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. Last Updated: 07/27/2016

Municipal Services in 'Crisis,' Say Experts

The country's municipally owned businesses, property and housing are in critical condition and need dramatic reorganization, said participants of a German government-sponsored conference on the issue, which ended Wednesday.

More than 130 representatives from the private and public sectors of Germany and Russia attended the Moscow region conference, one of 27 projects in the German government's $11.8 million Transform initiative to assist Russia's transition to capitalism.

One of the main reasons city-run services across the country are falling apart is the lack of participation by private firms, participants from both countries said.

Russia faces many of the same problems as Germany, which is still struggling to fully integrate the once-communist East Germany into its economy.

Diter Ohnesorge, former mayor of the East German city of Noishtadt-Wainshtrasse, recommended his city's successful system for running basic services such as water, sewage and garbage. City-owned enterprises provide the services, but the commercial part is run privately, he said.

"It took 30 to 40 years in Germany to adapt municipal structures to the modern world," said Heinz-Herman Runde, director of a municipal company in the German city of Nojss. "Municipal organizations must work on economic, not social principles," he said.

Claus Kiliman, a professor and ex-mayor of Rostok, said that "public-private partnerships are the future of municipal economies in Russia."

Despite financial, organizational and legal complexities, however, there are success stories of Russian cities making great progress at keeping the life-support systems of society functioning — profitably.

"After this conference I understand that in Russia there are many very progressive ideas that could be accepted in Germany," said Claus Brummer, an adviser to the German Embassy and coordinator of Transform.

Alexei Mikhalin, deputy head of the administration for the Moscow region town of Dzerzhinsky, said his town decided six years ago to turn over its housing-insurance system to a private company and, as a result, it became much more efficient. While average payments were comparable with those in Moscow at the time, citizens of Dzerzhinsky now pay only about a quarter of what those in Moscow pay, he said.

Irina Chernova, an expert with the Russian-German Tacis project "Municipal Management" and former deputy head of administration in the Moscow region town of Serpukhov, said city governments should set up an "observation council" to run municipal activities and develop long-term strategies. "Every company has a board of directors that monitors its activities; the same should be done in municipal units," she said.

A former Smolensk official, Valery Khrapov, said that city has set up a better alternative to using state-owned Sberbank to collect bill payments. Smolensk's Unified Cash Center accepts payments for all gas, water, heat and electricity bills and is more efficient and "comfortable" than Sberbank, he said.