Pension Reform

The Russian government is discussing the possibility of transforming the Pension Fund of Russia into a public-law company.

…initially, [there is a proposal] to create a government body of the [Pension Fund] on a three party basis – with the participation of the State, representatives of the trade unions, and employers.

According to experts, the new legal status would allow the PFR to become more independent from the budget, would give it an opportunity to increase its reserves, and… [invest in] companies for additional profit.

One of RBC’s sources said:

“About a year ago, it was decided to study the possibility of regulating the status of the PFR, based on the norms of the federal law on public-law companies [see link for the text of the federal law in Russian]; the final version [of the bill] is still not available. Discussions continue between the Ministry of Labor, the Ministry of Finance, the Ministry of Economic Development, the trade unions, and employers’ organizations.”

The Chairman of the Federation of Independent Trade Unions of Russia, Mikhail Shmakov told RBC:

“It is impossible to say unequivocally whether this is bad or good, there are pros and cons, but in any case, the first place for management should be three-sided, and then choose the form – public-law company or a joint stock company, this, in fact, is now the conversation [that is taking place]. There are supporters of one option, there are supporters of the second option. A decision has not been made.”

Shmakov stressed that the parties involved in the discussion cannot agree and build a structure that would satisfy everyone and be efficient.

According to the chairman of the PFR Anton Drozdov, the draft law on a three-party management [structure] was prepared by the Pension Fund, but it never went beyond inter-agency coordination. In particular, there was an idea to form a fund management body over the executive body in the form of a system based on three parties: representatives of workers, employers, and the State…

Drozdov told RBC that:

“We prepared this bill several years ago, but then there were different proposals… that the fund should have greater independence, and greater autonomy from the budget in terms of insurance premiums.”

And, he continues, this brought up another issue, “because there were questions about the ownership of these contributions…”

“We have not yet managed to agree… on all the nuances of these divisions, so the discussion will continue next year,” Drozdov said.

The delay might be due to the upcoming presidential “election” that is scheduled to take place in March. Although it seems unlikely that any decision on the government’s part might change the outcome of the election, they may figure it is better to be safe than sorry.

Granting the PFR the status of a public-law company would allow it to start forming and accumulating reserves, believes Alexander Safonov, the vice-rector of the Academy of Labor and Social Relations.

“The pension fund will acquire better opportunities to act independently of the State. The State cannot be extracted from this process anyway, but in this case the Fund would become more independent, has the right to allocate its reserves, [and] increase them. All over the world, one of the ways to overcome the demographic wave of economic crisis is the formation of reserves and… [investing them]… including in foreign [corporations], to obtain additional profit,” said Safonov.


Yuri Gorlin, the deputy director of the Institute for Social Analysis and Forecasting of the Russian Academy of Sciences, says that the Pension Fund does not accumulate reserves. “There are no reserves at the Pension Fund, there are still some remnants. The PFR pays out everything it collects.”

The Finance Ministry and Economic Development Ministry “oppose greater independence for the PFR.”

“The granting of [a new] legal status to the PFR means that it will not be possible to transfer money, spend the Fund’s money on non-target tasks, it will not be possible to withdraw reserves, which the Finance Ministry does not like,” Safonov notes.

According to Safonov, the Finance Ministry considers the Pension Fund to be part of its budget, and has been using the money from it to “plug any holes” in the budget.


Shadow Economy

Approximately 33 million Russians are paid under the table, a new report has found.

According to the director of the Center for Social and Political Monitoring of the Institute of Social Sciences of the Russian Academy of Sciences Andrei Pokida:

“…the share of citizens involved with varying intensity in the non-criminal shadow labor market during the last year is 44.8% of the total number of employed people.”

Pokida also notes:

“…the main reason for citizens working in the shadow economy is related to material interest. For some workers, it’s the lack of alternatives, since it is difficult for them to find a job with decent wages and formal design. For others… it’s an opportunity for additional income (in addition to their official employment). And the latter circumstance is very relevant to the current [economic situation], when the incomes of the majority of citizens have fallen.”

Pokida worries that such practices reduce the tax base.

According to experts, between 5 and 10 trillion rubles are not taxed every year. On the other hand, the activity of citizens in the shadow economy partly compensates for social tension in the labor market, offering jobs.

The barriers to formal employment make it unlikely that adding these workers to the formal economy will happen any time soon, experts say.

According to Vladimir Gimpelson:

“One of the most striking consequences [of the shadow economy] is a reduction in the revenue side of the State budget, since the shadow economy cannot currently be taxed. The total income tax is ultimately significantly lower than the potential one, which leads to a reduction in state revenues…. What does a formal job offer? A guaranteed pension. However, it is not so great that it would be worth it to officially work for it. Many people prefer to earn money, invest it (in apartments, houses, securities, etc.), and provide for their old age themselves. Moreover, many people do not understand and do not see the risks of the shadow economy.”

But what can be done?

How can the government motivate people to go to work in the formal economy and stop receiving salaries in envelopes? Obviously, it is necessary to stimulate citizens to work in the formal economy.

Pokida advises:

“…first of all, it is necessary to increase the role and importance of state guarantees of employment and wages, so that people imagine they can lose by working unofficially.”

While Gimpelson suggests:

“Perhaps raising the pensions for a certain length of service will have an effect.”

Pokida also notes:

“Many are poorly informed about their legal rights and do not even try to defend their rights.”

In addition, he says, it is necessary to create favorable conditions for businesses, especially for small businesses, because “with the combined taxation level that exists now, it is simply not profitable for them to work officially.”

Russia’s State Statistics Agency estimates that the total amount of hidden wages reached nearly 2.4 trillion rubles in the first quarter of 2017, compared to a little over 2 trillion rubles in the same period of 2016.

Why I Quit Twitter

I’ve been asked by several friends now about my views on the situation in the US. I have lived abroad for the last four years, so I feel like an outsider observer. Let me be clear, I did not vote in this last election. I got a lot of flak for it, but I still refuse to apologize for my decision. There was nothing in Clinton’s past record to recommend her. But Trump’s lack of experience was also worrying.

But what really bothered to me was the fact that the discussion on issues were once again pushed aside in favor of name calling and finger pointing. I think the US system is terribly broken, and needs to be reformed, but neither candidate was offering a way out. This only exacerbated my feeling of apathy. I would now self-describe as “agnostic” when it comes to American politics.

At the same time, I have been driven to quit Twitter. I initially joined the social media platform because I wanted to find others who were similarly interested in politics and foreign policy, especially in relation to Russia, a place and culture that has fascinated me for decades.

But in the past year or so I noticed that people were tribalizing. People had formed groups based on a common set of beliefs and were refusing to engage with others who held differing viewpoints. But worse than this, these groups were ganging up on people who held opposing views. Name-calling, bullying, etc. were taking place. In addition, I was blocked by several people for pointing out facts that did not agree with their agenda. No discussion took place. I just noticed one day that I had been blocked from seeing their tweets.

Far from being a place for discussion and debate that Twitter was initially, it had turned into an unwelcoming, and even sometimes frightening place. And I realized it had become a microcosm of what was happening in society at large. The fragmentation and tribalization of groups who could not see eye to eye. But instead of discussing their differences rationally, they had resorted to name calling and bullying, or just refused to talk to one another.

In addition, I had noticed for about a year or more that I was not getting many responses from people who wanted to discuss issues, but wanted to show off their own knowledge about or hatred of Russia. I laughed about it at first, but after awhile it started to get annoying. I confess I even started muting a few people because of it.

I joined Twitter initially to engage with people who had similar interests. Both to learn from others and to share my own views. And it was great for that. I met a lot of people from around the world who I would not have had I not had the platform. And I am grateful to the people who were willing to engage in discussion and healthy debate.

Academy Reforms

Last week Russian President Vladimir Putin publicly called out the Academy of Sciences for allowing high-ranking bureaucrats to join.

“Speaking on Wednesday at a meeting of the Council for Science and Education, President Vladimir Putin said that late last year he asked officials to abstain from elections to the Russian Academy of Sciences… and he appealed to the head of the Academy, Vladimir Fortov.”

However, according to Vzglyad, when the elections to the Academy were held in October, “many of the civil servants disobeyed the President.”

Sergei Leskov writes in Rosbalt that what happened was “an unprecedented event and its underlying causes require analysis and interpretation.”

“The immediate reason for the conflict situation was the fact that… a half dozen [high-ranking] officials were elected to the Academy. A few months ago, Putin gave a written order that officials were not to run for the RAN… that is we are talking about direct disobedience.”

And, as we found out yesterday, the president followed through on his threat, and signed a decree dismissing four of the officials who had violated the ban.

“Putin, as the builder of the power vertical cannot understand how officials openly violated his will, which cannot be misinterpreted. In this sense, the president’s decision to dismiss officials from the civil service… to an academic path is quite logical.”

There seems to be some mass movement of civil servants into the Academy, a position that is for life once a person is allowed entry. The process to gain a seat in the Academy is a rather long and arduous one.

“Each applicant must be nominated, must go through six rounds of interviews, and voting is always secret. The procedure is consecrated in a century of tradition, and, by design, should serve as a barrier to entry into the ranks of the Academy the unworthy public. This ensures the independence of the Academy from the authorities, but on the other hand, it strengthens the state itself, which out of short-term motives in every era tends to dictate its will onto the Academy. There are examples where the independence of the Academy saved her prestige.”

But that’s a rather idealistic view of the situation, Leskov continues.

“…of course you do not have to be a professor of human nature to guess that a secret ballot can be controlled and regulated…. It is necessary to conclude that not only the conceited officials, but also the management of the Academy took a risk in going against the president.”

So why did the Academy decide to go through with this dilution of its ranks by adding new members from the bureaucracy?

“Following the recent ruthless reform [that took place in 2013], when officials deprived the Academy of its rich assets, it [the Academy] felt a threat to its existence. We must fight for survival! According to the laws of Darwinism, social mutations have become inevitable. The strong devour the weak. So we must be strong. One of the coping mechanisms – to attract the alpha male.”

So the Academy added these officials for protection, he alleges.

“Some colleagues of [Academy President Vladimir] Fortov told me: “How could Putin humiliate the president of the Academy?” But we must admit that from the start the Academy itself and its president humiliated himself by swallowing the joke of a reform… When you yourself are willing to be humiliated, do not be surprised when others humiliate you.”

And, Leskov concedes, “…in our country the scientist has always been dependent and humiliated…. it is no coincidence that in our history there are practically no examples where a scientist has become an independent and wealthy man like Watt, Edison, Sikorsky, Gates, Jobs, Musk…!”

If in the Soviet era, it was rare for the elite to become members of the Academy (“it was a violation of party modesty”), then “in democratic times, habits have changed. Nobody has taken statistics, but there is a sense that the current election to the Academy has turned into a promenade show for VIPs.”

“The Academy of Sciences is often criticized for its lack of innovation. This is slander. A striking innovative achievement of the Academy is the trade in academic status…. But today the issue of the professional dignity of the scientist… is not necessary.”

What is happening in the Academy is a microcosm of what is taking place throughout academia in Russia, Leskov concludes.

“Russian academia is gradually and inexorably turning into a citadel of scientific nomenclature. And this leads to further brain drain. Young scientists, instead of living in Russia and moving up the career ladder, are forced to flee in search of the best scientific niches in the West. Youth… sees no prospects. It is characteristic that the Academy did not name [2010] Nobel Prize winner Konstantin Novoselov, who is a Russian citizen, but strengthens the rear of policemen, oilmen, and counterintelligence agents.”

“Once the Academy of Sciences was the most robust repository of moral and spiritual values of society. Today there are no intellectual and moral leaders, like Sakharov…  and none are visible on the horizon.”

*For more details on the “reforms” forced on the Academy by the Kremlin in 2013, see this article from the Institute of Modern Russia.


The Moscow Times reports:

“The decline of the Russian economy has slowed, according to the State Statistics Service.”


“The Economic Development Ministry has forecast that GDP would drop by 0.6 percent in 2016 and increase by 0.6 percent in 2017. At that rate, the Russian economy would rebound to the level of 2014 no sooner than 2020. The baseline scenario for long-term forecast assumes stagnation…”


“…former Finance Minister Alexei Kudrin said that the macroeconomic situation has improved and that the focus has shifted to the microeconomic level where reforms are needed.”

In separate comments, Kudrin “…compared the situation in today’s Russia to the late Soviet period. According to him, Russia is now facing the same risks – decentralization and the regionalization of the country…”

“The USSR collapsed not due to a weak army and not in connection with a weak KGB. It collapsed because it was an inefficient, bereft economic model.”

Kudrin also said that “…the main risks [for Russia today] are economic inefficiency and the inability to be technologically advanced.”

According to the Economic Development Ministry’s target scenario, economic growth will exceed 4 percent annually as early as 2018 — but only if Russia makes the transition to an investment model by which companies achieve increased revenues through lower costs, an improved business climate, and support from non-raw materials exports.

“One federal official points out, however, that effective investment does not consist of simply laying pipes in the ground or building bridges that go nowhere. The problem is that the crisis is affecting actual projects that under way, and fiscal policy is skewed away from supporting investment in infrastructure and human capital and toward social and defense spending.”

And that is exactly what Russia’s 2017-2019 budget is proposing:

To put that in context:

In a poll published last week, 48% of Russians said the economic situation has worsened in recent years. This is compared to 37% who said they thought so when asked the same question in September.

Almost 32% of respondents thought that the situation in the country will get worse in the next year or two. And another 13% of those polled thought the crisis will last more than two years.

3/4 reported that they were affected by the crisis, and more than 27% of respondents stated that they have been hit hard by the recession. An increasing number of Russians are afraid of losing their jobs, and complain about pay cuts and wage arrears. Rosstat says that total wage arrears in Russia increased by 3.6% between 1 Sept & 1 Nov, reaching 3.79 billion rubles.

Russians continue to save money on food, clothing, & shoes, as well as entertainment. 24% said they have reduced spending on medication. Saving on consumption remains the main form of adaptation to the crisis. People have begun to stockpile food. Nearly 31% said they are gardening more at their dachas. But only a few Russians have said that to combat the crisis, they have found a second job or some part-time work.

People have adapted to the weak economy and are prepared for a long life under poor conditions. But a sociologist told Vedomosti that the crisis would not have a negative impact on the government, as “the population resides in apathy.”

Nazism Without A Nation

Alexander Kushnar writes:

“The Putin Regime is substantially different from Lenin’s Bolshevism, Stalin’s totalitarianism, and Hitler’s Third Reich.”

While there are similarities, and the Regime has cherry-picked features from each, there are still stark differences. And if these differences are ignored, he continues, the tools needed to destroy the system won’t be chosen correctly.

“The fact is that the governments of Lenin, Stalin, and Hitler were based on socialist ideology, which arose as a reaction to the terrible social injustice that dominated the economic structure in those days: no one can deny that 15-hour child labor and the high mortality rate among 14-year-olds in manufacturing… required a strategic adjustment. All three systems gave the wrong answer to this challenge, and died at different times for different reasons.”

“In turn, Putinism is not an attempt to overcome a problem, but rather away from it and creating new challenges for the international community with only one purpose, to achieve the interests of only a small group of descendants of the imperial secret police…. The current Kremlin chimera is devoid of any ideology, an anarchist cesspool, the sole form of existence, which is endless mimicry.”

“The Russian special services have constructed an artificial, fake, non-existent enemy in the face of the West and beat him like a punching bag, posing a scarecrow for a real opponent.”

But the “three pillars of modern Russian political culture exist only on TV”. That is the law on the Russian Nation, import substation, and the restoration of Russia’s military are really nothing more than special effects for the masses to watch on TV every evening. And these are meant to “replace ideology, economy, a political system, culture, and the military.”

Kushnar then tries to argue that Russia cannot be a Nazi regime because, he says, “Russian society was atomized so long ago that reintegration is not possible…. which makes me skeptical of the threat of what is referred to as “fascist” Russian citizens.”

He continues:

“They are so disunited that social gravity is not able to bring them back into orbit with one another so that they gain at least a semblance of a normal society, which is the same as Scandinavian Europe. The most obvious example, in this sense, is the sharp contrast to how domestic violence is treated in Russia and Norway. Hence the confusion over drama related to the confiscation of children from Russian emigrants, considered normal assault.”

“For Russia, the typical story of when an alcoholic husband beats his wife with impunity for years with the complete indifference of the neighbors, and that much more tragic connivance of law enforcement bodies: they, like other social institutions, have migrated into the sphere of mirages. The country has become the world of the “Wild East” – similar to the “Wild West”. As in archaic times, concern about safety for Russians has become a private matter, and not the State’s.”

But, he continues,

“In the case of today’s Russia, we are dealing with fairly typical conformism, characteristic of intellectually weak and relatively randomly formed groups like students in remedial grades. No one would accuse twelve bullies [who are] humiliating their classmate of Nazism: it is clear that we are talking about the banal collectively fostered immorality, sometimes verging on administrative and even criminal violations.

“But Nazism requires more than a desire to assert itself at the expense of the humiliation of fellow citizens – namely, an ideological system in the form of major theories, far from the uncomplicated performances of Kiselyev and enshrined in numerous works, as well as – crucially – the real unity of social elements.

“However I do not see these factors in the generational environment of the 2000s. Nothing exists but infantile and absolutely separated (often disastrously ignorant) individuals, just as there is no ideology of the “Russian World”: it exists only as a set of hollow slogans that fit on the page of a newspaper.

“It is enough to compare this primitive stillborn product… with the amount of literature that is dedicated to the rule of law model, to see how far the Kremlin is from real plans for the indoctrination of social life.”

Yes, Russian adventurism is “a monstrous crime”, Kushnar concedes, “but it is not an independent existential threat to the West… If the Euro-Atlantic community has to live through another cycle of collapse-revival, it is not because of the Eastern barbarians, but for quite different – internal – reasons. The Russian threat here, if it even exists, is only a small, though integral part of the global disease of the US, the EU, and their allies.”

And meanwhile, Russia is on the verge of collapse, and likely won’t exist in 100 years. So what is there to fear?


At first, the authorities called it an “epidemic”, but later stepped away from that label.

RFE/RL wrote:

Tatyana Savinova, the first deputy chief of Yekaterinburg’s health-care department, said on November 2 that she used the word “epidemic” in her earlier statement to express how medical personnel view the situation, adding that a HIV epidemic has not been officially announced in the city.

But according to an expert:

“In many Russian cities, you can speak about a generalized epidemic [that is it is not merely high-risk groups who have contracted HIV]. Only our officials think that if they don’t declare it an epidemic, there isn’t one. In fact we have had an epidemic for 30 years, [and] it’s gaining momentum. What is now being done in Russia is not enough to stop it.”

Another activist said that it was good that Ekaterinburg had made this information public, and their partial retraction was the result of the way the system works.

“Unfortunately, they are afraid to talk about HIV in the Russian regions…. this is tantamount to admitting poor performance (although it is not really the same thing). Officials fear they will be scolded for “inefficiency”.


Human rights lawyer Pavel Chikov wrote on Facebook:

In a city of 1.4 million inhabitants, 27,000 have HIV (1.9%).

By comparison, New York has 20 million [residents] – 113,000 have HIV (0.5%).

In the UK, 64 million [residents] – 107,000 with HIV (0.2%).

In the South African province of KwaZulu-Natal [there are] 10 million inhabitants. 4 million have HIV (40%). In general, 18% of the population of South African have HIV. But 50% of them receive treatment.

In Eastern Europe and Central Asia 1.5 million people are living with HIV, of which 1 million are living with HIV in Russia (0.7% of the population).

In Russia, only 120,000 people with HIV are getting treatment (only 12% of those identified).

The World Health Organization recommends that antiretroviral therapy be assigned each patient with HIV.

In Russia, [there are] 2.3 million injecting drug users [IDUs].

50% of all HIV cases [in Russia are caused by] dirty syringes. The second half are from heterosexual [intercourse].

Russia, Turkmenistan, and Uzbekistan are the three countries where substitution therapy is prohibited for drug users.

Civil society organizations working on HIV and drug addicts, are labelled “foreign agents” in Russia.

About 40 billion rubles from the federal budget each year is spent on the purchase of HIV medications. The only buyer is a subsidiary of Chemezov’s Rostec.

Chikov offers 6 suggestions out of the current situation:

The HIV epidemic can be controlled, if:

  1. Large-scale voluntary HIV testing is carried out;
  2. Strive for 100% [antiretroviral] treatment;
  3. Introduce replacement therapy;
  4. Promote safe sex;
  5. Support NGOs in this sphere;
  6. To work with vulnerable groups – drug users, sex workers, and men who have sex with men.

The Russian Nation

“What we absolutely can and must implement — we need to be thinking about this directly and begin working on this in practical terms — is a law on the Russian nation,” Putin announced on Monday at a meeting of Russia’s Council for Interethnic Relations.

Alexei Roschin writes:

“The new idea of the Russian authorities shows that the authorities are suffering from the same illness as the opposition – from the total lack of constructive ideas.”

This is not surprising, he writes, “after all, the opposition in Russia is really the flip side of power, “her flesh and blood.” And that is why they have the same problems.”

But why does there need to be a special law about the “Russian nation”? he asks.

“…it is necessary, they say, to somehow train Russian citizens to the simple idea that in the modern state “nationality” is not determined by skull size, blood [type], and eye shape, but simply on citizenship, that is, for example, “a Frenchman” is just “a citizen of France”, and “an American” is a US citizen, and nothing more.”

But, he continues, the problem is that Russians have no concept of “citizenship”. “There are “subjects”, literally “paying tribute”…”. And they see the “designation as “Russians” as a negative one”.

Instead this will be seen as an effort to take away “…the awareness of belonging to some kind of “people”, that is, to at least some community within a society built on the absence of grassroots communities…”

The Act of “the Russian nation” will be adopted, Roschin says, and “will equally enrage everyone… both Russians and other representatives of the peoples of our “multi-ethnic country”.

“Small nations will decide that they are going to be deprived of their final identity and dissolve without a trace in the “new community – the Russian people”, as in the Soviet Union (then there were the “Soviets”). But the Russian… will decide the same thing – it has long been noted that our “profruskyi” [A “professional Russian”, according to Roschin, is somebody who treats being Russian as giving them special authority to discuss “life and all the phenomena of life”] tend to behave exactly as members of a small nationality, which are all “downtrodden”.

So, Roschin says, they will force this fake equation of nationality and citizenship on the population, “like the law on potatoes under Catherine”.*

But, he concludes, “it is clear that nothing will come of it. At one time V.I. Lenin, who despised all nations equally, said sensibly, “the best way to solve the national question is generally not to make it.”


*”In the Russian Empire, Catherine the Great ordered her subjects to begin cultivating the tuber, but many ignored this order. They were supported in this dissension by the Orthodox Church, which argued that potatoes were suspect because they were not mentioned in the Bible. Potatoes were not widely cultivated in Russia until 1850, when Czar Nicholas I began to enforce Catherine’s order.” []

Ivan Grozny

The authoritarian state lives on horror stories, the totalitarian on myths.

The blogger “Haydamak” had this to say in a long blog post this weekend on the statue of Ivan Grozny [Ivan the Terrible, as he is commonly referred to in English] that the authorities in Oryol erected on Friday. The Tsar ordered a fortress built in Oryol in 1566, and is therefore considered the “founder” of the city.

People with icons, including the face of Nicholas II (in a sense, the debtor to Ivan the Terrible – if he had not killed his son, there would be no Romanov rulers), [and] some strange figures, with indistinguishable faces.

People with icons of Ivan Grozny, Nicholas II, and the Virgin Mary.

The blogger noted that they “honored him almost like a saint (that Ivan was excommunicated from the church for debauchery and murder is somehow forgotten).”

He also brought up the fact that the governor of Oryol said at a press conference several months ago that Ivan Grozny blamed himself for his son’s death.

“Ivan Grozny once said that “I am responsible for the death of my son, because at the time I did not give him healers.” When they were on the road and he [the son] was ill. They were traveling from Moscow to St Petersburg… History should be remembered and nobody should be allowed to rewrite it.”

This is, of course, a categorically untrue statement, and Russians had a field day mocking the governor afterward.

Haydamak wrote:

Previously it was customary to frighten, now it is customary to simply invent a parallel world.