The monetization of benefits controversy: "a legal battle between dependents and robbers"


I can’t afford clothes,

I can’t afford food.

I’ll be wearing no pants when I come to see you,

President Vladimir Putin.

These lines were written by Vologda resident Viktor Lapenkov, winner of a humorous verse (chastushka) contest organized by the Russkii Sever newspaper in Vologda. This newspaper published some more of Lapenkov’s verse:

All of Russia has been robbed,

For the umpteenth time.

But the bureaucrats just say

They were obeyin a Decree.

* * *

Putin’s formed a party,

A party of bureaucrats.

And now, whenever things go wrong in Russia,

No one is held responsible.

In fact, a seach for those responsible for the social upheavals is underway at all levels of society. At the grass-roots level, however, a revaluation of values is only possible with regard to the president – since the president was the only one who had any authority among the people, all the rest had nothing to lose.

It seems that Putin’s renowned “Teflon” popularity rating is starting to smoke. As reported by Kommersant, implementation of the law on monetization of benefits has already entailed its collapse to the lowest mark over Putin’s entire presidency.

According to the Public Opinion Foundation (FOM) assessments printed by Kommersant, the proportion of citizens who think Vladimir Putin’s performance as president is “excellent” or “good” has fallen from 37% to 32%.

On the contrary, the proportion of those who regard Putin’s performance as “bad” or “very bad” has increased from 13% to 17%. Given that the share of the dissatisfied was only 7% at the start of 2004, the trend is evident.

It turned out that the share of those who answer positively to the question concerning confidence in president fell down to 43% (minus 4%) over a month, whereas the share of those who distrust him grew from 18% to 21%.

Commenting on the data for Kommersant FOM President Alexander Oslon admitted that the rating didn’t experienced such fluctuations even during the Beslan tragedy, because “the country’s population regarded Beslan more likely as a natural disaster, whereas it linked the situation with benefits directly to actions of the authorities.”

On its own side Nezavisimaya Gazeta appealed for comments to the Levada Сenter, which stated that this if the first time when the indignation of citizens is affecting the president, who has hitherto been a kind of a shield for the political elite.

“His rating had a kind of immunity. Emerging now is a certain understanding that the tsar is also guilty, along with his boyars,” chief research officer Leonid Sedov of the Levada Center explained.

According to the center, in similar conditions the president “gets into a danger posed by his own circle, rather than the people;” the inner circle may “at a certain moment say – why do we need him if he’s no more functioning as a lightning rod?”

Renowned political consultant Andrei Piontkovsky even published in Novoye Vremya magazine a version of the assumed “ITAR-TASS statement” with regards to Putin’s resignation, declared on behalf of members of the “secret-service capitalism” which make up his inner circle: “Unfortunately, by concentrating unbounded power in his hands, comrade V. Putin hasn’t always used it with maximal efficiency for the sake of our Great Secret Service Cause. Thus, having displayed inexcusable negligence and shortsightedness, he allowed political adventurers, who are mainly sent in from U.S. centers, to impose an anti-popular legislation on elimination of social benefits, which respond to the secular traditions and orthodox values of the Russian nation, on our people.”

Besides, according to the “document” presented by Piontkovsky, emerging inevitably of late are “definite personal flaws of comrade V. Putin,” who has proved to be “shallow, malicious, fretful and irritable.” The flaws which are quite tolerable among us, secret service agents” have been recognized “utterly intolerable on the post of the Highest Secret Service Agent.”

For this reason is has been found appropriate “to give comrade V. Putin a vacation for medical treatment, best of all in the Mediterranean (for instance, the Island of Sardinia, since a preliminary agreement has been obtained with Mr. S. Berlusconi).

On the contrary Anna Bossart, an observer with Novaya Gazeta, states that “nothing will ever change in this country, no matter who heads the regime, even if V. V. Putin leaves for Sardinia as an individual, because there are lots of insiders in our state, who are actually clones and will replace him mentally and instantaneously.”

However, the debating over Sardinia is aimless: the matter hasn’t yet come that far. Nevertheless, it is evident that the authorities urgently need a scapegoat.

“The entire past week through officials were seeking the guilty, catching the instigators and belittling the scale of the crisis,” says Newsweek Russia magazine.

Particularly successful in this was Finance Minister Alexei Kudrin, who said that only 30,000 people were involved in actions of protest. “Few people put faith in his figures. Tens of millions of people fell under monetization,” comments the magazine. No meetings passed only in 16, where the benefits were left unchanged.

Trapping the instigators wasn’t quite a success either. Evidently, it didn’t involve communists with their appeals or, even less, left radicals, of whom few pensioners have ever heard.

However, states the press, many figures were willing to get control over the wave of protest.

Dmitri Rogozin and his colleagues of the Motherland faction, who dared to conduct a hunger strike last week and demand dismissal of the Cabinet right inside the parliament, provoked a shower of pungent remarks at their door.

As reported by Vremya Novostei, immediately after Motherland members ceremoniously left the hall Alexei Mitrofanov of the LDPR reassured the deputies: “Dmitri Olegovich and I attend the same doctor. Let him lose weight. He’s indecently obese, as well as I’m.”

Already on Monday Kommersant newspaper assured its readers that refusal from food hasn’t affected the health and humor of Duma member. Moreover, the day before they endured “torture by borsch and meat rissoles,” the smell of which mysteriously emerged in a room where participants in the hunger strike are spending their time. “None of Motherland members could explain the source of tempting odors: the Duma canteen has autonomous ventilation; besides, only the refreshment room is open on Saturdays, but it sells neither borsch nor rissoles,” Kommersant related pensively.

The next day “truth-telling” poet Igor Irteniev published a new opus in Gazeta, dedicated to the hunger strike arranged by Motherland:

Rogozin has been fasting

For four days already.

He’s suffering for the people’s sake,

And therefore, for my sake.

His great endeavor

Will dispel the forces of evil.

His large body

Is a guarantee of that.

Keep up your spirits, Duma!

The whole country is with you.

It’s invincible,

Even if not quite as fat.

Other publications hurried to ascertain the underlying motives Rogozin’s hunger strike. Nezavisimaya Gazeta cites a statement by Garry Kasparov, chairman of the Free Choice 2008 Committee, who maintains that when making this decision Dmitri Rogozin and his associates had inside political information at their disposal. “Rogozin’s patrons in the Kremlin have apparently shared with him their valuable knowledge of some upcoming dismissals in the government. Being an experienced politician, Rogozin couldn’t pass up the opportunity to take advantage of that,” Kasparov said.

According to Kasparov, this assumption is based on “on a reading of the usual formula behind Putin’s actions. First, he told Zurabov not to worry. And we all know what that means: whenever Putin says something, all you need to do is change the sign. Secondly, it usually takes Putin a week or two to make such decisions. So the dates all correspond.”

Dmitri Rogozin struck a blow in response: “If these people had any civic courage, they would probably follow our example rather than focusing on the insinuations currently being spread by the presidential administration,” he told Nezavisimaya Gazeta. As yet, the hunger-strikers haven’t decided what they will do if their demands are not met. “I just see it this way: we have made our choice, and now the executive branch needs to make its choice as well.” For a group of lawmakers to hold a hunger strike in the Duma is a question of the state’s reputation, says Rogozin.

Political consultants are more skeptical about Rogozin’s action.

In particular, as Boris Kagarlitsky noted in Novye Izvestia, a demarche is more likely to be comic. “Motherland, which regards itself as an opposition party, is trying to side with the protest movement which has begun in Russia.” However, says Kagarlitsky, since Rogozin’s party is only simulating opposition, it cannot be seriously involved in protests: “Therefore, they have displayed a more symbolic sign of participation in this struggle.”

Besides, according to Kagarlitsky, “one shouldn’t think that if these citizens arrange a hunger strike somebody will be dismissed in a couple of weeks and Rogozin will attribute this achievement to himself.” As is rumored, a part of the presidential administration indeed thinks now that “it would be worthwhile to sacrifice Gref or even Fradkov.” However, the second part adheres to an opposite viewpoint; these parts are involved in a serious controversy.

Besides, says Kagarlitsky, even if the government is dismissed, “Rogozin’s gain won’t be tremendous, because this is not his own victory and the CPRF has the full right to register this dismissal as it achievement either.” In case a different viewpoint wins, “Rogozin wuill be sacrificed.”

Igor Bunin, director of the Political Techniques Center, is more prosaic about assessing the situation. “The deputies are on a hunger strike because they want to gain points on pensioners; most important for them now is to check out in the chain of events. Later on, some voters will recall that “Motherland has been to a hunger strike for our sake,” he told Novye Izvestia.

Bunin stresses absence of clarity in the cause of dismissing the government: “If might only take place in March-April at the earliest. Why should one sack those who could be used as scapegoats?”

Naturally, Rogozin’s action won’t last until spring: “Most likely, the hunger strike will last some 10-15 days. The doctors come then and say: a deputy is dying and whole group is about to follow him and won’t let them all die.”

In the opinion of Newsweek Russia someone of the Zurabov-Gref-Kudrin trio will be “relinquished” for sure; the question is when this takes place.

On the whole, the Kremlin has no pleas to worry.

The rating of confidence for the president has fallen, indeed, but this is not a catastrophe. Vladimir Putin has no intention to abandon his status and haven’t claimed responsibility for thwarting the reform, but shifted it to the executors – the government and regional administrations. On their part, the governors are shifting the blame to the federal center.

Likewise, notes the magazine, United Russia is blaming the regions for all sins, “as if the party doesn’t have tens of governors as its members.” However, says Newsweek Russia, United Russia won’t avoid problems: they cannot hope to get above 30% in the regional elections, whereas the CPRF and Motherland are reinforcing their positions.

Meanwhile, according to Kommersant-Vlast magazine, impartial factors show that president Putin should be recognized as “the only and major culprit of the “benefits” crisis. He had set up the notorious “power vertical, in the framework of which the federal parliament has been accurately vesting all orders received from the Kremlin in the shape of laws, while the government is only “a collective organizer” of their practical application.”

Evidently, not United Russia, which has transformed the parliament into a “machinery for supporting the president,” or “the technical Cabinet headed by Mikhail Fradkov” should be blamed for collapse, but personally the president, who has failed to ensure normal execution of the reforms he had initiated. “Many participants of actions of protest share this opinion and assert that Putin is worse than Hitler,” notes Kommersant-Vlast.

However, the president has no intention to confess his guilt and has therefore to convince the electorate that he has nothing to do with problems related to the monetization of benefits. Otherwise, neither the problem of strengthening the power vertical by means of appointing governors who are suitable to the Kremlin, nor the Successor problem 2008 will be solved.

Kommersant-Vlast also maintains that Fradkov’s government is not entirely suitable to the role of whipping-boy: it makes sense to dismiss the government not this spring, but as the Duma elections are approaching (which are to take place in 2007).

Moreover, reminds Newsweek Russia, the prime minister has an alibi: in late 2004 Fradkov visited the Kremlin to persuade the president into canceling the reform three times.

For similar reasons, United Russia doesn’t fit to the role of the chief culprit: it would only be proper to resolve to replace the power six months before the parliamentary elections at the latest, “so that the electorate wouldn’t get disappointed of the new Kremlin’s minion.”

Thus, governors who “failed to ensure timely implementation of the laws on monetization of benefits, passed by the Duma” become the main candidates for whipping. United Russia leader Boris Gryzlov announced that during the first day of the protest wave; he explained that on the whole good law on monetization of benefits is being implemented wrongly in the regions.

“The conclusion that the governors are guilty of the arising crisis is also advantageous for the Kremlin because it provides the presidential administration with another argument in favor of strengthening the power vertical; allegedly, the vertical is not functioning to the full extent because regional heads are yet elected, rather than appointed by the president,” explains Kommersant-Vlast. Only the universal replacement of incumbent governors with firm adherents to the “only correct course” may “ensure the steady growth in the welfare of Russians even in conditions of “reforming the benefits.”

However, even regional leaders appointed by the president won’t have many methods to reassure the worried citizens, continues the magazine.

The first method is only open to rich regions, such as Moscow and the Moscow region, which may afford to finance all benefits from their own budgets.

Poorer regions may try to convince the local businessmen to “chip in for subsidizing” of free travel for categories of citizens who use benefits or gain targeted “transport” transfers from the federal center as a kind of bonus for loyalty.

The governors who fail to reach agreement to the local business and are unwilling to share the budget revenues to the recipients of benefits will be compelled to combat the protest movement using repressive methods, aimed against leaders of local parties and movements and, primarily, against organization of protests.

If this work succeeds entirely, the outrage may move to the kitchens, as in the Soviet era. If so, says Kommersant-Vlast, regional leaders will be able to confidently “report to the Kremlin that the wise presidential and governmental initiatives have gained nationwide approval.”

According to Profil magazine, the most annoying aspect of the whole benefits saga for the government and the Finance Ministry is that the 2005 budget “is the most socially-oriented budget in the entire post-Soviet history of Russia – social spending has been increased by 200%. However, it is caviar to the general.”

Mikhail Deliagin, director of the Globalization Institute, explained to Profil that the gist of the current reforms concerns “cutting a huge amount of powers and saving tens of millions of rubles.” This was the fundamental objective of the Finance Ministry, and it has failed. “Extra spending is being announced daily now, to soothe public outrage and make up for the government’s errors.”

In the opinion of Deliagin, a rise in pension pays announced by the president won’t accelerate the inflation; neither will it halt the protests: “This is a trifling slap on the water before a tsunami.”

According to Finance Ministry’s calculations, extra budget spending envisaged for payment to recipients of benefits and additional indexation of pensions will total some 103-105 billion rubles. A key question is whether the Stabilization Fund will be tapped,” according to Profil.

Finance Minister Alexei Kudrin is certain that the expenditures will be covered at the expense of extra oil revenue. The budget is based on an average oil price of $28 a barrel – it is clear that the real price is much higher. Nevertheless, the majority of experts think that dipping into the Stabilization Fund will be unavoidable.

An outbreak of inflation is inevitable, says Novaya Gazeta, basing this prediction on official data.

It is known that the federal budget allocated 170 billion rubles to cover the compensation payments. What’s more, “in the past, the state spent only half that – and in kind, not in cash. In other words, that 170 billion rubles is entirely cash spending that didn’t exist until now.”

Meanwhile, as Deputy Finance Minister Alexei Ulyukayev admits, “everything above 60 billion is of macroeconomic significance, i.e. accelerates inflation to reach statistically notable amounts.” Bearing in mind that according to Mikhail Zurabov’s assessments over 100 billion rubles will be required to soothe public outrage (in addition to compensations), plus unscheduled indexation of pensions, it become clear that inflation will surely soar in Russia.

Thus, according to Novaya Gazeta, the monetization of benefits promises to become “the worst liberal reform in the history of modern Russia”: unlike liberalization of prices or privatization, which achieved their objectives (though this involved huge costs), “from the macro-economic perspective, monetization proves to be a senseless move, with inflation and rising social tension” emerging from nowhere “to become its only results.”

In the opinion of Novoye Vremya “both sides – the people and the authorities – represent an interesting picture” in the story of benefits.

According to Novoye Vremya, economic growth and doubling the GDP have been declared as the official goals of the Kremlin. “If it comes to that, the benefits should undoubtedly be monetized and the number of benefits recipients should be curtailed: we’ll have to choose between the benefit-is-no-problem approach and development.”

It would be appropriate to recall that “in no most prosperous country the retirement age is 60, but the pensions are high enough to ensure decent living standards”; and it’s impossible to sustain a situation where almost 50% of the population is exempt from paying fares on public transport – this is bound to lead to a collapse of the transport system, which is actually happening. “The same applies to health care and housing and utilities.”

However, the reforms are strange: “Usually when the economic upsurge is pursued, the largest and most efficient companies are not ruined” (the matter naturally concerns YUKOS). It would also be good to give up expensive adventures in foreign policy, at least for a while (the Ukrainian elections).

“In general, either the people must be campaigned for toiling in tight circumstances, or given two-week holidays, presenting them as the biggest political achievement,” says the magazine.

The behavior of protesters is strange as well. “When the citizens were actually stripped of the right to elect regional leaders, they didn’t make a sound of protest. But when they lose free travel on public transport – the entire country rises up.”

In general, says Novoye Vremya, one should admit: “the entire post-Soviet history of our economy is a never-ending court battle of dependents versus robbers.”

It is not money alone that matters: “Social benefits are a matter of principle for Russian citizens. If you are entitled to benefits, it means you have earned them. You might be poor, but at least you are acknowledged, your name is on the lists; it means you have rights, and even an advantage. But look what we have now: user pays for everything, like a fool, like an absolute bourgeois… but not enough money is available.”

In fact, says Novoe Vremya, “it has been decided to dismiss the nation from Soviet ranks (by forgetting to offer another occupation). This is not like dismissing regional leaders; a really strong hand is required in this affair.”

In general, according to humorous verse writer Viktor Lapenkov of Vologda:

Russia is a great country,

With its vast expanses.

President Vladimir Putin,

Send the con-men to Siberia!

* * *

And the next step is likewise obvious:

We love the reforms,

We’re dying of love.

Government, hurry up and

Bring back the stagnation years!