Wow, Russian GDP is up to 90% of the pre-1991 level? I knew it was was up, but not that much. I could kiss Vladimir Putin. From the newspaper Trud (Labor).
Trud June 1, 2005 WE'RE STILL IN THE RISK ZONE Widespread uncertainty about what tomorrow will bring for the economy Author: Vitalii Golovachev [Russia's excessively drawn-out transition to a civilized, fast-growing market economy is causing increased social tension. In a recent poll, most respondents said they consider social upheaval to be a realistic prospect, and are uncertain about the future.]
The results of a recent poll done by the National Public Opinion Research Center (VTsIOM) have probably come as an alarming surprise for the authorities. The poll focused on what would seem to be a routine topic: seeking to identify the major sources of anxiety and fear among ordinary citizens. VTsIOM has done similar polls over a number of years, offering respondents a list of about twenty options: from inflation, crime, and terrorism through to unlikely threats such as war against the West. This time, the list included a new option: respondents were asked if they fear the possibility of a drastic decline in living standards, up to and including hunger for a substantial part of Russia's population.
Uncertainty
This question might seem absurd; how can we talk of hunger when living standards are rising, the economy is growing stronger, and Russia's development is fairly stable? Even before the poll was done, it might have been possible to predict 5-10% agreement to the question about such fears, from the most nervous respondents. Yet it turned out that the majority - 70% of respondents - said that they consider a decline in living standards, up to and including hunger for a substantial part of the population, to be a realistic prospect. A further 23% said that such a scenario is possible, though unlikely.
In polling terms, these "forecasts" aren't the important point; the key finding here is that the majority of respondents believe social upheaval is a realistic prospect, are uncertain about the future, and don't believe the optimistic assessments pronounced regularly by senior officials from the Economic Development Ministry. Where does this pessimism come from? That's not an easy question to answer.
Obviously, this lack of confidence in the executive branch, which bears the primary burden of responsibility for the nation's progress, has not arisen for no reason at all. The most widely-discussed reasons spring to mind immediately. The ill-prepared replacement of in-kind social benefits with monetary payments (initially leading to widespread protests by citizens) was a vivid - and not unique, alas - failure for the present Cabinet. The most recent example was the power failure of May 25, striking suddenly in Moscow and three regions, affecting millions of citizens. President Vladimir Putin blamed this on the management of RAO Unified Energy Systems (RAO UES), saying that it is overly-concerned with "larger issues" and doesn't pay enough attention to ensuring smooth day-to-day operations. But citizens aren't only criticizing the electricity monopoly headed by Anatoly Chubais; they are also criticizing the executive branch as a whole - its personnel policies, the insufficiantly manageable structures further down in its hierarchy, the unprofessional approach and indifference of state bureaucrats. Naturally enough, such shake-ups don't promote social stability. Clear economic and social policies are essentially lacking; important institutional and structural reforms have stalled; there is dissent within the government itself; the authorities seem unable to rein in corruption and crime. All this, along with other negative and destabilizing factors, have damaged the image of the executive branch at the federal level so much that everyone is criticizing it; there is talk of a Cabinet dismissal. So is it really surprising that tens of millions of Russian citizens are concerned about the possibility of social upheaval?
Other polls confirm confusion among the citizenry. The Yuri Levada Analytical Center asked respondents if they feel confident about what tomorrow will bring. Two-thirds of them said no; a higher proportion than in a similar poll last summer. This indicates that anxiety and uncertainty persist, and are even increasing in some respects. And this, in addition to everything else, creates an advantage for destructive forces.
Don't overestimate the "oil doping" effect
Igor Nikolaev, head of the strategic analysis department at the FBK company, which does socio-economic and other research: "The assorted 'color revolutions' in the former Soviet Union have mostly happened in countries where the transition from a command economy to a market economy has been excessively drawn-out, leading to disappointed expectations among citizens. But how can we tell when a transition period is over? It's common practice worldwide to use a number of indicators for this. One criterion is the following: a transition period ends when a country's gross domestic product (GDP) reaches the pre-reform level, with market mechanisms functioning effectively. Among the countries which have exceeded their 1991 GDP levels are Armenia, Belarus, and Kazakhstan (by 16-19%). But a number of other CIS countries are still a long way from doing so. Moldova's GDP for 2004 amounted to only 54.6% of what it was in 1991. Georgia recorded 65.6%, Ukraine recorded 66.8%, Tajikistan recorded 75.6%, Kyrgyzstan recorded 81.8%. The figure for Russia was 89.3%. It's impossible to ignore the fact that four of the six abovementioned states have experienced major social upheavals recently. Our research has shown some correlation: if the transition period continues for too long, a state moves into the risk group. By the way, the transition period took 11 years in Hungary, eight years in Poland, two years in Slovakia and the Czech Republic. In Russia it seems set to take 15 years - since calculations show that GDP will match its pre-reform level by next year, God willing. On the other hand, it's fairly alarming to see that some important reforms have stalled in Russia. Of course, the very high oil export prices are rescuing us so far. But this factor should not be over-estimated."
Ranked second on living standards
A comparison with other CIS countries would be incomplete, of course, unless we also look at the key social indicators for living standards. These figures have been specially prepared for us by the CIS Inter-State Statistics Committee (ISSC).
The most interesting calculations are those for the purchasing power of the average monthly wage in the capital cities of seven CIS countries (the ISSC lacks complete official data for the other countries). The calculation methods are simple. The ISSC analyses how many standard consumer baskets can be purchased for the average monthly wage in Moscow, Minsk, Astana, Kiev, Bishkek, Chisinau, and Dushanbe. This hypothetical basket includes the following: one kilogram each of beef, butter, vegetable oil, sugar, bread, potatoes, and cabbage, plus one liter of milk and ten eggs. The resulting table of figures clearly shows the differences in living standards across the CIS.
The order in this unofficial ranking was the same last year, and the year before, and in 2002. Of course, living standards in capital cities are substantially better than in other cities, let alone rural areas. All the same, using this and other social indicators, it's possible to draw this conclusion: the citizens of Russia, Kazakhstan, and Belarus are significantly better off than the citizens of Moldova, Kyrgyzstan, and Tajikistan. Ukraine also lags behind the top three. In 2004, 27% of Ukrainian citizens were living below the poverty line. The situation in Moldova was worse: almost three-quarters of its citizens found it difficult or impossible to make ends meet. The corresponding figures were much better in Kazakhstan and Belarus: 16.1% and 17.8%. Poverty in Russia is also at 17.8%.
Given that our living standards are better than those in most other CIS countries, it might seem that there is no danger of Russia finding itself in the "risk group." However, we should also consider some acutely negative aspects of the situation in Russia. For example, we have the greatest extent of social stratification in the CIS: the incomes of Russia's richest ten percent are 14.8 times greater than the incomes of the poorest ten percent. In Belarus, this figure is only 6.5. Poverty has become an established way of life for many families. For example, according to Rosstat, 6 million Russian citizens live in families where the average per-person income in the first quarter of 2005 was negligible - only 30-50 rubles a day. This means extreme poverty, even with some unspecified "extra income" taken into account. And this isn't just about one or two months; it's lasted for over a decade.
Such deep and widespread poverty did not exist in the pre-reform era. Moreover, opinion polls indicate that hopes for improvement have started fading of late - since the government, in the view of many citizens, is incapable of achieving the social objectives set by the president. In short, in order to get Russia out of the "risk group," federal ministers need to stop arguing among themselves (a growing number of analysts say it would be even better to replace the Cabinet entirely) and take action to complete the transition period as soon as possible, paying special attention to the social sphere and the stability of the political-economic situation in Russia.
Average monthly wages in the CIS (in US dollars, 2004):
Azerbaijan - $98.40
Armenia - $78.70
Belarus - $161.80
Georgia - $58.50 (for 2003)
Kazakhstan - $207.80
Kyrgyzstan - $51.70
Moldova - $89.50
Russia - $237.20
Tajikistan - $20.50
Ukraine - $110.80
Translated by Grigory Malyutin
Nu, zayats, pogodi!
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