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In part, the mood swing in Russia can be attributed to the Kremlin's mid-2004 decision to monetize social benefits, a measure that was quickly endorsed by the obedient State Duma. The reforms directly affect over 30 million Russians and will have indirect ramifications for the entire nation. They introduce cash payments in place of benefits such as free electricity, transportation, telephone service and medicine -- benefits that Russians have been receiving for more than 50 years. In the near future, the Kremlin also plans to rescind some government housing aid.
Two-thirds of Russia's welfare recipients are against the reforms and have little confidence in the government's contention that they will improve their quality of life. Even high-level officials such as Health and Social Development Minister Mikhail Zurabov have noted the public's lack of trust.
Many recipients suppose that even when they actually receive the cash payments, the funds will rapidly be wiped out by inflation. Many are also concerned that the reform shifts part of the responsibility for the needy to regional authorities, which do not have sufficient funds to cover these benefits, or so believe many Russian experts. The reform has roused anger among diverse individuals and groups, from police officers and administrators to students and scholars. At the same time, there is a minority of Russians who support the reforms, particularly those who live in rural areas and are less likely to have access to the old system's in-kind benefits.
Having praised the welfare system only a few years ago, the Kremlin began criticizing the system in mid-2004 as a means of promoting its new approach. As Deputy Duma Speaker, Oleg Morozov, a member of United Russia suggested, "the existing system of benefits is socially unjust, corrupt and ineffective." Another official argument maintains that by replacing Soviet-era benefits with cash payments, the Russian economy will become more "normal, transparent and strong," as well as closer to a full-fledged market economy. Proponents see the reforms as an extension of people's freedom of choice, allowing them to use the money as they see fit. This freedom of choice, in turn, is often associated with the West.
Both the advocates and the adversaries of reform agree with this assumption. Galina Kurlyandsky, director of the Center for Fiscal Politics, promoted the reforms not only as an economically beneficial measure, but also as a way to keep up with the West. "There is nothing like Russia's in-kind benefits system in the West. Westerners are compensated only in cash payments," she claimed. Another supporter of the reforms and head of the Politika think tank, Vyacheslav Nikonov, seconded this view and claimed "giving up the socialist economy is an important part of the [state's] agenda."
Leading Moscow journalist Yulia Kalinina, while denouncing the reform, begged the country's leadership "not to copy the Western welfare system," which she believes is ill suited to life in Russia. Even Alla Latynina, a prominent liberal journalist and reputed expert on Western economies, treated the reform as yet another move toward a liberal economy.
Western journalists and analysts have embraced this justification as well. They perceive the benefits overhaul as an effort to wean the citizenry from their Soviet-era privileges and continue Russia's transition to a market economy. Most reports in the U.S. media have characterized Russia's old system not as a social safety net, the likes of which exist in all Western nations, but as benefits that "date from Soviet times." Arguments in favor of the reform can also be found in the statements of high-level Western officials. Thomas Dawson, the director of external relations at the International Monetary Fund, said in a recent press briefing: "The proposal to monetize the in-kind benefits is a good idea and it's to be welcomed."
The debate over Russia's benefits reform has revealed how an oversimplified view of the West can be applied incorrectly by those who support Western models, as well as by those who reject them. In fact, as Russia sheds its "Soviet-era benefits," this same type of in-kind allocation system has grown in importance in the United States. There are more than 80 benefit programs in the United States that provide both cash and noncash aid to the needy. The overwhelming majority of this aid is distributed in noncash benefits, such as free or reduced-price medicine, food stamps, housing and education benefits, and energy aid. Over the last three decades, the U.S. welfare system has moved increasingly toward distributing benefits in kind rather than in cash.
It would seem that many journalists and politicians in Russia, and perhaps also in the West, are not familiar with this trend. The U.S. welfare system in effect limits the "freedom of choice" of welfare recipients. The system's extensive use of noncash aid implies the need to guarantee that welfare benefits are used to improve the health and well being of the individual, and not for purchasing drugs and alcohol or even for noble causes such as giving money to friends.
Considering Russia's troubling social issues, its high crime rate and serious problem with alcoholism, the move to cash aid is a dangerous development, and one that has been mostly ignored by the Russian ruling elites, social scientists and public opinion. Proponents of the reform seem to have forgotten that hundreds of thousands of Russians in the 1990s sold their privatization vouchers for a few bottles of vodka. They do not recall that alcoholics were known to sell their privatized apartments to crooks at minimal prices in order to quickly acquire liquor.
Russia's Communists are among the few politicians who have voiced their concern about the way Russian welfare recipients may spend their cash payments. Opposing the reform, former State Duma Speaker and member of the Communist Party, Gennady Seleznev, wrote, "The money will not be used for health care or for medicine, but for binges and the further destruction of the people's health."
The image of the West has once again fallen victim to Russian reformers with sketchy agendas. During the period of privatization, similar reformers justified their corrupt and criminal actions by emphasizing the need to achieve Western economic standards. The same strategy is being used today. In a tired twist of irony, the proponents of the reform have moved the country toward a Western standard that does not exist. In the near future, as many Russian experts contend, the reforms will lead to a deterioration in the quality of life for millions of people and renew their urge to blame not only the Russian government, but also the Western way of life.
Vladimir Shlapentokh is a professor of sociology and Joshua Woods is a Ph.D. student at Michigan State University. They contributed this comment to The Moscow Times.
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