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Toni Schönfelder
A lifetime of innovation

The Business of Politics in Magadan

By John Round

Within hours of the Oct. 18 assassination of Magadan X, several competing theories as to the motive had already emerged. The first, suggested by the government, was that the killing was politically motivated and connected to Tsvetkovs attempts to regulate Magadans lucrative mining, fisheries, and alcohol industries. Others -- most notably State Duma Deputy Vladimir Butkeyev, a challenger in Magadans 2000 gubernatorial elections -- argued that the murder resulted from a clash over Tsvetkovs numerous business interests. Cryptically, Yabloko head Grigory Yavlinsky suggested that anyone outside the victims immediate family could potentially be a suspect.

To suggest that activities in Magadans political and business spheres can be easily separated, however, fails to recognize their deep interconnections. Tsvetkov -- who rose during the Soviet period to become the manager of one of the regions largest gold mines -- and his family and close associates were ideally positioned to gain control of the mine through one of post-Soviet Russias tainted privatization schemes in the early 1990s. Once he dominated a large share of the regions gold-extraction industry -- which was the only sector of the regional economy to survive the post-Soviet collapse -- Tsvetkov was in turn ideally positioned to pursue his political ambitions.

Running on populist rhetoric, Tsvetkov won Magadans first free elections in 1996. Despite his narrow margin of victory, Tsvetkovs achievement was considerable because the federal center and the regions political and academic elites backed incumbent Governor Viktor Mikhailov. Tsvetkov, however, countered the opposition through a simple but effective campaign strategy: He asked the electorate why, given the regions vast natural-resource wealth, they were among the poorest people in the Russian Federation. Magadan is one of Russias most marginalized regions, with unemployment, alcoholism, suicide and divorce rates among the highest in the country. Furthermore, due to the regions remoteness and extreme climate, food prices are up to three times the national average, putting even the most basic of goods out of reach of many citizens. In short, in 1996 the region was on the verge of social collapse, so a candidate implying that the regions wealth would be redistributed was sure to find support.

Upon gaining office, Tsvetkov moved quickly to marginalize his opponents. For example, Magadan State University, which supported Mikhailov, soon found itself starved of funding, and Tsvetkovs business associates quickly filled key administrative posts. Because the region is sparsely populated and its administration apparatus is one of the largest employers there, this process was relatively easy. Furthermore, in May 1999 Magadan was granted the status of a free economic zone, which made political control of the regions enterprises even easier as new layers of regulation were introduced.

Returning to his campaign strategy, Tsvetkov designated the region "our home" -- and argued that the regions wealth should benefit its people. Because the local population felt so cut off from the rest of the country, this rhetoric resonated strongly. However, it remains highly debatable whether any of the changes ushered in under the guise of "our home" actually benefited the population. Living standards remain painfully low to this day, and economic growth has proven difficult to achieve. Although the mining sector has been able to meet federally set production figures, the regions mines are becoming increasingly inefficient, and investment is desperately needed as the most easily extracted gold reserves are depleted.

For a time, it seemed this investment would come, in part, from a Canadian company called Pan American Silver, which paid $35 million in January 1998 for a license to mine in the region. However, it transpired that the license did not include the mines infrastructure, although the company was assured of success in a closed auction for it. Perhaps unsurprisingly, though, it later that year lost the auction by $1 to a Moscow-based firm. This meant the company was unable to begin mining before the September 2001 date required by the license. Thus, Pan American Silver has effectively lost its investment. The details of this are not essential here, but two clear outcomes do seem evident. First, the affair curtailed any interest in the region on the part of foreign investors; and second, it paradoxically cemented Tsvetkovs reputation as a defender of Magadan against outsiders trying to exploit its resources.

Tsvetkovs re-election in November 2000 was -- for all intents and purposes -- uncontested, and he was returned to power with more than 62 percent of the vote. What opposition there was argued that there needed to be a separation of political and business interests in the region, with one candidate describing the incumbent elite as "feudal lords." While only 42 percent of the electorate showed up to vote, suggesting fairly strong apathy, the winning margin was surprising given that living standards in the region had hardly budged during Tsvetkovs first term.

However, given the regions extremely narrow political base and the control Tsvetkov wielded over it, it is understandable why a credible challenger failed to emerge. Several potential candidates privately admitted that the risks inherent in challenging the entrenched incumbent elite made it inadvisable to launch a campaign. Furthermore, a common phrase heard among voters during this time was "better the devil you know ... ." Although living standards were not improving, people worried that if an "outsider" came in, the situation could get worse. This shows how deeply rooted the notion of "our home" has become among the people of Magadan.

Following his re-election, Tsvetkov presided over reforms that were mainly aimed at increasing state control of the fisheries and gold-mining sectors and the regions port. Contracts were signed with the English company Enothera Ltd. to further the development of Magadans oil industry. Any of these actions could potentially have created new enemies for Tsvetkov. Considering the above, it is clear Tsvetkovs death will create a considerable power vacuum in the region, particularly as there is no obvious successor.

With the federal government looking to rein in the regions, it would not be surprising if an outsider is placed in power in Magadan, one with much closer and more direct ties to the Kremlin than Tsvetkov enjoyed. Another open question is whether the Chukotka Autonomous Region will be reincorporated into Magadans sphere of influence. Chukotka Governor Roman Abramovich, an oligarch who is reportedly close to President Vladimir Putin and who was named to the Presidium of the State Council last month, has indicated he will step down as governor after just one term in office, and Tsvetkovs murder would seem to make a merger more likely.

The regions population would likely not oppose increased central control, despite the lingering allure of the "our home" motif. It should not be difficult for a new administration to convince the public that improving living standards depends on increased investment in the crucial mining and fisheries sectors. Given the present context, it might well be that only some form of informal "central administration" for the region can prevent Tsvetkovs murder from signaling the beginning of a new wave of regional crime and corruption.

John Round is a lecturer in geography at the University of Leicester. This comment originally appeared in RFE/RLs Newsline.

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