Far Eastern City Sees Kremlin as Cause of Its Troubles

Russian Pacific Fleet's tanker Izhora leaves the port of Vladivostok, Sunday, March 29, 2009. A unit of the Russian Pacific Fleet, the Admiral Panteleyev anti-submarine destroyer accompanied by a rescue tug and oil tankers including Izhora, left Vladivostok Sunday for the pirate infested waters of the Gulf of Aden to take part in ongoing anti-piracy operations, the Russian news agency RIA-Novosti reported. (AP Photo)
Russian Pacific Fleet's tanker Izhora leaves the port of Vladivostok, Sunday, March 29, 2009. A unit of the Russian Pacific Fleet, the Admiral Panteleyev anti-submarine destroyer accompanied by a rescue tug and oil tankers including Izhora, left Vladivostok Sunday for the pirate infested waters of the Gulf of Aden to take part in ongoing anti-piracy operations, the Russian news agency RIA-Novosti reported. (AP Photo) (AP)

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By Philip P. Pan
Washington Post Foreign Service
Tuesday, June 23, 2009

VLADIVOSTOK, Russia -- Last summer, the harbor in this city on Russia's Pacific coast was a symphony of commerce, with armies of dockworkers unloading ships as other vessels waited their turn in the glistening waters of Golden Horn Bay.

Secondhand Japanese cars, the most common cargo, filled the piers and packed nearby garages, where dealers did a brisk business moving them on to points across the former Soviet Union.

Now, six months into Russia's worst economic downturn in more than a decade, the cars are gone, many of the workers have lost their jobs, and the few ships left in the bay sit idle. But residents don't blame the global recession for the city's woes. They blame the Kremlin's efforts to fight the downturn.

In January, the government slapped a stiff tariff on imports of used cars in an attempt to help the nation's struggling automakers. The measure failed to stop sales of Russian-made cars from plunging, but it devastated the economy here and touched off protests against Prime Minister Vladimir Putin that appear to have rattled the Kremlin.

The decision to impose the tariff is an example of how the authoritarian system built by Putin has struggled to forge an effective response to the crisis. After eight years of growth, the economy is contracting and unemployment has soared. The Kremlin appears unsure what to do, as top officials offer contradictory forecasts and policies.

By intimidating organizers of the protests and controlling media coverage, the authorities have succeeded in preventing the demonstrations from getting out of hand. But there are signs the system is strained. At a critical moment, local officials here say, police commanders refused to use force against peaceful demonstrators.

The dispute over how to handle the protests reached the highest levels, with Putin favoring a tougher approach and his protege, President Dmitry Medvedev, backing a regional police official who resisted harsh measures, according to a person here who was briefed by a Kremlin insider and spoke on the condition of anonymity.

The rift between Putin and Medvedev, first reported by newsmagazines in Moscow, did not appear to damage their partnership. But it offered a glimmer of hope to activists and entrepreneurs trying to organize an opposition movement around an unlikely cause: the right to buy a used car from Japan.

Mom-and-Pop Importers

Almost all the cars in Vladivostok are Japanese hand-me-downs. They dominate roads across the Russian Far East and are easy to spot because, unlike most vehicles in Russia, they have the steering wheel on the right.

Sailors struggling to survive after the fall of the Soviet Union were the first to bring them in, and criminal groups controlled the business for much of the 1990s. But at the end of the decade, the market opened up. Almost anyone could travel to Japan, buy a used car and ship it back to be sold at a profit.

Konstantin Shatoba, deputy chairman of an association of local car importers, said the business offered a rarity in Russia: an open and level playing field. "In other businesses, you had to deal with a huge bureaucratic machine," he said. "But with the cars, you just had to go through customs."

The advent of the Internet made it even easier, he said, and by last year, Japanese used cars were being imported by an estimated 15,000 dealers, mostly small, family-run operations buying and selling as few as a dozen vehicles a year.


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