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. Last Updated: 07/27/2016

Buying the Pensioner's Vote

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No Russian politician would risk opposing pension hikes in an election year. During the State Duma campaign, the competition was fierce among all of the parties to become the greatest friend of the country's 38 million pensioners. The Kremlin and United Russia led the way in this effort. Now with the elections behind us, it will be interesting to see if the pensioners will continue to get the same heightened attention.

With the full backing of the United Russia majority in the Duma, the government increased pensions twice in 2007. Then on Oct. 11, President Vladimir Putin, who headed the United Russia party list, announced another monthly increase of $12 per person. The increase came into force on Dec. 1 -- coincidentally enough, just one day before the parliamentary elections. This brings the total 2007 benefit growth to 26.6 percent, compared to just 12 percent in 2006.

The Kremlin's "political technologists" made the correct decision from a strategic political point of view to spend more on pensions because it is an investment with high returns. Not only are the elderly the most disciplined voters in Russia, they also are the most likely to appreciate a $12 monthly increase and to reward the provider.

Most retirees still regard pension payments as Putin's handouts. Buying the loyalty of the elderly helps to preserve the democratic facade of Putin's regime, which has been challenged by, among other things, the use of excessive police force against opposition parties.

The Kremlin has also extended its political control over organizations representing the elderly. Valentin Chaika, a United Russia member, heads the Union of Pensioners. Alongside the Federation of Independent Trade Unions, Chaika's pensioner association signed a collaboration agreement with United Russia to advance the interests of the elderly and refrain from supporting protest activities organized by the Communist Party.

The Kremlin also co-opted the Russian Party of Pensioners and successfully used it in the 2003 Duma elections to lure away votes from the Communists. In the fall of 2006, the Russian Party of Pensioners was incorporated into the Kremlin-manufactured center-left party A Just Russia.

Despite their political importance, pensioners remain poor in Russia. Having eliminated President Boris Yeltsin's massive backlog of pension arrears during his short tenure as prime minister in 1999, Putin has failed to protect pension benefits against inflation during his presidency. Price hikes for food and utilities have wiped out the government's regular indexation rates. Independent estimates put actual inflation as high as 25 percent for the year. It is no accident that the Kremlin rushed last month to strike a deal involving a price freeze on basic staples with the major food producers until the end of the electoral cycle in March 2008.

Unlike military expenditures, spending on pensions actually slumped from 4.8 percent of gross domestic product in 2002 to 4 percent in 2006. The gap between the average pension and average wage has grown from one-third in 2000 to one-fifth by the end of 2006.

The Kremlin largely failed in its 2002 reform of public pensions. Reforms intended to create personal investment choices through capitalized pension savings accounts quickly became an immense pool of cheap credit for the government. In the absence of an effective public information campaign, almost 95 percent of participants in the new system picked the state investment company, Vneshekonombank, to hold their savings.

Since this bank can only invest in safe but low-yield state bonds, it has posted rates of return that have not kept up with inflation in recent years. The Kremlin's architect of reform, former Health and Social Development Minister Mikhail Zurabov, thus managed to secure the government's control over pension savings.

Increasing the welfare of pensioners was a key issue in the Duma elections campaign. While increasing pensions is a laudable decision, these carefully timed one-time election payouts to buy the pensioners' votes do not compensate for the ways that the government has robbed pensioners, which in the end only benefits the Kremlin elite.

Mitchell A. Orenstein is associate professor of European studies at Johns Hopkins University. Ilian Cashu is a Ph.D. candidate in political science at Syracuse University.