Low Pay, Protests Don't Mix

Street protests by pensioners over the cancellation of benefits have seriously undermined Russia's political stability. President Vladimir Putin's personalized style of presidential rule makes the head of state the only source of legitimacy. Hence, any serious public protest immediately takes the blame to the core of the system, straight to Putin.

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Many Western observers have wrongly assumed that the benefits being scrapped are Soviet-era relics. In fact, the Soviet Union was a grim state that did not give much comfort to its citizens. Public transport was heavily subsidized and fares were low, but there were no free rides for many of today's beneficiaries. Most of the benefits that are being abolished today were introduced after communism fell, as a safety net for those who did not benefit from market reforms.

Policemen, military officiers and other employees of the security ministries were also given various perks. The broad nature of the benefits system in Russia has made dismantling it much harder than in many other former communist countries.

Finance Minister Alexei Kudrin told reporters that in many former Soviet republics benefits were replaced by compensations much lower than in Russia, or without any compensation at all. Moreover, the price tag for the reforms is growing: Up to 105 billion more rubles ($3.7 billion) will be disbursed from the federal budget in 2005 to increase compensations and pensions in an apparent attempt to end the unrest. Economic Development and Trade Minister German Gref announced that this extra spending will not cause much additional inflation, but spending "another 100 billion" would indeed have disastrous consequences.

Gref seemed to indicate that other low-paid groups in Russia, apparently including the military and Interior Ministry employees, will not get higher cash benefits. The law enforcement officers called in to control the antigovernment demonstrations are themselves badly paid and have also been stripped of their benefits.

An authoritarian state facing widespread public protest and at the same time paying its military and police pitiful salaries is looking for trouble. If the people challenge Putin's rule in streets, who will defend the Kremlin and shoot into the crowd? As things stands, the answer is no one. Putin's regime, which seemed so stable and so solid only a month ago, may be edging toward a colored revolution, something like what happened in Georgia in 2003 or in Ukraine last year.

The security ministries have some 4.5 million people on their payrolls, of which more than 2 million work for the Defense Ministry. Majors and lieutenant colonels have an average paycheck of 7,000 to 8,000 rubles, or $250 to $285, per month, and many rank-and-file officers get even less. Now, they have also lost their benefits. In the present climate of uncertainty and mass protest, the Kremlin would be well advised to double their pay to ensure loyalty. However, the vast numbers involved make this virtually impossible.

Colonels in active service alone number more than 100,000. To double their pay and raise the minimal monthly paycheck in the armed services to 10,000 rubles would require an extra 500 billion rubles per year. Even with this raise, a colonel would still be making an average of only 20,000 rubles per month.

At present, the total federal spending on defense, national security and law enforcement in 2005 is budgeted at 929 billion rubles ($33.18 billion). Spending an additional 500 billion rubles on extra pay would surely send inflation skyrocketing. By the year's end the pay raises and higher pensions and compensations would be wiped out by inflation.

Putin has failed to use the years of relative social stability from 2000 to 2005 to reform the military and other security ministries and to cut numbers while increasing qualifications and pay. It is now too late to begin major cuts in personnel, since this would cause additional unrest. Moreover, it is impossible to raise salaries substantially to dispel existing social tensions within the ranks. At the same time, state propaganda has constantly highlighted the growing wealth of Putin's Russia, such as the $120 billion of currency reserves in the Central Bank. Pensioners, servicemen and millions of other badly paid Russian believe Putin and his government are too greedy: They have waited long enough, and now they want their share.

Pavel Felgenhauer is an independent defense analyst based in Moscow.