— Do you use a gas stove at home?

No, we have an electric one. However, we used gas cookers when I was in the army and served in the Primorye Region on the Chinese border. In the early 1990s, there were some supply problems. Disruptions occurred from time to time.

In Chechnya today, there have been no shortages for a long time. But there are problems with payments. Consumers owe Gazprom a hefty sum. Yet even here, some tried to cut corners: at the request of the republic’s prosecutor, a court in Grozny ruled that a nine-billion-ruble ($137-mln) debt should be written off at the stroke of a pen…

To begin with, no specific sum was mentioned in the court’s ruling. It’s sheer speculation. Moreover, there was no write-off. I should say, the whole affair looked like a reconnaissance-in-force operation, an attempt to see how society would react.

— The answer was No. The public outside Chechnya did not like the idea at all.

I’d say, yes. Large household utility debts do exist. This is true of the Chechen Republic and other regions that constitute the North Caucasus Federal District (NCFD). As at the end of 2018, the debt for natural gas stood at about 94 billion rubles ($1.4 bln). Regrettably, it keeps growing. As for wholesale purchases, the federal district’s debt is really stunning – 200 billion rubles ($3 bln). This is a mammoth sum. The issue is being addressed. The necessary instruments are available.

There is a special group for the fuel and energy complex under the Prime Minister Dmitry Medvedev-led government commission for the development of the North Caucasus Federal District. I’m in charge of this group, and I regularly report our progress to the government. A package of measures is being taken. First and foremost, all payments are being converted into non-cash form. About 75% of consumers have already done that.

This is extremely important. Whenever cash is involved, all sorts of shady schemes emerge more often than not. All sorts of middlemen must be eliminated.

And, of course, the problem of phoney bank accounts has to be addressed.

— What’s that?

It looks like this. There are official personal accounts both individuals or corporate entities use to make payments. Alongside them there may emerge twin, phoney bank accounts. According to the latter both individuals and organizations are tax evaders, though they may be even unaware of this. The phoney accounts are actively used by the shadow economy sector, which is still significantly present in the North Caucasus, but doesn’t pay a dime in federal taxes. There are bootleg brick factories, oil refineries, greenhouse farms and alcohol distilleries…

They consume gas illegally and write off the costs through these bogus accounts. This fraudulent scheme is polished to perfection.

— Electric power supply is surely vulnerable to the same type of fraud.

That’s true, the two situations are largely similar, but gas theft is still larger!

I’m aware of the Chechen leadership’s arguments and why it is trying to resolve the problem in such a cardinal way. However, this approach does not look correct to me. A dispute between economic entities is not something out of the ordinary, but still such matters are beyond the range of competences of a district court.

 

— Besides, the question that instantly arises is this: Why is somebody allowed to take certain liberties that others cannot?

Exactly! The country has seen a sort of a flash mob campaign. Other regions of Russia, too, have begun to demand that their retail gas debts should be written off, as well.

Let me say once again, the mechanisms of lifting tensions in this field have been created. There are local groups managing the fuel and energy complex, which the regional leaders are in charge of. That’s where the corresponding decisions are to be made. That’s the place where disputes are to be taken instead of litigation in district courts.

As far as Chechnya is concerned, one should bear in mind one very important circumstance. Grozny argues that the mammoth retail debt was accrued during the second military campaign. When the war was over, the Chechen authorities suddenly discovered that the retail consumers owe an awful lot for gas. Then there followed speculations about the statute of limitations, which had long expired.

In a word, all aspects of the problem must be taken into account. Hasty decisions should be avoided by all means.

— The recent arrest of Karachay-Cherkessia’s Senator Rauf Arashukov, followed by a series of detentions, is related to the gas industry, too. Investigators say the amount of the embezzlement has soared into the tens of billions.

Let us wait and see. I suspect that we’ve seen only the tip of the iceberg. The law enforcers are now looking into the situation. The investigation and trial will show what has remained out of sight so far.

— Why is the regional fuel and energy complex subordinate to the Ministry of North Caucasus Affairs?

To tell you the truth, I was surprised, too, when I saw the list of my responsibilities. Whatever the case, we have to do what we’ve been told.

The supply networks’ depreciation rate is a problem that is no less acute than the gas and electricity debts. I’m referring to gas carriers and the high-voltage power lines. Most supply lines were installed back in the Soviet era. Now their life cycle is about to expire.

The power distribution company Rosseti did a great job in Dagestan. The republic held a large-scale exercise, which brought together specialists from different parts of Russia. They pooled efforts and repaired power grids in the area of Makhachkala. This considerably improved the situation, which was extremely important, because the capital city and its surrounding areas are home to more than half of the republic’s population. About 40% of Dagestan’s power supply network is found there.

— And how much electricity is stolen?

The overall losses in Dagestan’s power supply networks currently stand at about 33%, including the loss of energy transmitted at long distances and the aging equipment-induced losses. Likely theft of electricity is counted, too.

Vladimir Vasiliev was dispatched to the region in order to restore order. I believe that he is coping with his duties well enough. Dagestan’s fuel and energy complex is being streamlined slowly but surely. Payments by households and utility companies are going up and losses are shrinking. Such positive trends can be observed not only in Dagestan, but in the whole region. However, perfect order is still a long way ahead.

The republics in the North Caucasus are the recipients of federal subsidies, but the money comes in different ways. There is budget-leveling, in other words, direct irrecoverable subsidies, and there are investments, most of them from the Ministry for the North Caucasus and the Corporation for the Development of the North Caucasus (CDNC). The ministry strictly controls the way the money is spent.

— What are the amounts of money you have to handle?

Each region in the North Caucasus gets about one and a half billion rubles for investment projects. In 2018, 4.86 billion rubles ($74 mln) came from the CDNC and approximately as much - 4.3 billion ($66 mln) - was disbursed last year for the development of health resorts in the North Caucasus Federal District. The funds for this year have been distributed and the projects selected. The last finishing touches are to be added.

It is important to ensure the money should be spent effectively, within the agreed deadlines and on decent purposes. I know that the Audit Chamber, the law enforcers and different watchdogs are somewhat critical of the CDNC and why. We are taking their comments into account and reorganize our work accordingly. The results will be soon in sight, I’m sure about that.

— How long did it take you to sort things out? You’d never had a chance to deal with North Caucasus affairs before, hadn’t you?

Never directly. I had contacts with partners in Transcaucasia. We cooperated on culture, interregional ties, and on economic and humanitarian affairs. The North Caucasus was invariably present within my range of attention. I was personally acquainted with many leaders of the NCFD’s constituent regions. It would be incorrect to say that I’m starting from scratch. This is not so.

President Vladimir Putin signed a decree on my appointment to the ministerial post on May 18 last year. Three months later, I already found my bearings in the social and economic processes underway in the North Caucasus.

I’m already deeply immersed in the local problems, but in fairness a 12-month cycle is to be completed before a newcomer can understand how the region works.

— Who broke the news that you might become a government minister?

On the eve of my appointment, Chief of the Kremlin staff, Anton Vaino, interviewed me. He told me the decision had been agreed on in a preliminary fashion with Vladimir Putin and Dmitry Medvedev. Right after that I was received by the prime minister, who at the end of the conversation wished me success in my future capacity. Soon after, I saw Dmitry Medvedev on television mention my name to the president alongside other members of his Cabinet.

— Refusal was not a possibility, I reckon?

Only in combination with a resignation letter… Honestly speaking, both interviews implied a clear answer to the question if I was prepared to take a federal minister’s position. I replied in the affirmative.

To tell you the truth, I never ever rejected my superiors’ proposals to try a new job. Never. Many assignments turned out not to be easy ones, and even hard to cope with, but I always accepted. This time, too, I told Vaino and Medvedev that I would do my best to live up to their expectations.

— When did you travel to the Caucasus for the first time?

When I was a boy. I was there on vacation with my parents. But that’s beside the point. Everything was different then – the whole world and myself as well.

— You are from the Far East, aren’t you?

I was born in the village of Magdagachi, in the Amur Region. It’s a railway station on the Trans-Siberian Line. The nearest city, Zeya, is 200 kilometers away. And Blagoveshchensk is a little less than 500 kilometers from it. My father, a graduate of the Khabarovsk Institute of Railway Engineers, was a track foreman. My mother was a student in the same institute, only two years younger. After they got married my elder sister, Valentina was born. My mother took maternity leave to never resume her college studies.

When I was two, my father was transferred to Chita. There I started going to school and completed an eight-year course. Both my parents are buried in that city. I still have some relatives and good old friends there. Naturally, I consider Transbaikalia to be my native soil. Oddly enough, I remember my life in Magdagachi amazingly well. There’s a common misconception that when people grow up, they forget everything that happened to them at the age of two to four. Not so in my case. I can still describe the room we lived in, our furniture and the coat my mother used to wear during the wintertime. I can recall the tiniest details of life in Magdagachi. A little kid’s memory can be very tenacious…

There’d been no railway employees in my family before my parents. My granddad on the mother’s side, Mikhail, was a Cossack from the Don River area. In 1919, a Cossack uprising erupted in the upper reaches of the Don. It was brutally suppressed, my great grandparents were arrested and my dad, who was seven at the time, was sent to an orphanage.

I’ve visited the Upper Don area twice to see site of the family farm, called Demidov, on the right bank of the river near the village of Kazanskaya. Before the revolution, it had a population of some 450 – all of the people there were Cossacks. Nothing is left of the family farm today – only a barren field and barely noticeable ruins of homes overgrown with wild grass. Farmer Sergei Kozlov, whose family has lived in this area since the late 1980s, respects the Cossack traditions and takes care of the mass grave of Red Army soldiers, who lost their lives during World War II, but let me say once again, there is not a slightest hint at what life was like there in the past.

Now back to my dad, Mikhail. I can say that until the end of his life he remained a steadfast Soviet patriot. In 1945, he was in the army fighting against the Japanese in northeastern China. He was firmly committed to the Communist ideals and a member of the Communist Party himself. He was repeatedly elected to the district governmental body, the Soviet. Even after retiring on a pension, he kept working in the local fire-fighting service.

And he never had a grudge against the authorities, though life had no mercy on him. In particular, in his childhood.

— And how did he feel about Stalin?

I’d say he felt esteem. At least I recall my dad was very upset when during the so-called “Khrushchev thaw” a large bas-relief of Stalin, which GULAG inmates had chiseled on a large rock near the Trans-Siberian Railway, was blown up…

— The so-called thaw, you say?

The way I see it, there was no thaw as such. Just a time-serving maneuver. And not for the better… Anyway, this is a topic for discussion on a different occasion.

— Then let’s talk more about your family.

On my mother’s side, I have peasants from the Odessa Region of Ukraine. My granddad Pyotr was a tractor driver. In 1944, he was drafted into the army only to be killed in action a month later. His grave was never found, so he was listed as missing in action. My grandmother, Ksenia, had three little children to support. After the war, she moved to the Rostov Region to get a job at the Krasnosulinsk Steel Mill, where she was paid a bonus for exposure to heat, and given free milk in compensation for occupational hazards. Naturally, she brought the milk home for the kids.

When she was 16, my mother joined a group of Young Communist League activists delegated to the Far East to build what is now the city of Komsomolsk-on-Amur. A year later, she was admitted to the Khabarovsk Institute of Railway Engineers, where she would meet my dad. I’ve already told you about our life in Magdagachi and the resettlement to Chita.