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Thursday, November 01, 2007

Another Original LR Translation: Putin's Compensation

Ace Russian translator Dave Essel opens another window into the Russian blogosphere, this time from the website While hardly the Russian version of 60 Minutes, you could say it's the Russian version of Matt Drudge. How long it will be able to publish reports like the following is anyone's guess, given the Kremlin's pernicious crackdown on the Internet.

The Wages of Putin

Translated from the Russian by David Essel

The Russian president conceals 90% of his income under the heading of expenses. The hotline to the president [Essel: a recent telephone call-in] received more than 2 million questions, ours among them. Our question was: “Vladimir Vladimirovich, what is your salary?” No answer was forthcoming from the call-in and we therefore decided to find out for ourselves. As it happens, it’s not as easy as might be thought to conceal the real amount of the president’s remuneration from the people. This is because the size of Putin’s stipendium (in plain words, his salary) is shown annually as a line item in the federal budget of the Russian Federation passed by the Duma. However, we at set out to investigate precisely how much Mr. United Russia #1 gets and how it’s dressed up.

If one compares the 2001 budget with the draft 2008 budget, one finds an entry for the total spend on the “functioning of the head of state, President of the RF”. This includes all expenditure including on the president’s administration and on the [regional] plenipotentiaries and it has risen in that time from 1.4 billion to 7.17 billion roubles ($56M to $290M). furthermore, these are the planned figures and the amount actually expended is always greater. Thus in the 2005 budget the allocation was 4.1 billion ($166M) but 5.9 billion ($238M) was actually spent. It’s worth noting that this generosity is unique; the rubber-stamp Duma as it has become in recent years is not accorded similar favours and is being squeezed. The figures for spending on the legislature were a mere 4.4 billion ($178M) despite a 2005 budget allocation of 5.3 billion ($214M).

A fair proportion of the ‘functional expenses” goes on salaries of high-ranking bureaucrats. And of course, the president must have the highest salary of all. More interesting still, however, is not the president’s official salary but what one might call the “secret bit”.

USSR President Gorbachev’s salary was set in 1990 at 2000 roubles [per month]. At the then existing “tariff’ this was the maximum possible wage, amounting back then to between 5 and twenty times a standard worker’s wages. This differential was maintained during the Yeltsin years. However, the swingeing social re-stratification that hit the country then made the president's salary laughably tiny. It would not occur to a president to compare his salary to a worker’s but in comparison to the pay of directors of privatised enterprises, not to mention bakers, Yeltsin salary was pitifully small.

In order for Yeltsin to feel comfy, his entourage invented a nice little trick: to his standard wage for being president, they added an amount for so-called “expenses”. These “expenses” were of course not spent on anything and were handed to the president in person. Real presidential expenses are paid under a different budget heading – “expenses of the Presidential administration”. (Of interest is that fact that these two headings never got mixed up or bundled together.) Back then, plenty of respectable people received, besides the official (“white”) salary, a second salary in a brown paper envelope (“black cash”). And so “presidential expenses” budget heading became Yeltsin’s pay in a brown-paper envelope. And the contents of the envelope of expenses money was about 10 times as much as his official salary. In the federal budget, these headings then got curious names: the basic salary with bonuses and holiday pay was called “monetary salary of the president” but this amount together with the “expenses” was called “upkeep of the president” (but how can upkeep be other than monetary?). He was not being paid expenses in oranges and pears, was he? But the situation in the country and the pro-Communist Duma made it impossible to legalise this situation: if Yeltsin’s salary started to look too large, the deputies would have refused to pass the budget.

One would have thought that all would change with Putin’s arrival. The Duma year by year became more and more “loyal” and there president had any number of opportunities to bring his salary out of the shadow of “expenses”. Putin, however, showed himself to be more cunning still. Using the excuse that the president’s salary was tiny. Putin raised it but… at the same time proportionately raised his expenses allocation.

For example, Vladimir Putin’s upkeep cost in the 2001 budget was 2,738,800 roubles ($110,872) of which 293,400 roubles ($11,880) was “monetary salary” and 2,441,400 ($98861) “expenses”. This rose in the 2002 budget to 1,011,500 roubles ($40,959) salary and 7,542,700 ($305,432) expenses. In 2003 the amounts were 1,161,800 and 14 million ($47,045 and $566,912) and in 2004 – 2,404,300 and 19,869,500 ($97,359 and $804,590) and so onwards and upwards.

Furthermore, the amounts actually paid to Putin as salary were every year notable higher than the amounts allocated in the budget, sometimes exceeding them by half as much again. Thus data from the Ministry for Taxation and Collections and the Pension fund, Putin’s official salary was 1,634,700 ($66,195) in 2003 and 2,545,100 ($103,060) in 2004.

Here one needs once again to emphasise that we are not speaking here of any real expenses of Putin’s. If any such expenses ever occur, they are covered by the Administration or other government departments with whom he makes an official visit. Furthermore, there is a record high budget allocation of 579.5 million roubles ($23,466,135) in the 2007 for “cost of foreign visits by the supreme organs of power”!

Thus if one cares to calculate Putin’s monthly salary, the result is pretty fantastic, working out at 2.7M roubles per month for 2007 and rising to 2.9M in 2008 ($109,333-$109,333), not forgetting, as already noted, that what he gets is always more than what has been allocated. A realistic estimate is that Putin is today being paid a salary in excess of 3 million roubles a month ($121,481).

So Russia’s pensioners had better stop moaning “how can Putin not see that it’s impossible to live on 3000 roubles ($121) a month”. He really can’t – because he’s living on another planet with a life totally unlike that of plain Russian folk. A man on 3 million a month and another subsisting on 3 thousand really do live in different worlds.


Artfldgr said...

this is a copy of stalins era. where the kremlovsky were paid low to preserve the illusion of the shared sacrifices... but were ablet to get lots of things on 'expense', like the use of cars, shopping for nothing in special stores only for them. etc.

however, if you look at the valuations. how can putin think of stepping down or letting it end? its one thing when you get 200k salary.. or even a million.. and then can leave and make 200k a speech and make millions writing books, and even more with other things (the US president)..

and a situation that when you leave, you lose all that huge monies (that secure your family lineage), and can lose what you have as you no longer have the protections of the position.

scary to think that it degrades to a case of either i become despot, or the next guy will and take everything... thats not an excuse for the behavior, its the explanation for what will end up happening... the paranoid assumption that if he doesnt grab the ring someone else will and all that will be taken away..

basically with the lack of control he has conflated his real world power, and his soviet power. outside of russia he has the money power.. inside russia he has the kind of power that Ford craved "i want to own nothing, and control everything". inside the state, he doesnt need money (not in that kind of state).

should be interesting...

Anonymous said...

ARe these figures before or after tax?

An importatn differnece becauase a Russian will ususally quote his salary as net per month, ie after tax, while many western executives, and job ads, will quote salaries gross per year, ie before tax.

Makes a difference of 25-50%, unless of course you have an account offshore, or are non-domicilsed in the UK, or have etc etc.