|Russia and the CIS News Digest
Russian President, Gov't Scramble To Calm Pensioners' Anger
On Jan. 17, after protests by pensioners throughout Russia, President Vladimir Putin publicly addressed the turmoil, touched off by the Jan. 1 replacement of in-kind entitlements with cash payouts. He criticized how the new policy had been implemented and offered stop-gap palliatives, but did not, so far, back off from the policy as such. The new law, passed last summer, eliminates many state subsidies for social services, demanded of Russia by international financial institutions for over a decade.
As some economists had warned, compensation for in-kind benefitswhich included free medical care and public transport for pensioners, and 50% subsidies of housing, utilities and phone bills for retirees and the disabledwith cash payments equivalent to $25 or $40 per month, came as a shock to the 40 million people who have depended on them. The shock hit on Jan. 10, after the holidays, when fare-collectors began to demand money from pensioners, military personnel, police, and other former entitlement recipients, when they boarded public transportation. Thousands of older citizens took to the streets in protest. By Jan. 16, cumulatively 10,000 people had blocked highways or protested on the streets in the Moscow Region, surrounding the capital. On Jan. 15, 10,000-15,000 people jammed central St. Petersburg. Five to seven thousand demonstrated in Tomsk, western Siberia. The Patriarch of the Russian Orthodox Church appealed to prevent the reforms from hurting the people. Two leading Generalsthe commander of the Air Force and an adviser to Prime Minister Fradkovwarned that military men are also very unhappy with the vanished benefits.
When Putin spoke to the Cabinet on the 17th, he blamed the government and the heads of regions, for failing to prepare for implementation of the measures. He called for speedy action on "the most sensitive problem, that of transport": regions should immediately sell a monthly transit pass, costing no more than the amount of cash compensation people are getting. In addition, he said that a general old-age pension increase of 100 rubles/month, scheduled for April 1 under the planned indexation schedule, should be moved up to March 1, and doubled. Minister of Health and Social Welfare Mikhail Zurabov then announced that that pension hike will be 240 rublesabout $8.
On Jan. 19, the Kremlin aired footage on national television, of a meeting between Putin and Gov. Nikolai Merkushkin of Mordovia, one of only nine of Russia's 89 regions, which have not experienced protests. Putin expressed confidence that things will get better. "I agree with you," he told Merkushkin, "that the overwhelming majority of people in regions like Mordovia have gained from these reforms." Merkushkin stated that only 10% of the population, people living in cities, have experienced any hardship. Meanwhile, Russian state TV carried stories on rural pensioners, who made remarks like, "I haven't taken a bus in 30 years," and expressed happiness with their few-hundred-ruble cash payments.
Leaders of several regions also acted to cool the protests. Governor Boris Gromov of the Moscow Region negotiated with Moscow City an agreement to restore free commuter train travel for previous entitlement-recipients. This affects people like elderly women who lug their home-grown potatoes and cabbages into the city to sell them. Tatarstan President Mintimer Shaimiyev promised on Jan. 13, to double the promised cash compensation. In Kemerovo Region, central Siberia, Gov. Aman Tuleyev reinstated free public transportation for pensioners.
The background to the entitlements conversion and related social-sector reforms in Russia was reported in EIR of May 14, 2004 ("Mont Pelerinite Walpurgisnacht in Moscow") and July 30, 2004 ("Russian Economy: A Leap in the Wrong Direction").
Worse Cuts in Russian Entitlements To Come
There will be a second wave of protest in February, predicted Nezavisimaya Gazeta on Jan. 17, because pensioners and others will start to receive utilities and rent bills that reflect the elimination of subsidies. NG projected that these rates will increase 35-40% in most regions. Owned by the exiled tycoon Boris Berezovsky, Nezavisimaya consistently depicts worst-case scenarios for President Putin, including big play-up earlier this month, of a Morgan Stanley-published prediction of Putin's ouster this year. But in the case of a coming second wave of public protests, the government daily Rossiyskaya Gazeta concurred with NG. On Jan. 16, Rossiyskaya Gazeta estimated the housing and utilities rate increase at between 15 and 35%, and wrote that protests would surely happen.
Also warning that harder blows are yet to fall, was Duma member and economist Sergei Glazyev. In a Jan. 19 address to the Moscow Region branch of his "For a Decent Life!" movement, Glazyev said that "the results citizens have experienced during the first two weeks of this year are only the first buds of spring." Glazyev continued, "Greater unpleasantness lies ahead. The reform of health care will lead to a sharp increase in the cost of medical care. Millions of chronically ill people will be unable to obtain life-sustaining medication. The implementation of housing code reforms lies ahead; it will legalize evictions of people from their apartments. A real estate tax lies ahead, which, coming on top of the utilities rate increases, will strike an even bigger blow against our citizens' pocketbooks. The commercialization of education and health care lie ahead."
Glazyev is calling for a national referendum on these policies. He told the meeting that "free competition" is inappropriate for the social sector, "because the goods and services, provided by the social sector, are not for the sake of current profit, but for the development of the nation, the development of society, and the people's welfare." He warned that some people want to exploit the current crisis, "to bring to power a new Russian Pinochet, instead of the current Russian President."
Putin Under Pressure as Neoliberal Ministers Lash Out
Some Russian commentators have accused President Putin of preparing to scapegoat Prime Minister Fradkov and/or Minister of Health and Social Welfare Zurabov for this month's protests, while retaining neoliberal cabinet members like Finance Minister Alexei Kudrin and Economics Minister German Gref (though the latter recently went out on a limb to denounce the Kremlin-orchestrated renationalization of Yukos Oil's main unit). Kudrin, however, is also on the hot seat, as he is supposed to come up with financial help for the regions, to cool out the protests. Kudrin is on record as holding that Russia's multi-billion-dollar so-called Stabilization Fund, comprised of revenues from taxation of oil exports, should be spent to pay the foreign debt, and for no other purpose. On Jan. 19, Kudrin lashed out against the protests, charging that "it's not pensioners who are organizing all this," but rather the Communist Party and nationalist extremists, who have posted on the Internet, maps of what highways to blockadeas if most Russian 70-year-olds log onto their computers to get on-line marching orders!
Not All Smiles During Russian Defense Minister's U.S. Visit
Despite the show of cordiality between U.S. Secretary of Defense Donald Rumsfeld and his Russian counterpart, Defense Minister Sergei Ivanov, during the latter's recent visit to Washington, Ivanov pointed to tensions between the two, when he spoke Jan. 15 at the New York Council on Foreign Relations.
"We cannot but have some concerns about reports of possible plans to deploy U.S. silo-based anti-missile launchers in eastern Europe," Ivanov said. "If a decision to deploy such systems is eventually taken, then it could substantially, I'm afraid, undermine the work on theater missile defense programs underway within the framework of NATO-Russia Council, as well as have an adverse impact on the entire system of Euro-Atlantic security."
Ivanov pointed to another contentious issue, Rumsfeld's intention to deploy NATO naval forces in the Black Sea: "Russia's joining the NATO-led Mediterranean actors in their operations is yet another important route for our cooperation.... At the same time, Russia is opposed to extending the mandate of this operation to the Black Sea area, in the firm belief that security needs as well as new threats and challenges in this region can be successfully addressed by the Black Sea naval forces."
Regarding NATO military involvement in other parts of Eurasia, Ivanov indicated that some moves would be unacceptable for Russia: "Georgian service personnel are being trained so that further on, they would take part in the peacekeeping operations outside of Georgia, say in Iraq.... But it's of fundamental importance to us that those U.S.-trained Georgian service personnel would not start off some kind of domestic conflict about involving Abkhazia or South Ossetia, including the ethnic conflicts which are there."
Russia Backs European Initiative for Iran Dialogue
Russia will not accept a U.S. offensive against Iran, Foreign Minister Sergei Lavrov made clear at a Jan. 21 press conference. He backed the European Union initiative to persuade Iran to give up any nuclear technology that could be used for military purposes, through dialogue and negotiations, and joined France in urging the United States to join the effort. The issue was at the center of discussions in Moscow, between a French delegation and Russian government representatives, the week of Jan. 17. After two days of talks, the International Herald Tribune reported, Foreign Minister Sergei Lavrov and his French counterpart, Michel Barnier, "stressed in unison that the only way to reach a reliable agreement with Iran was through the political dialogue that France, Britain, and Germany launched 16 months ago." They said the initiative would also need U.S. support, to succeed.
"We are working in parallel to the Europeans, we are backing their efforts," Lavrov said. Barnier welcomed the Russian position, telling the IHT, "The Russians' backing is very important for us.... Three large European countries have enough credibility to launch this dialogue, but for it to succeed we need both Russia and the United States to be behind us." Referring to the spate of threats from Dick Cheney and others in Washington, Barnier and Lavrov played down the possibility of action: "I don't think attacking is an option, either for us or for the Americans," Barnier said.
Russia and Kazakstan Agree on Borders, Natural Gas Development
The Presidents of Russia and Kazakstan, Vladimir Putin and Nursultan Nazarbayev, signed an agreement delimiting their common border and allowing joint development of the Central Asian republic's second-largest natural gas field, during Putin's mid-January visit to the Central Asian nation. "We have established the principles of a strategic partnership with Russia, particularly in the economic field," Nazarbayev said. Putin said the two sides "paid very serious attention to the process of integration within the Commonwealth of Independent States. Kazakstan is one of the countries that defends the integration process the most."
The high point of the meeting was the signature of an agreement delimiting the 7,500-kilometer (4,600-mile) Russia-Kazakstan border, and defining terms for the two countries to develop natural-gas fields near the border. The document stipulates that the two countries have an equal claim on the once-disputed Imashevsk gas and condensate field near the Caspian Sea. The field holds some of the largest proven natural-gas reserves in the region and its development is key to ensuring growth of Kazakstan's natural-gas exports. Analysts expect the Imashevsk field to be jointly developed by Gazprom and Kazakstan's state oil company KazMunaiGaz.