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16 Oct, 2010 07:01

Climbing out of crisis: Novgorod region makes ambitious plans

The ancient Russian city of Velikiy Novgorod boasts a rich cultural heritage, attracting thousands of tourists every year. However, in the region’s villages and towns, people are struggling to make ends meet.

For a hundred years, a plywood mill supplied most people in the town of Parfino with jobs. Its newest equipment was from the late 70s and when the economic crisis struck two years ago, the factory could not compete. It went bankrupt, and took the town down with it.

“Whole families worked here, and suddenly they lost their jobs,” said chief accountant at the plant Galina Goncharova. “Pensioners had to help their children and grandchildren buy enough food to eat. The town was devastated.”

Svetlana Danyuk has an unfinished degree in management. However, it is of no use in the town. To support her son, she had to get a job at the mill, only to lose it.

“Sitting at home without money, my relationship with my husband deteriorated, and my family fell apart. I blame the factory and this town,” she told RT.

Regional authorities provided a bailout and tax relief, and Svetlana returned to work. Out of 1600 employees before the crisis, only a third now work at the plant – which is still officially bankrupt.

Parfino's plywood mill has been saved, but continues to be on life support. Its products are still not turning a profit. In order to survive, it needs to modernize and that goes for the region as a whole.

The Novgorod region has a population of less than 700,000. It has been forced to look for creative ways to generate wealth.

So far, the authorities have adopted a three-pronged strategy aimed at boosting the region’s economy.

They want to generate more tourist revenue. The city of Velikiy Novgorod, 500 kilometers north-west of Moscow, is a UNESCO World Heritage site. However, to attract visitors to the ancient Slavic republic, the infrastructure needs to be developed.

“Same as everywhere else in Russia, we have to bring the infrastructure up to the same level as the attractions themselves,” said Novgorod mayor Yuri Bobvryshev.

Secondly, the authorities are aiming to increase foreign investment in the region.

“In previous times, a difficult relationship with the local administration has prevented a good investment climate from forming. Now, we have swung our doors open,” said vice governor of the region Aleksandr Gabitov.

The area is also focusing on developing industries that are competitive, not just in Russia, but abroad. The versatile medium-sized truck, Silant, produced at the city auto plant promises to be a breakthrough.

“Silant is several times cheaper than foreign equivalents,” said director general of the plant Andrey Melekhin. “Our production lines are the same as our competitors' but the staff costs are lower.”

However, these ambitious plans have yet to bring substantial cash into the government coffers.

According to student Ekaterina Suchilina, there are jobs in Velikiy Novgorod and there are reasons to be optimistic about the region’s future.

”I am on the last year of my studies and I am working already in my profession,” she said. ”Our town is developing and it is developing quite fast. There are some international companies being opened here, in Novgorod region, tourists keep coming here. A lot of people get to know our town so I am really optimistic about this.”