Petrozavodsk (29.09.1998 - Juhani Artto) The Republic of Karelia is part of north-western Russia. For many Finns Karelia is a highly emotional issue because a large part of the region belonged to Finland until 1944. At that time 400,000 Finns lost their homes and their property in Karelia and were resettled in various provinces of post-war Finland.

Another natural reason for the considerable interest shown by Finland in Karelia is the long common border. The Fenno-Russian border is 1269 kilometres long. In the north, Finland borders the Murmansk region and in the south, the Leningrad region surrounding St. Petersburg. The Republic of Karelia lies between these two regions and has a 700 kilometre border with Finland.

780.000 people currently live in the Republic of Karelia. The principal ethnic groups are Russians (74 %), Karelians (11 %), Belorussians (7 %), Ukrainians (3 %) and Finns (3 %). The ethnic Karelians are linguistically and ethnically closely related to the Finns.

Before the 1990s, official statistics recorded that Karelian levels of production and living standards were slightly above the Soviet averages. The basis of wealth lay in the forest and engineering industries.

In the last few years, the Russian economic crisis has hit the Republic of Karelia especially hard. Most of the large industrial companies have either shut down or drastically reduced their operations. Although the official unemployment rate is 6,8 per cent of a labour force of 270,000 people, the real rate is much worse, says Gennadi Salaponov, President of the Karelian central trade union.

Unpaid salaries and wages are as serious a problem in Karelia as elsewhere in Russia. Even the leading export industry combine, the Kondoposhk pulp and newsprint mill, has not been able to pay its 6,000 employees on time.

In Salaponov's opinion, the Russian government made a big mistake in not favouring the key industries which could have financed the State budget. "In Karelia the forest industry is the key sector, but even now it is in trouble."

"Heavy taxation is an unbearable burden for many companies. They are unable to pay wages and salaries, as the authorities have frozen company accounts because of unpaid taxes", Salaponov explains.

Recently the Swedish forest industry company AssiDomän relinquished its ownership in the Segeza pulp and paper combine blaming the authorities for not being able to negotiate properly concerning vital issues. Segeza normally has 6,000 employees, but due to conflicts between the company and the authorities its production has been interrupted for long periods.

Positive news for Karelia has been the newly won right to export directly without interference from Moscow. In 1995 export values rose to USD 600 million, which was three times higher than in the early 1990s. Since this record year exports have fallen slightly. One reason for this was vocal criticism by environmental groups. According to these groups, logging partly takes place in forests which should be protected.

In 1997 the major export sectors were pulp and paper (29 %), timber and wood (25 %), aluminium (14 %), iron pellets (13 %) and machinery (12 %). Finland is the largest market for Karelian products. Half of the Republic's foreign trade is with Finland, Germany and United Kingdom.

Foreign trade plays an important role in Karelia's economy since one third of total production is exported. Its future, however, is threatened by a continuously low level of investment. The forest industry even suffers from raw material shortages, although the annual growth of the Karelian forests far exceed the annual logging. The contradiction is explained by the weak liquidity of companies.

The economic crisis has seriously reduced the incomes of most people living in the Republic of Karelia. Individual smallholdings have become the main providers of daily rations. The old and the sick who are dependant on public social programmes have been worst hit by the crisis.

In early September 1998 industrial workers earned around USD 100-120 a month but the near future prospects were dim and unpredictable. The strong downward trend in the value of the rouble greatly influences the prices of basic consumer goods which to a great extent are imported.

Since skilled Finnish workers are among the top ten, or at least the top twenty earners in the world, hardly anywhere in the world is the income gap between two neighbouring nations as great as that which exists on the two sides of the Fenno-Russian border.

For the trade union movement, these rapid political, economic and social changes have been difficult to manage. In the new situation the experiences gained in the Soviet Era have been of little help. In the past, trade union organisations had no independence from the ruling élite.

However, the high rate of organisation originating from the Soviet past and the Karelian tradition of "doing things together", provides a favourable starting point for strengthening the trade union movement. 160,000 people are currently trade union members, meaning a 60 per cent organising rate. This is less than the 70 per cent rate of two years ago.

The trade union organisations have had to reduce their own staff considerably. As little as four years ago the central trade union employed 64 people. It now has a staff of 12.

Trade unions, employees and the government in the Republic of Karelia have made a framework agreement on working conditions. The more concrete terms are fixed in sectoral collective agreements made at federal level in Moscow.

Finnish trade union organisations have reacted quickly to the new needs and prospects for co-operation with the Karelians. Before the 1990s cross-border union contacts were mainly restricted to official meetings with union leaders in Moscow. In the 1990s these contacts have become more versatile.

In the largest common project in Karelia, the Finnish trade union movement is subsidising courses for union leaders and activists. The project, which is co-financed by the European Union, has attracted hundreds of activists. In the first round of the programme in 1997, 80 union leaders and activists participated in training in Finland. Since then these courses have taken place in Karelia. The project is due to continue until 1999.

In early September, soon after the beginning of the latest crisis, the mood of activists was at a low point. "The most difficult thing is that we don't know what to expect", says the president of Karelia's forest industry workers' union Anatoli Sedov. "We don't know what the State wants from us, as politicians devote their energies to in-fighting and forget the needs of the industrial sector", he analyses.