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Tuesday, June 06, 2006

Billionaires and Beggars -- Just Like It's Always Been

Knight-Ridder confirms what La Russophobe has been saying for some time now, that the idea of economic progress in Russia is absurd mythology. Just as in Soviet and pre-Soviet times, there is a small group of leeches bleeding the nation dry and a vast underclass languishing in abject poverty, even as the country plans to build more ICBMS and even undertake moon flights. The more things change in Russia, the more they stay the same.

VOLGOGRAD, Russia -- Thanks to high oil prices, Russia -- the commodity's No. 2 exporter -- is booming in many ways. The government is paying off debt early, amassing a $60-billion windfall fund and reporting $225 billion in foreign reserves. Real estate prices in Moscow have never been higher, and the nation boasts 33 billionaires, topping all except the United States and Germany. But tens of millions of working adults barely get by. In a vast nation of 143 million people, revenue from oil and natural gas benefits only a tiny sliver at the top."The oligarchs are doing well. They're bandits and now everything they stole is legal," said Roman Tarusov, 27, a married father of one child who lives on the outskirts of Moscow. "Every high-ranking official for the state has enough money, but the people suffer." Many of Russia's working poor have no days off, no paid vacations or holidays and no health insurance. In some professions -- such as waitress, store clerk or security guard -- a shift might last 24 hours. Street vendors often stand outside all day, even in the frigid winters.

Like weddings for horses

They work to exhaustion and hope for better times, like Nadezhda Sasova, a taxi driver in Volgograd, a southern provincial capital of 1.4 million people 650 miles southeast of Moscow. "Ordinary people have hard lives," said Sasova, 50, a married mother of two sons. "I wonder if I'll be able to survive." Sasova's place in the post-Soviet economy is driving strangers in her 1983 yellow Zhiguli, one of the smallest and cheapest sedans made. It's in constant need of repair. A high school graduate, she makes $500 monthly, which is considered a decent wage. But doing so means 7-day weeks and days that run from early morning until late at night. She keeps a gritty sense of humor, with such jokes as: "Holidays for us are like weddings for horses. Our heads are in flowers, but they're beating our behinds." She's held a succession of menial jobs, fallen victim to loan sharks and racked up $10,000 in debt. She lives on the outskirts of Volgograd in a wood-sided house with peeling paint and a yard for the small garden that supplements her diet.

Poverty too narrowly defined

There are signs of modest progress for those at Russia's economic bottom. The government says the number of people living below the official poverty line has steadily declined in recent years, from 29 million in 2003 to 22 million last year.But some economists say the government's poverty definition -- those who make $90 to $150 monthly, depending on the regional cost of living -- understates the number of people who should be considered poor. "These are absolute beggars," Yelena Rumyantseva, president of the Center of Economic Policy and Business, said of the government numbers. "But there are more people who are poor, who don't have medical treatment and the rest." By Rumyantseva's calculations, only 20% of Russia has achieved middle-class status or higher, which she defines, in Moscow, as a family of three who owns an apartment and has at least $1,000 in monthly income and, for cheaper provinces, at least $500 monthly. "All below are different categories of poor. They are not beggars, but they are poor," Rumyantseva said. "State statistics are aimed at decorating the situation."

The problem is well diagnosed: The Russian economy remains dependent on raw materials. Sectors that might produce large numbers of decent-paying jobs, such as manufacturing, still aren't strong. "Neither in manufactured goods nor advanced technologies nor consumer goods is Russia really competitive," said Yevgeny Volk, the Moscow director of the Heritage Foundation, a policy-research center. "They are not accustomed to competition and were always relying on government subsidies." President Vladimir Putin regularly speaks of the need to improve citizens' well-being, as he did in his May 10 state of the nation speech.

Sasova was too busy to listen. She's learned not to count on the distant Kremlin. "There's the top level and the lower level," Sasova said. "My vote means nothing."

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