While defending its interests, the soviet coal industry helped the Soviet Union collapse
The summer of 1989 saw the most massive strike of coal miners in the Soviet Union. Launched on July 10 in Kuzbass – the Kuznetsk Coal Basin – it spread to the Donbas by July 19. That series of strikes tends to be interpreted as the harbinger of Ukraine’s independence. It was the pressure of the striking coal miners that forced the Verkhovna Rada of the Ukrainian SSR to pass a law on the republic’s economic autonomy. The strikes of the late 1980s made the miners’ movement look like anti-soviet independentists that joined efforts with Narodnyi Rukh, the People’s Movement, the key pro-independence dissident political force in Ukraine, to drive Ukraine towards independence. A closer look at those developments, however, reveals that the miners – with all due respect for their determination – were pushing for their own corporate interests first and foremost, while their cooperation with Ukraine’s national democratic forces was mostly an opportunistic union. That episode of Ukraine’s history is both interesting and useful today. The miners’ strikes between the 1980s and 1990s provide a clear example of how a powerful corporation or an equivalent commercial entity can become a subject of politics and affect the future of states.
The workers’ aristocracy
Whoever wants to understand the miners’ strikes of the late 1980s should understand what soviet coal mining industry was like. It had been in a pretty dire position during Stalin’s industrialization. A huge number of mines stood ruined after the revolutionary turmoil, while specialists were either eliminated or fled the country. A lack of workforce was a universal phenomenon. To some extent, the Soviet Union compensated for its technological backwardness with equipment and experts imported from other countries for the money received from plundering the country and its population. More generally, the workforce was recruited through forced labor mobilization or delivery of labor camp prisoners under convoy. The conditions of life and work in the Donbas could only be attractive for those who had no choice or other place to go to. Therefore, the Soviet Union’s coal industry looked very sad right after World War II with slightly over 600,000 miners across the entire country. Once the post-war reconstruction was completed, however, their status began to change rapidly. The country needed more and more coal and material incentives gradually replaced terrorist-style forced labor in mines.
By the 1950s, 1.5 million people were working in the coal industry. The change was not about numbers alone. Firstly, it was a strategic industry since the soviet industry and energy sector relied heavily on coal. Secondly, the coal corporation had its powerful lobby in Moscow that could deliver ultimatums, threaten and blackmail virtually anyone including secretaries general. Thirdly, the coal industry controlled huge symbolic capital which mattered a lot in the superideological totalitarian state: soviet propaganda portrayed miners as the salt of the soviet land, the heroes of labor and the glorious builders of Communism. Therefore, any attacks against them were simply dangerous. Fourthly, the coal industry was a well-spread network of communities with virtually military-style discipline and hierarchy. The coal communities included mine staff, as well as the whole towns and villages whose life was built and based around the operation of mines. As a result, coal miners had turned into an equivalent of aristocracy of the workers’ class by the late 1970s. In addition to high salaries, they received significant privileges, including a 30-hour long workweek, benefits, bonuses and more.
By contrast to the industry, the economy was following an opposite trend. According to the Ministry of Coal Industry, 78% of coal enterprises were operating with losses in the Soviet Union by 1958. More than half of them reported up to 30% of losses. When the glory and wealth of coal miners peaked in 1978, the industry was no longer making any profits whatsoever. 1980 finished with the soviet coal industry’s loss of 1.3bn rubles while 1985 saw a loss of 1.8bn.
This was not unexpected. The first source of the losses was the nature: a century of active coal mining began to exhaust the deposits of the Donetsk Basin and the profits it could generate. For example, over 40% of the Donbas coal was extracted in the mid-1970s from the layers of up to 1.2 meters high – this ruled out efficient mechanization of the process and stifled the productivity of enterprises. Soviet leadership contributed to the decline with its chaotic policies of authorizing the construction of poorly productive mines and feeding them with subsidies. Finally, the entire world was switching to the era of oil and gas while the coal industry was becoming a thing of the past.
The 1989 strike was caused by the declining qualify of life for the miners which they found especially painful. On one hand, they had grown accustomed to their well-being. On the other hand, their labor was indeed difficult, harmful and dangerous. The rallies were not chaotic: the decision to strike was taken by the leadership of mines, the strikers were let in the square based on their work number tags, while the failure to attend the strike qualified as a missed day of work. “By contrast to Lviv where we were surrounded by a noisy and uncontrolled crowd, Donetsk met us with organized thousand-strong rows of protesting miners sitting at the square in front of the party oblast committee and banging their helmets against the asphalt,” wrote Mykola Holushko, a KGB officer from Mikhail Gorbachev’s entourage. Gorbachev had good reasons to rush to Donetsk: 500,000 miners stopped working in the Donbas, Lviv and Volyn basins simultaneously. The miners did not encourage all of the frustrated public to protest. Quite on the contrary, they were determined to stay away from the “civilians” since they saw the strike as a personal or corporate conflict with those in power from day one.
What the miners did lack was political experience. The strike that swallowed mines from Lviv to Vorkuta did not have a common list of demands. As a result, the miners customized them to fit their own needs in every given region. The majority of their demands were about better funding, living and working conditions, longer vacations, earlier retirement etc. A miners’ strike committee of Vorkuta also demanded abolition of the provision on the leading and defining role of the Communist Party in the soviet Constitution,elimination of privileges for the nomenklaturaand real elections of the Soviet Union Supreme Council leader. The Donbas did not support the political section of the demands. “I don’t see why we should share this political extremism today,” the Regional Union of Strike Committees claimed.
The strike resulted in the Soviet Union Council of Ministers’ Resolution No 608 dated August 3, 1989, that promised many things for the miners, including economic independence of mines and a license to export the coal extracted over the norm. The state pledged to make the mines profitable and improve the environment in the mining regions. In a word, the government pledged to build communism for the workers of a given industry. The euphoria from this victory did not last: the government shelved Resolution 608 as soon as the strikers calmed down.
When they realized that Moscow was not going to meet its promises, the miners tried to renew their struggle in the summer of 1990. This time, the miners’ corporation decided to openly declare itself as a political entity. “The first convention of miners underlines full independence of the workers’ organizations in the coal and mining industries from any political entities. Our aspiration towards independence determines our approach to the Communist Party of the Soviet Union,” said the resolution of the First All-Union Miners’ Convention held in Donetsk on June 11-15, 1990. The convention blamed the dire position of the miners on the Communist Party of the Soviet Union, demanding the withdrawal of party comissars from their enterprises and nationalization of the party’s property. Seeking to create a stronger impression, the miners held a one-day strike on July 11, 1990, where 300,000 miners stopped work at 100 mines. They blocked the work of party comissars at enterprises and shut down their offices. This was clearly a challenge for the Communist Party of the Soviet Union which was right in the middle of its 28th convention. Moscow ignored all this.
In October 1990, the miners gathered for the Second Convention where they were going to officially break off from the official trade unions controlled by the state. But then-Coal Minister Mykhailo Shchadov (the miners had held a no-confidence vote on him back in 1989) managed to spark a clash between the Donbas and Kuzbass convention members. This internal conflict was used to reject their demands. Regardless, it was already too late to speak to Moscow: the USSR was on its last legs.
Once Ukrainian miners realized that negotiations with Moscow made no sense in the given political circumstances, they launched talks with Kyiv. In March 1991, Donetsk hosted the first miners’ rally where traditional socio-economic demands were supplemented with requirements to make the Declaration of State Independence for Ukraine a constitutional document, to dismiss the Communist Party of Ukraine and the Communist Party of the Soviet Union, to hold re-election of the Ukrainian SSR’s Verkhovna Rada etc. The Ukrainian SSR’s leadership knew how fragile it was and pledged to some unrealistic commitments, including doubling salaries for all workers of the coal industry. The miners liked Kyiv’s willingness to make concessions, as well as the prospect of putting a state border between themselves and the cheap Kuzbas coal and Russian gas, thereby turning themselves into monopoly energy providers of Ukraine. This sparked Stakhanov-like enthusiasm for undermining the soviet order and pushed the miners to establish contacts with Ukraine’s national democratic forces. Vasyl Kuibida, the People’s Movement leader, recalled later that it was the Donbas miners from the Dimitrov Mine that nominated Viacheslav Chornovil to become president of Ukraine.
This union was superficial: the miners supported national democrats but preserved their corporate autonomy. “We will be working with the new democratic parties and help you take power from the Communist Party of the Soviet Union. But we are not joining you under your flags,” was the position of the All-Ukrainian Union of Strike Committees that joined the Independent Democratic Ukraine coalition established to coordinate resistance to GKChP, the State Committee on the State of Emergency. The Donbas unanimously supported Ukraine’s independence at the 1991 referendum. But the miners continued to stand for their corporate interests. On June 7, 1993, the most massive strike in the history of Ukraine started: more than 200 out of 250 mines across the country stopped working. The reason was a hike in food prices, so the miners demanded an increase in wages but added political claims to that. In 1993, they demanded a referendum of no-confidence for the president and the Verkhovna Rada, as well as economic autonomy for the Donbas. This was hardly a chaotic strike of average workers given its scale and the fact that it started from Zasiadko Mine which had not joined any strike since 1989.
In a strange coincidence, four days after the strike began, Yukhym Zviahilsky, the former director of the mine who had moved to the office of Donetsk mayor and then became First Vice Premier of Ukraine shortly before the strike – heading the negotiations with the government of Leonid Kuchma – got concessions in the interest of directors of these mines. The demand of average miners were largely ignored. A week later the strike ended thanks to the efforts of mine directors. As to the political demands, they were cunningly sold down the river. On June 17, the Verkhovna Rada scheduled a consultation referendum on no-confidence for the president and parliament. Then, both referenda were cancelled – allegedly, for the lack of resources.
The differences between the industry leaders and average miners had long been brewing and manifested themselves back in the 1980s. In June 1993, they led to the final split and conflict whereby mine directors ultimately subordinated the masses of miners and converted the protest into their political capital. When the collapse of their life quality moderated the ambitions of the miners while Berkut’s batons and unrestrained freedom of action for mine directors made them obedient, the miners’ movement was ultimately intstrumentalized by the former bosses of the coal corporation that rapidly turned into the owners of enterprises and oligarchs.
Today, miners are no longer seen as a huge explosive force. The legends of 30 years back faded in the spring of 2014 when the Donbas miners who largely did not support separatism, did nothing to disrupt the riots in the Donbas and prevent the aggravation of their own positions. After most of the coal-rich parts of the Donbas ended up on the territory not controlled by Kyiv, the social weight of miners shrank to a minimum. However, it’s not the number that matters but the persistent trend towards monopolization of the coal industry. According to the Association for the Protection of Energy Consumers’ Rights led by Andriy Herus, Rinat Akhmetov’s DTEK extracts 85% of coal in Ukraine and controls 60% of coal imports. It owns 80% of thermal power plants in Ukraine (other indicators for this company are no less threatening). This allows DTEK’s Akhmetov to wage wars against the Ukrainian government by lobbying his own business interests, not even the interests of the industry. This campaign could be led behind closed doors of the top cabinets. Instead, miners are traditionally used as its main tool.
The most recent appearance of coal miners took place in April 2015 as several thousand miners crowded the government district in Kyiv. The protesters demanded the dismissal of Volodymyr Demchyshyn, the Minister of Energy and Coal Industry, higher prices for coal and thermal power plant-produced energy, and state subsidies for the coal industry. At the same time, a convention of coal miners was taking place where the delegates of miners’ communities condemned the work of Volodymyr Demchyshyn and were threatening to launch an energy disaster. Journalists and eyewitnesses reported that most of the miners were from DTEK enterprises. The main effort to hold the convention came from DTEK people as well. One does not need much insight to draw conclusions here: DTEK was actively campaigning for an increase in coal prices from UAH 1,100 to 1,500 per t in the spring of 2015. It needed the government to authorize such a price hike. The government blamed DTEK for monopolizing the industry and charging too much as the real production cost of a ton of coal from DTEK mines was allegedly UAH 800-900. Naturally, the company wanted to compensate for the losses it faced with the occupation of the Donbas, so “the miners on a hunger strike” turned into the leverage of socio-political pressure against the government. They could have been hungry indeed as their mines were already delaying their wages.
As a result, Ukraine found itself in a pathological situation where individual companies manipulated their weight in the energy sector to launch an open war against the government and used their staff as a battering ram. The revenues they receive under the likes of the infamous Rotterdam+ coal supply formula hardly ever reach the average workers. In other words, the coal is getting more expensive while the position of the miners is getting worse.
At first sight, ineffective management of the industry is the reason for this – especially the failure to eliminate corruption schemes. However, even full eradication of corruption in the coal industry will only delay the crisis into which it has been tumbling over the past half a century. Once Ukraine’s energy sector modernizes itself sooner or later, it will no longer need even the mines that remain in operation today. How dramatic that final is depends on how effectively the government will manage to support the workers whose arduous and hazardous work will no longer be needed by the country. The main problem is that the threat of big influential companies capable of shaping the entire industries – from energy and transportation to agriculture, banking and more – will not vanish. There is no guarantee that the DTEK miners banging their helmets against the asphalt in Kyiv in 2015 will not be replaced by the staff of other companies whose emotions and interests will be similarly manipulated by other bosses and managers. At some historical moments, such corporate wars can influence not just a given government but the existence of the state. And that influence will not necessarily be aimed at preserving Ukrainian sovereignty.
During the 28th Economic Forum in Krynica-Zdrój (Poland) The Ukrainian Week discussed with the President of the Center for the Study of New Generation Warfare about the situation in the Black Sea and the historical and modern aspects of the confrontation between the USA and Russia.