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29 Sep, 2009 08:33

Russia’s industrial powerhouse struggles through economic storm

Alongside untouched nature, a unique cultural ethnic mix and stunning scenery, the Republic of Bashkortostan boasts a wealth of mineral and agricultural resources, making it one of Russia's richest industrial regions.

Bashkortostan produces well over 20 million tons of oil every year, which accounts for about 17% of all the gasoline used by autos across Russia and about 15% of diesel fuel used by trucks and vans.

In the republic’ capital Ufa, State Petroleum Technological University chemistry professor Semyon Zlotsky says they have everything they need for educating students and training them within the industry so they can later effectively work in it.

Oil has made Bashkortostan one of the country's industrial heartlands – but it has also made it vulnerable to the vagaries of the world markets.

As such the region is struggling in the current economic crisis.

In the town of Salavat, as with the entire republic, one in five people works for the local petrochemical company.

During the boom years both the salary and workforce increased in the company. Now it is struggling to avoid layoffs.

“The crisis has sobered our outlook. The volatility in this market means that one month we are earning billions, and the next we are losing billions. To reduce risk we have to run our refineries at minimum capacity,” says Damir Shavaleev, Salavatnefteorgsintez General Director.

Agriculture has also been hit, as local authorities have slashed subsidies.

At Alekseevsky Farm they believe only the leanest will weather the crisis. The newest Western equipment has allowed the massive farm to undercut its competitors but it's hardly escaped unscathed itself.

“It's been difficult. Simply people's purchasing power has fallen, so we've had to drop our prices,” explains Oksana Lazareva, Alekseevsky Farm Chief Economist.

This has led to a cut in farming wages, which is already far behind those in other industries.

Pavel Murashkin is a chief designer of a mosaic workshop that creates luxury panels tailored to individual order – and like thousands of other companies with no government bailouts or subsidies, it's struggling to stay afloat.

“We're grinding our teeth and carrying on working. We are working for ourselves, and the stock room is one of our main clients now – that’s never happened before. The people see the displays, they ‘ooh’ and ‘aah’, but then leave,” says Pavel Murashkin, Artel Mosaics Chief Designer.

It is not all doom and gloom. Despite a more than 10% year-on-year fall in industrial output, Bashkortostan is far from the worst affected Russian region, even though recovery is not yet in sight.

And speaking about sight, the Russian Eye and Plastic Surgery Center located in the republic stands on the brink of the cutting edge of high technology and fairly unorthodox methods of eye surgery which lets its doctors operate on patients considered to be incurable, and isn’t limited to Russians. The clinic attracts people from all over the world to ‘the center of last hope’, says Professor Ernest Muldashev.