MUST READ--Russia's New Problem: Poverty

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Created: 22.03.2005 09:36 MSK (GMT +3), Updated: 09:36 MSK

The nationalist-leaning Rodina — or Motherland — party organized a rally on Saturday in central Moscow’s Tverskaya Street. Just the night before, party activists dressed in red and yellow patrolled the streets handing out flyers asking if Russians were afraid for their children’s future and inviting passersby to join.

Although the demonstration was really a protest against unpopular government policies like a new welfare reform replacing benefits with monthly payments and a new housing bill that would end free apartment privatization, dress-up artists, clowns — and even bears — joined in the march alongside religious Orthodox Christians bearing icons and banners....

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http://english.pravda.ru/main/18/87/347 ... efits.html

Russian pensioners block traffic protesting against elimination of state benefits
01/12/2005 11:49
Thousands of Russian elderly people went out in the streets demanding the return of Soviet benefits

The project of the Russian government to abolish the Soviet system of state benefits and replace them with financial support has not evoked any enthusiastic feelings in the Russian population. The people did not believe the fairy tale. Moreover, the government's reform to eliminate state benefits has become a shock for the Russian society. The first announcement of the reform exerted a rather negative influence on the rating of the Russian government.

Residents of five Russian cities went out in the streets yesterday to protest against the reform. Needless to say that the meetings were not authorized. In Samara, 80 pensioners blocked traffic in the city center. The chairman of the Internal Affairs Department in Samara, Valery Trofimov, stated that the pensioners did not have a permission to carry out the action. When spokespeople for the city authorities came to protesters and clarified all points of organizing such meetings, they all went to their homes. The police did not have to use force; the action lasted only for an hour.

The meeting of protest in the Moscow region gathered a lot more people, though. Pensioners organized their action of protest on a major highway in the morning of January 10th. About 300 people came to the meeting, news agencies report. The pensioners blocked traffic on the busy highway for three hours. The police drove the indignant pensioners off the highway and tried to explain the situation to them. The pensioners decided to finish their action and went home.

A source in the law-enforcement agencies told RIA Novosti yesterday that the authorities filed a criminal case against the people, who came to participate in the meeting of protest in the Moscow region. Law-enforcement officers believed that the pensioners' actions could be categorized as an administrative breach. Reports were drawn up against 12 pensioners.

About 30 elderly people blocked the tram traffic in Russia's Belgorod region on Monday protesting against the elimination of the public transportation benefit for pensioners.

Most massive actions of protest took place in the cities of Ufa (the Bashkiria republic) and Almetyevsk (the Tatarstan republic). About 4,000 residents went into the streets of Ufa asking to raise compensations, retrieve the right to use the public transport free of charge and take urgent measures to stop the "catastrophic growth of prices" on bread, petrol and other vital consumer goods. Five thousand people took part in the meeting of protest in the city of Almetyevsk. The city residents gathered on the central square asking the government to retrieve the free urban transport for pensioners and cancel the 100-percent payment for public utilities. The traffic in the city was blocked during the meeting. The police and spokespeople for local authorities persuaded the elderly people to go home.

Yegor Belous

Read the original in Russian: http://www.pravda.ru/politics/2005/1/1/ ... SLGOT.html (Translated by: Dmitry Sudakov)

Pravda.Ru

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http://www.cdi.org/russia/246-13.cfm

CDI Russia Weekly #246 Contents Printer-Friendly Version

#13
Majority of Russian army officers live in poverty: official

MOSCOW, Feb 27 (AFP) - More than half of all officers in Russia's underfunded military live in poverty, a member of the upper house of parliament said Thursday."Last year's wage increase for soldiers unfortunately did not raise their standard of living, because of a large increase in costs," said Valery Manilov, adding that 56 percent of officers lived in poverty.

Last year, 43 percent of officers lived under the poverty line, defined by a monthly wage of at 59 dollars (55 euros), Manilov said, quoted by Russia's Interfax-AVN news agency.

Nearly 370,000 Russian soldiers live without assigned housing, said Manilov, a former first deputy chief of general staff.

Russia's armed forces, some 1.1 million strong, have been plagued by financial problems since the collapse of the Soviet Union in 1991.

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http://www.cdi.org/russia/johnson/6532-6.cfm

Nov. 4, 2002: #6531 #6532
#6
Novaya Gazeta
November 2, 2002
THE RUSSIAN MILITARY GETS A NEW OBJECTIVE
The Russian Armed Forces are crushed by continued poverty
Author: Vladimir Urban
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

PRESIDENT PUTIN HAS PUBLICLY SET OUT THE NEW OBJECTIVE FOR THE RUSSIAN ARMED FORCES: TO FIGHT TERRORISM AT THE GLOBAL LEVEL. HOWEVER, HE DIDN'T MENTION WHERE THE MONEY TO DO THIS WOULD COME FROM. IN FACT, THE MILITARY IS ALREADY DESPERATELY SHORT OF MONEY FOR WAGES.

This week, President and Supreme Commander-in-Chief Vladimir Putin publicly set out a new objective for the Russian Armed Forces: to fight terrorism at the global level. The General Staff doesn't seem to have a clear idea of what it should present to Putin as a strategic plan in this connection. Now the top brass in the General Staff are at a loss, because the new tasks set by the supreme commander-in-chief greatly differ from the current strategy of the Russian Armed Forces, focused on fighting external enemies. And the new objective will definitely require new spending.

Russia's budget is scarcely able to cope with the conflict in Chechnya. However, the government has adopted a reliable method of saving money: it simply doesn't give its soldiers the money it has promised them. Although "combat pay" was cut considerably last year, the government is still unable to pay servicemen what is due to them. According to our sources in the Main Financial-Economic Department of the Defense Ministry, the government owes current and former servicemen of the 58th Army alone 20.3 billion rubles for the first and second campaigns in Chechnya. Clearly, maintenance of the Armed Forces costs a lot; but officers and contract servicemen still want to get the money they have earned.

We obtained a copy of a curious document signed by Deputy Defense Minister Lubov Kudelina. According to this, servicemen of the 58th Army will not see their combat pay for a long time, and even if some of them should manage to hammer out their money in some way, this money will be paid at the expense of other items of the military budget. The document says: "Since the 2002 military budget does not include funding to cover outstanding combat pay (at triple the original rate) or wages (at double the original rate) carried over from previous years, and also due to complying with court decisions, the Defense Ministry, operating in tight financial circumstances, is forced to seek this money from the federal treasury at the expense of other spending items, including current wage payments and less funding for military hardware." In other words, if the 20.3 billion rubles in outstanding wages are repaid, regiments will be completely out of money for a long time. Ms. Kudelina concludes that "since the number of court orders for repayment of the wage debts is increasing, it is impossible to make all the payments on schedule and in full."

Essentially, military personnel are being told to live in the trenches for delayed wages. If the government continues to use this method extensively, its funds may apparently suffice for more than the battle against guerrillas in Chechnya. Russia will also be able to take the "fire and the sword" to the foreign "ideological and financial" protectors of terrorists. However, it is not clear that the Armed Forces themselves are prepared to tolerate continued poverty. The numerous lawsuits filed by military personnel are a great reproach to the government.

The troops are seriously worn out by the war in the Caucasus; therefore, they need some basic respect from the state. Officers are certain that it will take the nation several decades to resolve the conflict in Chechnya. So far, the Kremlin is relying exclusively on the force of arms. Therefore, even those detachments that have been released from the war by Chief of the General Staff Anatoly Kvashnin will inevitably be returned to the Caucasus. An experiment in transition to contract service is underway in the 104th parachute airborne regiment of the 76th Pskov division; but in March, servicemen of this regiment will be sent to Chechnya, although only 519 volunteers have consented to participate in the experiment so far. However, reserves of the General Staff seem to have dwindled so much that it has decided to assign a detachment that has not yet acquired a stable structure to fight guerrillas in Chechnya.

We hope the paratroopers will pass this test. However, there is also military hardware that has not been upgraded for many years. According to a special regulation issued by the government, the Pskov division is to get 13 million rubles for re-equipping its testing grounds and training facilities in order that contract soldiers can learn to fight a war. However, the Finance Ministry has not allocated any money for this, although it was Putin who signed the plan for the experiment in Pskov. Thus, the appeals to reconsider the tasks of the Armed Forces are made against a backdrop of a situation where the Defense Ministry is unable to provide its soldiers with what it needs to give them.

(Translated by Kirill Frolov)

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Nov. 4, 2002: #6531 #6532

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http://www.mosnews.com/news/2005/04/28/ ... test.shtml

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Russian War Veteran Rejects Anniversary Medal in Protest at Poverty
Created: 28.04.2005 12:51 MSK (GMT +3), Updated: 12:51 MSK

MosNews

A war veteran refused to accept a World War II anniversary award protesting the poverty plaguing the nation for whose sake he and his comrades fought to defeat the Nazis.

World War II veteran Nikolai Protasov, a resident of the Altai region in Siberia, has refused to accept a 60th war anniversary medal in protest at the poverty in his native region and the entire country.

Protasov, 80, has voiced indignation over the poverty and despair plaguing people around him, especially doctors and teachers in rural areas, the Interfax news agency reports.

Protasov lives alone on what he calls quite a decent pension. The veteran says that in the times when he and his brothers-in-arms were fighting in the war they dreamt of a different future for this country. “This is not what we fought for. We dreamt of how rich life would be after the war,” the veteran says.

The local military authority regularly phones Protasov to find out whether he has changed his mind about accepting the award, but he remains adamant.

As Russia is preparing for grand celebrations of the 60th anniversary of its victory over Nazi Germany in World War II, critics have voiced concerns over the government’s failure to address war veterans’ problems.

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http://www.gateway2russia.com/st/art_231925.php

27 April 2004 11:48
Who`s Poor in Russia?

Natalya Arkhangelskaya

Poverty in Russia is a popular topic. It turned from a local issue in the early 1990s into a global problem and an obstacle to economic development. We should not drag our feet in addressing the problem of poverty. But who should be considered poor? The government has developed new criteria, a minimum basket of consumer goods, but on the day-to-day level other guidelines often work better.
According to experts, we can get more or less accurate information about someone’s income, including when that person is poor, by looking at their spending. Logically, spending has to equal income. This equation can be calculated on the macro level, or in other words for the entire country. As a result, we see that Russians’ spending exceeds their declared official income by a third, and this figure fluctuates insignificantly from year to year. In principle, people in all countries are inclined to underreport their income, but not to such a dramatic extent.
The official government poverty criteria, on the other hand, are severely behind the times. The infamous basket of consumer goods is calculated according to completely anachronistic Soviet patterns. You have to agree: one coat and two dresses every five years and 450 grams of bratwurst per capita per year are absurd.
The authorities have announced that they admit their mistakes and are ready to roll up their sleeves and battle poverty. They have promised to raise wages, pensions, and welfare payments. But it will not be possible to change the standard of living without a developed civil society and without reforming education and health care and increasing low-income Russians’ access to these services.

To understand more about the problem of poverty in Russia, Expert spoke with Lilia Ovcharova, Director of Academic Programs at the Independent Institute for Social Policy and of the Laboratory for Standards of Living at the Russian Academy of Sciences’ Institute for Socioeconomic Issues.

Poverty is relative

• It’s impossible to give a simple answer to the question, “Who is poor in Russia?” Depending on how the answer will be used, researchers apply different criteria and methods and accordingly get different results. International comparisons provoke the most discussion. There is no single way to determine poverty in the US, Russia, Nigeria, and Sweden: poverty is a relative concept. But there is a single tool to define extreme impoverishment. You determine the portion of the population living on a dollar a day, then for various countries like Russia, which has a cold climate, various coefficients are applied. As a result according to these methods, a poor person in Russia is someone living on 25 rubles a day. These people make up about 7% of the population. There are no people this poor in America and Western Europe, if we are talking about legal citizens. But in Eastern Europe they make up 3-4%, and in China 18%.
• But seven percent is really low. You often hear estimates that more than twenty percent of Russians live below the poverty line.
• That is the result of other methods. When the president, for example, talks about poverty, he usually uses the figure 22%, or thirty million people. Other methods give other results. But let’s deal first with the official poverty line. It is based on a minimum basket of consumer goods that cost 2143 rubles late last year.
• How do those who end up with figures of 7-10% calculate the number of poor Russians?
• Again, by different methods. We face something similar, for instance, when we estimate the size of the middle class. We use three criteria: income and property, education, and self-perception. It turned out that those people who have practically none of the above are in fact the extremely destitute. They make up about 10% of the population. These are the people who need targeted assistance, or to put it more simply, food subsidies. In America, the government simply gives people $100 in food stamps. We need something similar, as the main priority is to improve their nutrition. In the West, however, officials hand out assistance very carefully, so that people do not fall into the so-called poverty trap, when they can make more from welfare transfers than from working.

A group portrait of poverty

• One of the specific features of Russian poverty is that half of the Russian poor work. In Europe, where those earning half of the average income are considered low-income, the poor (12-13%) are unemployed.
• What about pensioners?
• Around the world, there are traditionally poor groups: large families with many children, single-parent households, and the unemployed. Russia’s main risk groups are approximately the same, though families with children face the biggest risk of falling in to poverty. Especially if a family has two or three children. Regarding pensioners, they are not included in the category of the poor, and the poverty of Russian pensioners, especially those with jobs, is to a significant extent a myth. They do have one serious problem: they frequently cannot get necessary medical treatment. Another specific feature of the Russian situation is that in the West, the majority of the poor are concentrated in large cities, while in Russia they live mostly in villages and small towns. This is where the well-off live in Europe.
• What would a collective portrait of the thirty million poor Russians look like?
• The poorest group is children ages seven to fourteen. Next come people living in villages and towns in depressed regions, regardless of profession. The poor are often government employees, like teachers, doctors, and low-level clerks. The poorest people by profession are the service staff at hospitals and clinics. The situation in education is a little more equal. The average age of a poor Russian is impossible to determine, but in general, the poor are older than those who are better off. Gender is also a factor, but its significance is gradually disappearing. Also, importantly, the most serious factor determining poverty is education level.

Rich man, poor man

• The rich in Russia have fourteen times the income of the poor. This figure is based on data from the State Statistics Committee, and it is fairly stable. But I think that we actually have greater inequality, as the SSC’s sample does not include major purchases made by the wealthy. There are also other reasons to doubt this figure. The Gini coefficient, the coefficient of inequality, is calculated by taking the poorest 10% and putting them in one general group. The same thing is done with the richest 10%. But in reality the rich in Tuva, for example, are not that different from the poor in Moscow. The average income in Moscow is seven times higher than in the poorest Russian region, Ingushetia. In other words, poor Muscovites raise the average level for the poor and the rich in Ingushetia lower the average level for the rich. If Russia did not have this great interregional inequality, the Gini coefficient would not be fourteen, but eighteen.
• What region has the fewest poor?
• Tyumen is the leader, followed by Karelia, and in third place comes Moscow. The capital has the highest per capita income and at the same time has the highest level of inequality, 53 times.
• So all of Russia’s oligarchs and all its homeless live in the capital?
• The homeless are not included in these statistics. Moscow is a good example of how even wealthy areas can have great inequality. If we had resettlement patterns like they do in developed countries, there would be no pensioners living in Moscow. It would be too expensive. The fact that young people all want to go to Moscow is normal. Around the world, financial resources and the labor market are concentrated in capital cities.
• What is the Gini coefficient for developed countries?
• Russia cannot be compared to every country in this way. In Europe, for instance, incomes vary by about ten times. But European countries are small, with only one kind of climate and evenly developed economies. Russia has eleven time zones, and Moscow has the same level of development as Europe, while the South and Eastern Siberia are more like Africa. That is where the huge difference in standards of living comes from. America and Brazil are similar. Canada is also a large, northern country, but there is nothing of the sort. If we were to move people out of inefficient regions where there are no jobs, roads, or other infrastructure, we could reduce this inequality. But migrants will go where the work is. Meaning, to Moscow, which we don’t want.

Rescuing the drowning

• If we were to rank problems, then the first thing we need to do is increase the wages of those workers who make up half of Russia’s poor. The second thing to do is get the officially unemployed, able-bodied workers without jobs back on the labor market. And only then should we provide assistance to the remaining 8-10%. These are households where earning potential is either nonexistent or so low that it would cost more to integrate them into the workforce than to give them welfare. This is only if we are calculating wages and welfare. But we also need to take into account the costs of law enforcement and medical treatment, as the unemployed sometimes turn to crime and vagrancy and often end up in hospitals. Their children have a hard time integrating into society and this is a problem for the future. In short, the total cost of a low-paying job and welfare payments is sometimes the same. In these nuances lies the heart of right- and left-wing ideologies. It’s not for nothing that society swings between the two and maintains its balance that way. Nonetheless, we have to understand that targeted assistance will not reduce the number of poor people. It’s more important to help those on the edge of poverty to move up.
• This is sometimes called the “tidal wave” model in the West. John F. Kennedy applied it, and his tactics are often juxtaposed to those of Johnson, who focused government efforts on welfare. Putin, to all appearances, has just that in mind: reducing poverty by developing the economy. But is it possible to do this in just three years?
• In principle, it’s possible but it’s a very ambitious goal because in my opinion it contradicts plans to double the GDP. That amount of GDP growth is extreme and will only be made possible by the most promising points of growth. But war on poverty requires the government focus on the least promising groups in society, namely unqualified, surplus workers who need higher wages but won’t necessarily give much in return. If the state doesn’t work with the labor market and doesn’t even out the differences between cities, villages, and rural areas, but only focuses on wages while maintaining currently levels of public assistance, employment, and spending (i.e. free health care and education, no increase in utilities or housing prices), then by 2015 we could turn the minimum wage to a living wage and reduce the number of poor by 13%. In practice, in order to make the minimum wage a living wage, it needs to triple. This would only be possible on one condition: we substantially cut the number of state employees. We are not in the position to triple the amount of money in the state budget. In addition, it will be necessary to increase payments for children to at least 50% of the minimum standard of living from the current level of 3%. Today, this program costs 18 billion rubles, but we need 16 times more.

Poor but proud

• Has the problem of persistent poverty in Russia been severely neglected?
• I have always gotten into arguments with the people who say that we need to quickly set up a banking systems, stabilize the ruble, pay off our foreign debts, and so on. Everything else will follow. If we were talking about a year or two, then perhaps that would be possible. But we have been living under this system for more than ten years, and in that time huge number of people has become accustomed to poverty. We have gathered a large body of empirical evidence. If a person is only poor for a year, he most of all would like to find a job. Any job. After three years in poverty, his priorities change. The most important goal is to economize, while the search for income moves into second place. The next turning point comes at seven years. The person is so bogged down by trying to save money that he barely reacts to job offers. This means social degradation, a serious threat second only to social aggression in terms of dangerousness posed by poverty. And this is exactly what we refuse to see.

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