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Thursday, March 22, 2007

Russia's Poor Get Pulverized, Neo-Soviet Propaganda Continues Apace

Writing in the Guardian journalist Luke Harding, reporting from the central Russian city of Oryol, brilliantly (and horrifyingly) chronicles the desperate straights of Russia's impoverished masses that he sees all around him.

It's worth nothing a certain obscure Russia blogger (who shall be nameless because he's just that contemptible and dishonest) has written that Harding's implication that pensions have fallen under Putin is not correct. According to the blogger's data, Kremlin-supplied information shows that pensions have remained constant or risen slightly after factoring the overall inflation rate. What the blogger, in a classic act of Russophile propaganda, doesn't care to mention, is that it's not the overall inflation rate that is relevant to Russians who live on $100 per month or less. For people in that position, only the inflation rate on the tiny basket of basic goods and services they can actually afford matters, and La Russophobe has previously documented that this "basic" inflation rate is much, much higher than the general rate. If the inflation rate that matters is were factored in, then you would see a significant drop in pension value throughout the Putin years even though the nominal amount has risen, exactly as Mr. Harding describes. The blogger, a fundamentally dishonest cretin, also doesn't care to mention what every thinking person on the planet knows full well: Kremlin data simply isn't reliable.

What's more, of course, anyone who tries to argue that it is somehow wrong to claim that people asked to live on an income of $3 per day or less are living in horrible poverty, made even worse by the presence of a growing class of billionaires,
just because their incomes are staying the same rather than falling, is engaging in propaganda that borders on criminality. Today's Russia is no different than the Russia of 100 years ago, with a tiny elite class of super-rich presiding over a vast ocean of desperately poor people on the verge or extinction. Russia has learned nothing from the period of Tsarist oppression, and from the presence of proud KGB spy as president it's clear Russia has learned nothing from the era of Soviet oppression either. Now, it has the worst of both worlds. Anyone who tries to distract attention from that fact is an enemy far more dangerous to Russia's survival than any foreign invader.

Standing in his fetid kitchen, Sasha Ivanovich shows off a bucket of muddy potatoes. Dug from his snow-encrusted garden, they are his lunch. In fact they are his supper too as, he points out, he has nothing else to eat.

"Everything has got more expensive. Bread has gone up. Cigarettes have gone up. My sister pays my gas bill. I can't afford vodka. Can you give me 100 roubles [£1.97]?" he asks, hopefully.

Since Vladimir Putin took power seven years ago, Russia has enjoyed growing prosperity. The days when the country was forced to borrow billions from the IMF, devalue the rouble, and beg for international help are a fading Yeltsin-era memory.

Instead, Russia has so much money that it doesn't know what to do with it. Last month President Putin boasted that the country had paid off its $22bn (£13bn) foreign debt. Rising oil and gas prices have transformed its economic fortunes and made it a resurgent global force.

The Kremlin is now sitting on a vast mountain of cash, coyly known as the stabilisation fund. Last week it topped $103.6bn. (Others suggest Russia's total surplus is more like $300bn.) And the American magazine Forbes recently revealed that Russia has 53 billionaires, 20 more than last year.

Unfortunately none of this has trickled down to Sasha, 56, who lives alone in a wooden cottage, and whose poor sight renders him unfit for work. Like many at the bottom of Russia's pile, Sasha survives not through the generosity of the state but thanks to his kindly neighbours.

His home, in the village of Lavrov, is a 45-minute drive from the town of Oryol in south-west Russia, past forests of silver birch. The young people have all left and most of the older men appear to have died - hardly surprising in a country where male life expectancy is 58. Like much of rural Russia, Lavrov appears to be on its last legs, along with many of its remaining citizens.

"It was much better during Soviet times," Tonya Fominyh, 79, says. "Pensions were small but equal. We lived well. Now our pensions are nothing."

Mrs Fominyh receives 1,540 roubles a month from the state. She spent three decades working for the Soviet police force but now survives on handouts from her son.

So far few of Russia's petro-billions have found their way to society's poorest groups: pensioners, the unemployed and government employees, including teachers and hospital workers.

This month Russia's orthodox church warned that the gulf between the rich and poor was growing wider, with some 20% of Russians below the poverty line. There is still no real middle-class and there is a significant gap between urban and rural life, the church said, warning: "Russia possesses between 30% and 40% of the earth's resources. Revenues from exports of natural resources built the stabilisation fund. But only a very small part of society is getting richer. It is doing so at a pace that amazes even some of the richest people in the world. On the other hand, the majority of the population lives in destitution."

It is not only pensioners in villages who are hard up. Sitting in her tiny flat in urban Oryol, Tatiana Tsherbakova gazes at a giant photo of a sun-kissed beach pasted to her living room wall. It is the Canaries, one of many places Mrs Tsherbakova, 68, would like to visit. "I don't have the money to travel," she explains. "It's my great passion. I've always wanted to see Vladivostok. But the train ticket is too expensive."

This is one of the strange ironies of post-Soviet Russia. Thirty years ago Mrs Tsherbakova was not allowed to travel to the west, but she took advantage of cheap internal fares to roam across the Soviet Union, holidaying in Moldova, swimming in the Black Sea and hiking in the Kazakh mountains. Now she is free to travel anywhere, but on her state pension of 5,600 roubles a month she cannot afford to.

Kremlin economists say they face a dilemma. It is impossible to raise pensions significantly, they argue, without increasing inflation, currently running at 9%. They also point out that Russia's 38 million pensioners claim their pensions much earlier than western Europeans - at 55 for women and 60 for men.

"I don't believe this [argument about inflation] to be true," said Natalia Rimashevskaya, a poverty expert at Moscow's Institute of Social and Economic Studies of Population. "At the moment 30% of all salaries are below the minimum needed to live. Pensions are very low. The average is 2,500 roubles. This leaves pensioners on the edge. If prices go up, they fall into poverty."

At his annual press conference last month Mr Putin said that reducing social inequality would be one of his key tasks before he leaves office next year.

Average salaries have gone up significantly under Mr Putin. But the statistics conceal the fact that for millions, wages have hardly changed at all, Ms Rimashevskaya said. One of the biggest problems, she added, was the tax system, which saw oligarchs and road sweepers paying an identical tax rate of 13%.

In numbers

Estimated value of Russia's so-called stabilisation fund $103bn

The number of billionaires in Russia 53

Amount of foreign debt paid off $22bn

The average monthly pension £50

Proportion of salaries considered to be below the minimum needed to live 30%


Anonymous said...

Interesting to note that my correction to the 30 percent number hasn't yet been posted. Again, call Mr. Litwack of the World Bank in Moscow -- he'll tell you that the number is actually closer to 15 percent. Not holding my breath.

La Russophobe said...

If your comment has not been published, one can suspect two possiblities: (a) You violate our rule about calling yourself "anonymous." (b) You claim to point out an "error" without posting a link to any source material that contradicts us. Either one would be enough to delete your comment, both combined is a pretty sure ticket to nowhere land.