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19 August, 2019  ▪  Denys Kazanskyi

Industrial reset

How Estonia solves the problems of its “Donbas”

Restructuring of the coal industry is one of the most acute and painful problems that Ukraine has faced during its independence. The outdated and crisis industry, which was inherited from the USSR, became a source of serious economic problems for the young state in the 1990s. The large-scale shutdown of the mines, which the country was forced to resort to, made life in the coal province unbearable, at the same time creating a favorable environment for the development of various destructive, anti-state sentiments and thus laid the groundwork for the 2014 conflict. Until now, mining towns have remained cells of social tension.

The occupation of the Donbas by armed formations of Russian-controlled militants partially facilitated the task of Ukraine to eliminate the crisis. The problem mines and depressed towns turned out mostly to be in the territory of the ORDiLO. As the saying goes, it was a mixed blessing. However, there are some of the depressed mines, which are to be liquidated soon, in the controlled area - in Lysychansk, Toretsk, and also in Novovolynsk. And Ukraine will still have to solve this problem sooner or later.

The experience of other post-Soviet countries that also faced the need to restructure their coal industry after the collapse of socialism and transition to market economy can help our state in solving such a sensitive and complex issue. And they solved this problem more successfully than Ukraine. First of all, we are talking about our neighbors – the Poles, as well as Estonians, with whom the Ukrainians have recently lived as part of the united Soviet state. Few people associate this small country with heavy industry or mining work. However, the relevant industry in Estonia is still working. With the only difference that it is not coal that is mined there, but oil shale.

Slate burns worse than coal, costs less, but the industry is profitable, so Estonians continue to develop it. The deposits are concentrated mainly in the eastern part of the country, in the region of Ida-Virumaa, where the largest number of Russian-speaking population lives. Since 1945, the Soviet Union had actively industrialized this region due to the development of mineral resources. Therefore, the Russian-speaking population that still lives there was brought to Ida-Virumaa from other parts of the USSR.

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This circumstance, like the mining specifics of the region, makes Ida-Virumaa akin to the Ukrainian Donbas, albeit adjusted for the scale and national characteristics of both countries. The problems in the Estonian region were in many ways similar to those in the pre-war Donbas. In the early 1990s, separatist sentiments also ran high there, and the Russian-speaking population tried to organize the disconnection of the territory from Estonia. On July 6, 1993, the local authorities of the cities of Narva and Sillamae belonging to the Ida-Virumaa region held a referendum on the establishment of Russian territorial autonomy with the prospect of declaring independence or even reunification with Russia. The organizers said that the majority of the population supported such an initiative, but the government ignored the referendum and, as a result, the separatist movement got nowhere.

One of the factors that contributed to this was the rapid rise in the standard of living in Estonia. The mining regions had more problems, so they developed worse, but the government of the country made every effort to solve them and finally achieved certain success.

Oil shale is not very high in the world, the demand for it is insignificant, therefore Estonians mainly satisfy their domestic needs due to this fuel. They use it for power stations, and also in the chemical industry (for producing shale oil).

This energy source is burned predominantly within Estonia at the local power plants, which were originally designed to use this type of fuel. The largest oil shale stations in the world are now owned by the Eesti Energia concern and provide more than 90% of Estonia’s electricity. Thus, the government supports the demand for oil shale and provides sales for the enterprises that mine it.

However, a number of old and unprofitable mines Estonians still had to close as well as reduce staff at others that are still functioning.

As Lembit Kaljuvelle, the former head of the “EstonSlanets” company, said, at the end of the 1990s, about 8 thousand people worked at this enterprise, which included shale quarries and mines. And within several years more than 3 thousand people were sacked due to the reduction and liquidation of some mine adits. The state did not have money to pay unemployment benefits, but the company itself decided to allocate the money to redundant employees (1 million krones). They decided to send these funds to retrain the miners.

“Back then many were skeptical about such an initiative. The media wrote that it was impossible to retrain miners. But we still decided to complete that task. And we managed to employ the majority of those people. We formed commissions that were involved in transferring young workers to other mines that were still operating. We literally forced their management to hire new employees. We carefully analyzed the lists in order to minimize the negative effects of the cuts, for example, so as not to dismiss two people from the same family at once. Those who were less than five years until retirement the enterprise were able to allocate funds from its resources, and thus the problem of finding jobs for this category of people was solved simply by allowing them to retire on pension. Thus we managed to survive the most difficult period in the late 1990s and early 2000s. Now the situation has become much better; normal unemployment benefits have appeared, more workplaces have been created at new enterprises”, says Anneke Teylak, the head of the Ida-Virumaa department of the Unemployment Insurance Fund (similar to Ukrainian employment agencies).

The creation of workplaces was the main prerequisite for overcoming unemployment, the crisis and the economic decline of the mining region. Without the appearance of enterprises that could offer people new jobs to replace those that were liquidated, it would have been impossible to solve the problems of the region. Therefore, the Estonian authorities have begun to actively attract foreign investors in Ida-Virumaa.

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Over the past 10 years, several industrial parks have been established in the region, corporated in “Development of Industrial Parks in Ida-Virumaa”, which is engaged in attracting investors to problem cities. For example, in the mining Kohtla-Järve, the industrial Baltic Chemical Park was opened in 2018. And as its name implies, it will mainly specialize in the chemical industry, which is historically developed in the region. The volume of investments in this technopark by the EU and Estonia amounted to € 2.6 million.

Things are not bad in other cities too. Thus, in the Narva Industrial Park, a new line of the “Waldchnep” electric motor plant has recently opened. And in the park of the city of Johvi, an enterprise for the processing of used tires is being built.

As for the liquidated mines, on their base now they are creating a completely new tourism industry for the region. Old industrial sites in Estonia, as in other EU countries, are becoming a kind of attraction for visitors. In the city of Kohtla-Nõmme, the shale mine, closed in 2001, has been turned into a mining museum. Now tourists can descend into the adits and find out what the mining of shale in the past was, to see the mining equipment - underground combines, electric locomotives and minecarts.

At the same time, the mine-museum has created dozens of jobs, and over the year thousands of tourists visit it. Perhaps, this is not many, but it is better than nothing. And, of course, when you look at how it works in Estonia, you involuntarily think: why does Ukraine not at all use its unique industrial complex of the Soviet times, which came out of the production process, to attract tourists? After all, for this we have much more opportunities than little Estonia. And for a western tourist, any Soviet factory or mine is exotic.

 

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