Alexander Morozov: The Price Russia Has Paid for Crimea

krym nashGraffiti and counter-graffiti on the parapet of a bridge over the River Spree in downtown Berlin, March 8, 2019. By changing a single letter in the spelling of “Crimea,” “Polina, Lera, German, Roma, Arina, and Vlad” reasserted that “Crimea is ours,” i.e., it belongs to Україна (“Ukraine” in Ukrainian, not Russian), on January 28, 2019. Photo by the Russian Reader

The Price Russia Has Paid for Crimea
Alexander Morozov
New Times
March 11, 2019

The five years that have followed the events of 2014, regardless of whether you refer to those events as annexation, the Russian spring, a Putinist coup, reunification, a homecoming, an historic choice and so on, have emerged as a whole set of consequences powerful in terms of determining history, having a lasting influence, and shaping Russia as a whole, that is, impacting Russian domestic politics, the Russian economy, and the self-awareness of large segments of the Russian populace. These consequences have generated “another Russia,” a country different from the one that existed in reality and people’s minds throughout the previous stages of its post-Soviet progress.

Destroying Eurasianism
Early Putinism was drive by the integration of so-called Eurasia, i.e., the former Soviet republics. Nursultan Nazarbayev, president for life of Kazakhstan, was the man behind political Eurasianism, as we know. During the Yeltsin administration, Moscow was indifferent to the concept. Later, however, the idea that Russia was Eurasia’s leader was made basic Kremlin doctrine.

Moscow’s actions in this respect were alternately gentle and crude, but generally its policies were seen as rational, as attuned to the region’s economic growth and security.

The Crimean adventure completely gutted the Eurasianist policy. It managed to frighten such stalwarts of Eurasian integration as Belarus and Kazakhstan. At the same time, it put paid to notions of “Slavic unity” and inevitably provoked an assault on the so-called canonical geographical domain of the Russian Orthodox Church.

As long as the logbook contained only one point, the war with Georgia, we could say it had been an extravagance. But the occupation of Crimea was the second point, which could be joined in a straight line with the first.  The Kremlin abandoned its policy of cultural and economic expansion, pursuing instead a police of aggression, bullying, and crude displays of superiority.

Not a single neighboring country has recognized Crimea’s accession to the Russian Federation. Consequently, Russia has symbolically transitioned from Eurasia to solitude. Putin abandoned Eurasia, going over its head to engage in various unilateral actions in the far abroad. Although Russian university lecturers habitually still rattle on about Eurasianism, the occupation of Crimea has meant that Kremlin, like Zarathustra, has climbed to the top of an imaginary mountain peak, whence it transmits its rhetorical messages, addressed to the void.

Warring with the West
The occupation of Crimea has meant that, since 2014, the perpetual cold war with the west has taken on a more heated, hysterical tone than under the communists in the sixties, seventies, and eighties. During one of his last interviews, in 2014, the late former prime minister Yevgeny Primakov, an imperialist politician if there ever was one, said, “Television has been laying it on thick. The propaganda [on Russian TV] suggests we are preparing the populace for war.”

Before the occupation of Crimea, between 2007 and 2014, the period following Putin’s Munich speech, the Kremlin made numerous demands on the west, reacted harshly to any criticism of its polices and actions by international institutions, and sometimes made rather abrupt diplomatic moves. But the word “rivalry” still described all these things. The occupation of Crimea shifted relations with the west into another stage of aggregation known as hybrid war.

The term is quite obviously inaccurate, like any other term containing the adjective “hybrid.” But the key word in the phrase is “war.” It does not matter whether we believe the Kremlin has been conducting a well-conceived and well-coordinated war based more on the power of networks and the internet than brute force or whether we think the degree of coordination has been exaggerated. All observers have argued that the numerous discrete incidents paint a picture of a networked war against liberal democracy, the preparatory stages of a major war to redraw the world’s geopolitical spheres of influence or an attempt to provoke the United States. The occupation of Crimea put Moscow’s relations with the west on a different conflictual footing.

Transparency
The occupation of Crimea has made everything the Kremlin does automatically malicious, so that between 2014 and 2019 the notion of what the Russian presence means has changed completely. Nowadays, everyone looks for Russian fingerprints everywhere. This means that, as in the recent Troika Dialog money laundering scandal, very old deals and transactions are reviewed as well. Russia’s communications with the rest of the world have come under a spotlight, they have been run through an x-ray machine. Things previously regarded as dubious but acceptable have suddenly gone toxic. The Kremlin has gone from being a partner, albeit a problematic one, to a keeper of rat holes and catacombs. Foreign intelligence agencies, financial monitoring bodies, and reporters are now busy, as they once were with the Islamic presence in Europe, segregating what used to be considered the harmless Russian presence as something automatically toxic. However, the hot zone, meaning the people and entities found to have connections with the Kremlin and its malignant plans, has been expanding continuously for the last five years. Clearly, this investigatory work has not reached the midway point. The exposure of the Kremlin will continue for a long time to come.

Sanctions and Consolidating the Elite
The main outcome of international sanctions has been that the truly powerful segment of the Putinist elite has been professionally recounted. Before Crimea was occupied, people also had notions of who was a member of Putin’s inner circle, and they traced the orbits of his clients. But these speculations were a matter for experts and were thus open to debate. Everything has now fallen into place, which is quite important symbolically. The key personal positions of the players who vigorously went on the hybrid warpath are not just represented in political consultant Yevgeny Minchenko’s periodic “Politburo” reports or some murky media rating of the “100 Most Influential Politicians in Russia,” in which actual stakeholders are confused with officials who have no access to real resources. All of them have now been posted on the world’s bulletin board.

The sanctions have also caused the Russian elite to consolidate. Putin’s dependence on the elite has increased, and the so-called collective Putin has stopped being a metaphor, becoming a specific list of people. Of course, Russia’s history is not predetermined: history consists of twists and turns. But the actual collective Putin’s moves are predetermined, of course. The occupation of Crimea made it impossible for it to change course. At each new fork in the road, the collective Putin must turn towards further escalation, while Putin himself can no longer pull the emergency brake.

Novorossiya
Through the post-Soviet period, Moscow relied on the basic notion that there were two Ukraines, left-bank Ukraine and right-bank Ukraine. It was simply regarded as a fact that, in particular, gave rise to various “cultural” and “humanitarian” undertakings, for example, the long involvement in Crimea of ex-Moscow mayor Yuri Luzhkov and his people.

The occupation of Crimea, however, produced a monstrous historical about-face. In order to pull off its seizure of Crimea, the Kremlin had to support the so-called Novorossiya campaign to divide Ukraine, which has now gone down in Eastern European history. There is no argument that would make these events look any less inglorious than the partition of Poland and the occupation of the Baltic countries. Whatever history holds in story for Crimea, the Kremlin’s outright malevolence towards a neighboring people in the twenty-first century has been recorded in big black letters. The Novorossiya campaign has meant that all elements of the Kremlin’s earlier policies towards Ukraine have inevitably been reexamined. In the light of latter events, they now appear to be only parts of a plan to invade Ukraine.

Intellectual Perversion
Crimea is the poison that for five years has been continuously injected in small doses into the entire system of education and culture in Russia, as well as the mundane ways the country argues about its national identity. The media constantly have to devise, spread, and discuss on talk shows different fallacious grounds for occupying Crimea. This lie has had to be incorporated into school textbooks, movie plots, the system of legal training for civil servants, and all the pores and crevices of public space.

Russian society cannot live with the thought it unjustly annexed part of another country, and it has an even harder time admitting that it has been complicit in the attempt to partition Ukraine.

It has thus been necessary to engage in nonstop production of the rhetorical glue that kept the textbook The History of the Soviet Communist Party from falling to shreds during the late-Soviet period, i.e., the solid, ornate lie that was meant to show the rightness of the party line despite the endless mistakes and violence.

This intellectual perversion itself turns into a huge machine that latter cannot be extracted from the state apparatus without damaging the entire system. The lie machine and the state come to be equated, meaning Crimea has been inflating like a bubble inside the system. It cannot be localized. Every day it dispatches cancer cells in all directions within the tissue of state and society.

What is next? The five post-Crimean years have been much to short a historic period to make generalizations. It is clear, however, that if Putin had not seized Crimea and then organized the Novorossiya campaign, it is scary to imagine the wonderful chances he and his gang of stakeholders would have had at increasing their influence unchecked in a world encumbered by Trumpism and a Europe weakened by Brexit. But now Putinism is not merely a cowboy, but a horse rustler.

Therefore, international crises and growing uncertainty do not work in favor of the Putinists, although they do fool themselves when it comes to uncertainty, trying every which way to manufacture it themselves. The Putin gang will never try and play nice again. Any way you slice it, Russia will ultimately have to show the world another gang, because the current gang has proven incapable of accommodating itself to Russia’s long-term place in the world.

Thanks to Sergey Abashin and Alexander Etkind for the heads-up. Translated by the Russian Reader

Russian Trade Union Blues

f98cd1
“Peace, Labor, Putin.” The Federation of Independent Trade Unions of Russia (FNPR) has 22.7 million members, who annually pay out almost 68 billion rubles to fund their trade union associations. (The FNPR has 122 such affiliated organizations nationwide). At best, only 140 million rubles make it to Moscow. The rest stays at the local level. Photo courtesy of vestnikburi.com

An RBC Investigative Report: How Russian Trade Unions Make Money 
Vyacheslav Kozlov
RBC
April 29, 2016

The Federation of Independent Trade Unions of Russia (FNPR) will celebrate May Day with a march in support of workers. As RBC has found out, the budget of the country’s largest trade union organization runs in the billions of rubles, much of it earned from real estate it freely inherited from the Soviet Union. 

In February 2016, Crimea’s most famous resort got a new owner. The Foros Spa, right down the road from the residence where Soviet President Mikhail Gorbachev was held captive during the 1991 coup attempt, was purchased for 1.4 billion rubles by the Federation of Trade Unions of Tatarstan.

Even their bosses in Moscow could not understand where a little-known noncommercial organization from Kazan had got its hands on that kind of money.

“When we saw the news, we didn’t even reprint it at first. We called and checked whether it was true,” an employee at the FNPR’s central office told RBC. (The Federation of Trade Unions of Tatarstan is an affiliated member of FNPR.)

The folks in Kazan reassured the trade union bosses in Moscow. The organization, which is mainly funded by membership dues paid by workers, really did not have that kind of money. It had acted as a middleman in the purchase of Foros, getting the money from major regional companies.

“There are such companies there: KamAZ, Tatneft, petrochemical plants [part of the TAIF GroupRBC],” said FNPR leader Mikhail Shmakov, bending his fingers back as he listed off the companies.

Shmakov spoke with RBC in his office on Leninsky Prospekt, 42, in Moscow. In keeping with Soviet tradition, the building is even nowadays called the Trade Unions Palace of Labor.

foros
Ukrainian billionaire Igor Kolomoisky, who owned the property before the peninsula was annexed by Russia, could have insisted on imposing sanctions on the buyers of the famous Crimean spa Foros. The scheme for buying Foros, involving the Tatarstan trade unions, made the deal less risky, sources told RBC. The view, above, is of the government dacha Zarya (Dawn), where the coup plotters held Mikhail Gorbachev in 1991. Courtesy of Mikhail Pavlishak/TASS

Shmakov could not conceal his satisfaction with the deal, calling it “brilliant.” RBC’s source in the FNPR executive committee and another source, close to the Tatarstan government, said the scheme for buying Foros, involving trade union bosses, was employed so the real buyer would not end up on the sanctions lists of the European Union and the US.

“To act as a middleman in such deals you have to have good connections with the authorities and big business. They have to consider you one of their own. You have to be a loyal organization,” a source close to the FNPR leadership explained to RBC.

The FNPR has long been cooperating with the authorities and business. Heir to the All-Union Central Council of Trade Unions (VTsSPS), the federation is proud of the fact it is the largest labor union in Russia, with 122 affiliates and over 20 million members.

How does the country’s largest trade union organization make its money?

Budget
Despite its federal scale, the FNPR is an extremely closed organization. It does not publish financial statements.

“This information is available only to members of the executive committee, and even then documents containing specific figures are not distributed to everyone. Some are given documents without any figures,” said an employee in the central office.

RBC has obtained a document describing the FNPR’s budget in terms of percentages. From this document it follows that the federation has only two sources of income, membership dues and “other income,” a phrase that mainly conceals revenue from commercial operations.

shmakov
FNPR chair Mikhail Shmakov (pictured above) has remained at the helm of the country’s largest trade union organization for all 25 years of its existence. Photo courtesy of Oleg Yakovlev/RBC

The document reveals that membership dues make up 70% of the FNPR’s revenues, while “other income” amounts to 30%.

Expenses are more complicated. 40.5% is spent on organizational and business operations, and 46.6%, on subsidizing FNPR institutions. Six percent goes to the so-called solidarity fund (for holding protests, paying wages of workers during downtime on the job, and making one-time payments to members involved in work-related accidents), while another 6.3% pays for dues in the international organizations of which the FNPR is a member, and 0.4% is spent on maintaing the auditing commission. In other words, nearly 90% of expenses go towards maintaining the organization itself.

Shmakov confirmed the income percentages in conversation with RBC. (He said nothing about expenses.) In 2016, the FNPR’s budget was 200 million rubles, according to Shmakov. An RBC source close to the Kremlin, who was well acquainted with the operations of the trade unions, confirmed that the FNPR’s annual budget was comparatively small.

“A few years ago, it did not exceed one million dollars,” he said.

The amount looks strange when you consider the number of people paying membership dues nationwide. The income of FNPR’s various affiliated trade unions, from factory locals to central committees, is incomparably greater than the parent organization’s budget.

Membership dues in most Russian trade unions are one percent of wages. If we take the official membership figures (according to Shmakov, the FNPR has around 20.7 million dues-paying members, plus another three to four million students and pensioners who do not pay dues) and the national average monthly wage (according to Rosstat, it was 33,900 rubles in February 2016), the dues paid by all FNPR-affilated trade unions should come to approximately 5.7 billion rubles monthly or 67.9 billion rubles a year.

But not all that money makes it to Moscow.

“The money is spread around the entire organization,” said an employee in the central office.

Locals keep from fifty to ninety-five percent of collected dues, explained our source. The rest is split among central and regional organizations.

How are these billions of rubles spent?

Expenditures
“Exempt trade unionists” is the Soviet-era legal term for trade union employees, from executives to secretaries, who are exempt from working directly at a particular enterprise. Their salaries are usually paid by the trade union itself. Trade union association executives surveyed by RBC confirmed that up to half of an organization’s budget can go to paying exempted workers. For example, the Pskov Federation of Trade Unions spent nearly 30 million rubles of its 2015 budget of 66 million rubles on the salaries and bonuses of over sixty exempt employees, says the federation’s head, Ulyana Mikhailova.

RBC asked the FNPR to provide it with the number of exempt employees nationwide but our request was turned down. Open sources mention the number of elected trade union officials. According to a 2011 FNPR executive committee decision, there were 13,500 such officials.

union membership
How Union Membership Has Declined. [According to the graph, union membership in Russia has declined from 65 million in 1992 (the first full year of independence) to 20.7 million in 2016. – TRR.] Sources: RBC interview with Mikhail Shmakov; decisions of the FNPR executive committee; white paper edited by Sergei Khramov and Mikhail Delyagin. Inserted text reads: “On average, 24% of the able-bodied population, i.e., approximately 17.2 million people, admit they are trade union members, according to an October 2008 poll conducted by the Russian Public Opinion Research Center (VTsIOM).” Courtesy RBC

But this is only a small part of the trade union army. According to figures for 2011, there were 191,000 trade union locals in Russia.

“At least one exempt worker emerges in a local with no less than three hundred members,” said Yuri Milovidov, director of Proftsentr, which assists trade union activists. “By my calculations, at least a quarter of these locals have at least one trade union worker. Some have several. There are fifty to seventy thousand such workers countrywide.”

A source in the FNPR executive committee said there were fewer trade union employees, around forty thousand. But even if we take this figure at face value, it turns out that the FNPR is one of the country’s major employers. (By way of comparison, AvtoVAZ, Russia’s largest auto manufacturer, employed around fifty thousand people as of late 2015.)

According to the FNPR employees surveyed by RBC, the average monthly salary among trade union employees is around 25,000 rubles, a little lower than the national average. The payroll bill for professional trade unionists across the country thus might be as much as one billion rubles a month.

Known as the Labor Palace of Trade Unions since Soviet times, FNPR's headquarters on Leninsky Prospekt in Moscow is of the most well-known pieces of real estate managed by the federation. Photo courtesy of Oleg Yakovlev/RBC
Known as the Trade Unions Palace of Labor since Soviet times, the FNPR’s headquarters on Leninsky Prospekt in Moscow is of the most well-known pieces of real estate managed by the federation. Photo courtesy of Oleg Yakovlev/RBC

The exact number of employees in the FNPR central office is unknown. The federation declined to answer this question when asked by RBC. A source in the central office said there were no more than 120 employees. Another source said their salary was small but higher than the national average: around 60,000 to 70,000 rubles a month.

Shmakov declined to disclose his salary.

28 Kilometers from Moscow
In the village of Chigasovo, in an elite neighborhood on the Rublyovskoye Highway in the Moscow suburbs, there is a house and plot of land (516.2 square meters and 1,798 square meters large, respectively) owned by a Viktor Shmakov, which is the exact same name as that of Mikhail Shmakov’s son. The FNPR chair’s son does business. According to SPARK, he is the director of Art Mix LLC, which organizes celebrations and events. As ads on the real estate and property rentals website CIAN.ru indicate, several five-hundred-square-meter cottages sited on fifteen-acre plots in Chigasovo are valued at around 36 million rubles. Mikhail Shmakov forwarded our questions about the house and land’s ownership to the proprietor, as listed in the Unified State Register of Real Estates Rights and Transactions (EGPR).

The Russian Federation of Spas
The FNPR acquired property amid the turmoil of the early 1990s, when familiar institutions of Soviet power crumbled. It was then that the young trade union leader Mikhail Shmakov, previously employed as a rocket engineer, managed to gain standing among Russian leaders and head the new organization, which immediately declared itself the VTsSPS’s legal successor. In legal terms, its property was transferred to the FNPR in 1992 through a special agreement. This property is now the source of the “other income,” mentioned above, the revenues the trade unions generate from commercial operations.

The exact number of real estate properties and land plots that were donated to the FNPR is contained in the appendices to the 1992 agreement, which the federation keeps secret. During the twenty-five years of its existence, the agreement has never been published. (The FNPR also refused to provide a copy to RBC.)

Milovidov, who worked for the FNPR for many years, claimed that 2,582 properties were transferred to the federation: 678 health spas, 131 hotels, 568 stadiums, and over 500 Young Pioneer camps.  It is unclear how many of these properties are still managed by the federation, but informally, sources there said the trade unions had lost around sixty percent of the property belonging to the VTsSPS when the Soviet Union collapsed.

According to Profkurort, the main trade union tourist agency, the trade unions now run exactly 374 resorts (health spas, boarding houses, vacation retreats, and children’s summer camps) in sixty-five regions from the Russian Far East to Kaliningrad.

The FNPR’s most profitable properties are in the southern Russia and Moscow. The trade unions particularly cherish their properties in the Caucasian Mineral Waters area. Their health spas account for over a quarter of so-called bed capacity among all the resorts in the area. Annually, they can take in 160,000 guests.

“Shmakov personally handles the Caucasian Mineral Waters. It’s his project,” RBC’s source in the federation’s central office explained.

To manage all its properties in the Caucasian Mineral Waters area, the federation founded Spa Management (Holding) LLC in 2005, which runs twenty-two health spas, including balneo baths and mud baths, mineral water drinking rooms, three boiler plant companies, a kindergarten, a library, a repair and construction company, and a car and truck pool. The federation’s share in the holding is nearly 85%, while over 15% belongs to the Stavropol Territory Association of Trade Unions, also affiliated with the FNPR. In 2015, the holding’s total revenue was 5.4 billion rubles, and its net profit was 294 millions rubles, Yulia Korogodova, Spa Management’s director, told RBC.

The FNPR’s other claim to fame are its hotels and health spas in Sochi. (According to RBC’s calculations, the FNPR and its subsidiaries own twenty-six buildings and seven lots there.) Sochi was the site of the FNPR’s biggest project in recent years, the reconstruction of three hotels for the Winter Olympics.

“Everyone was surprised that Shmakov had decided to get involved in the reconstruction of Sochi along with billionaires Vladimir Potanin and Oleg Deripaska, and other big businessmen. The authorities set them the harsh task of finishing in time for the Olympics at all costs, and this led to the fact that the poor FNPR was almost among the first to deliver its sites,” a source close to the federation’s central office told RBC.

metallurg
Steelworker Spa in Sochi is one of three properties reconstructed by the FNPR for the 2014 Sochi Winter Olympics. The federation borrowed two billion rubles from Vnesheconombank to finance the work. The trade unions are now attempting to restructure their debt. Photo courtesy of PhotoXPress

The trade unions had no money of their own, said our source, so they took out a loan from state-owned Vnesheconombank, which was the main source of funding for the Olympic projects, another source close to the FNPR told RBC. Shmakov confirmed that there was a loan. RBC found out from Vnesheconombank that the funds had been allocated to three joint-stock companies: Adler Spa, Steelworker Clinical Spa, and Trade Union Spas (Svetlana Spa). These companies all manage trade union properties in Sochi.

According to Shmakov, the loan amounted to 1.5 billion rubles. Spa Management, however, clarified that 2 billion rubles had been borrowed. The total investment in the Olympic hotels was 2.7 billion rubles, according to Spa Management, although they did not explain the source of the additional 700 million rubles. Shmakov said the FNPR was forced to put up Adler Spa as collateral for the loan. He confirmed that all revenues from the reconstructed hotels now have to go towards paying off the loan. In the current circumstances, however, the FNPR would rather not have to pay. According to sources at Vnesheconombank, the FNPR has sent them a request to restructure the loan.

Vnesheconombank’s money was used to rebuild the Svetlana Health Resort as the Sea Galaxy Hotel Congress & Spa and renovate the Steelworker Spa and one wing of the Adler Spa. There are 690 beds in the 18-story Sea Galaxy. In high season, a standard single room, according to the hotel’s price list, costs 5,300 rubles a night. In 2014, Profkurorty (Svetlana Spa) JSC, which manages the reconstructed hotel, recorded revenues of nearly 197.3 million rubles and a net profit of over 178.6 million rubles.

The ownership of trade union real estate is extremely confusing and opaque. Without engaging in commercial operations itself, the FNPR has founded dozens of companies to manage its properties nationwide.  (The Krasnodar Territory Trade Unions Council alone has registered 74 subsidiaries at various times.) However, as analysis shows, many of the spa companies in the Caucasian Mineral Waters areas and Kuban are closed organizations: over thirty of them are closed joint-stock companies, while the rest are private legal entities. From 2010 to 2014, these companies earned nearly 45 billion rubles.

From One Funeral to the Next
In late June 2015, the latest memorial service took place in the House of the Unions on Bolshaya Dmitrovka in Moscow, a building that belongs to the trade unions. People came to pay their last respects to former Russian Prime Minister Yevgeny Primakov. Even President Putin attended the ceremony. Almost three weeks later, Alexander Bulgakov, perennial director of the House of Unions, was arrested by police investigators right in his office, next door to the State Duma.

The Investigative Committee reported that Bulgakov had been detained as he was receiving 308,000 rubles from the director of another commercial entity, House of the Unions Refreshments LLC. Allegedly, Bulgakov had extorted the money, which was ten percent of the cost of the banquets and receptions catered by House of the Unions Refreshments. A year later, Bulgakov was sentenced to four years in prison.

house of unions
The House of the Unions, adjacent to the State Duma building in Moscow, has long been considered the country’s primary venue for paying last respects to famous politicians and public figures. Along with the Trade Unions Palace of Labor, it is the most popular architectural landmark belonging to the trade unions. Photo courtesy of Wikipedia

An RBC source, close to the FNPR, did not rule out a link between the two events, the memorial service for Primakov and Bulgakov’s arrest.

The service’s organizer, the Presidential Property Management Directorate, was, allegedly, displeased with the original fee Bulgakov had asked for holding the ceremony, said the source. (According to the state procurements site, the event’s final cost was 1.222 million rubles.) Complaints against Bulgakov were made to law enforcement authorities. RBC’s source in the FNPR’s central office confirmed he had heard this hypothesis.

Shmakov also acknowledged he had heard the story about dissatisfaction with the price of the memorial service, but he said it was not confirmed in the end. According to him, when negotiating the arrangements for Primakov’s service, Bulgakov had quoted the usual rate for such an event.

“It all started with the memorial service for Shvetsova [former State Duma deputy and former Moscow deputy mayor Ludmila Shvetsova — RBC]. It cost four million rubles. Moscow city hall paid this money, because that is how much such events cost. It was this price that he [Bulgakov] offered,” Shmakov said now.

Like most of the trade union properties in the capital, the House of the Unions belongs to the Moscow Federation of Trade Unions (MFP), which is part of the FNPR. The MFP also owns the Izmailovo Hotel Complex, Krylatskoye Velodrome, Znamensky Brothers Olympic Center, Trud Swimming Pool, Sokolniki and Peredelkino Spas, and Planernaya Olympic Center in Khimki.

Izmailovo-Hotel
The Izmailovo Commercial and Hotel Complex in Moscow is trade union property like, for example, the Sputnik Hotel on Leninsky Prospekt. In contrast to the Sputnik, however, which is owned directly by the FNPR, the Moscow Federation of Trade Unions holds the controlling stake in the Izmailovo complex. Photo courtesy of top10hm.net

The most profitable asset in Moscow is the Izmailovo Hotel Complex. The Moscow Trade Unions Property Fund owns 75% of the shares in Izmailovo Commercial and Hotel Complex JSC, which manages the Gamma, Beta, Delta, and Vega buildings, while the FNPR holds a seven-percent share. (The remaining shares are owned by members of the board of directors.)

In 2014, the total revenue generated by the hotels in the Izmailovo holding was over 3.25 billion rubles, with a net profit of over 240 million rubles. The MFP wholly owns the Alpha Commercial and Hotel Complex, which manages one more of the Izmailovo hotels, which is not part of eponymous joint-stock company. In 2014, Alpha’s gross profits were over 770 million rubles; its net profits, over 33 million rubles.

The FNPR does not own so much property directly in Moscow. It owns the Trade Unions Palace of Labor on Leninsky Prospekt, where the organization has its central office; the nearby Sputnik Hotel; a motorpool near Kaluzhskaya subway station; the building of the Academy of Labor and Social Relations, in western Moscow; and its own tailor’s shop and primary care clinic.

At Public Expense
People who began their careers in Soviet times know the terrifying sounding word sotsstrakh (“social insurance”). These were payments made by the Social Insurance Fund (FSS), which was managed by the trade unions until the early 2000s. Sotsstrakh paid for children’s trips to Young Pioneer summer camps, and for workers and pensioners to go to health spas. Then the FSS was taken over by the state, but the health spas were left to the trade unions, providing them with yet another way of making money.

“When the state lacks enough of its own health spas to provide treatment for everyone who has a legal right to it, it refers people to trade union spas,” explained Nikolai Murashko, director of the FNPR’s Spa Directorate.

Judging by public procurement records, government contracts are a serious source of revenue for the trade unions. Over a period of six years, from 2010 to 2016, FNPR’s Resort Holding implemented government contracts worth more than 4.8 billion rubles. During the same period, the spas owned by the Krasnodar Territory Trade Unions Council sold holiday packages worth a total of approximately four billion rubles.

The FNPR’s affiliated trade unions also make money on government contracts. The MFP and its member organizations, for example, were awarded government contracts worth more than 617 million rubles during the same six-year period. The Federation of Trade Unions of Saint Petersburg and Leningrad Region earned 242 million rubles, while the FNPR earned 32 million rubles itself.

What does the FNPR give the state in return?

A Necessary Organization
Shmakov had no doubt the federation fulfilled its main functions: protecting labor rights and controlling the propertied classes. For sixteen years, the government has convened a special tripartite commission for regulating social and labor relations. Government ministers, employers (e.g., the Russian Union of Industrialists and Entrepreneurs and Opora Russia), and trade unions officials sit at the same table. A Kremlin official, however, warned against exaggerating the commission’s role.

“The minutes from some of the meetings are long, but that is where it ends: in the minutes. The state conducts its own policy,” he said.

He was echoed by someone who had been involved in the meetings.

“A trade union that, for example, is capable of getting people onto the streets can have a real impact on social and economic policy. Because of this, when it comes to the FNPR’s bread-and-butter issues, pensions, for example, the federation finds it quite hard to pound its fist on the table and say things will be the way it says.”

Rosstat’s data suggests that while in the 1990s there were several hundred or even thousands of labor strikes recorded annually, the numbers slumped to several strikes a year in the 2000s. One of the causes was the tightening of procedures for striking, as described in the new Labor Code, which took effect in 2002.  One of the authors of the new Labor Code was current State Duma deputy speaker Andrei Isayev, formerly a secretary of the FNPR.

“The law on strikes is prohibitive,” said Boris Kravchenko, chair of the Confederation of Labor of Russia (KTR).

The KTR, like a number of other independent trade unions, such as the locals at AvtoVAZ and the Ford plant outside Petersburg, emerged in the late 2000s as a counterweight to the the FNPR, which cooperates with the authorities.

The Kremlin appreciates the fact that the FNPR does not go on strike and cooperates with the United Russia Party. [Isayev is a member of the party’s general council — RBC.]

“The FNPR are constructive critics. The goal of certain other organizations is to get people protesting on the streets. The FNPR has a different stance: solving a problem before people take to the streets,” says an official in the presidential administration.

* * *

In May 2011, the FNPR was one of several organizations that joined together to establish the Russian People’s Front (ONF), headed by Vladimir Putin. The ONF is now the only public organization in Russia comparable to the FNPR in terms of numbers of regional offices. And, like the FNPR, the ONF does not disclose its budget.

With additional reporting by Mikhail Rybin, Anastasia Napalkova, Maria Zholobova, and Yevgenia Glazova.

Translated by the Russian Reader. Thanks to Sean Guillory for the heads-up. NB. Because of the sheer quantity of figures given in rubles in this article, I have foregone my usual practice of converting them into euros for ease of comprehension. Current and historical currency rate conversion tables, however, are eminently accessible on the web, so knock yourselves out. TRR