Many Russians Fear Trading Benefits for Cash

By David Holley

June 20, 2004 12 AM PT

Times Staff Writer

MOSCOW — World War II veteran Leonid Karlov hates many of the changes since the collapse of the Soviet Union and he’s convinced that plans to move Russia further from socialism are only going to make things worse.

Karlov joined a recent protest against proposed legislation that would substitute cash payments for free or subsidized transportation, medical care and other privileges to which many Russians have been entitled since Communist times.

“I am not in poor health, but my wife, who is 75 years old, needs to get free medicines,” said Karlov, 77. “If she loses that privilege, she will have to spend a lot.”

President Vladimir V. Putin -- reelected by a landslide in March and backed by overwhelming support in parliament -- is laying out legislation that would reduce government’s role in providing a range of benefits.

The aim is to shift to a more market-oriented approach in meeting basic needs such as housing and utilities. This move is expected to include laws to make it easier for people to get mortgages, but also to make it simpler to evict tenants who do not pay their rent or utility bills, or homeowners who fail to pay back their bank loans.

Many Russians oppose dismantling social protections and shifting to greater reliance on market forces and individual choice. But Putin enjoys high popularity, a docile parliament and effective control of television, which means he has an opportunity to do largely as he pleases. Many observers say Putin is serious about free-market reforms and doesn’t mind risking some public unhappiness to carry them out.

“Right now is the most favorable time for the Kremlin to do it, as the mass media -- and above all television -- are ready to cover it the way the government wants them to,” said Boris Nadezhdin, a member of parliament from the Union of Right Forces, who backs the proposed law.

Dissatisfaction with Putin’s new policies was reflected in a banner at the June 10 protest that Karlov attended near the White House government building in Moscow: “Goodbye to the kind Putin. Resist the thieving government.” About 1,500 protesters showed up in a cold rain.

At least 100 million of Russia’s 143 million people -- including pensioners, war veterans, disabled people, children, students, people who work in hardship posts and many others -- are eligible for government benefits. The “cash-for-benefits” measure working its way through parliament would affect 12 million to 32 million of them, according to published estimates, with most receiving $25 to $75 a month in place of their benefits.

“This law destroys not only the social structure of the country but it destroys the conceptual meaning of about 150 other laws connected with social privileges,” Communist Party leader Gennady A. Zyuganov said. “This law can’t be allowed to pass at any cost.... It is not a law, it is sabotage at its ugliest.”

Zyuganov said that the annual value of the privileges the law would eliminate is more than $17 billion, but that cash payments to replace them would be no more than $6 billion.

Supporters of the bill, however, argue that many people are entitled to benefits that they do not use so they would be better off receiving cash. This includes people entitled to reduced phone rates who have no phone and people entitled to free subway service who live in rural areas.

“One can think that he is entitled to free medical care in a city clinic and spend the whole day there in endless lines to get a few minutes of indifferent if not outright unfriendly consultation,” Nadezhdin said. “The Communists scream that there is a discrepancy in the value of the privileges and the funds allocated for compensation. But it is almost impossible to really estimate the price of all the privileges when many of them don’t come free anyway, or are not delivered at all.”

But critics say in-kind privileges retain their value, while cash payments almost surely will not keep up with inflation.

Alexei Surikov, deputy chairman of the Federation of Independent Trade Unions of Russia, which organized the recent demonstration in Moscow and protests across the country, said the legislation was largely aimed at making life easier for bureaucrats.

“This reform will significantly simplify their work,” he said. “In the end they will save a lot of money and do away with a lot of problems they face in the social sphere....

“This will be hard on doctors and teachers in the provinces, whose life was made easier by a lot of perks that get them to stay and work in provincial schools and hospitals despite low pay. This will be hard on the workers in the north, whose harsh working conditions were compensated by various privileges.”

Nina Labachyeva, 65, a pensioner who joined the Moscow protest, said she could lose the free transportation she receives because of a disability. “But the worst thing is that we are all like beggars, and we have to ask our government not to take away our privileges,” she said. “Such humiliation is the worst thing for me.”

Times staff writer Sergei L. Loiko and Yakov Ryzhak of The Times’ Moscow Bureau contributed to this report.