Andrew Osborn








Russia, a Lumbering Giant, Asks: Care for Some Cut-Rate Logs? --- To Aid the Jobless, One Place Makes Timber As Cheap as Beer; Mr. Boiko Gets Out a Saw

The Wall Street Journal, 17th June 2009 11:25

By Andrew Osborn

SOSNOVKA, Russia -- Anatoly Boiko stands in front of a pile of neatly sawn planks. The wood, he says, is one of the oddest government handouts he's ever received.

To help the unemployed, Vologda, the cash-strapped region where Mr. Boiko lives, is giving residents something it has in abundance: lumber. The idea is that they'll build houses with it.

It's an effort to tap a home-ownership aspiration shared by millions of Russians still stuck in run-down Soviet-era apartments. "My dream is to be able to sit beneath my own apple trees, on my own property, in old age," Mr. Boiko says.

A few feet away, his half-built house is rising. The interior is empty, and the front door is brand new, yet already jams. Squat and akin to a ski chalet, it's an apt symbol for Russia's efforts to battle the financial crisis: A lot has been thrown at it, but it isn't quite working.

If Mr. Boiko has a dream, the Kremlin has a nightmare: That Russia's weak economy -- and the first decline in incomes in a decade -- will undermine the nation's de-facto one-party system.

"We're trying to reduce social tension," says Svetlana Polikova, a senior forestry official in Vologda, a region that's also home to Russia's answer to Santa Claus.

Even with the third-largest foreign-currency reserves in the world, Russia can't afford to toss around welfare aid like sugar plums. But "wood is something we have reserves of," says Yevgeny Trunov of Vologda's Forestry Department.

Cheap lumber is one of many programs dreamed up to aid Russia's growing ranks of unemployed. Joblessness hit a nine-year high of 7.7 million in April, or 10.2% of the working population.

With unemployment benefits capped at just under 5,000 rubles, or about $160, a month, the race is on to keep a lid on social unrest. A sign of the times: Last month, Prime Minister Vladimir Putin penned an article advising managers how best to fire people. In the article, Mr. Putin -- who is famed for his stern demeanor -- showed a softer side. "Sometimes from outside it seems like someone should simply be swept away with a broom," he wrote. "But I can assure you it's not always like this."

President Dmitry Medvedev set the tone earlier this year, ordering the government to consider letting people prospect for gold in Kolyma, a region famous for Stalin-era labor camps. One part of Siberia has promised free plots of land to anyone who is physically able to plant potatoes and has been directly affected by the downturn. Several governors have urged the jobless to renovate various things around town, including apartment stairwells.

The downturn has hit Vologda hard. Its main revenue earners -- steel, timber and chemicals -- are export-oriented, but global demand has tumbled. Government data indicate joblessness tripled in the past year.

Vologda's residents have had the chance to buy wood at a discount from the authorities for years. But when the crisis bit, the region's pro-Kremlin governor, Vyacheslav Pozgalyov, decided it was time to go further. For an average price of 200 rubles ($6.50), or what it costs to buy four beers in a local watering hole, he gave locals the chance to buy enough timber to build a house. The price can be even cheaper depending on variables such as the quality of the wood.

There's a catch: Beneficiaries really do have to build that house. They also have to fell the trees themselves.

More than 1,800 people have applied for wood. Officials say they've already signed hundreds of contracts with eager house builders.

Mr. Boiko was actually a lumberjack before losing his job. He was at the front of the line to take advantage of the cut-price timber.

A resident of the tiny village of Sosnovka, 10 miles from the town of Vologda, he faces tough times. He lost his apartment a while back in a messy divorce.

Today he shares a cramped apartment with his new girlfriend and her two teenage daughters. The apartment is hers, not his, and there's no hot water.

Before the financial crisis, Mr. Boiko, 36 years old, had a steady job with a forestry firm cutting roads through the region's thick forests and laying asphalt. He made about 20,000 rubles ($650) a month.

At the end of last year, his firm told him work was drying up. "I wasn't needed anymore," Mr. Boiko says.

From mid-January, his working day was cut to four hours and his salary chopped to a quarter of what he used to earn. In effect, the job is on hold. He says the authorities told his employer, and millions of others across Russia, not to fire workers like him so as not to add to official unemployment figures.

To make money, he takes on odd jobs such as repairing truck engines.

In February, he applied for some cheap timber. Official records show he bought 50 cubic meters of spruce for 23 rubles. Under the program, people are entitled to 200 cubic meters.

In March, Mr. Boiko and some friends went to a forested area designated by the authorities, and cut the wood.

They had to hurry because in spring and summer the ground turns swampy, making vehicle access impossible.

It took him three days to fell the trees. He then hauled the timber to a sawmill to be cut into planks.

Mr. Boiko says the house could take years to finish. That's not uncommon in Russia, where house building is often piecemeal as the pace of work tracks the owners' fluctuating financial fortunes.

Mr. Boiko sold some of the cheap timber he got to a local construction firm at a huge profit, making 96,000 rubles. Under the program, people are allowed to sell up to half the wood they receive.

His gratitude toward the local authorities is hard to discern. "It doesn't solve anything," he says of the lumber largess.

After taking a quick call on his cellphone, he jumps into an ancient tractor and drives off. To raise more cash, Mr. Boiko has also started sowing seed potatoes for neighbors.

"The authorities wanted to do something good," he growls, pointing to the planks. "But they should do more."