great is the fnancial impact of these measures that the question 'why did they wait so long?' is understandable. Less fnancially dramatic, but nevertheless a step towards a different future, are the high­comfort supplementary­ fare 'express' medium­distance trains. In 2000, for the most part, freight work continued as previously, but there were signs of the future in the slow but nevertheless real increase in the number of container trains. Freightcars in one or another form of private ownership amounted to 23 per cent of the total effective stock; half of those were private vehicles, around

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100 000, were tank cars. The Ministry was talking of a private­ owner stock that would amount to half the total, but it well knew that the high price of new freightcars was a very serious deterrent. Independent operating companies were just beginning, some with their roots in forwarding companies and some being 'technological' operations by industries for their own products or materials. Two frms (Russkii Mir and the export­oil carrier BaltTransServis) seemed on the brink of leasing their own locomotives to haul their mix­ ture of fully­owned and leased trains. There were still obstacles facing independent operators and the Ministry may not have been in a hurry to remove them. It was, however, looking into the prob­ lems caused by the absence of a fxed legal framework for such matters as charges, conditions of operation, and so on, and was publishing some guides on these subjects. Its insistence that ordi­ nary general­use freightcars should remain in its possession was one reason some proposals never progressed. In essence, the intention of the Ministry was that while some freight would be carried by the new independent operating compa­ nies, it would set up its own freight operating companies to carry the bulk of the traffc and one day these might become indepen­ dent. But its 'concepts' had carefully made no promise about full independence, merely treating it as a possibility. In the meantime a refrigerator car operating company had been set up (and foundered, although things were improving in 2000), and a container operating company was being born. For these and other companies established by the Ministry, the device of the holding company had been favoured. This would en­ able the state­owned Russian Railways to retain control of activities allocated to companies that could be plausibly presented as steps toward privatisation. Individual railways could also organise their own holding companies to supervise newly­formed companies within their own, local sphere of activity. The high charges the railways levied for moving private­owner freightcars discouraged industries from acquiring their own rolling stock, although in August 2000 private­owner rates were eased. In the meantime, the Ministry made a gesture by establishing its own commission for cooperating with private owners. This, among other things, was to organise competitive bidding for rolling stock. The shedding of low­traffc lines had not proceeded very far by 2000, although some local governments were exploring the idea.

226

Soviet Railways to Russian Railways

A big step forward came when Governor Lebed agreed that the Krasnoyarsk regional government would take fnancial responsibility for the 259 km Reshoty-Karabuda branch line.

Equipment The Ministry's Technical Policy Administration had early decided to refrain from purchasing old­technology equipment offered by industry. It could do this because during the 1990s there were no crucial problems with locomotives and rolling stock, although the provision of passenger equipment sometimes raised anxieties. How­ ever, it could be expected that the new century would witness a renaissance in this feld. Soviet Railways had obtained its electric commuter trains from the Riga Works in Latvia, but this fow petered out after Latvia became independent and set its own prices. Two Russian works, the Demikhovo Works that previously built narrow­gauge mining vehicles, and the Torzhok Works, experienced in building rail car­ riers for missiles, were diverted into commuter train construction. Various unpleasantnesses visited upon the Russian­origin citizens of Latvia helped the new Russian producers attract skilled workers from the Riga Works. By 2000, domestic production of these trains was limited not by physical capacity but by fnancial stringency. The locomotive stock inherited from Soviet Railways contained some time­expired designs, but with the traffc fall there was ample locomotive power available. Locomotives were fairly reliable, though somewhat heavy, and not economical in their use of fuel - but they could fulfl their function of hauling trains. There were some prob­ lems with their capital repair; the electric passenger locomotives were Czech­built, and only a handful of these were sent back to their makers for refurbishment. The rest had to rely on improvised repair facilities and, increasingly, home­made spare parts. A similar situation troubled operators of mainline diesel locomotives built at Lugansk, which was in Ukraine. But there was never a real locomotive shortage, and few new locomotives were built. The decade provided an opportunity to study new designs and for this purpose Western companies were invited to assist. At the turn of the century the Novocherkassk electric loco­ motive works was being helped by Adtranz to produce new designs, some incorporating, for the frst time in Russia, asynchronous tech­ nology. Meanwhile the Lyudinovo Works, with some American

The New Century

22�

(General �lectric) help, was planning to move into diesel locomotive production and also diesel trains. The old­established Kolomna Works was also expecting to produce diesel locomotives. With the end of the German Democratic Republic came the end of cut­price German­built passenger cars, which for decades had formed the overwhelming part of the non­commuter passenger train stock. �xisting vehicles, in their thousands, soldiered on even though some were badly corroded and none met modern fre­safety stan­ dards. In the summer peaks of 1999 and 2000, there was clearly a shortage of passenger accommodation. But Russian works were poised to assist. The Tver Works, a traditional supplier, had evolved a de­ sign for fast trains, and the Voitovich Car Works also offered some interesting designs. Both were receiving orders from Russian Rail­ ways and only fnancial diffculties prevented the expansion of such orders. In 2000, faced with disappointed would­be passengers, it seemed likely that the Railways Ministry or, possibly, the new pas­ senger companies, would fnd funds for more. French and Spanish companies had also been drawn in, the former for devising doubledeck cars and the latter for refurbishing existing vehicles. Meanwhile the Sokol high­speed train prototype was pursuing its trials. There were rumours of defects, but the assumption was that several railways, or their passenger companies, would order these trains as soon as there were tracks good enough to make their high speed usable. However, the Sokol did have competitors, including high­speed vehicles that, locomotive­hauled, could form high­speed conventional trains. The use of the Spanish 'Talgo' lightweight train was also possible. One of these was tried on the Moscow-St Peters­ burg line in 1996, and in 2000 contracts were signed that were expected to lead to the introduction of high­speed 'Talgo' trains with adjustable­gauge wheelsets, admirable for services into Poland, Germany and elsewhere. As with passenger cars, so with freight; there were no immediate problems but there were shortages on the horizon. Here, too, the 1990s slump had provided an opportunity to evolve new designs. After all, the standard vehicles handed down by Soviet Railways run on trucks designed in the 1930s. Their predicated mileage before major repair is 100 000 km, several times less than the corresponding standard for American freightcars. In 1999, Russian Federal Railways acquired only about 1500 new freightcars, slightly down from 1998. However, additional cars were built for private owners; for example, an order from the Sverdlovsk electric power

228

Soviet Railways to Russian Railways

company for coal­carrying cars may have saved the big producer, ralvagonzavod, from bankruptcy in 1998. Its annual production would fall to around 2000 cars by the century's end, a tenth of the Soviet­ era output, and its other product, battle tanks, was facing a market as depressed as that for freightcars.

Infrastructure The poor state of the track inherited from Soviet Railways was likely to be a long­term feature of Russian Railways. But the reduced traffc of the 1990s did give more opportunities for capital repair. Two advances gave cause for hope that the deterioration had stopped and might even be reversed. One was the acquisition of Western­ model track­repair machinery, largely fnanced with the help of the �uropean Bank for Reconstruction and Development, and the other was the experience gained in reconstructing the Moscow-St Peters­ burg line, which among other things showed that a doubletrack line did not need total closure for work to proceed. The October Railway played a large part in both these developments, but its managers received scant appreciation for their efforts. Much of the railway signalling and communication system dates from the 1950s and 1960s. Fortunately, its replacement has coin­ cided with a communications revolution. Computerisation had its frst success in Soviet times with a network reservations system. There was also DISPARK, a car monitoring system which in 2000 was still not fully exploited but was already producing great savings. The biggest failure of the computer system went largely unnoticed by the public, because in most regions it happened at dead of night; it occurred on 29 February 2000, when there was a system­wide stoppage because nobody had told the computers about leap years. In the spirit of the market economy, Russian Railways is active in telecommunications. It had inherited the second largest telephone system in the USSR. Since then, fbre optic cables have been laid alongside its principle lines, providing far more capacity than needed for railway operation, and this capacity is being offered for sale while at the same time the railway telephone system is expected to provide serious competition for the main provider Rostelekom in long­distance dialling facilities.

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Labour

The early 1990s witnessed a drastic fall of traffc. This seemed to threaten jobs and the Soviet­style railway trade union was super­ ceded by a new organisation, which ostensibly was more ready to fght for its members' rights. But there was no fght and the right to strike was denied railway workers (see p. 42). From written sources, although not always from oral sources, the picture emerges of a labour force aware that its industry is in trouble and having faith that its management will do what it can for it. The formation of a rival trade union exclusively for locomotive men was probably not very helpful to anybody. It split the labour force and, at least up to 2000, did not attract many members, its main support being on the October Railway. In the frst half of the decade the Ministry did what it could to hold on to its staff, expecting a recovery of traffc the day after tomorrow. Workers were transferred to non­operating work and various enterprises were established using railway assets. Cultivat­ ing farms to provide railwaymen with food was one endeavour, and sometimes the production was suffcient to also supply the general market. Old boxcars formed the foundation for the manufacture of private­car garages and garden sheds. Furniture making was also a proftable business. But in 1995 and 1996, in line with government policy, there was a serious effort to reduce the railway workforce. In 1996 it was planned to reduce operating workers by 32 000, of whom only 5500 would be clear cases of redundancy, the rest being attained by nor­ mal retirements and a cut in recruitment. However, the larger than expected traffc fall in 1996 brought redundancies alone to 32 000. �fforts to cushion the cuts included a reduced working day for al­ most half a million workers in 1996, and more in following years. Different railways followed different avenues. On the Sverdlov Rail­ way, for example, 84 minutes was cut off the working day, and a monthly unpaid day­off was introduced. The Moscow Railway had earlier eliminated night shifts at many stations, and continued the process. �xtra unpaid holidays was a recourse of many railways. However, the process of reduction had to continue, simply in order to reduce costs and contribute to a situation in which tariffs could be reduced. The process continued so that by 1999 the railway workforce (operating workers only) was down to 1.053 million people, from

230

Soviet Railways to Russian Railways

1.235 in 1991 and 1.240 million in 1992. However, although in terms of cost­cutting this process was an unquestioned success, a future problem was looming. This was that changing technology, among other things, meant that there was a growing shortage of qualifed staff and a growing surplus of unqualifed staff. Railway higher educational and technical schools were still pro­ ducing graduates, but not all of them seemed to come to the railways or, if they did, they soon moved elsewhere. There was also a ten­ dency for qualifed staff of many years service to move to better­paid or less onerous jobs and this was particularly marked in big cities where alternative jobs were on offer. In 2000, the average worker's pay was about 3500 roubles on the railways, whereas in the gas industry it was close to 12 000 roubles. The October Railway, as has been mentioned, found its qualifed enginemen drifting away and was forced to re­hire retired men. At the time of writing, there are no signs that this problem is being solved. It is not unique to Russia; the pattern of railway work, with its shifts and general unpredictability means that it is not popular when the economy is offering alternative ways for qualifed people to earn a living.

The transformation of a command economy to a market economy is a subject on which perhaps too many academic careers have been built, but nevertheless it does raise important theoretical ques­ tions. One such question, particularly relevant to the transformation of the USSR, was whether the move to market mechanisms should precede or follow, or coincide with, privatisation. The trend of Rail­ ways Ministry policies was that, the market economy having come frst, privatisation, if unavoidable, should come last. Reference to the section on tariffs in this book should be enough to confrm that the distortions embedded by the planned economy went so deep as to require years, if not decades, to unravel. Other adaptations to the market economy, such as premium freight centres and customer­ friendly passenger train schedules, were quite quickly adopted as policies by the Ministry. The development of railway banks (see p. 111) suggested that railway managers had enough initiative to grasp opportunities when they saw them. The robust mutual poach­ ing by the railways and the postal service (see p. 118), two big state industries, was not quite what was meant by the advocates of free competition but it at least showed that the Railways Ministry did

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not shun competitive rough­and­tumble. However, there remain doubts, as elsewhere in Russian society, as to whether the railways understand the conventions of the liberal market. Suddenly switch­ ing tariffs in 1998 (see p. 183) to prevent clients making a killing from the rouble's crash may have been defensible in terms of sturdy socialist morals, but moving the goalposts in mid­stream is a mixed metaphor which should not be needed to describe events in a well­ run market economy. In all countries, railways have a life of their own and their experi­ ence is not necessarily applicable to the rest of the economy. But it is worth noting that in the frst post­Soviet decade the Russian railway industry continued to provide a service that was little worse, and occasionally better, than what had gone before, while remain­ ing accessible to the same wide public. It had not been subjected to the upheavals suffered by other branches of the economy, nor had undeserving characters made great fortunes out of it. Slowly, it had adapted to the new situation, while hanging on to the positive charac­ teristics inherited from Soviet times. There were periods of economic convulsion when it seemed to be almost the only branch of the economy offering any promise of stability. At such times, it was a reminder that there had been an alternative course which other sectors of the economy might have taken in the 1990s.

232

N����

Notes

1

The Soviet �egacy

1 O. D'yachenko, 'My nuzhnyi drug drugu', in G, 5 April 1991, p. 3. 2 P�� ���k�m� kr ��h����, 3 1996, p. 16. For Paristyi's role as initiator see: I. Paristyi (ed.), M��k���k���� zh���z����� k�r���, (M. 1997), p. 364. 3 V. Yurasov, 'Poryadok stoit dorogo', G, 3 April 1991, p. 2. 4 Zh.T. 4, 1991, p. 64. 5 A. Durov, 'Poyavilas' konkurentsiya', G. 5 Feb. 1991, p. 1. 6 V. Grechanin, 'Volga­Kama otkryvaet schet', G. 28 Feb. 1992, p. 2. The proponent, E. Plokhov, was not successful in this proposal but it evidently did nothing to hold him back. He was shortly appointed head of the North Caucasus Railway, and later headed his old railway. 7 Zh.T. 1, 1991, pp. 60-3, and V. Anikeev ��� ��., 'So svoei kotomkoi na rynok', G. 19 June 1991, pp. 1-2. 8 Centralised purchase, whereby the Ministry bought equipment and materials and then distributed them to its own satisfaction among the railways, did not end overnight. The range of items was progres­ sively scaled down and individual railways increasingly conducted their own negotiations with suppliers. 9 Zh.T. 2, 1991, pp. 15-16. 10 '"Stabilizirovat! rabotu otrasli', Zh.T. 4, 1991, pp. 2-6. 11 'Osnovnyie napravleniya stabilizatsii raboty', Zh.T. 2, 1991, pp. 2-5. 12 Zh.T. 4, 1991, pp. 56-7.

2

New Frontiers

1 M. Gorbis, 'Ot "voiny zakazov! k "voine tarifov!', G. 13 Feb. 1991, p. 2. 2 M. Ustyugov, '"Ne komandovat', a upravlyat!, G. 8 May 1991, p. 2. 3 'Rasshirennoye zasedaniye kollegii MPS Rossiiskoi Federatsii', G. 29 Jan. 1992, p. 3. 4 This and the following section on freightcar allocations are based on reports of the various meetings of the Railway Transport Council appearing in G�k�k 12 Feb. 1992, p. 1; 2 Dec. 1992, pp. 1-2; 17 Nov. 1992, p. 1; 18 Nov. 1992, pp. 1-2; 13 Oct. 1992, p. 2; 14 Aug. 1992, p. 2; 17 July 1992, p. 1; 29 Oct. 1992, pp. 1-2. 5 I. Antonyuk, 'Delyat vagony i konteinery', G. 1 July 1992, p. 1. 6 L. Zadvor'eva, 'U stal'nykh magistralei svoe sodruzhestvo', G. 10 July, 1999, p. 2. 7 V. Novikov, 'Kazhdoi derevushke svoi prichalik', G. 3 Sept. 1998, p. 2. 8 News report of a Latvian delegation visiting the October Railway head­ quarters, G. 3 Oct. 1998, p. 1. 232

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9 A. Baranovskii, 'Stroitel'stvo porta v Ust'­Luge priostavlenno', G. 17 Oct. 1998, p. 2. 10 V. Perzashkevich, 'Urok ekonomicheskoi geografi', G. 3 Dec. 1998, p. 2. 11 Evgeniya Musikhina, 'Otdeleniye', G. 22 Jan. 2000, p. 2. 12 Unsigned, 'Pereshli na yazyk ul'timatov', G. 20 March 1999, p. 2. 13 Elena Musikhina, 'I ostalis' kazakhi u razbitogo koryta', G. 22 Oct. 1999, p. 2.

� Privatisation 1 V. Stolyarov, 'Iz konkurentov - v soyuzniki', G. 7 July 1992, p. 2. 2 A summary of the state company approach is in V. P. Tret'yak, '"Zheleznodorozhnyie! aktsii - eto real'no', in V�kh�� r�r�m��, Vol. 1, pp. 362-4. 3 T. Andreevna, 'Na stroikakh transporta', G. 14 April 1995, pp. 1-2.

4 P�r���r 1, 1998, p. 19.

5 V. Khovrin, 'Operatovskaya kompaniya', G. 11 July 1998, p. 2.

6 V. Yurasov, 'Aktsionirovaniye: plyusy i minusy', G. 2 April 1998, p. 2.

7 V. Yurasov, 'Nuzhny investitsii i vremya', G. 12 July 1995, p. 2.

8 A. Vasil'ev, 'Pervenets vagonostroeniya Rossii', G. 10 Oct. 1996, p. 1.

9 V. Khovrin, 'Peredel sobstvennosti, ili aktsiya vtorzheniya', G. 12 Sept.

1995, p. 2. 10 V. Ryzhkov, 'Formula razoreniya', G. 30 Dec. 1994, pp. 1-2. 11 N. Yurlov, 'Zhizn' posle bankrotstva', G. 26 Oct. 1999, p. 2. 12 See Yu. Krasnov, 'Ne podvedem zakazchikov', G. 28 Feb. 1996, p. 2, and V. Chistov, 'Voprosov bol'she, chem otvetov', G. 23 April 1997, p. 2. By 2000 Zh��k�rr�mm��h would become a k�r�k����� under the Ministry, responsible for administering the locomotive capital­repair works, and there would be a similar k�r�k����� for rolling stock capital repairs, V����r�mm��h. 13 I. Besedin, 'O strukturnoi perestroike zheleznodorozhnogo transporta v Rossiiskoi Federatsii', V�rr ���� Ek���m�k�, 4, 1998, pp. 90-1, and T. Andreeva, 'My v nachale novogo puti', G. 10 Jan. 2001, pp. 1-2. 14 G. Poddubnyi, 'Nuzhen li takoi posrednik?' G. 29 July 1992, p. 2. 15 Yu. Lysenko, 'Vopros - otvet', G. 23 Nov. 1993, p. 2. 16 Stolyarov, op. cit., pp. 1-2. In fact the statute of the Transport Min­ istry, confrmed in late 2000, made industrial railways the responsibility of that Ministry, with the exception of those lines handled by the Railways Ministry. 17 V. Chistov, 'Rukovodit' - znachit predvidet'', G. 24 Feb. 1996, p. 2. 18 E. Chubasheva, 'Trassa na Kochkomu', G. 16 Nov. 1993, p. 2. 19 V. Khovrin, 'Pervaya kommercheskaya v Rossii', G. 9 July 1993, p. 2. In the late 1990s the project was repeatedly described as 'almost com­ plete'. According to one account, foreign investors did not have faith in a private company so the Railways Ministry and October Railway were to acquire some additional shares from Moscow and the Gellefint company. The Karelian government agreed to take over the little­used connecting line from Syoyarvi to Yushkero. See OM-P�r���r, 8 Dec. 1998,

234

20 21 22

23 24

25 26

27 28 29 30 31 32 33 34

N���� p. 1. G�k�k (28 Oct. 2000, p. 2) reported that the line was 'complet­ ing'. Zh.T. 12, 2000, p. 32, reported on the October Railway's intention of fnishing this line. Unsigned, 'Belomor'ya do Urala', G. 26 Sept. 1995, p. 1. The project does not appear to have made much progress. The silver spike cer­ emony was noted in G�k�k, 28 Oct. 2000, p. 2. See report in G. 20 Sept. 2000, p. 2. G.P. Gauf, 'Pravovoye regulirovaniye deyatel'nosti zheleznodorozhnogo transporta', Zh.T. 12, 1991, pp. 23-9; E.B. Aizenberg, 'Pravovoye obespecheniye zheleznodorozhnogo transporta', Zh.T. 4, 1992, pp. 58-60; N.M. Ivanitskii, 'Transportnoye pravo i perekhod k rynku', Zh.T. 9, 1991, pp. 64-7. G. Aug. 15 1995, pp. 4-5. For comments on the law by railway lawyers, see L. Zadvor'eva, 'Avtoritet zakona', G. 14 Sept. 1995, p. 2 and L. Patronova, 'Zheleznyie dorogi i zakonodatel'stvo', G. 20 June 1995, pp. 1-2. For comments by ship­ pers (who felt that the law favoured the railways and did not do much to help clients), see I. Sokolova, 'S pozitsii gruzovladel'tsev', G. 11 April 1995, p. 2. N. Cherkashin, 'My zhivem v strane passazhirov', G. 5 March 1998, pp. 1-2. This was one of those esoteric Soviet situations in which outcomes were unpredictable. The majority of buffets and restaurant cars, it seems, did not close for lunch. But if the staff decided that they would exercise their right to a lunch break, then they did. The author observed this phenomenon only once, in 1975 between Moscow and Leningrad, when the buffet attendant closed his premises at lunch­ time and took a nap behind the counter, despite the protests of hungry passengers. D. Novgorodova, 'Vagon­restoran ne roskosh', G. 11 Sept. 1992, p. 2. A. Aboronov, 'Stolknoveniye interesov', G. 30 Dec. 1993, p. 3. A. Vaigel' (interviewee), 'Zakonnost' i spravedlivost'', G. 29 Oct. 1994, p. 2. I. Fursova, 'Kotleta s garnirom', G. 25 Jan. 1997, p. 2. S. Vislyaeva, '"Zaletnykh ptits! ot obshchepita pustyat "v oshchip!', G. 27 Aug. 1999, p. 2; G., 20 Sept. 2000, p. 3. L. Zadvor'eva, 'Nel'zya dopustit' razvala zheleznykh dorog', G. 29 April 1996, p. 1. G. 21 May 1996, pp. 2-5. G. 18 May 1998, p. 2. Pages 1-4 of this day's G�k�k were devoted to the conference.

4 The Zaitsev Interregnum 1 There is nothing especially Soviet or Russian in this cult of the indi­ vidual. For example, during the reign of Donald Gordon on the Canadian National in the 1950s, the Railway's employee magazine K��r���� Tr�dk would include a dozen or more pictures of the com­ pany president in each issue.

N����

235

2 This interview was also printed by G�k�k, and it is the G�k�k text and picture - which is the source; 'Snyat' s kolesa nalogovyi tormoz', G. 19 Nov. 1996, p. 1. 3 He also, of course, discussed other matters, like the state of the Trans­ Siberian route. As for the tea question, this was interesting though not particularly important: Indian tea reached Russia via Denmark and a more sensible route, through Iran, was impracticable because of the Armenia/Azerbaidzhan war. Zaitsev proposed a sea route to Novorossiisk; this would have provided an attractive long­haul, high­ value rail movement. 4 This denigration of privatisation was somewhat stronger than Zaitsev had expressed four years earlier (A.A. Zaitsev, 'Marketing v upravlenii zheleznoi dorogi', Zh.T. 12 1992, pp. 46-51) when, advocating the shift of railways to share companies, he commended the late­tsarist practice of handing over some railways to private companies (pre­ sumably he was referring to new, fairly short railways). In that same article he acknowledged that the recent presidential decree affrming state ownership would make private participation in railways more diffcult. 5 Zaitsev's ideas are scattered through a number of his published ar­ ticles, some of which are already cited. His collected thoughts also appear in A.A. Zaitsev, A.I. Efranov, V.P. Tret'yak, V�kh�� r�r�m�� , M 1999. The immediately relevant pages are pp. 118, 129-30, 207-10 of the second volume. 6 The US experience was that such despatch centres brought great gains, but the despatchers' lack of local knowledge was a defnite, though hard­to­measure, handicap. 7 G. Litovchenko, 'O reorganizatsii struktury upravleniya', G., 14 June 1996, p. 2. This article, by a railway archivist, gives a good summary of the history of the railway division, with emphasis on the Perm Railway. 8 M. Zibrov, 'O reorganizatsii struktury upravleniya', G. 27 May 1996, p. 2. G�k�k's editorial comment on the proposal to organise a larger number of smaller railways was to refer to the 'mistake' made when the ancient Russian grand duchy was divided into several, weak, duchies. 9 A useful source of detailed information about how the merged div­ isions functioned, complete with chain­of­command diagrams, is A.P. Kuznetsov, 'Opyt raboty i problemy ob'edinennogo otdeleniya', Zh.T. 12, 1995, pp. 2-7. 10 V�kh�� r�r�m�� , Vol. 1, pp. 221-2. 11 E.I. Kolesnikov, ���������� -�k���m�dh��k���� ��r�������� ��� zh���z��k�r�zh��m �r���r�r��� �� ���r�m����kh� ��������kh, Ekaterinburg 1997, pp. 46-9. The author was head of the Sverdlov Railway. 12 This was Komarov, head of the East Siberian Railway, quoted in T. Andreevna �����., 'Irkutskaya model'', G. 20 June 1997, p. 2. Relations between the two railways may not have been good because the East Siberian was the railway most likely to absorb the Krasnoyarsk Rail­ way, should the latter, rather small railway be abolished. 13 V. Kustov, 'Kogda dubler lishnii', G. 3 Feb. 1996, p. 2.

236

N����

14 Z. Shingareva, 'Otdeleniya dorogi ukrupnyayutsya', G. 2 Feb 1996, p. 2. This is an interview with a Moscow Railway deputy head. 15 A long account of the East Siberian Railway's restructuring and re­ naissance is T. Andreeva ��� ��., 'Irkutskaya model'', G. 20 June 1997, pp. 1-2. Other articles about the Railway in the same newspaper were: 4 February 1997, p. 2, and 19 February 1997, pp. 1-2. 16 This delegation was largely composed of railway chief engineers. One of them, from the BAM, wrote a long article about his experiences: L. Makhtiarov, 'V naznachennyi srok', G. 5 July 1995, p. 3. 17 V. Sidorenko, 'V usloviyakh denezhnogo deftsita', G. 13 March 1997, p. 2. 18 V. Vershinin, 'Bez svyazi avtomatika bessil'na', G. 31 Oct. 1998, p. 2. 19 For a view of how a railway organised itself while retaining its div­ isions (with circumscribed functions, and with line enterprises transferred to affliates of the railway), see S. Vnuchenkov, 'Strukturnaya perestroika magistrali', G. 17 March 1998, p. 2. This is about the South Eastern Railway. 20 G. 31 Oct. 1998, p. 1. 21 According to an interview with its head (G. 4 July 2000, pp. 1-2), the Kuibyshev Railway restored some divisions in 1999. 22 I. Besedin, 'O strukturnoi perestroike zheleznodorozhnogo transporta v Rossiisskoi Federatsii', V�rr���� �k���m�k�, 4, 1998, pp. 83-98. 23 A book was published to mark its independence: V.N. Kurkov, V�� ��dh��������� d� k�r���, Kemerovo, 1980. 24 N. Domozhirov, V. Lendov, 'Al'ternativy ob'edineniyu zheleznykh dorog net', G. 20 Feb. 1997, p. 2. 25 N. Domozhirov, 'Novaya tarifnaya politika', G. 15 July 1997, p. 1. 26 V. Khovrin, 'Severnyie tekhnologii', G. 1 Feb. 1997, p. 2. 27 This was Irina Fursova, in G. 29 Jan. 1997, p. 2. Her interviewee, a deputy railways minister who had been the head of the BAM until its dissolution, admitted that not enough information had been given to the public. He regretted that the Ministry in the name of economy had given up its regular news programme on Channel 2 television. 28 N. Yurlov, '"Lebed! snova klyuet tsentr', G. 19 Aug. 1999, p. 1. In due course the government, and Railways Ministry, got their way and installed P. Kucherenko as head, charged with restoring the Railway's fortunes. 29 A. Borisov, N. Davydov, 'V gosudarstvennoi dume Rossii obsuzhdaetsya kontseptsiya reform', G. 1 Feb. 1997, p. 1. 30 N. Cherkashin, 'Snyat' s kolesa nalogovoi tormoz', G. 19 Nov. 1996, p. 1. 31 Interview with Zaitsev, Ok���kr�k���� m�����r���, 14 Jan. 1998, p. 2.

5 Rethinking Restructuring 1 While he was Railways Minister, Aksenenko did not reveal much about himself, but when he was promoted out of the Ministry in May 1999 he seemed to unbutton himself in a long interview with G�k�k:

N����

2 3

4 5 6 7 8 9 10 11 12

13 14

15

16

237

N. Aksenenko, 'Ya nikogda nikomu ne dostaval bilety po blatu . . .', 29 May 1999, p. 2. Cynics said this frankness was not unconnected with allegations of corruption which were foating around at this time. The headline of the interview, 'I never pulled strings to get anyone a railway booking', is certainly interesting. G. 16 Nov 1996, p. 1.

Details of this and the other accidents are from V. Yurasov, 'Krusheniye',

G. 3 July 1997, p. 2. As beftted a newspaper published by the Minis­ try, this article gave the Ministerial side of the case rather than that of the October Railway. In this particular instance there was a driver shortage, with better­paid jobs luring away railway workers at that time. V. Vershinin, 'Chto meshaet . . .', G. 7 May 1998, p. 2. Interview under the headline 'Sobytiya, mneniya, lyudi' in Ok���kr�k��� m�����r���, 14 April 1998, p. 2. Ok���kr�k���� m�����r���, 25 April 1998, p. 2. Ok���kr�k���� m�����r���, 25 April 1998, p. 1. Ok���kr�k���� m�����r���, 29 May 1998, p. 1. L. Zadvor'eva, 'Glavnaya zadacha - stabilizatsiya fnansov zheleznykh dorog', G. 14 May 1998, p. 1. V. Yurinov, 'A Zaitsev: Istinoi prichinoi kadrovykh reshenii MPS', Ok���kr�k���� m�����r���, 25 April 1998, p. 1. G. 19 May 1998, p. 1. This section relies heavily on a railway feature in the monthly Ek�r�r� (No. 9 March 1998, pp. 18-38) which included pieces by representa­ tives of organisations presenting proposals for concepts (a member of the Federal Natural Monopolies Service, a railways deputy minister and a representative of the M��f� investment company, several of whose researchers had previously worked in a Railways Ministry re­ search centre). Other sources used for this chapter are from G�k�k: V. Persianov, 'Demonopolizatsiya naiznaiku', 28 Jan. 1998, p. 2; L. Matyushin, 'Kommertsiya bez konkuretsii mertva', 24 Sept. 1998, p. 2; N. Davydov, 'Vozobladal zdravyi smysl', 19 Feb. 1998, p. 2; V. Persianov, 'Ne razryvaite arterii Rossii', 5 Sept. 1997, p. 2; N. Davydov, 'Bez yasnoi, obosnovannoi tseli', 23 April 1998, p. 2. V. Chibisov, 'Vagonnyi park i "nezavisimyie perevozchiki!', G. 13 Jan. 1998, p. 2. A long article, tinged with �dh�k���r��k�, about the Transport Ministry's frst decade, appeared in G�k�k as: E. Pegov, A. Rubtsov, 'Agoniya Mintransa', 10 Sept. 1997, pp. 1-2. The Ministry's status was rede­ fned in 2000 as covering civil aviation, highway, ocean and waterway transport, electric urban transport (including metros) and industrial feeder railways not operated by the Railways Ministry; see news item in G. 24 Feb. 2001, p. 3. For example, F���������� �z�������, as quoted in G�k�k 8 Oct. 1997, p. 1, suggested that the Service was unrelentingly against railway people, and that its head regarded the absorption of the MPS by the Trans­ port Ministry as inevitable. P. Mostovoi, 'Zabota MPS' in Ek�r�r�, 9 1998, p. 24. Mostovoi was a

238

17 18 19 20

21 22 23 24 25 26

N���� member of what was then called the Government Commission for Reforming Natural Monopolies. N�z�����m���� ��z��� , as quoted in G�k�k, 8 Oct. 1997, p. 1. R. Leont'ev, 'Tr���r�r �� �r����� k��k�r������� ', G�k�k, 26 Oct. 2000, pp. 1-2. Ek�r�r�, 9 1998, p. 28. Beyond the Railways Ministry, in various institutes, British and other experience was indeed studied more sympathetically and deeply. Franchising was acknowleged to be one possible solution of the state/ railway relationship problem. See, for example, V. Kokorev, 'Insti­ tutsional'naya reforma v sfere infrastruktury v usloviakh estestvennoi monopolii', V�rr���� �k���m�k�, 4 1998, pp. 115-33. The full text, occupying a page of the newspaper, was published in G�k�k, 22 March 1998, p. 2. Persianov, �r.� d�� ., 28 Jan. 1998, p. 2. V. Kovalev, 'Sokhranim luchshee, chto nakopleno za mnogiye gody', G. 2 Feb. 2001, p. 2. N. Davydov, 'G���k�r��������� r�kkh�k', G. 27 Feb. 2001, pp. 1-2. G. 4 May 2001, p. 1. 'V kakoi forme byt' reforme', G. 3 Oct. 2000, pp. 1-2. The example of switch manufacture seems ill­chosen, as this activity was clearly non­ transportation. O. D'yachenko, 'MPS daet dobro perevozchikam', G. 24 March 2001, p. 1.

� Freight in the Market Economy 1 G., 24 Feb. 2001, pp. 1, 3. Transport Ministry fgures tended to give a larger share to the highways; for example, 36 per cent for 1999. 2 G.A. Kryzhanovskii, V.V. Shashkin, Urr��������� �r���r�r���m�� �����m�m�, SPB 1998, pp. 136-8 deals with the phenomenon of narrow­minded regulation. As an example, the authors cite a State Customs Commit­ tee regulation of 19 Sept 1995 according to which all international highway haulage using imported foreign equipment belonging to domestic highway companies was virtually stopped, thereby giving the advantage to foreign frms and ruining several Russian operators. 3 A brief history of the charters, starting with the reign of Vladimir Monomakh, is provided by G. Alekseev, 'Kazhdoi epokhe svoi ustav', G. 11 June 1997, pp. 1-2. 4 S.B. Postnikov, 'Gosudarstvo i zheleznyie dorogi', Zh.T. 11 1999, pp. 15-21. 5 V.V. Stetsenko, E.A Glukhova, 'Planirovaniye gruzovykh perevozok', Zh.T. 4 1999, pp. 15-17. 6 For example, the 1995 Railway Law gave the railways the right to sell certain types of property, but local branches of other government departments did not recognise this right. See V. Kustov, 'Zakon ne dyshlo', G. 22 Nov. 1995, p. 2. 7 The full text of the 1998 Charter was published in Zh.T. 1 1998, pp. 29-52, and as a 4­page supplement in G�k�k, 22 Jan. 1998.

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8 Interview, 'Na ostriye interesov gosudarstva', G. 18 Jan. 1997, p. 2. 9 L. Maksimova, 'Standart dlya ekspeditorov', G. Commercial Supplement, 18 Feb. 1998, p. 1. 10 'Spisok ekspeditorskikh organizatsii, imeyushchikh dogovory s MPS Rossii', G. 30 Oct. 1998, p. 6. 11 V.V. Kvitko, 'Tranzitnyie gruzy na Transsibe', Zh.T. 4 1999, pp. 36-7. 12 S.M. Rezer, 'Gil'dya ekspeditorov', Zh.T. 4 1999, pp. 58-9, and L. Zadvor'eva, 'Chtob ne propast' poodinochke', G. 23 Nov. 1999, p. 2. 13 E.I. Kolesnikov, ���������� -�k���m�dh��k���� ��r�������� ��� zh���z��k�r�zh��m �r���r�r��� �� ���r�m����kh� �������kh, Ekaterinburg, 1997, pp. 32-3. 14 Yu. Orlovskii, 'Konteinernym ekspressam - zelenyi svet', G. 18 Dec. 1997, p. 1. 15 An investigation into the activities of Tr���r��� was mounted in a Rus­ sian business journal: D. Sivakov, 'Svyazannyie odnoi tsel'yu . . .', Ek�r�r�, No. 9 1998, pp. 30-3, and much of this paragraph is based on it. 16 G�k�k made the most of this; see N. Davydov, 'Pochemu lyudi peretayut verit' pechatnomu slovu', 3 Dec. 1997, pp. 1-2 and 'Vnachale byla spravka, i spravka byla lozh'yu', 10 Dec. 1997, p. 1. 17 I. Sukhinina, 'Veter peremen', G. 2 March 1995, p. 2. 18 S. Proskuryakov, '"Veter peremen!', G. 22 April 1995, p. 2. 19 For the subsequent history of Gorkii Railway initiatives, see G.P. Komarov ��� ��., 'Strukturnyie preobrazovaniya', Zh.T. 4 1998, pp. 14-21. 20 According to Zaitsev they were based on Canadian National experi­ ence. V�kh�� r�r�m��, Vol. 2, �r.� d�� ., pp. 104-7. 21 A. Loginov interviewing Elena Kunaeva, deputy general manager of the T�FTO in G. 11 April 1998, p. 2. 22 Quoted in T. Andreevna ��� ��., 'Irkutskaya model'', G. 20 June 1997, p. 2. 23 N. Filipenya, 'Bor'ba za navyazchivyi servis', G. 24 Nov. 1999, p. 2. 24 N. Davydov, 'Khodyat denezhki po krugu', G. 20 Jan. 2000, p. 2. 25 V.A. Petrenko, 'Firmennoe transportnoe obsluzhivanie - instrument ozhivleniya ekonomiki', Zh.T. 3 1998, pp. 2-7. 26 E. Trofmov, 'Les rubyat - sostavy letyat', G. 11 Dec. 1999, p. 2. 27 O. Masslenikova, 'Banki i zheleznyie dorogi', G. 20 Jan. 1996, p. 2. 28 V. Belovanov, 'Poka sud da delo . . .', G. 23 Nov. 1995, p. 2. 29 A. Shchuchkin, 'Baltiiskii bank menyaet kurs', G. 18 Oct. 1996, p. 2. 30 N. Davydov, 'Banki i zheleznyie dorogi', G. 14 Feb. 1995, p. 1. 31 M. Bodeeva, 'Plastikovyie den'gi', G. (Commercial Supplement) 23 April 1997, p. 11; A. Shchukin, 'Bank i doroga: etapy sotrudnichestva', G. 24 April 1997, p. 2. 32 V. Mikushin, 'Doroga vybrala svoi bank', G. 30 May 1995, p. 2. 33 S. Postnikov, F. Ovchinnikov, 'Na puti k rynochnoi ekonomike', Zh.T. 2 1993, pp. 2-8. 34 N. Davydov, 'Vysokii reiting "Zheldorbanka!', G. 6 April 1995, p. 2; A. Kovalev, 'Banki ob'edenyayut usiliya', G. 27 March 2001, p. 2. 35 V. Grechanin, 'Gde i pochemu zastryali den'gi', G. 18 Sept. 1998, p. 1. 36 N. Davydov, E. Ushenin, 'Finansovyie potoki i banki', G. 28 May 1998, p. 2.

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37 A. Zaitsev, Vekhi peremen, Vol. 1, p. 309. 38 In fact, fruit prices were so low that supplies disappeared from the shops in a fash, making it possible for enterprising Caucasians to board a Moscow­bound plane (whose fare was artifcially low) with a sack of lemons, do a quick deal at an infated price, and return home well satisfed. 39 L. Zadvor'eva, V. Chistov, 'Rekviem po telegrafnym stolbam', G. 2 March 1998, p. 2. 40 V. Stolyarov, 'Detektivnyi pomidor', G. 13 Aug. 1991, pp. 2-3. 41 L. Zadvor'eva, V. Chistov, �r.� d�� ., p. 2. 42 L. Patronova, V. Vasil'ev, 'Stydno byt' nishchim pri bogatstve', G. 26 May 1998, p. 3 gives the trade union view; N. Davydov's 'Taina za sem'yu pechatami', G. 22 Oct. 1998, p. 2 and 'Nevostrebovannyi servis' G. 15 April 1999, p. 2 are resentful but give the Ministry's view an airing. 43 Zaitsev, �k�k., Vol. 2, p. 306. 44 This agreement between the Ministry and the Federal Administra­ tion for Insolvency and Financial Recovery was dated 14 Dec. 1995. Its non­application in this case meant that the affairs of the com­ pany were handed to someone lacking knowledge and experience, the Ministry said. This case is discussed, fairly temperately, in I. Verkhovnaya, 'V tryasine tyazhby', G. 11 June 1998, p. 2, and with some indignation by N. Davydov in 'Tsena ambitsii - bankrotstvo', G. 14 May 1998, p. 2. 45 V. Pakulin, 'Avtomobil' v pochtovom vagone', G. 21 April 1995, p. 2. 46 V. Kamyshev, 'Yamshchik, ne goni loshadei', G. 26 Jan. 1996, p. 2. 47 A.M. Yakuben', 'Ekspress­pochta MPS Rossii', Zh.T. 10 1999, pp. 15-16. 48 A.A. Zaitsev ��� �� ., V�kh�� r�r�m�� , Vol. 1, pp. 332-3, and Zh.T. 8 1991, pp. 57-8. 49 See, for example, V. Abgaforov, 'Konteiner doma i za granitsei', G. 23 Sept 1998, p. 2. 50 E. Ushenin, 'Konteinery ischesayut v polnoch'', G. 29 July 1999, pp. 1-2. 51 Ik�k. 52 A. Loginov, 'Gruzovyie, skorostnyie', G. 6 Feb 1999, p. 2. 53 V. Al'kov, 'Perevozki gruzov uskorennymi konteinerymi poezdami', Zh.T. 4 1999, pp. 30-5. 54 'Eshche odin konteinernyi most', G. 19 Feb. 1997, p. 1. 55 E. Chuvasheva, 'Kholodil'niki na rel'sakh', G. Commercial Supplement, 18 March 1998, p. 1. 56 V. Chibisov, 'Ussuriiskii variant', G. 8 Aug. 1995, p. 2 and A. Borovik, 'Chem men'she zatrat, tem bol'she dokhodov', G. 1 Sept. 1995, p. 2. The Ussuriisk depot, at least before it became a company, was prob­ ably the most innovative of all the refrigerator administrations. Its container trains, which were devised with some help from the German Dessau company, consisted of 24 fatcars, with electric power supplied by four diesel generators installed in two service vehicles. 57 L. Zadvor'eva, 'U semi nyanek konteiner bez glazu', G. 3 Dec. 1999, p. 2. 58 I. Batishev, S. Sarkisyan, 'Integratsiya transportnoi sistemy', Transport Rossii, 26, 1999, p. 1.

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59 A. Prasol, 'Avtomobil' na platformakh', G. Commercial Supplement, 11 Nov. 1998, p. 1. 60 Some of the better­informed arguments about this rolling highway are to be found in: V. Ishechkin, 'Sleptsy i dorogi', G. 23 April 1999, p. 2; A. Kotlyarenko, 'Kontreilernyie perevozki nuzhny', G. 26 Aug. 1998, p. 2; V. Chebotarev, 'Kontreilery na rynke perevozok', G. 24 Sept. 1998, p. 2; A. Baritko, 'Eshche raz o kontreilernykh perevozkakh', G. 28 July 1998, p. 2. 61 The 20­ft container tariff for Novorossiisk to Moscow was as follows, according to Pr���k�r��� 10-01: railway container, loaded with dom­ estic goods 866 dollars, but 746 dollars if in shipper's container; loaded with imported goods 377 dollars, own container 320 dollars. 62 M. Krotova, 'Rify v prolivakh', G. Commercial Supplement, 12 May 1999, p. 1. 63 N. Davydov, 'Transsib, TRASEKA i drugiye', G. 12 Feb. 2000, p. 2. 64 Interview with Fadeev in OM� P�r���r, 2 1998, pp. 8-10. 65 L. Maksimova, 'Skorost' i nadezhnost' garantiruyutsya', G. Commer­ cial Supplement 21 April 1999, p. 1. 66 G. Morozova, 'Uskoreniye Transsiba', OM� P�r���r No. 2 1998, pp. 12-13. 67 Several other container rates are given in 'Transsib - osnovnoi tranzit Rossii' (unsigned), Zh.T. 8 1998, pp. 40-3. 68 'Transsib - osnovnoi tranzit Rossii', Zh.T. 8 1998, pp. 40-3. 69 M. Krotova, �r.� d�� .

7 Passenger Service in the Market Economy 1 Except where other wise stated, 1991-96 fgures are from O.F. Miroshnichenko, A.E. Sadova, 'Vozmozhnosti snizheniya ubytochnosti passazhirskikh perevozok v prigorodnom soobshchenii', V�����k� VNIIZhT, 2 1998, pp. 29-35. 2 A.V. Kreinin, E.Yu. Timokhin, 'Problemy prigorodnykh perevozok v sovremennykh usloviyakh', Zh.T. 1 1994, pp. 54-9. 3 Ik�k., p. 56. 4 K. Pashkov, 'Passazhir ne zaplatit lishnego', G. 7 Feb 2001, p. 2. 5 N. Davydov, 'Nazemnyie lainery MPS oboshli vozdushnykh kon­ kurentov', G, 29 July 1999, p. 1. It is not clear whether this includes the few who had a 100 per cent discount, but the context suggests it does not. In any case, the fgure is unlikely to be exact, given the shortage of numerical prime data. 6 Unsigned, 'Stavki na novyie tekhnologii', G. 6 April 2000, p. 2. 7 V. Chibisov, 'Elektrichka vletaet v kopeechku', G. 11 March 2000, p. 2. 8 Yu. Shakalinis, 'Bilet bez ubytkov', G. 29 Dec. 1998, p. 1. 9 Yu. Mokrov, V. Brezhnev, '"Zaitsy! Lebedya', G. 18 March 2000, p. 2. 10 G. 15 April 1999, p. 2. The Ministry had requested railways to spend 50 per cent of these payments on new trains. 11 V. Bakarev, 'Pochemu na Kovrov i Vyazniki otmenili polovinu elektrichek', G. 22 Jan. 1999, p. 2. 12 After all, wrote G�k�k, 'competition is competition', G. 24 Sept. 1998, p. 1.

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13 N. Davydov, 'Nazemnyie lainery . . .', �r.� d�� . 14 O. Miroshenko and A. Sadova, �r.� d�� ., pp. 32-3. 15 U.A. Zhitenev, 'Vytyanet li lokomotiv federal'nuyu programmu passazhirskikh perevozok? L�k�m����, 2 1996, pp. 2-8. 16 TsNIITEI MPS, Zh���z����� k�r���� �������k��� F�k�r�����, M. 2000, p. 21. 17 These are so­called m�r�hr�� (end­to­end) speeds. Quoted in V. Chibisov, G. 15 April 1999, p. 2. 18 Yu. Shakalinis, '"Prigorodnyi ekspress! udivit dvazhdy', G. 1 July, 1999, p. 2; V. Ishechkin, 'Krasivo esdit' ne zapretish' . . .', G. 29 June 1999, p. 1; T. Glyva, 'Na "ekspresse! iz Ryazani v Moskvu', M��k���k�� zh���z��k�r�zh��k, 20 May 2000, p. 4. 19 Unsigned, 'Komfort - delo tonkoye', Zh���z��k�r�zh����� k��� , 1 1999, pp. 28-9. 20 V. Tikhov, 'Ostorozhno: dveri rassypayutsya', G. 1 March 2000, p. 2. 21 A. Shchuchkin, 'Passazhirskiye kompanii v strukture magistrali', G. 4 March 1998, p. 2. 22 V. Lendov, '"Zapadnosibirskii variant!', G. 21 April 1998, p. 2. 23 V. Chibisov, 'S veterkom i komfortom', G. 6 April 2000, p. 2. Also G. 20 July 2000, p. 2. 24 I. Fursova, 'Passazhirskii kompleks menyaet status', G. 4 June 1998, p. 2. 25 I. Fursova, N. Yurlov, 'Gosudarstvennyi transport ostanetsya gosudar­ stvennym', G. 19 July 2000, pp. 1-2. 26 It might be mentioned that a particular, unspoken form of competi­ tion existed in the circumstance that over a long­distance route trains would be provided by different railways, and sometimes the trains of one railway were preferred by regular passengers over that of the other. No fnancial gain was receivable by the railway providing the best trains, but pride was satisfed. 27 V. Omel'chuk, '"Transservis! zavoevyvaet avtoritet', G. 15 Jan. 1998, p. 2. 28 V. Albantsev, 'Zavoevat' simpatii passazhira', G. 19 Feb 1998, p. 2. 29 P.K. Chichagov, 'Strukturnaya reforma zheleznodorozhnogo transporta: sostoyaniye i perspektivy', Zh.T. 2 2000, pp. 19-23. 30 Even after civil aviation had stabilised, in 1999 the economy air fare between Moscow and St Petersburg was 650-900 roubles, compared with 193-273 roubles for a high­grade compartment berth on the 'Red Arrow'. Moscow-Vladivostok was 3000 roubles by economy air, 971-1166 roubles in a railway sleeping compartment. 31 These fgures are quoted in I. ll'in, 'Problemy reformirovaniya federal'nogo zheleznodorozhnogo transporta', V�rr���� �k���m�k�, 4 1998, p. 105. 32 I. Verkhovnaya, 'ER-200 kursiruet teper' tri raza v nedele', Ok���kr�k��� m�����r���, 1 Dec. 1998, p. 1. 33 See news items in G�k�k, 6 Dec. 2000, p. 2, and 30 Jan. 2001, p. 2.

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� The High-Speed Railway 1 'Vysokoskorostnyie zheleznodorozhnyie magistrali', Zh.T. 3 1991, pp. 4-7. (Texts of some of the addresses follow on pp. 8-22.) 2 L.N. Danil'chik, director of L����r��r��� , later gave more defnite fgures (�k�k. p. 16): grams per pass/km of harmful substances emitted were 386 for an aircraft, 12 for an automobile and 0.6 for a train; noise near an airport was up to 120 decibels and for a 300 km/h train at 25 m less than 90 decibels. The fgure about territory required for airports is meaningless with no indication of how many airports would be used. However, it has been pointed out that the Paris-Lyons TGV line required 2400 hectares whereas Roissy Airport which handles fewer passengers than that line occupies 3100 hectares of high­value land. A six­lane highway, which is equivalent, so it is said, to a doubletrack electrifed line, needs more than double the land of the latter. 3 Zh.T. 4 1991, p. 25. 4 This chapter rather ignores the technical problems raised by the pro­ posed high­speed railway. A good introduction to these can be found in M.V. Egorov, 'Neskol'ko voprosov avtoram proekta vysokoskorostnoi magistrali', L�k�m����, 2 1997, pp. 8-10; Yu.A. Zhitenev, 'Vysokosko­ rostnym magistralyam net al'ternativy', L�k�m���� , 6 1997, pp. 14-17; and V.K. Pis'menskii, 'Nuzhny li nam seichas dorogiye proekty?' Lokomotiv, 7 1997, pp. 2-6. 5 Zh.T. 3 1991, p. 11.

6 Zh.T., 4 1991, pp. 36-7.

7 L.V. Gutkin, D.M. Samarets, 'Resul'taty eksploatatsii elektropoezda ER200',

Zh.T. 5 1994, pp. 38-41. 8 G.I. Shabalin, 'Etapy razvitiya skorostnogo dvizheniya', Zh.T. 5 1992, pp. 22-5. 9 Zh.T. 3 1991, p. 15. This section also draws on an article by V.M. Savvov, assisted by V.A. Kudryavtsev and V.M. Petrov, 'LeningradMoskva', Zh.T. 4 1991, pp. 32-3. 10 Interview with Fadeev, 'Vse eto sil'no smakhivaet na avantyuru', Ek�r�r �, 9 1998, pp. 36, 38. 11 For a detailed description of the reconstruction, see V. Zimting, 'Vysokoskorostnaya ili skorostnaya?' G. 29 April 1998, p. 2. 12 There was little sign of movement, however, in the proposed upgrad­ ing of the parallel lines that were intended to take much of the freight traffc when the fast passenger trains began to run. Probably the decline of freight traffc removed the urgency. 13 Quoted in Ek�r�r�, 9 1998, p. 35, which mentions that vice­premier Nemtsov also thought the project was premature. 14 E. Pozamantir, 'BAM - tozhe prekrasnaya ideya. Tol'ko dlya drugoi strany', N������ �r�m���, 49 1996, p. 20. 15 V. Chibisov, 'Ekologiya torzhestvuyet, no . . .', G. 10 July 1998, p. 2. 16 V. Vershinin, 'Bez dyma i gari', G 24 Sept 1999, p. 2. The ecological debate was endless, although quite interesting. An article by the chairman of the Duma's ecological committee, Tamara Zlotnikova, 'Avantyura,

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i ne tol'ko ekologicheskaya', foreseeing an appeal to the Supreme Court on this matter, was published in N������ �r�m���, 49 1996, p. 19. 17 L�k�m����, 7 1997, pp. 2, 4. 18 B. Volkov, V. Shul'ga and A. Bolotin, 'Effektivnost' proektov vysokos­ korostnykh linii', Zh.T. 4 1994, pp. 28-33.

9 Money Problems 1 TsNIITEI MPS Zh���z����� k�r���� �������k��� F�k�r������ �� 1999�, p. 24. See also 'Effektivnaya rabota zheleznykh dorog', G. 25 Dec. 1998, pp. 1-2. 2 Compiled from data in Besedin �r.� d�� ., p. 97. 3 TsNIITEI, Zh���z����� k�r���� �������k��� F�k�r������ 1999, p. 28. These per­ centages relate to 1998. 4 I. Il'in, 'Problemy rasformirovaniya federal'nogo zheleznodorozhnogo transporta', V�rr���� �k���m�k�, 4 1998, pp. 110-11. 5 I. Il'in, �k�k., pp. 111-12. 6 TsNIITEI, �k�k., p. 24. 7 N. Davydov, '"Pochemu lyudi perestayut verit! pechatnomu slovu', G. 3 Dec. 1997, pp. 1-2. 8 Zh.T. 6 1991, pp. 69-70. 9 I.A. Buchin, L.A. Mazo, 'Dogovornyie tarify', Zh.T. 2 1991, pp. 63-7. 10 The Russian term is k�����r���, which means 'agreed' but could also be rendered as 'contracted'. The term 'fexible tariff' is also sometimes used but, like 'free tariff', is a less specifc term. 11 A.A. Zaitsev, 'Rynochnyie otnosheniya i zheleznaya doroga', Zh.T. 8 1991, pp. 58-60. 12 Ik�k., pp. 56-60. 13 The Sakhalin Railway is an exception to the general rule in many ways. Its tariffs were triple the standard rates. 14 S.B. Postnikov, F.E. Ovchinnikov, 'Na puti k rynochnoi ekonomike', Zh.T. 2 1993, pp. 2-8. 15 A. Loginov, 'Na rynke transportnykh uslug', G., 11 March 1995, pp. 1-2. 16 V.A. Petrenko, 'Firmennoye transportnoye obsluzhivaniye - instrument ozhivleniya ekonomiki regiona', Zh.T. 3, 1998, p. 7. 17 Interview with G. Davydov, general director of Metallurgtrans, 'Glavnyi zakon otrasli', in G. 12 April 1995, p. 2. 18 'Tarifnaya politika MPS', G. 30 May 1998, p. 2. 19 Unsigned, 'Reformam na zheleznodorozhnom transporte - dinamichnoye razvitiyu', Zh.T. 1 1998, pp. 2-9. 20 This referred to the case of Severstal', which had an agreed tariff to Murmansk. The Severstal' operation also played the role of guinea­ pig when the MPS was ruminating on precisely how the proposed freight operating companies should be organised. Severstal' had had a not very amicable relationship with the railways up to about 1997, from which point the arguments between the two sides were con­ ducted at a more gentlemanly level. Severstal' was quite pleased by the railways' intention to grant discounts to shippers paying mostly

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21 22 23 24 25 26

27 28 29 30 31 32 33 34 35 36 37 38

39 40 41

245

in ready cash; in 1998 it was paying the railways' bills 60 per cent in cash. L. Zadvor'eva, I. Sokolova, 'Na baze real'noi sebestoimosti i razumnoi rentabel'nosti', G. 3 June 1998, p. 2. Interview with V. Petrenko, OM-P�r ���r, 5 1998, p. 22. Interview with A. Lebed in OM-P�r���r 5 1998, p. 22. Interview with T. Saratseva, OM-P�r ���r, 5 1998, pp. 22-3. Interview with B. Nemtsov, OM-P�r ���r 5 1998, p. 23. The Kemerovo industries, mainly privatised, resented the fact that railway tariffs included a substantial price for terminal operations which in fact were performed mainly by their own industrial railways. G. 9 Aug. 1997, p. 2. On the other hand, the industrial railways were not paying for the use of railway freightcars. When an establishment like the Kuznets Metallurgical Combine at Novokuznets held cars for an average of 81 hours this represented a sizable burden. The shift from fnes to rather low demurrage payments made industries even less keen to return freightcars promptly. Any payments the feeder railways owed the mainline railway tended not to be paid promptly. L. Rogacheva, 'Stoibishcha na pod'ezdykh putyakh', G. 21 July 2000, p. 2. A. Antonenko, 'Skidki na tarify', G. 3 Dec. 1997, p. 2. V. Kustov, 'V osobykh usloviyakh', G. 19 Aug. 1997, p. 2. See, for example, the Minister's interview headlined 'Vse podorozhaet', K�mm�r���� , 6 March 1999, p. 4. T. Andreeva �����., 'Tarifnaya politika MPS - politika gosudarstvennaya', G. 14 April 1999, pp. 1-2. A. Andreeva ��� ��., �r.� d�� ., p. 2. V. Grechko, '"Zaitsy! v pogonakh', G. 24 Dec. 1998, p. 2. Unsigned, 'Yamschik zagnal loshadei', G. 23 Feb. 1996, p. 1. T. Kagakova, 'Chto v pochtovom vagone?' G. 30 Sept. 1998, p. 1. V. Ryzhkov, 'Kogda meshayut stereotipy', G. 3 Nov. 1998, p. 2. T. Andreeva, 'A klient pust' edet na Bermudy', G. 4 Oct. 1997, p. 2. The article relates the experience of the Altai Division of the West Siberian Railway. G. 7 Oct. 1995, p. 1. This was announced by the deputy prime minister, B. Nemtsov, in a speech to the Railway Collegium, G. 4 Oct. 1998, p. 1. The railways had argued that since they used power 24 hours daily, they were an ideal customer and deserved a rate lower than the normal industrial tariff. Despite this agreement, the railways continued to complain about power charges. Presumably the agreement, like so many others, was slow to be implemented. It could also be expected that even after normal industrial charges had been applied to the railways, the latter would have a good case for arguing that they deserved a concessional rate. P. Knyazev, 'Doroga pred'yavlyaet veksel'', G. 25 June 1995, p. 2. N. Vasil'ev, 'Vygodno klientam i zheleznym dorogam', G. 16 Aug. 1996, p. 1. G. Morozova, 'V poiskakh "zhivykh! deneg', G. 17 May 1997, p. 2.

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42 Speech of Boris Nemtsov, G. 4 Oct. 1997, p. 1. The railways' foreign currency earnings were important for the economy, it was said, be­ cause incoming dollars had the effect of injecting money into the system without infationary consequences. 43 I. Paristyi, 'Magistral' i fnansy', G. 29 Nov. 1995, pp. 1-2. 44 T. Akhatova, 'Bluzhdayushchiye milliony', G. 31 Oct. 1995, p. 2. 45 N. Domozhirov, 'Mif o "blokade!', G. 12 July 1996, p. 2. 46 V. Lendov, 'Den'gi na bochku, gospoda dolzhniki!' G. 19 Jan. 2000, p. 2. 47 V. Chibisov, 'Govorim o rynke, a rabotaem po starinke', G. 9 Aug. 1997, p. 2. 48 T. Andreeva ��� ��., 'S minimal'nymi raskhodami k vysokomu kachestvu raboty', G. 26 Dec. 1998, pp. 1-2. This was not the frst time this Railway found itself with taxation problems; in 1993, just when it was congratulating itself on keeping its head above fnancial water, various local governments exercised their new rights by imposing taxes on its landholdings. (The local branch of the state property com­ mittee also put up for sale the central bus station in Miass, which happened to be also the railway station, built at the expense of the Railway as a contribution to transport coordination.) V. Mikushin, 'Rasschityvaem na sebya', G. 15 March 1994, p. 2. 49 A Pochkin, 'Upravlyat' fnansovymi potokami', G. 18 Dec. 1997, p. 1.

50 Besedin, �r.� d�� ., p. 89.

51 Il'in, �r.� d�� ., p. 112.

52 Zh.T. 1 1998, p. 3.

53 Unsigned, 'Podarok revizorov', G. 16 Oct. 1998, p. 2.

54 A. Kuzhelev, 'Prokuror, ty ne prav', G. 16 Oct. 1998, p. 2.

55 A. Korobov, 'T'ma v kontse tonnelya', G. 3 Nov. 1999, p. 2.

56 V. Yurinov, 'Na perekrestke interesov', G. 26 May 1998, p. 2.

1�

Crime and �iolence

1 The trip was made in autumn 1998 and the letter published in G�k�k on 27 May 1999, p. 2, under the headline 'Vymogateli v oranzhevykh zhiletakh' ('Extortioners in orange vests'). Train­spotters wishing to avail themselves of the chance to experience hump­yard travel should present themselves at any freight station with their furniture; this is standard practice. 2 B. Trofmovskii, 'Tam vzyatok ne berut', G. 25 July 1998, p. 7.

3 V. Krotkov, 'Deputaty umyvayut ruki', G. 5 June 1999, p. 1.

4 V. Lobov, 'Na klyanuznyi rotok nakinut platok', G. 10 June 1999, p. 1.

5 V. Ryzhkov, 'V mutnoi vode', G. 11 April 1998, p. 2.

6 A. Sergeev, 'Teplovoz - "oboroten!', G. 12 Jan. 1990.

7 V. Chibisov, 'Poka posrednik pravit bal', G. 29 Oct. 1993, p. 2.

8 G. Kulikova, 'Vozvrashchayut milliony', G. 29 Sept 1998, p. 2.

9 V. Yurasov, 'Poryadok stoit dorogo', G. 3 April 1991, p. 2.

10 V. Grechanin, 'Pomozhet li chelovek s ruzh'em?' G. 9 Sept. 1993, p. 2. 11 V. Fimin, 'Net povoda dlya optimizma', G. 14 Nov. 1991, p. 3.

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12 V. Pakulin, N. Goryachev, 'Desant s neba', G. 18 June 1993, pp. 1, 3. 13 A. Romakhov, 'Na strazhe zakonnosti i poryadka', G. 10 Nov. 1995, pp. 1, 3. 14 A. Dvoryanskii, 'Budni transportnogo prokurora', G. 1 Dec. 1995, p. 3. 15 See, for example, R. Yakmets, '. . . I militsiyu ne uvazhal', G. 22 May 1999, p. 4. 16 B. Zimting, 'I gryanul 'Grom', G. 5 Sept. 1996, p. 2. 17 E. Chubasheva, 'Poka "Grom! ne nagryanet, zhulik ne perekrestit'sya', G. 29 July 1999, p. 2. 18 Ya. Dmitrieva, 'Poimat' vora, vernut' ukradennoe', G. 11 Oct. 1995, p. 2. 19 See, for example, the half­page advertisement in G�k�k, 20 August 1993, p. 4. The pistols, which could use starting­pistol rounds to produce noise and fame in addition to the disabling aerosol, were made by the celebrated Izhevsk Works. There was a minimum order of 50 guns and Interior Ministry permission was required. 20 A. Margovenko, 'Vystrel na peregone', G. 11 Sept 1993, p. 3. 21 E. Musikhina, 'Iz merov - na skam'yu podsudimykh', G. 10 April 1998, p. 2. 22 V. Yurasov, 'Zloumyshlenniki v mundirakh i bez', G. 5 July 1998, p. 3; N. Davydov, 'Protiv loma my nashli priemy', G. 19 April 2000, pp. 1-2. 23 V. Voronkov, 'Po goryachim sledam', G. 14 Aug. 1998, p. 2. 24 From time to time railwaymen were attacked and sometimes killed, but this never became a mass phenomenon. The highest­ranking railwayman to die was the head of the Volga Railway, Yu. Tsittel', gunned down in what was apparently a contract killing in 1994. G. 9 Nov. 1994, p. 1. In November 1995, G�k�k commemorated the anni­ versary of this murder, but elucidation has not been forthcoming. 25 So no further action was taken, apparently. Unsigned, 'S avtomatami v kassu', G. 24 Oct. 1995, p. 1. 26 S. Borzenko, 'Zarplaty zabrali politseiskiye', Ok���kr�k���� m�����r��� 10 Jan. 1998, p. 1. 27 V. Efmov, 'Pokusheniye na chuzhiye den'gi', G. 19 Nov. 1998, p. 3. 28 T. Kutsenina, 'Mashiny i elektrovozy - pod arestom', Oktyabrskaya magistral' 13 May 1997, p. 1. 29 A. Shchuchkin, V. Yurasov, 'I vse­taki spekulyatsiya protsvetaet', G. 29 Jan. 1993, p. 2. 30 Various authors, 'V interesakh passazhira i poryadka', G. 8 July 1995, p. 2. 31 G. Morozova, V. Yurinov, '"Rel'sovaya voina!', OM-P�r ���r 5 1998, pp. 6-7. 32 Interview with Fadeev, OM-P�r ���r 2 1998, pp. 8-10. 33 N. Domozhirov, 'Magistral' perekryta', G. 11 July 1998, p. 1. 34 Unsigned, 'Shakhtery snyali blokadu na . . . tri chasa', G. 11 Aug. 1998, p. 1. 35 Unsigned, 'Shakhtery ukhodyat s rel'sov', G. 7 Aug. 1998, p. 1. 36 Unsigned, 'Blokada budet snyata', G. 15 Aug. 1998, p. 1. 37 B.S. Skachkov, 'Bezopasnost' dvizheniya poezdov: itogi goda', Zh.T. 6 1993, pp. 24-8, on which these paragraphs are based, gives many additional fgures and comparisons.

248

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38 Unsigned, 'Povyshat' bezopasnost' dvizheniya poezdov', Zh.T. 3 2000, pp. 12-14. 39 This government document, issued 29 Oct 1992, was No. 833 in its series. It was very much a creation of the Railways Ministry, the classi­ fcation as a government programme imbuing it with extra weight. 40 N. Davydov, 'V poezda mozhno sadit'sya bez strakha', G. 3 Sept. 1999, p. 1. 41 Yu. Shakalinis, 'Golovnaya bol' ot golovotyapstva', G. 21 Oct 1999, p. 2. 42 Red lights at non­automatic level crossings are marker lights only. Their message is that a train is, or is not, coming. 43 A. Prasol, 'Torg na krovi', G. 3 Aug. 1999, pp. 1, 3. The case was still on appeal before a higher court in 2001. 44 V. Yurasov, 'Zloumyshlenniki v mundirakh i bez', G. 5 June 1998, p. 3. 45 N. Morokhin, 'Pokusheniye na "Vyatku!', G. 22 March 2000, p. 4. The late date of the report is explicable by the six years needed to bring the two culprits to justice. They got fve and ten years respect­ ively. The instigator appears to have escaped identifcation. 46 Ok���kr�k���� m�����r��� 28 June 1997, p. 2, and 25 Dec. 1998, p. 1; V. Yurasov, 'Pokusheniye na "Avroru!', G. 15 Jan 1997, p. 4. 47 T. Gurova, 'Zakon molchit, vandal nagleet', G. 17 Oct. 1995, p. 2. 48 Yu Shakalinis, 'Pod patronazhem Zhirinovskogo', G. 17 April 1999, p. 8.

�ibliography

249

Bibliography

A Note on Sources English­language sources are meagre. For an economist's study of how Soviet Railways functioned in the 1950s, see the very detailed Soviet Trans­ portation Policy by Holland Hunter (Harvard 1957). The same author's Soviet Transport Experience (Washington 1968), and E. Williams, Freight Transport in the Soviet Union (Princeton 1968) carry the story further. For a trainspotter's commentary on the Soviet railways in the 1960s, there is J.N. Westwood's Soviet Railways Today (London 1963). For a later period of Soviet Railways there are chapters in John Ambler and others, Soviet and East European Transport Problems (London 1985) and Johannes Tismer and others, Transport and Economic Development - Soviet Union and Eastern Europe (Berlin 1987). The fnal stage of Soviet Railways and comments on their restructuring are very well presented by a study based on research undertaken for the European Bank for Reconstruction and Development: J.S. Strong and J.R. Meyer, Moving to Market: Restructuring Transport in the Former Soviet Union (Harvard 1996). Until it ceased publication in 1998, ABREES (Abstracts, Russian and East European Series) gave detailed cover­ age of current events in transportation. Just a few big, mainly university, libraries stock this periodical. A draft paper by Robert N. North, Russian Transport: Problems and Prospects, presented in 1995 under the auspices of the Royal Institute of International Affairs, proved useful as an overview of all transport modes. Currently, Railway Gazette International gives reli­ able news of major developments, and the annual Jane's World Railways provides basic data at length. The present book, dealing with recent and current events, naturally has few hardcover sources on which to draw and relies heavily on news­ papers and periodicals. Most heavily used is Gudok, the old­established railway daily newspaper. The di ff erent railways also produce their own newspapers and these are usually quite hard to locate. Use has been made of those of the October Railway (Oktyabrskaya magistral') and the Moscow Railway (Moskovskii zheleznodorozhnik). These three railway newspapers provide a grassroots view of thingsj this book would have been possible without them, but it would have been a very diff erent book, and the author is grateful to their many contributors who, so obviously, know their business. G. Fadeev, the former Railways Minister, was expected to publish his memoirs in 2001 under the title Sud'ba moya - zheleznaya doroga.

249

250

�ibliography

Russian-language books Akademiya transporta, �ol'shaya entsiklopediya transporta, tom 4 (SPB., 1994).

Atlas zheleznykh dorog SSSR (M., 1990).

Galaburdy, V.G. (ed.), Edinaya transportnaya sistema (M., 1997).

Kazakov, A.A., Aleshin, V.N. and Kazakov, E.A., Avarii na stal'nykh magis­

tralyakh (M., 1993). Kolesnikov, E.I., Sotsial'no­ekonomicheskaya strategiya na zheleznodorozhnom transporte v sovremennykh usloviyakh (Ekaterinburg, 1997). Kryzhanovskii, G.A. and Shashkin, V.V., Upravleniye transportnymi sistemami (SPB., 1998). Paristyi, I.L. (ed.), Moskovskaya zheleznaya doroga: cherez gody, cherez ras­ stoyaniya . . . (M., 1997). Raspisaniye dvizheniya passazhirskikh poezdov (kratkoye) (M., 1987). Raspisaniye dvizheniya passazhirskikh poezdov 1999/2000 (M., 1999). Raspisaniye dvizheniya passazhirskikh poezdov 2000/2001 (M., 2000). TsNIITEI MPS, Zheleznyie dorogi Rossiiskoi Federatsii v 1999g (M,. 2000). Zaitsev, A.A., Efranov, A.I. and Tret'yak, V.P., Vekha peremen (2 vols. M., 1998). Zheleznodorozhnyi transport: entsiklopediya (M., 1994).

Russian-language periodicals Ekspert Gudok Kommersant Lokokmotiv Moskovskii zheleznodorozhnik Nezavisimaya gazeta Novoye vremiya Oktyabrskaya magistral' OM­Partner Po sledam krushenii Put' i putevoye khozyaistvo Rossiiskii ekonomicheskii zhurnal Transport Rossii Transportnoye stroitel'stvo Vestnik VNIIZhT Voprosy ekonomiki Zheleznodorozhnoye delo Zheleznodorozhnyi transport

Index

Abakanvagonomash, 33 accidents, 15, 71-2, 206, 213-17 accounting, 13, 23, 73, 83, 84, 144, 169, 224 administrative structure, 6, 7, 18, 55, 90, 168-9 see also restructuring agreed tariffs, 172 agriculture, railway, 9, 87 airlines, 82, 146 Aksenenko, N.E., 51, 53, 61, 66, 67-9, 72-4, 100, 103, 139, 160, 161, 193, 199 Armenia, 19, 20, 23, 24 Association of Transport Users, 176 Austrian railways, 19 automatic gates, see turnstyles auxilliary services, 10, 11, 16, 87, 96, 229 Avrora train, 145, 147, 149, 157, 217-19 Azerbaidzhan, 18 Baltic Bank, 52, 75, 112, 113 Baltic Construction Company, 160 Baltic states, 19, 20, 22, 25, 26, 28, 125, 222 BaltTransServis, 89, 225 BAM, 6, 53, 62, 156, 164, 183 bankruptcies, 35-7 banks, railway, 11, 52, 75, 111-14, 207-8 barter, 111, 174, 182, 185 Belarus (Byelorussian) Railway, 18, 23, 27, 28 Belkomur company, 41 bills of exchange, 188 Bogotol repair works, 37 Bolshakov, Aleksei, 159 'British Model', 85, 89, 144 bribery, 196-200 Byelorussian Method, 6, 202

Canadian railways, 58-9, 79 Chelyabinsk 'Break', 79 Cherepovets, 33, 40, 89, 119-21 Chernomyrdin, Victor, 48, 51, 84 China, 9 Chubais, Anatoly, 43, 49, 77 closures, line, 53, 86, 225-6 coal traffc, 11, 25, 63, 79, 107, 120, 170, 178, 180, 182, 191, 212 Collegium, MPS, 21, 75, 96, 112, 183, 189 'concepts', see restructuring Communist Party, 4, 5, 12 commuter services, 52, 91, 134-44, 145, 224 competition, 45, 52, 86-7, 95-6, 103, 118, 124, 125, 153, 178 computerisation, see information technology construction, new line, 14 containers, 54, 101, 110, 121-7, 130-3, 172-3 cooperatives, 11, 174 coordination of transport, 97, 119-33, 139 see also intermodal corruption, 104, 199-201 costs, operating, 8, 11, 87, 140, 166-70 crime, 196-220 cross subsidisation, 53, 67, 89, 134, 167, 169, 224 customs, 26, 97, 126, 129, 130, 131 Czech locomotives, 157 debts, see indebtedness problem decentralisation, 7, 8, 11, 17, 70, 98, 168-9 Defence Ministry, 47, 66, 85, 185, 190 Demikhovo Works, 141, 226 251

252

Index

despatching centres, 55-6, 60, 61, 62, 90 directorates (direktsii), 57, 143 DISPARK, 228 Dorozhnik Bank, 112 Dortranskonteiner, 106 drink problem, 46, 202, 216 Duma, 41, 52, 64, 88, 98, 199 DWA company, 35, 227 East Siberian Railway, 57, 58-61, 112, 182 ecology, 152, 154, 162 education, 7, 52, 230 effciency, operating, 3, 4, 13, 15 Ekspress trains, 137, 141-2 Ekspress-Del'ta, 102 Ekspress-pochta MPS, 119 Ekspress-prigorod, 143-4 electric power, 29, 87, 138, 140, 145, 177, 188 electrifcation, 7, 14, 76 electronic communication, see information technology embezzlement, 205-6 ER-200 high speed train, 147, 157 European Bank for Reconstruction and Development, 77, 82, 87, 228 European Commission, 156, 162 Evro-Sib, 100 Fadeev, G.M., 21, 42, 43, 47-9, 51, 69, 74, 131, 137, 160-1, 211 Far Eastern Railway, 66, 182, 194 fare collection, 135-7, 209 fare discounts, 136, 146 fare evasion, 134-7 fares, passenger, 13, 141, 146, 171 fare setting, 135-6, 147 fnance, 7, 13, 17, 83, 90, 166-84 see also banks, costs, foreign currency, indebtedness, investment, penalties Finland, 22, 40 'Finland Model', 31 frmennyi train, see premium trains foreign currency, 24, 70, 102-3, 154

forwarders, 16, 24, 52, 99-104, 174 fraud, 200-1, 209 freight, 95-133 freight schedules, 110, 124-6, 131-3 see also traffc freightcar private ownership, 80-2, 84, 85, 172, 176, 184, 224-5, 227 freightcar supply, 4, 10, 13, 26-8, 33, 227 freightcar utilisation, 4, 13, 27, 90, 98 frontier problems, 18, 19, 23, 24, 25, 29-30 gauge problem, 153, 227 Georgia, 19, 20, 22 Germany, 52, 114, 155, 227 Glavzheldortrans, 38 Gorkii Railway, 58, 59, 61, 87, 104, 135, 138, 141, 201 Gosimushchestvo (State Property Service), 8, 36-7, 45 Gosplan, 3, 12, 161, 170 grade crossings, 217 Grom organisation, 204 Gudok, 21, 22, 30, 36, 75-6, 118-19, 193, 216, 221 heavyweight trains, 6, 13, 14 High-speed Railway Company (RAG VSM), 159, 164-5 high-speed railway, 152-65 high-speed trains, 147, 154, 157 highway transport, 82, 95-6, 124, 128-9 housing, 7, 9, 86, 167, 195 International Monetary Fund, 48, 73, 161 indebtedness problem, 11, 24, 47-8, 52, 53, 110, 111, 169-70, 175, 185-91, 192, 193 indexation, 179, 182-3 industrial railways, 7, 38-9, 177, 191 infation, 79, 185

Index information technology, 22, 24, 55, 59, 60, 62, 81, 84, 102, 106, 110, 131, 228 Institute of Complex Transport Problems, 119, 161 insurance, 114, 215 intermodal, 101, 110, 119-33 Interstate Commerce Commission, 4 Intourist, 70 investment, 7-8, 13, 32, 34, 61, 88-9, 156, 159, 167-8, 194 Japanese railways, 58, 163 Kaliningrad Railway, 18 Kazakhstan, 18, 20, 27, 29 Kemerovo Railway, 63-5, 190, 193 Komarov, Gennadii, 58-60, 76 Konarev, N.S., 12, 85, 100 Konteiner company, 127 Kovalev, V., 85, 103-4 Krasnoyarsk Industrial Railway, 39 Krasnoyarsk Railway, 57, 65, 137, 182 Kreinin, A.V., 170 Kuibyshev Railway, 8, 58, 112, 138, 143, 202 labour, see workforce 'Land Bridge', 130-3 land tax, 195 leasing, 17, 45, 46, 100 Lebed, General A., 65, 137, 180, 226 Ledmozero-Kochkoma line, 39-40 Lengipotrans, 158 Link Gil, 32, 89 Lobko, V., 73-5 local government, 52, 53, 64-6, 135, 137, 139, 145, 167, 181, 190, 193, 226 locomotives, new, 226-7 Logunov, V., 106-7, 174 LUKoil-trans, 101 Luzhkov, 48, 49 Lyudinovo Works, 227

253

mail service, 118-19, 186 maintenance, rolling stock 27, 28-9, 81 maintenance, track, 10, 15, 60, 71, 218 managers, railway, 4-5 see also Railways Ministry market economy, 5, 7-8, 12, 16, 52, 54, 98, 146, 230-1 marketing, 106-11 marshrut service, 98, 175 mergers, divisional, 47, 52, 55-62, 70, 208 mergers, railway, 47, 62-6 mileage, railway, 14, 19, 63 militia, transport, 196, 197, 201, 203, 207 Moldova, 18 Mongolia, 22, 55 monitoring system, 228 Moscow City Industrial Railway (MGAG), 39 Moscow Railway, 6, 49, 58, 72, 107, 116, 135, 137, 138-9, 141, 143, 187, 189, 202, 216, 229 Moscow State Transport University, 77, 83 MPS, see Railways Ministry Murom Works, 89 named trains, see premium trains Natural Monopolies, Federal Regulating Service, 77, 83-4, 85, 89, 181 Nemtsov, Boris, 51, 67, 84, 87, 181, 189 North Caucasus Railway, 45, 106, 108, 111, 113, 128-9, 141, 142, 143 Northern Railway, 10-12, 36, 40, 95, 110, 206, 211 October Electric Train Repair Works, 34-5, 113 October Railway, 6, 19, 40, 51, 54, 57, 58, 61, 63, 70-6, 96, 101, 109-10, 111, 113, 117-18, 126, 128, 135, 142, 142-3, 157-8,

254

Index

October Railway, continued 159, 160-1, 192, 193, 195, 204, 207-8, 214 oil traffc, 32, 101 Gktransveshneterminal, 109 operating companies, 32-4, 52, 86-7, 89, 101� passenger 142-6, 223, 225 Operating Rules, 6 parcels traffc, 118 Paristyi, I.L., 6, 31, 39, 49, 58, 107, 116, 139, 189 partition, 18-30 passenger rolling stock, 33, 137, 138, 140-1, 145, 146, 148, 157, 227 passenger services, 23, 24, 43, 52, 99, 134-65, 147-9, 157 see also timetable, public pay, 15, 47, 112, 195, 230 penalties and fees, 12, 16, 29, 98, 177 Petra, 103 pipelines, 95 Pitirim, Metropolitan, 48 planning, 98, 170-1 police, see militia, transport ports, 25-6, 28, 110, 179 Predportovaya bankruptcy, 75, 117 premium freight centres, 10, 60-1, 101, 105-11, 127, 187 premium trains, 147 press relations, 49, 75 privatisation, 8, 16, 17, 31-49, 54, 77-8, 144, 225 productivity, labour, 15 proftability, 4, 15, 166-70 Promzheldortrans, 38 purchasing, 9, 10, 40, 61, 98 'rail war', 194, 211 Railway Charter, 42, 86, 97-9, 186, 187 Railway Law, 41-2, 48, 86, 176, 208 Railway Research Institute, 33, 77, 85, 128, 153, Railway Transport Council, 21-4, 174

Railways Ministry, 7, 9, 17, 21, 37, 38, 41, 48, 60, 76, 80, 83, 84-91, 107, 113, 127, 167, 168, 176-7, 222-5 rates, freight, see tariffs 'Red Arrow', 157, 164 refrigerator cars, 28, 114-17 refrigerator services 32, 114-18, 125, 198 Re�servis, 32, 114-18 repair works, 34-7, 89, 226 restaurant cars, 43-7, 145 restaurants, 43, 45 restructuring, 16, 47, 53, 54-66, 70, 77-91, 223-4 see also privatisation Riga Works, 141, 157, 226 Road Fund, 122, 195 Russian Federal Railways, 18, 41, 90 'Russkaya Troika', 157 Russkii Mir, 89, 102, 225 Rybinsk motor works, 36 sabotage, 217-18 safety devices, 214, 215 Sakhalin Railway, 19, 213 Samara Commuter Company, 143, 145-6 Savvov, V.M., 158, 162 schedules, freight 23, 31-2 schools, railway, 7, 30 Severstal', see Cherepovets Sokol train, 159, 161, 227 Sotnikov, E.A., 155-6 South Eastern Railway, 36, 113, 187 South Urals Railway, 29, 112, 140, 191, 212 Soviet Railways, 3-17, 18, 23, 25, 27, 30, 62, 79, 97, 170-1 speeds, freight trains, 60, 124-6, 128, 131-3 speeds, passenger trains, 141-2, 148-9, 157 St Petersburg Transport University, 76 Starostenko, V.I., 70, 190

Index

255

State Highway Inspectorate, 129-30 state order, 171 State Property Service, see Gosimushchestvo station improvement, 144-5 strikes, 42, 229 subsidies, 53, 67, 138, 139, 145, 171, 224 supply industry, railway, 47 see also purchasing Sverdlov Railway, 19, 57, 124, 135, 173, 190, 229

Transmash �orks, 159 Transport Construction Ministry, 32 Transport Ministry, 77, 82 Transreil, 100, 102-3 Transrestoranservis, 44-7 Transservis, 142-3, 144, 145 Transtroi, 32, 40 Transzheldorekspeditsya, 104 TRASEKA route, 130-1 Turkmenistan, 19, 21 turnstyles, 137, 224 Tver Works, 227

Talgo trains, 227 tariff conferences, 179, 183 tariffs, freight, 13, 16, 25, 65, 78-80, 83, 85, 87, 90, 110, 113, 120, 123, 131-3, 170-84 taxation, 17, 53, 58, 64, 103, 144, 189, 191-5 taxation police, 207-8 telecommunications, 228 Telman Works, 36-7 theft, 116, 131, 201-7 ticket fraud, 209 ticket regulation, 210 see also fares timber traffc, 11, 110, 182 timetable, public, 149-51 Torzhok Works, 142, 159, 226 track, 10, 14, 71, 157, 228 traffc density, 15, 154 traffc forecasting, 156, 163 traffc levels, freight 8, 11, 13, 14-15, 54, 95, 96 traffc levels, passenger 134-5, 146 Trans-Baikal Railway, 8, 188, 203 Trans-Siberian Express forwarder, 101, 103, 125, 179 Trans-Siberian Railway, 8, 19, 29-30, 101, 124, 126, 130-3, 148, 188, 212 Transkom, 52, 142-3 TransKreditBank, 113

Ukraine, 18, 20, 23, 26, 27 unions, labour, 12, 22, 229 Uralvagonzavod, 228 USA, 81, 84, 155 user friendliness, 5, 98, 101, 104 see also premium freight centres Uzbekistan, 19, 23 vandalism, 219-20 Voitovich Works, 227 Volga Railway, 138 Voronezh Diesel Locomotive Works, 37, 200 VSM, see high-speed railway West Siberian Railway, 8-10, 63, 143, 173, 181, 190, 193 workforce, 7, 9, 15, 60, 64, 71, 74, 229-30 see also pay, strikes, unions working hours, 215, 229 �aitsev, A.A., 50-67, 73-6, 121, 161, 173 �HASO insurance agency, 215 �heldorbank, 16, 113, 113 �heldorekspeditsiya, 52, 101, 109 �heldoreksport, 102 �heldorremash, 377 �heleznodorozhnyi transport, 14, 23, 221 �hirinovskii, V., 219