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. Last Updated: 07/27/2016

Norilsk Residents Want a New Home

The residents of Norilsk want their city moved.

Inhabitants of the Arctic enclave that grew up around metals giant Norilsk Nickel have overwhelmingly opted to pledge allegiance to the Taimyr autonomous district, rather than Krasnoyarsk, Norilsk's City Council said Thursday.

In a survey officially approved by the council, 99 percent of the nearly 106,000 respondents said Norilsk, which lies within the Taimyr region, should be exclusively subject to Taimyr law. Although Taimyr is also part of the Krasnoyarsk territory, it has an autonomous governor and budget.

The survey was initiated by the Taimyr Duma, as any moves it makes will affect all Norilsk residents, said Nikolai Bova, head of the City Council's survey commission.

Norilsk is physically located in Taimyr, which has a population of 300,000. But its taxes go to Krasnoyarsk, which has a population of 2.5 million.

"Who wants to pay taxes to a region with 2.5 million people when you could pay taxes to little Taimyr and live, if not like Kuwait, then like an oil city such as Khanty-Mansiisk?" said Natalya Zubarevich, a professor of geo-economics at Moscow State University.

Krasnoyarsk authorities were not impressed.

"Such a question violates the laws of the Russian Federation, the country's Constitution and the charter of the Krasnoyarsk territory," Krasnoyarsk Governor Alexander Lebed said in a statement. The Norilsk prosecutor's office agreed with the governor, filing a protest with the City Council, which rejected it.

"They are trying to move the issue of tax distribution from the realm of negotiations ... into the streets. They are trying to disorient public opinion," Lebed's spokesman, Gennady Klimik, said by telephone. Regarding the results of the survey, he remarked dryly: "We didn't even see such unanimity in Soviet times."

The survey is the latest step in a conflict that has been brewing for most of the past decade and intensified in the past year, as newly elected governor of Taimyr Alexander Khloponin and Lebed have fought for cash cow Norilsk Nickel's taxes. The two regions each have a lot at stake: The metals giant's payments accounted for about 68 percent of Krasnoyarsk's budget and more than half of Taimyr's.

However, as metals prices have fallen, so have Norilsk Nickel's revenues -- as well as the amount it says it will pay in taxes this year.

Lebed, in a speech to the territory in February, called on the city to share the burden.

Krasnoyarsk, expecting a budget deficit in 2002, rejected the city of Norilsk's 6.6 billion ruble ($212 million) budget, offering it 2.2 billion rubles and promises of more if the federal government accepts Krasnoyarsk's petition for subsidies.

The city of Norilsk's choice seems clear. On one hand, Krasnoyarsk is struggling under debt payments and wage arrears, which have only grown while the territory is still trying to pass its 2002 budget. On the other hand, Taimyr has a population of 300,000, counting Norilsk's 230,000 residents.

The conflict could be resolved through negotiations, which have been stalled since the beginning of the year, or in the Constitutional Court, where the survey could be submitted as an argument, Bova said.

Under the Constitution, border changes can be made only with the agreement of both regions involved, and Krasnoyarsk is opposed.

"Of course, it is always better to reach an agreement," said Maria Sapuntsova, Khloponin's spokeswoman. "But the issue should be resolved this year. It can't drag on indefinitely."

Norilsk Nickel said it is disinterested in the dispute.

"There is no difference for Norilsk Nickel which administrative territory it is located in and at which address it pays taxes. The altercation over the city of Norilsk's administrative status is below a company of our standing," Norilsk Nickel general director Mikhail Prokhorov said by e-mail.

Nonetheless, in 2000 Norilsk Nickel registered its head company in Dudinka, the capital of the Taimyr region, shifting a large portion of its assets and cash flows from Krasnoyarsk.

"Norilsk planned to gradually reduce tax payments to the Krasnoyarsk territory," said Kaha Kiknavelidze, an analyst at Troika Dialog. "By registering the company in Dudinka, it also gained more bargaining power."

Norilsk Nickel raised Krasnoyarsk's ire by making a recent natural resources tax payment to the Taimyr budget. "They did it consciously. It was hostile," Klimik said.

"It is possible the campaign is being intensified in time for the Krasnoyarsk gubernatorial elections this spring and is aimed against Lebed," said Alexei Titkov, a regional and political analyst at the Carnegie Center.

"In the past two years, corporate interference has become commonplace. During elections in the neighboring Yevenkia autonomous district, the local officials faded into the shadows and hid while oil majors LUKoil and Sibneft fought for the governor's seat and decided who was dominant in the region," Titkov said. "In sparsely populated northern regions with powerful companies, this has become an normal thing, a normal practice."