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. Last Updated: 07/27/2016

Cabinet Offers $3.7Bln in Extra Cash

ReutersPensioners marching in central Kazan on Wednesday in a protest against the benefits reform. The banner reads "Putin and United Russia are gravediggers for the people!"
Shaken by the continuing uproar over the cancellation of Soviet-era benefits, Cabinet ministers said Wednesday that the government would subsidize transport costs for pensioners and war veterans, while opposition parties called for a range of sanctions from dismissing the government, to firing the ministers who drew up the controversial reform.

Health and Social Development Minister Mikhail Zurabov told a meeting of the State Pension Fund that the Cabinet had drawn up a plan to introduce subsidized transport passes for former recipients of benefits, and had sent it to regional authorities for their approval.

While offering this carrot to the country's 40 million pensioners, who lost many of their Soviet-era benefits on Jan. 1, ministers accused the Communists and the radical National Bolshevik Party of being behind the protests, and warned pensioners against being used as political pawns.

"Only 1 percent of the recipients of benefits have taken an active part in the protests," Interfax quoted Finance Minister Alexei Kudrin as saying. "These protesters have able organizers."

Unfazed by this combination of carrots and sticks, thousands of mainly elderly protesters took to the streets in the Samara and Chita regions Wednesday, demanding the return of their benefits. Smaller rallies were held in the cities of Khabarovsk and Kazan.

Opposition parties have moved in recent days to put their weight behind the protests, which appeared to be a largely spontaneous response as pensioners and other affected groups learned that cash payments would not fully compensate them for their lost benefits. The protests have attracted tens of thousands of mainly elderly people in what is fast becoming the most serious domestic challenge to President Vladimir Putin's rule.

The Communist and Rodina factions in the State Duma confirmed Wednesday that they are working to call a vote of no confidence in Prime Minister Mikhail Fradkov's government. Ninety deputies' signatures are required to call the vote.

The motion would almost certainly fail to win the 226 votes it needs to pass without the support of United Russia deputies, whose have a two-thirds majority.

A Rodina proposal to let presidential ombudsman Vladimir Lukin address a Duma debate on Friday, along with Zurabov and Kudrin, was voted down by United Russia deputies on Wednesday.

"In any case, we cannot stand back," Communist Party official Yury Petrakov said by telephone Wednesday. "We will raise this issue in the Duma next week."

Pensioners and war veterans have traditionally been the biggest electoral base of the Communists.

Rodina spokesman Sergei Butin confirmed by telephone Wednesday that his party's faction would back the vote to dismiss the government.

Rodina will also propose to the Duma on Friday that regions that have no money to make cash payments to pensioners continue to provide their benefits instead, party leader Dmitry Rogozin said in a statement Wednesday.

In addition to supporting the no-confidence motion, the Rodina faction will also separately demand the ouster of Kudrin, Zurabov and Economic Development and Trade Minister German Gref, all outspoken free-marketers in the government, Rogozin said.

"It is high time to settle scores with this trio," he said.

Massive protests began across the country shortly after the end of the New Year's holiday break, as it became clear that federal and regional authorities had failed to adequately compensate pensioners and other socially vulnerable groups for the cancellation of Soviet-era benefits.

Cabinet ministers initially tried to shift the blame on to regional authorities, but have this week bowed to the growing pressure and offered to increase pensions and subsidize travel passes.

Kudrin promised on Wednesday that the federal government would fund discount travel passes to the tune of between 3.5 billion rubles and 5 billion rubles ($125 million to $179 million), or about 30 percent of the cost of the passes. Zurabov said that the passes should not cost more than the cash payments due to benefit recipients.

The extra burden on this year's federal budget from the travel subsidies and pension raises could reach 105 billion rubles ($3.7 billion), Kudrin said.

But he said the government would not fund the measures by dipping into its stabilization fund, from which it has planned to pay off part of Russia's $44 billion debt to the Paris Club. Instead, the extra money will come from excess revenues on oil exports above the average $28 per barrel projected in this year's federal budget, he said.

Transportation officials in some regions have complained that the protests themselves are costing them money by blocking traffic, with the city administration in Perm saying two days of protests this week had caused losses of 73,000 rubles ($2,600), Interfax reported.

Deputy Transportation Minister Sergei Aristov told NTV television that cash fares were needed to maintain the country's rapidly deteriorating transportation infrastructure.

"Everything may end with [a scenario where] those who are demanding free transport now will have nothing to ride," Aristov said. "Last year, on average, 60 percent of bus rides were taken by benefit recipients. In some regions, that figure reached 80 percent to 90 percent."

Defense Minister Sergei Ivanov also sought Wednesday to defend the benefit reform. Military servicemen are among those hardest hit by the law, as they enjoyed free transport rides and other perks.

"In itself, the law [on benefits] is correct. How it is implemented is another question," Ivanov told the State Duma on Wednesday.

Both Ivanov and Dmitry Kozak, another key Putin ally, said Wednesday that they do not support an idea voiced by Fradkov's adviser General Vladimir Shamanov that the authorities freeze implementation of the reform until next year.

"Our fundamental position is that we should not shrink away from this reform," said Kozak, Putin's envoy to the Southern Federal District. "Undoubtedly, it is useful, necessary and in the interests of a majority of citizens."

Lukin, the ombudsman, blamed the mess surrounding the reform on a lack of feedback between society and Russia's ruling elite.

"Government and society are completely isolated from each other," he told Wednesday's Argumenty i Fakty daily. "The law ... was forced through, instead of having been properly discussed with the people."

Russian newspapers have speculated this week that the benefits crisis has left are a bigger dent in Putin's approval ratings than any other event or Kremlin initiative during Putin's five years in office.

Alexei Makarkin, an analyst with the Center for Political Technologies, said Wednesday that the country's political elites were desperately "searching for someone to blame" for the policy fiasco, and that the political fallout is likely to be felt by April.

"The government, along with Zurabov and Fradkov, could well be dismissed," he said. "It is just as likely, however, that they will stay, and the benefits crisis is used to oust the liberal reformers from government."