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. Last Updated: 07/27/2016

Sakhalin's Troubled Path

Professor Valentin Fyodorov, one of Russia's most controversial regional politicians, has been replaced as governor of the Far Eastern island of Sakhalin, a post which he had held since April 1990.


On April 8, Boris Yeltsin recalled Fyodorov to Moscow. This followed a virulent campaign by the local soviet, or council, which almost hysterically hated the island's governor.


Fyodorov courted the attention of the world's media with his bold plan to create a model free-market economy on Sakhalin.


As early as 1990, he wanted to take the island out of the centrally planned system. Sakhalin was to be a self-sufficient tax haven, an offshore beacon for foreign investment that would take nothing from Moscow and use the income from its own natural resources.


His plans were largely thwarted. The Sakhalin Free Economic Zone was approved by the Russian Parliament in June 1990, but Moscow ministries suffocated it under a mass of bureaucracy.


Locally he made enemies among leaders of the large collective farms and state enterprises. They felt neglected by Fyodorov's encouragement of private enterprise and agriculture, and he took the blame for economic troubles, which more sympathetic judges might have blamed on the situation in Russia as whole.


The industrial lobby is strongly represented in the Sakhalin soviet, where Fyodorov had few friends. Fyodorov tried to dissolve the soviet. The soviet tried to remove the governor. The constitutional deadlock closely resembled the drama between Yeltsin and parliament.


The local press had only abuse for the former governor. The Free Sakhalin newspaper declared: "Fyodorov's feverish imitation of activity concealed for a while his inability to manage the affairs of the region".


Few Sakhalinites have a good word for the reformist former governor. Yuzhno-Sakhalin, the island's capital, is an eerily conservative place. Lenin's black statue casts a cold shadow over the central square.


The central theater is named after Anton Chekhov, who in 1890 said he had discovered hell on Sakhalin. Modern life on Sakhalin may not be hell, but it is certainly hard: 80 percent of homes do not have bathrooms. The local bathhouses have been privatized and many people can not afford a bath. They do not care much for free enterprise.


One of Fyodorov's main achievements was to encourage private agriculture. He persuaded the military to give up land and he redistributed it among 1, 200 private farmers. He also gave every family on Sakhalin a small plot.


Still, even this reform is little appreciated in Sakhalin, A local journalist asked me, "What is the point of giving people land if you don't give them tractors and money? " He seemed unable to understand that farmers must learn to stand on their own two feet.


On my last day in Sakhalin, a man in military medals came up to me on the street. He wagged his finger and said, "Foreigners must give us credits to build new houses".


Foreign companies are presented with a long wish list of roads airports, schools and hospitals, which they are supposed to build in order to win a contract, even before production begins: "We don't know how to build hospitals" complained one foreign oil and gas man, "But we could build them a fine liquified gas plant and they could spend the money from the taxes and royalties themselves".


Fyodorov must take some of the blame for the delays and wrangles with oil and gas companies. In early 1992 he challenged the result of an international tender for gas and oil fields on the continental shelf off Sakhalin. Moscow had decided to award the tender to an international consortium consisting of McDermot, Marathon, and Mitsui, which was later joined by Shell and Mitsubishi.


Fyodorov backed a rival consortium, but the root of his demand was that the winners of the tender should virtually rebuild the island's entire social structure and economy.


Today, the consortium continues to negotiate its deal, about a year behind schedule. If the deal comes through, it will bring $10 billion of investment to the region. Much of that money will filter through into the island's economy. Building a gas pipeline across the island will create 10, 000 jobs. Many of the benefits of foreign investment are indirect. Even Fyodorov, a man who preached self sufficiency, did not seem to fully understand that.


Hugh Fraser is a freelance journalist based in Khabarovsk.