Russia and the CIS News Digest
Russian Gov't, Parliament Rip Up Guarantees for Population
On Aug. 7, the Federation Council, Russia's upper house of the Federal Assembly, voted up the law on entitlements, which was passed earlier in the week by the State Duma. The conversion of in-kind benefits, such as subsidized access to transportation and to medicines, into fixed cash payments, affects over 30 million people directly. The Federation Council vote was nearly unanimous (only 1 against), despite widespread fears among its members, the governors of Russia's regions, about the new system, which requires regions to pay part of the cash outlays. Governor Oleg Chirkunov of Perm Province said in an interview with the latest issue of Novaya Gazeta, that the entitlements reform will cause some regions to go bankrupt and lead to social unrest.
The law was one of dozens, rushed through the Duma before it recessed until September. Another blow to the general population is a bill that passed in the first reading, which cancels the 100% Federal guarantee of deposits held in Sberbank, the state savings bank. Accounts existing before October 2004 will supposedly continue to be fully insured (though people were never compensated for the wipe-out of their Sberbank savings by the devaluations of 1992 and 1994), but thenceforth, the guarantee will be equal to what commercial bank deposits enjoy: a maximum of 100,000 rubles ($3,400) is insured. The government argument in favor of this change, is to end Sberbank's unfair competitive advantage over commercial banks. Sixty percent of personal savings accounts are in Sberbank. Evidently the idea of using Sberbank's deposit base to underpin the creation of credit for productive investment in infrastructure and other real economic development of national importance, which was laid out in the State Council's Ishayev Report several years ago, has fallen by the wayside.
Russia's Poor Are Getting Poorer
Even without the undermining of the well-being of a huge part of Russia's population by the draconian "monetization of privileges," just approved by the State Duma, social stratification in Russia has increased during the past two years. President Putin's rhetoric about the "struggle against poverty" is turning into a lie, as is obvious from figures, published in Izvestia. In 2002, the poorest 10% of Russia's population received 2.1% of the total personal income in the country. Now their share has shrunk to 1.9%. The deepening impoverishment of the poor is especially visible against the backdrop of the enrichment of the wealthy. Most of the 20% growth in total incomes goes to the top 20% income category of citizens, who receive over 50% of the aggregate incomes.
Economist Yevgeny Gavrilenkov from Troika Dialog Bank attributes this tendency for increased social stratification, largely to the "flat" tax ratethe across-the-board 13% personal income tax, the imposition of which was the first triumph of the Mont Pelerin Society ideologues within Putin's economics team. It resulted in an inefficient redistribution of monetary resources. Even though industrial production reportedly rose by 7% in the past year, the number of jobs in private industry shrank, said Gavrilenkov, adding, "We are just repeating the failed experiments of other countries, like Britain under the Labour government."
Reports Show Crisis of Children in Russia
Several new reports on the demographic and social welfare situation in Russia have come out recently, which show that the crisis of Russian children that emerged during the 1990s is getting worse. These reports come on top of the horrific estimate, presented earlier this year, that Russia and Ukraine are at the take-off point of the HIV epidemic, with infection rates of 1% of the adult populationwhere South Africa, which now has a 20% infection rate, was a decade ago.
On June 1, Interfax reported a press release issued by the Russian Children's Foundation, which estimated that there were 700,000 homeless children in Russia at the close of 2002. That is close to the absolute number of homeless children in the Soviet Union after World War II. Moreover, RCF chairman Albert Likhanov said that the total number of children in Russia has fallen from 44.3 million in 1992, by 14 millionover 30%. "The pace at which the number of children has been declining suggests that the situation will only get worse," Likhanov said. Thus, over 2% of Russian children are homeless.
Another report, issued by the Citizens Commission for Human Rights (an international NGO; the reliability of statistics is not known to EIR), claimed that 600,000 Russian childrenanother 2%are living in mental institutions.
The RCF release said that a recent nationwide tabulation of medical checkups showed that only 32% of Russia's children are healthy. Among the children in orphanages and other institutions, the RCF cited a survey by the Russian Prosecutor General's Office, which found that 40% of children in institutions become alcoholics or drug addicts after they leave, "40% of them join criminal groups, 10% commit suicide because they have no place to live, and a mere 10% are able to live a normal life."
Pravda.ru on July 19 carried a report from Novyye Izvestiya newspaper, that only 10% of women of childbearing age in Russia are truly healthy. One out of every six women of childbearing age is unable to conceive, many as a result of undergoing abortions, which also remains the number one cause of female mortality.
Wage Demonstrations Flare in Southern Russia
Nezavisimaya Gazeta reported Aug. 5 on rising tensions over wage arrears in the south of Russia, on a scale the paper called "unprecedented" in recent years. In the Rostov area, employees of over 200 companiesboth public and private sectorhave unpaid wages totalling 500 million rubles ($17.2 million). Russian news services monitored by RFE/RL Newsline reported that a picket line of laid-off workers from a bankrupt electric power construction firm in Volgodonsk was broken up Aug. 4 by police on the pretext of a problem with their rally permit. City officials also complained that the workers were using political slogans in an "economic" protest, including demands for Volgodonsk Mayor Alexander Kleimenov, a founder of the bankrupt company, to resign.
Russia Takes a Stand on NATO Observers
Russia will continue strict limitations on visits by NATO representatives to its nuclear projects and exercises, Russian Defense Minister Sergei Ivanov told reporters Aug. 9, commenting on the results of the Avaria (Accident)-2004 exercise on defense of nuclear facilities. He noted that such exercises are conducted in Russia every year. Observers from 17 NATO countries were present for the first time at such an exercise, carried out near Murmansk. "However, we have never permitted and will not permit them to visit nuclear projects and to see our nuclear ammunition. It is quite another thing to familiarize our partners in the alliance with the organization of the system of protection and overcoming of aftermaths of a possible accident with nuclear ammunition," Ivanov explained.
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