mines have been closed in recent years<sup>and oneremainsinoperation.10</sup> At the same time, the coal industry continues to provide about<sup>30%ofAnzhero-Sudzhensk's budgetrevenues.</sup> Anzhero-Sudzhensk is home to three major<sup>employers outside thecoal industry: amachine-</sup> building factory, a pharmaceutical factory,<sup>andaglass factory.Anzhero-Sudzhenskalsohas</sup> some important infrastructure advantages:<sup>itislocatedon theTranssib railway,andthefiber</sup> optic cable running from Japan to Europe passes<sup>throughthe town.</sup> 32. Novoshakhtinsk is located in Rostov Oblast,<sup>inthe EasternDonbasscoalbasinon the border</sup> of the Ukrainian Donbass, with which<sup>itsharesacommonhistory,economicandgeological</sup> conditions and extremely limited prospects<sup>forthe coalindustry.Novoshakhtinskhas beenhard-</sup> hit by mine closure under the restructuring<sup>program,having seen theclosureof fiveminesin</sup> recent years and probably facing the prospect<sup>of moreclosureinthemonthstocome.Atthe</sup> same time, thanks to the particularly dynamic<sup>effortsof thecitygovernment,Novoshakhtinsk</sup> enjoys a good reputation for having<sup>establishedaneffectiveinfrastructureforthedevelopment</sup> and support of small business. The city was<sup>oneof themunicipalitiesselectedforparticipation</sup> in the European Union's TACIPS-MERIT<sup>program".</sup> 33. The significance of Anzhero-Sudzhensk<sup>andNovoshakhtinskasminingtownsthathave</sup> suffered from mine closure is illustrated<sup>bytheirstatusasrecipientsforsubsidiesforlocal</sup> development programs. Of the several<sup>dozen municipalities whichreceivedsubsidiesfromthe</sup> Federal budget to finance local development<sup>programs(thenumberof municipalitiesaverages</sup> around 65, varying from year to year<sup>dependingonthemineclosureprogram),bothcitieswere</sup> among the top five recipients in 1999,<sup>eachhavingreceivedontheorderof $1.2-1.3million.In</sup> 2000, Anzhero-Sudzhensk received about<sup>halftheamountofthepreviousyear,while</sup> Novoshakhtinsk again received a little<sup>over$1million,reflectingthegreater impactof mine</sup> closure in that town.

34. In mid-2002, coal sector restructuring<sup>inRussiaisatanadvancedstage.</sup> Some of the program's major goals have been achieved,<sup>suchastheprivatizationoftheindustryandthe</sup> elimination of the subsidization of<sup>loss-makingproduction,andthefundamentalperformance</sup> indicators of the industry itself in recent years<sup>havebeenencouraging. Withthe exceptionof one</sup> major company in Rostov Oblast, it is unlikely<sup>that morelayoffswillbe effectedinconnection</sup> with mine closure. These and other factors<sup>indicatethat2002 maybecomethefinalyearof</sup> formal implementation of coal sector restructuring<sup>inRussiaasithas beenknowninrecent</sup> years. At the same time, it is likely that<sup>the Governmentwillcontinueto financeeffortstomake</sup> good certain critical liabilities, such as environmental<sup>damage,social infrastructureand housing</sup> and relocation, although the level of financing<sup>andthe exact mechanismare at present unknown.</sup>

# **_Ukraine_**

35. Ukraine possesses a large and old coal<sup>industrythatisnowforthemost partuneconomic</sup> with a particularly poor productivity and<sup>safetyrecord.In1996,theGovernmentadopteda</sup>

> ° Data on unemployment underscore the severity<sup>of impact of mineclosure onAnzhero-Sudzhensk.In1998,some</sup> 83% of the officially registered unemployed in<sup>thecity wereformercoal industryworkers.</sup> i i TACIS-MERIT provided assistance to five<sup>mining municipalitiesin Russia to helpthem formulateand implement</sup> an integrated strategy for municipal development<sup>focusing onimproving the diversificationof thelocaleconomy,</sup> strengthening the private sector, and enhancing<sup>localbusiness development.</sup>

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