councilor.org
| Source | Louis Proyect |
| Date | 05/01/13/16:37 |
| End of Soviet-Era Freebies
Dents Putin's Popularity; Risk to 2nd-Term Agenda By GUY CHAZAN Staff Reporter of THE WALL STREET JOURNAL January 13, 2005 MOSCOW -- Russia's implementation of far-reaching, ground-level economic changes to the welfare system this month has provoked huge protests and put an immediate dent in President Vladimir Putin's seemingly ironclad popularity. The Kremlin has scrapped Soviet-era social benefits for the elderly, the disabled and other disadvantaged groups, replacing free public transport, prescription drugs and phone lines with cash handouts of as much as $70 a month. The move is part of Mr. Putin's plan to dismantle the last vestiges of the old socialist economy, but the ensuing demonstrations -- the biggest in years here -- could slow his pursuit of further changes. Free-market advocates long had called for an overhaul of the old system, which was inefficient, open to abuse and saddled the government with more obligations than it could afford. But the chaotic way the transition has been handled shows that despite Mr. Putin's tight grip on all branches of government, his administration still struggles to operate efficiently. Many people have yet to see any of the cash payments they were promised, and those who have say the money doesn't compensate for the benefits they have lost. The result has been a wave of protests on a scale not seen since 1998, when angry miners lay down on railway lines to protest wage arrears. On Monday, hundreds of pensioners blocked the main Moscow-St. Petersburg highway for several hours before being dispersed by riot police, and similar demonstrations have been held in other cities. Across the country, bus conductors who have tried to collect fares from pensioners have been attacked. Policemen, who also lost their right to free transport, have protested as well. Mr. Putin has taken note, telling a local governor in Siberia yesterday to make sure groups affected by the changes, such as veterans of labor and victims of Stalin-era political repression, "don't feel insulted," he said. "We have to think about ... the people." CONTROVERSIAL CASH The changes have contributed to a souring of the public mood. Opinion polls show the share of Russians who think the country is on the wrong track is rising after several years of registering a more positive outlook. Mr. Putin's popularity, while still high, has slipped. For Mr. Putin, the outcry could bode ill for his second-term agenda, which was to be dominated by an overhaul of Soviet-era institutions. Plans are afoot to make Russians pay far more for education, health and pension provisions. Liberals now fear the mishandling of the benefit changes could give Mr. Putin pause. "The whole idea of economic reform has been discredited," says Mikhail Zadornov, a former finance minister and leading independent lawmaker. "This will inevitably mean that the next big overhauls -- of the budget, education, health -- will be put off. That will be ruinous for the economy." Mr. Putin's first term was defined by moves to simplify Russia's tax code and allow the privatization of land, earning him the reputation of a free-market modernizer. But the benefits change is the first major move to directly touch tens of millions of Russians since the 1992 decision by Boris Yeltsin's government to free up state-controlled prices. While that move eliminated shortages and ushered in a market economy, it also led to hyperinflation and wiped out the savings of millions of Russians, causing widespread disenchantment with all efforts to revamp the economy. The same reaction is afoot today. "People believed the official propaganda that this law will be good for pensioners," says Valery Gartung, head of the Russian pensioners' party and a member of parliament. "Now it's come into force and they realize they've been deceived again. They realized this as soon as they started getting kicked off buses and trams." The rising tension comes as economic policy, a relative success story during most of Mr. Putin's first term, has lost direction. Paralyzed by a long-running administrative shake-up, the government of Prime Minister Mikhail Fradkov has repeatedly postponed promised measures to liberalize the energy sector, overhaul the banking system and reshape public services. Business confidence has been soured by the state's pursuit of oil giant OAO Yukos, and capital flight has increased. The drift in policy led to a slowdown in growth last year, endangering Mr. Putin's plans to double Russia's gross domestic product in 10 years. Mr. Putin long has argued that Russia's benefits system was ripe for change. "In a market system, the old methods of state support ... have become inefficient," he told reporters last month. "A lot of resources were allocated ... but a lot of it just didn't reach the people." Federal spending on the poor and the disadvantaged would increase sixfold this year, he said. But the effort was mismanaged from the start, critics say. In early calculations, ministers underestimated the number of benefit-recipients by several million. Regional parliaments weren't given enough time to pass the hundreds of regulations required to underpin the new system. Most controversial of all, the Kremlin forced regional governments to foot the bill for about half the 30 million people receiving the new handouts. That isn't a problem for cities such as Moscow, which is continuing to subsidize pensioners' transport, or for oil-rich parts of Siberia. But some regions are so poor they can barely afford to pay public-sector workers, let alone supplement the incomes of the disadvantaged. "About two-thirds of Russian regions don't have enough money to cover this," says Mr. Gartung. Previous attempts to change Russia's welfare state were modified substantially after encountering tough resistance from lawmakers in the Duma, or parliament. But after years in which Mr. Putin has steadily eroded Russia's democratic institutions, stacking the Duma with pro-Kremlin parties and putting all the major television channels under state control, the latest benefits changes were subjected to far less public criticism before being signed into law in August. "What's most scary is that no one seemed to care about how the people felt about this," says Sergei Smirnov, director of the Institute of Social Policy at the Higher Economic School. "This reform affects half the population, but they just brush off people's opinion like it's a nuisance. They know that whatever stupid laws they write, they'll still sail through the Duma." |
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