Tag Archives: Russian pension reform

A piggy bank of $6 trillion for Putin’s cronies to “salt the stash away”

Tomorrow, on October 24th, the State Duma will be considering a proposed draft of the federal budget for the years of 2019-2021 in its first reading. One cannot be calling that document anything else but short of sensational, and Vladimir Milov, a leading Russian political and economic analyst, explains why. We have just recently heard about the “absolute lack of any other alternatives” but raising the taxes and increasing the retirement age. However, now the Putin’s government has found trillions of surplus cash in the excess revenues. And that impressive stash will be given away into a piggy-bank for Putin’s cronies.

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Chirikova: Russian civil society needs support

Valeria Jegisman of Free Russia Foundation recently sat down with Yevgeniya Chirikova, a Russian environmental activist who currently lives in Estonia, to talk about civil society and activism in Russia – whether it can develop in an oppressive environment and its efforts are noticed in the West.

 

When the West looks at Russia, it seems that it often sees Putin and the regime, and fewer people think about civil society and activism in Russia. Does Russian activism exist?

Yes, it does and it has been growing and developing very rapidly for the last 10 years. I understand why there is such an attitude because for a very long time — in Soviet times and for a long time during the Putin regime — there was no activism like there is now. In my opinion, the rapid growth of activism began around 2010. Of course, some manifestations of activism existed before – Russia is a big country – but activism did not have a massive influence and it was not the norm. For a long time, the notion of an activist was generally negative. The perception was that an activist is not someone who is completely mentally normal — that if a person participates in activism without an order from his superiors, then there is clearly something wrong with this person. This is such a heavy legacy of the Soviet regime. So, starting from the forest fires of 2010, when people realized that they were on their own against nature because the authorities were not going to solve their problems, they began to organize themselves and solve problems independently. This gained good public coverage and in terms of timing coincided with our movement in protecting the Khimki forest.  At the time we managed to gather a large rally on Pushkin Square in Moscow – there were 5,000 people protesting. That was a lot; there hadn’t been any rallies like that in over 10 years. Later on, we managed to gather 100,000 people in support of fair elections, but in 2010 that would have been nonsense. We managed to achieve an incredible thing in the history of Russia: then-president Dmitry Medvedev said he would suspend the building of the Moscow-Saint Petersburg highway through the Khimki forest which we opposed.

I believe that activism is very young in Russia. You can see the descriptions of various forms of activism on our website, activatica.org. We created this website to support activists and we also have a database on Russian activism. There is a map there that traces various activist efforts and there are already thousands of points, where each point represents a particular undertaking. So yes, activism exists in Russia.

Why do you think activism persists despite the growing repressions and do you think it will continue to grow or not in the current political environment?

It will definitely keep growing. Putin and his regime will lose money because of the sanctions and the sanctions will continue because Putin will not give up his militarist policy. But Putin is used to living well, to buying off foreign politicians, to spending money on a repressive apparatus, on a propaganda machine and his own luxurious lifestyle. So he will need money and will extract it from people, who are basically the “new oil”. New unjust laws and decisions will be adopted, such as the Platon electronic toll road system — essentially double taxation for trucks — which provoked a powerful movement of truck drivers against the system throughout Russia and even in a region like Dagestan, which has always voted for Putin. The whole of Dagestan took to the streets against this system. Activism seemed to arise where it had not existed at all. Right now Putin’s pension reform has generated strong protests, which have taken place in 70 Russian cities despite the fact that participating can be dangerous.

I think repressions will intensify, but also as the political and economic situation worsens the number of protests will increase and the more severe the repressions are, the more brutal the protests will be.

Do you think people will overcome the fear of taking to the streets?

But they will not have any other options. It is not about overcoming something; people will be put in situations like the aforementioned truckers who just understood that they won’t earn any money and if they don’t come out to the streets, nothing will change. And they were able to achieve some change. So people will come out because of hopelessness. The Russian authorities do not leave any scope for normal, legal, peaceful problem solving – you cannot go to court, you cannot write a letter to anyone, because that will not solve your problem. By getting rid of the ways of peaceful and legal resolution, the Russian authorities end up forcing people to the street. As with the pension reform, for example, the authorities rejected a proposal from the Communist Party to hold a referendum, arguing that people are not educated enough to understand the matter. Essentially, people are capable of working until they’re 65 but they aren’t capable of understanding the question on raising the retirement age.

Do you think the authorities will make any concessions?

Of course they will, but it will depend on the strength of the protests. The more people protest, the fewer opportunities the authorities have for implementing tough measures. The government is in the process of acquiring this horrible new equipment for suppressing popular uprisings called “stena”.  And this is happening in the context of the pension reform protests; at a time when people are demanding political change. But the more people are out there, the less likely it is that the authorities will use severe methods to suppress protests.

The government runs into trouble when it makes decisions that affect a broad group of people – like the pension reform. The protests against raising the retirement age will inevitably lead to concessions. Even now, these relatively small protests have led to Putin already reducing the retirement age for women. The more the protests continue to grow, the more concessions will be made. Our authorities have a very good sixth sense and understand they can be taken out of power at one moment and they are afraid of that. But any concessions will be proportional to the efforts of the civil society.

Is it possible that the pension reforms have had such a negative effect on people that even if concessions are made, a lot of people have got a taste of activism and this could potentially lead to political change in the future?

Of course, because when a person becomes an activist, when they begin to take to the streets, they take on a different view of the state. They will begin to experience police lawlessness and they will begin to really understand what propaganda is. When a person becomes an activist, they watch TV in a different way after that, they begin to see the real picture of the Russian reality, it changes them. This does not mean that everyone will immediately become active oppositionists like Alexei Navalny, but it will definitively change their mind.

How does your website help activists?

First of all, we offer media support, including through social networks. When we first started this activity, there was very little information about activism available. Now, thank God, other projects such as ours are emerging as well and we welcome it. We are happy that this topic has become extremely popular and we feel we can be useful in supporting activists and spreading information about their activities. Sometimes spreading information is a matter of physical survival for an activist — that’s in my own biography. There were several cases when timely journalistic investigation about who has beaten up the activists helped stop the beatings and saved their lives.

The psychotherapeutic factor is important, too. It is very difficult to be an activist in Russia – everyone says at best you are crazy, an outcast and an accomplice of the United States. But when you open our website and see the map that tracks activism, you’ll see that all of Russia is actually engaged in this and you feel different. And of course, the role of our website is to unite activists so they can do joint campaigns and support each other.

Returning to the first question: If the Western world, looking at Russia, mainly sees Putin and the regime, how can it be shown that Russia – it is also an evolving civil society? How could this message be conveyed?

It is a very good question and I don’t have a clear answer. But I try to do just that, speaking at different venues about activism in Russia, and I usually surprise people. I recently spoke at the US Congress – everything I said seemed like news there. I talked about campaigns that are already 2-3 years old and I saw that it was a surprise to hear about that.

But it is actually more difficult with Europe – after the conflict with Ukraine, Europe has become more active in its purchasing of oil and gas from Putin’s regime. Germany is buying twice the amount and Nord Stream 2, led by Putin and former German Chancellor Schröder, is under way. So, the West consists of different people. For the West that makes decisions, at least in Europe, it may not even be very profitable for there to be another Russia – the Russia that exists today is very convenient as you can buy oil and gas for cheap. Of course, if something changes in Russia and another, democratic government comes to power, the first thing they will do is stop the current model for supplying gas. In Russia, 30% of people are without gas, and instead use coal for heating, which leads to catastrophic environmental consequences. Of course, Germany will cease to receive its cheap gas and Holland will not receive its cheap oil, and many will be upset. Whoever launders the money will also be upset. Take the scandal at the Estonian branch of Danske Bank, which has laundered a huge amount of Russian money. Someone gained incredible profits and this someone will be very upset if everything changes in Russia. So the West is not all about being good and it simply may not really want to see civil society flourish in Russia.

There are two trends here – there is this wonderful sale of hydrocarbons, which not only did not stop but actually increased after the annexation of the Crimea and the war against Ukraine. The West has not stopped communicating with Putin and has actually strengthened Putin’s regime with hydrocarbon money. On the other hand, at exactly the same moment as the annexation of the Crimea, when the “law on foreign agents” was adopted in Russia, the West and Western donors stopped helping civil society due to fear of these laws. Thus, the nascent Russian civil society was left without support. And it is a good question: how can we change this situation? We need to combine our efforts somehow and I am very glad that Free Russia Foundation has also become engaged with issues of activism.  It seems to me that it is necessary to organize more conferences and events through joint efforts.

I would also note that I have more events in the States than in Europe, which is very disappointing because Europe is closer to us and it could share experience and knowledge. But even in America it is becoming more difficult, especially after Trump was elected. I sense the donors have problems with helping Russia. It feels like the help they try to provide is being blocked, whereas the interactions with Putin’s regime seem to continue.

The interview took place on 20 September 2018 in Tallinn, Estonia. Photo credit: wtaq.com

Russian pension reform: a “black swan” for Vladimir Putin?

Russian pension reform aimed at sharply raising the retirement age has all the chances to become a long-anticipated political “black swan” for Vladimir Putin’s government – a mistake that may not necessarily lead to immediate political problems for Putin, but would definitely deliver one of the strongest blows to his grip on power in years. The media has already picked up the decline in Putin’s approval ratings to pre-Crimea annexation levels, and there’s a good reason for it. There was hardly any major element of governmental policy in the past couple of decades that was met with such overwhelming rejection (and “approval” nearing the statistical margin of error, if any) by the society as the proposed “pension reform.”

A recent opinion pollby the Levada Center (dated July 5th, 2018) illustrates explicit rejection of Government-suggested pension reform by Russians—only 7-8% view raising retirement age totally positively or somewhat positively, whereas 89-90% view it somewhat negatively or strongly negatively, with “strongly” negative responses clearly prevailing (70-73%). (The fluctuation in percentage points is explained by the fact that two different questions were asked: one about raising retirement age for men from 60 to 65 and one about raising it for women from 55 to 63. Similar figures are shown by another pollster, FOM (dated June 29th): 80% of the respondents reject raising retirement age, whereas only 6% approve.

Russian opposition is currently actively working the political grassroots in the Russian region, and was behind recent sizable protests in provincial Russian cities. Our interaction with ordinary Russians in Moscow and in the region, suggests that people view the proposed retirement age raise not simply as just another economic reform, but instead as a breach of one of the few available major social guarantees. This guarantee remained untouched for decades, from Stalin’s era through very difficult reforms of 1980s and 1990s. Frankly speaking, there are very few solid social guarantees available to ordinary Russians from the government, and pension is arguably the most fundamental one. Many people build their living strategies after 40 on “holding out until retirement age,” as demand for elderly workers in Russia is quite limited. Vedomosti cites a recent study by the Higher School of Economics which shows that the salaries of Russians peak, on average, at age 45, after which begin to severely decline (by 15-20% compared to peak). This is a stark contrast to developed Western countries with higher retirement ages, where peak salaries are observedbeyond 45 and 59 years. Russian hiring ads traditionally include provisions like “inquiries from candidates aged above 40/45 are not considered.”

The age group which falls under the provisions of current “pension reform” – for whom retirement will be delayed beyond 60 years for men and 55 for women – fall under very high risk of ending up unemployed or forced to take extremely low-wage jobs. Analysts at Raiffeisenbank have calculated that about 660,000 Russians per year will be affected by a raised retirement age, of whom 200,000 risk ending up unemployed – that’s 5% of the total current numberof unemployed Russians.

Yet another problem is poor health of Russians: according to already cited a Levada poll on July 5th—58% of Russians stop working after reaching retirement age due to poor health. According to many independent experts, the majority of Russians around pension age have chronic diseases which complicate their competitiveness in the labor market and their ability to continue to work. See, for instance, Tatiana Maleva and Oksana Sinyavskaya: “Raising retirement age: pro et contra”. The poor health of elderly Russians also devalues the government’s promises of “higher pensions after 65”. Since many peoples’ health sharply deteriorates after 65, they basically have no time to enjoy their retirement and instead begin to fight for physical survival. The Russian government is aiming to take away these relatively smooth first five years of pension

In this regard, raising retirement age as proposed by the Russian Government puts tens of millions of Russians in the risk zone for the upcoming decade, potentially driving unemployment higher and creating millions of “new poor” people who will not be in demand by the labor market and will have a very difficult time living through to reach the new, raised retirement age.

This perspective is completely understood by the Russians in the risk zone. According to our surveys, about one fifth of the attendees of protest gatherings against raising the retirement age in provincial Russian cities in the past weeks were completely new people who have never attended opposition rallies before. These people have very strong feelings about what they believe to be dishonesty and betrayal by the authorities:

  1. There was not a word about such swift raising of retirement age during the “presidential elections” campaign. In fact, Putin and many top ruling party officials have categorically rejected such a perspective many times on record in the previous years;
  2. As said above, the current retirement age was one of the very few solid social guarantees by the government surviving decades of changing policies, and people truly believed in it and built their basic living strategies upon it;
  3. Unlike other countries where retirement age has been raised before, there was never an open debate in society about it—instead, the government recently switched on its full-throttle propaganda machine spreading ridiculous and poorly crafted messages that “working longer is great and everyone will just be happier.” This clearly heightens the negative reception of the reform. Instead, critical voices are suppressed. This atmosphere does not help build trust to suggested measures, to say the least;
  4. Aggressive governmental propaganda is so out of touch with reality: nice looking TV hosts in designer clothes discussing how nice it is to work after 60, whereas the bitter reality for many Russians at that age is poor health, enormous medical costs, and the total inability to find a job.

Also, it’s worth noting that the pro-reform message is extremely weak in terms of its argument. The comparison with other countries simply doesn’t work due to poorer health and quality of life in Russia. Talk about the “inevitability” of raising the retirement age due to pension fund deficits hardly sells itself on the background of fresh news about record surplus of the federal budget, which is expected to hit over 1 trillion rubles this year due to rising oil prices.  According to Minfin, the government’s National Wealth Fund reached $77.1 billion on July 1st. That amount alone is sufficient to close down the debate on raising retirement age for at least a decade.

So, our feedback from the Russian region tells us that this time it’s serious. Relations between the public and Vladimir Putin’s government are broken. Yes, Putin always has the option of interfering and softening the proposed scale of raising retirement age, but it seems unlikely that he will completely cancel the reform after decades of discussion. Key political decisions to proceed with the raise have already been taken, and any such softening gestures will not be able to restore the trust of those people who lost it after the pension reform was announced in June.

Of course, the retirement age factor alone can’t radically transform the Russian political landscape. Russian society in many ways is traditionally driven by inertia and adaptation rather than revolt, as people have very limited historic experience of democratic governance. Many Russians believe that their lone voice can’t make a difference, but postponing the retirement age – a blatant breach of an important provision of informal social contract – will definitely be one of the game changers that will ultimately contribute to ruining trust in Vladimir Putin and his system. It is already becoming one.