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Remote Russian region builds on billionaire's legacy

ANADYR, Russia (Reuters) - While Russia’s population declines, there’s a baby boom happening on its outer edge.

A man walks in the port with an abandoned barge in the background in the city of Anadyr in Chukotka, July 20, 2009. REUTERS/Robin Paxton

Lilia Omrytagina has just given birth to her second child, Ruslan, in the hospital that serves Chukotka’s biggest town. “We have belief in tomorrow,” the 28-year-old mother says.

Chukotka, nearer Alaska than Moscow, is a region revived by the billions of ex-governor Roman Abramovich. Salaries rose fivefold during his term, easing the shock to reindeer herders starved of subsidies after the collapse of the Soviet Union.

“I was elected during a period of crisis for Chukotka,” said Abramovich, who governed the region twice the size of Germany from late 2000 until July 2008. “I believe we were able to resolve many of the most important issues during my tenure.”

Now, the challenge for Chukotka is sustaining this growth by exploiting abundant reserves of fish, coal and precious metals.

Chukotka has become Russia’s biggest gold-producing region, supplying a fifth of national output, since Canadian miner Kinross Gold Corp launched its enormous Kupol mine in mid-2008.

In the capital, Anadyr, vivid colors lift apartment blocks out of the gloom that descends in winter. New roads have been laid and the hospital has been completely refurbished.

Marina Ostras, its deputy chief doctor, inspects ultrasound equipment made by U.S. firm General Electric as she makes her rounds. About 800 people are born in Chukotka every year, she says, while deaths number only around 500.

A United Nations report this year said Russia’s population could drop to 131 million by 2025 from about 142 million today, ravaged by alcohol, smoking and poor diet. “If it’s a problem in Russia, it’s the opposite here,” says Ostras.

The trend toward having more than one child is growing. “I have confidence I can provide for my children. Ten years ago, I wouldn’t have been so sure,” 23-year-old accountant Anastasia Khvoroschanskaya says while rocking her second baby, Alexander.

Day dawns on Anadyr nine hours before Moscow, the same time as in Tonga. The town’s population fell by 30 percent in the 15 years after the break-up of the Soviet Union, but people no longer want to leave.

“Abramovich allowed us to stand on our own feet again,” says Nail Gaifullin, 28, who works in the fish processing plant in the capital, Anadyr. This season’s catch was the best in years.

Chukotka’s isolation, so often a curse, has been its savior during the economic downturn. The crisis, an everyday word throughout Russia, is rarely heard here, where the monthly wage of 40,000 rubles ($1,285) is over twice the national average.

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“People are still spending. Our purchasing power hasn’t dropped,” says Ivan Biryukov, the 62-year-old deputy director of the Field of Wonders shopping center.

Dmitry Sorokin, 28, a ventilation system technician who spends his evenings skateboarding near the docks, said: “Before, the goods were in the shops, but nobody had cash to buy them.”

Fuel prices are settled annually to coincide with the summer navigation period, the only time warm enough to deliver supplies by sea. For the rest of the year, the 200 dock workers at Anadyr Sea Port spend their time repairing weather-beaten ships.

“We bring in coal, construction materials, food, everything that’s required for life in Chukotka,” says Viktor Tyukhty, the port’s general director.

Tyukhty has worked in the port for three decades. The only tangible effect of the financial crisis, he says, is a slowdown in deliveries of construction materials this year.

The construction industry’s share of the regional economy is forecast to drop below 2 percent this year from 10 percent in 2008, bad news for the Turkish builders who live in an area of Anadyr called ‘Little Istanbul’ by the locals.


For the fifty thousand people who live in Chukotka, half of them ethnic Russians, it may not always be easy to maintain this confidence. Abramovich, who spent about $2.5 billion when he was governor, admits this.

“There is still work to do,” he told Reuters, “but the region is in a substantially better position from which to address its ongoing challenges.”

Roman Kopin, briefly Abramovich’s deputy before becoming governor a year ago, says mining will contribute 37 percent to the regional economy this year, up from 22 percent in 2008.

The indigenous people who comprise nearly 30 percent of the population are also benefiting from new investment in fish farms and the commercial production of reindeer meat from their herds.

A Moscow-based design company has revamped the local museum, installing soft lighting, touch-screen displays and interactive games based on indigenous lifestyles.

A fledgling travel industry aims to attract more visitors. Less than a thousand tourists arrived last year, says Aivana Enmynkao, the 31-year-old manager of Northern Travel Company.

“We’re trying to build an image of Chukotka as a land of authentic people,” says Enmynkao, half-Eskimo, half-Chukcha.

“Some people come here because they don’t believe the media and they want to see for themselves if what has been published about Chukotka is true.”

Abramovich chooses not to publicly reveal his motivation for serving as governor. Some say it was a pact with then-president Vladimir Putin to return some of the riches he made from oil and aluminum; others say that he was testing the water in politics.

His company controls a small gold mine in Chukotka and Sibneft, the oil company he sold to state firm Gazprom in 2005, was active in the region.

But much of Abramovich’s investment in Chukotka was through charities and in rebuilding infrastructure, housing, education and healthcare.

“I will also continue to invest in Chukotka, in commercial projects that help create jobs and expand the tax base, as well as through my charitable foundations,” Abramovich, who is still chairman of the regional legislature in Chukotka, said.

For some, Chukotka’s revival might be too late. His clothes ripped and stained, Grigory Nikitievich falls repeatedly to the ground after leaving his last empty beer bottle at a bus stop.

“Why work? Let the young people work!” says Grigory, 73, who gives only his name and patronymic.

But here, there is help at hand. A teenage passer-by drags him to his feet and they walk, hand-in-hand, up the street home.

Editing by Megan Goldin