Russian President Vladimir Putin speaks at his 7th annual press conference held in the Kremlin, February 14, 2008.
Photo: Dmitry Azarov
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No Changes
Kommersant Vlast publishes its last article about the social, demographic, political, and other changes that Russia has underwent in the last eight years. Thus time, observer Igor Fedyukin sums up Vladimir Putin’s presidency.
Six months ago, when Kommersant Vlast just began striking the balance, we were eager to obtain answers for two questions only. The first is a particular one: what exactly has changed in the country in the last eight years, and how these changes are linked to the actions of the executive branch headed by Vladimir Putin? The second is a general question: do these changes display common features, same style, which would allow to call the eight-year period, which is now coming to its end, ‘the Putin epoch’?
From the very start, Vlast decided not to discuss politics and ideology, for it is hard to make objective and convincing conclusions here. So, we adhered to two guidelines. First, our appraisal of Putin is an evaluation of whether his own plans have been implemented, the plans that he declared publicly and officially early in his presidency. We aimed at finding out whether he has done what he had promised. Second, we decided to mention only those results which can be estimated in numbers taken from official statistics or from special research, usually carried out at the authorities’ request.
Social Sphere
We intentionally chose the social policy to begin with, for it was President Putin who started speaking openly about the poverty issue in Russia. He now lists the Russian citizens’ living standard growth among his chief achievements. Besides doubling the GDP, program documents of 2000 also planned reducing poverty by half. The task has been solved: in 2000, 29 percent of Russians had incomes below the poverty line, while in 2006 – just 15.3 percent. It is not surprising, for Russians’ incomes nearly doubled in the same period. Meanwhile, not only incomes, but also social inequality has increased: incomes of 20 percent of most wealthy Russian households in 2006 were six times higher than those of 20 percent of most poor ones. To compare, the index was 5.2 in 2005. There is even a more dangerous trend: there has appeared the so-called hereditary poverty. Its cause is not the general economic situation. It is due to certain families’ incapability of economic activity and their social degradation. According to the Independent Institute for Social Policy, 9-10 percent of Russian families now suffer of hereditary poverty.
In fact, the state has not learned to use the social policy instruments in the last eight years. In 2002, Russia was ahead of all developing countries in the ratio between social expenditures and the GDP. In 2005-2006, social transfers (state transfers to citizens) grew by 6 percent and reached its highest level since 1992. Yet, this money is spent ineffectively. “Ministers’ children can do without child support money, and bankers’ wives – without unemployment benefits,” said Putin in his first presidential address. However, he failed to build the targeted social assistance system. According to the World Bank, Russia spent 400 billion rubles on social assistance programs in 2004, but only 80 billion of the sum went directly to aiding the population’s poorest members, to child support, and to housing grants-in-aid.
Education and Science
Early in Putin’s presidency, the education reform’s main principles were laid down. The authorities began experiments with the Uniform National Exam, education vouchers, per-capita financing of schools, shift to the Bachelor-Master system, and integration of universities with academic research institutions. However, reforms do not pass smoothly. The vouchers experiment was stopped in 2005, and the draft law on introducing the BA-MA system was signed in autumn 2007. Salaries of teachers and professors still make up 60-70 percent of Russia’s average salary, which makes professional degradation and corruption inevitable. Scientific potential keeps reducing rapidly. According to the State University’s Higher School of Economics, less than 16 percent of Russia’s higher school professors conduct research now.
Science is undergoing a similar situation. The law passed in 2002, about “The principles of the Russian Federation’s policy on the development of science and technology till 2010”, set the following goals: to create demand for innovations, to adjust the science-technology complex to the market economy conditions, to strengthen science in universities. However, data shows that Russia is now withdrawing from its positions on the global scientific market. Provision for fundamental research grew significantly in 2000, but the number of publications by Russian scientists reduced. Russia’s science remains in need of human resources. Meanwhile, the country is becoming a net importer of technologies: the growing demand for innovations, displayed by some sectors of industry, is usually satisfied by means of importing technologies and equipment.
Demography
Putin introduced demography-related amendments to the National Security Concept on January 10, 2000, when he had just entered office. In 2001, it provided basis for the Russian Demographic Development Concept till 2015. Certainly, there have occurred some positive demographic changes in recent years. For instance, infant death rate reduced. According to official data, the death rate among children under one year of age was 15.3 per 1,000 in 2000, and 11 per 1,000 in 2005. However, even that is too high. In France, for instance, it was just 4 per 1,000 in 2003. As of 2006, the average life expectancy has somewhat increased in Russia.
At last, the birth rate has indeed increased. Russia’s birth rate fell to its minimum in 1999, making up 8.3 newborns per 1,000 people. The growth began in 2000, that is long before the state’s measures to support childbirth could produce any effect. It is a different question -- whether they could have been effective. One-time benefit at birth or monthly allowance for the period of taking care of a child grew multiply, but the paid sums remained surprisingly small. So, the monthly allowance, which is supposed to be paid to mothers to compensate their loss of income, was just 500 rubles in 2004. It is 21 percent of the minimal living cost (2376 rubles in 2004), or 8 percent of the average per capita income (6410.3 rubles in 2004).
Healthcare
It was ‘the Gref program’ that set tasks for the healthcare’s large-scale modernization. However, there were no active steps to implement it in Putin’s first term. The 2004 presidential address to the Federal Assembly outlined key directions for development: to work out medical service standards, to shift from budgeted support of medical institutions to payment for the amount and the quality of medical service, to create incentives for voluntary insurance development. However, these plans encountered resistance from the healthcare sector itself. After the unsuccessful benefits monetization reform, the government decided to refrain altogether from any steps that might anger the population. So, the state’s healthcare expenditures in the last eight years have grown – from 2.7 percent of GDP in 1999 to 3.5 percent in 2006, which is a growth by 76 percent in real terms. Yet, these expenditures do not seem to be very effective. There are no evident changes in the free medical aid’s availability and quality, while the general illness rate keeps growing.
Army
From his presidency’s first days, Putin declared he intended to create a strong Russia. Against the Chechnya conflict’s backdrop, the army crisis was especially noticeable. The army’s current state and structure did not correspond to the tasks set to it. The army reform’s necessity was obvious, and the draft reform was being worked out by the president’s closest associate Sergei Ivanov, who soon became the Defense Minister.
However, there were limited achievements in this sphere. The plan to shift to contract manning of the army (instead of draft) is not fully implemented. So far, the army has not been re-equipped. The most complicated issue is army financing. Nominally, it is growing. Yet, we should keep in mind that weaponry prices grow much faster than consumer prices. So, the picture looks different in real terms. Russia’s army pilots fly very few hours still: on average, 12 hours annually in early 2000, 25 hours in 2005, and 40 hours by early 2007. Army marines seldom go to sea. In recent years, the federal budget allocated just 60-70 percent of funds necessary to equip the army with clothing.
Foreign Policy
There were very favorable conditions for strengthening Russia’s positions on the international arena in early 2000s. Russia’s influence was growing together with oil prices growth. Russia managed to assert itself as an independent great power, but its foreign policy achievements are much more modest. Russia’s attempt to incorporate into the West on its own terms has failed, and it proved unacceptable for Moscow to do it on the US and EU terms. Political relations with the U.S. and most EU countries remain strained.
State Apparatus
Putin considered it a key element of his course to strengthen the country to make the state administration function better. The president said in 2000 the situation was critical. He spoke of “political power vacuum” and “privatization of the state”. According to Putin, the state bodies’ incapacity was due to excessiveness and disorder of their functions. Speaking of excessiveness, we should admit the number of officials has not reduced. On the contrary, it has been steadily growing: for instance, it grew by 7.9 percent in 2006. Meanwhile, the average salary of a federal executive official increased by the record-setting 37 percent and reached 15,803 rubles in the first semester of 2007.
There was some success in eliminating the red tape and improving conditions for business. A whole package of laws passed between 2001 and 2003 was aimed at it. However, just a half of companies now complete their registration in allocated time, and just a half of issued licenses meet all legal requirements. Moreover, the situation got worse in 2006. The time it takes to register a company and the share of companies resorting to connections or gifts to speed up their registration have increased again.
The most large-scale attempt to establish order in the state apparatus was the so-called administrative reform. It is still going on: in February 2008, it was prolonged till 2010. However, the president himself has already acknowledged its major elements to be unworkable. Primarily, the idea to separate agencies and services from ministries. Another important aim of the reform was to regulate the way public services are provided. In November, the Economic Development and Trade Ministry’s Secretary Anna Popova acknowledged that, although the real estate right registration should be taking 10 days, “the actual time it takes to register land reaches up to 10-12 months”. “It is nearly impossible to obtain the public service without involving intermediaries,” said Popova’s report. Indeed, according to Indem Fund’s data, the corruption market was by one third less than the federal budget’s annual income in 2001, while in 2005 the former exceeded the latter by 2.66 times.
Thus, the chief conclusion to sum up Putin’s eight years of presidency is that the plan to modernize the country fell through. The ‘Putin Plan’ had already existed in 2000: back then, the president had already had thorough understanding of what it is necessary to do to develop key sectors. In a number of directions, there were indeed some achievements. For instance, increased financing in many sectors helped sooth the acute issues. However, among the multitude of reform plans, we could not find any which would have been fully implemented. None of the sectors was transferred to new order, as it had been planned eight years ago. So, Russia now faces the same issues and tasks which it faced early in Putin’s presidency.
All the Article in Russian as of Feb. 25, 2008
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