In ‘Russia Redux?’, Vladimir Popov has provided a lucid reckoning of the terrible economic, political and human costs of the shock-therapy era. If Russia is in slightly better shape now than seven years ago, it is still significantly worse off than it was twenty years ago. As one striking graph after another demonstrates, gdp, investment and life expectancy have yet to return to their 1989 levels. What Popov terms ‘the recession’ has few comparisons in world economic history. Nevertheless, it is heartening that he can present data which point to significant improvements in several areas. After the ceaseless turbulence and moral bankruptcy of the Yeltsin years, the two administrations of Vladimir Putin have been widely characterized as inaugurating a new era of stability in Russia: state power has been reasserted and, thanks to high oil prices, gdp has grown markedly, government finances are in the black, and much of the country’s external debt has been paid down. There has also been good news in the social sphere: the birth rate has risen, while the suicide and mortality rates have declined.
However, as Popov warns, there are many dangers ahead. The rouble is overvalued, and the economy is overly dependent on the current commodities bonanza. Moreover, the government has not used the windfall from natural resources to fund spending on public goods, and has even opted to further shrink the tax base. Nonetheless, Popov concludes that ‘Russia is in better shape today than seven years ago’, and asserts that the priority is to ‘restore the institutional capacity of the state’. The erosion of democratic prerogatives that has accompanied Putin’s re-centralization drive is the price that must be paid for continuing stability; the alternative is chaos.
Popov’s empirical approach is a much-needed corrective to the liberal-capitalist mirages of ‘transitology’, and to the Kremlin shadow-puppetry of the mainstream Russian media. Above all, it provides a solid basis on which to advance discussion. What follows is an attempt to probe further into the trends Popov has outlined. This is in part a matter of more detailed quantification—differentiating the elements of the overall picture, in order to see more clearly the imbalances between them. But a closer examination of Russia today also has far-reaching qualitative implications, which in turn will determine how—or indeed if—the hazards Popov has identified are addressed.
The rate at which Russian gdp has grown since the rouble collapse of August 1998 is significant, reaching a high of 10 per cent in 2000, and averaging between 4 and 7 per cent over 2001–06. The rising economic tide has lifted the incomes of many: the national average reached 10,287 roubles ($350) per month in November 2006, compared to 2,281 roubles (around $80) in 2000, while the poverty rate declined from 29 per cent in 2000 to 17.6 per cent in 2004. The country’s Gini coefficient, the standard aggregate measure of income distribution, rose from 0.3 in 1992 to almost 0.5 in 1998, but by 2000 had dropped to 0.4, indicating that at least some of the staggering inequalities of the 1990s had been smoothed out. However, the Gini figure has since then begun to creep upwards: from 0.397 in 2000 to 0.409 in 2004.footnote1
Two further qualifications should be made to this picture, relating to the social and geographical distribution of Russia’s new prosperity. Wealth remains highly concentrated: in 2002, the top 20 per cent of the population by income accounted for 46.6 per cent of total income, the bottom quintile for only 6.1 per cent. The latter were faring worse in relative terms by 2004, when they commanded 5.6 per cent of total income.footnote2 Contemporary Russian society is to a large extent stratified by chronology: among those buffeted by the hurricane winds of shock therapy in the 1990s, the elderly and the retired were prominent, as already meagre pensions went largely unpaid during the Yeltsin years. Here again the country’s improving fortunes have helped, and the sums paid have even increased. However, they remain low—2,395 roubles a month ($85) in 2005—and the monetization of a string of benefits in 2004 has stretched pensioners’ resources still further. Their standard of living has been eroded by having to pay for transport and utilities they previously received for free, and by inflation—formerly in double figures, now at 9.7 per cent, and still likely to outpace any increase in the standard pension.
Geography is a crucial variable in assessing Russia’s present condition. Both population and resources have always been distributed extremely unevenly across the country’s vast territory. Industry is concentrated in European Russia, the Urals and the Arctic Circle; as a result, the per capita gross regional product of the Central Federal District, for instance, is two and a half times higher than that of the Southern steppe and North Caucasus. The capital’s gravitational pull on the country’s economy is extraordinary: Moscow alone accounts for 20 per cent of gdp. If we factor in the wider Moscow region, St Petersburg and Tiumen’, only ‘four regions produce nearly half of Russia’s output’.footnote3 The present reliance on exports of oil, gas and metals has exacerbated existing imbalances by dramatically raising the wealth of resource-rich regions: annual per capita gross regional product in Tiumen’ oblast’, for instance, stood at 575,411 roubles in 2004 ($19,800), compared to 12,583 roubles ($430) in Ingushetia, the Russian Federation’s poorest sub-unit.footnote4 Needless to say, this torrent of cash has largely flowed into the coffers of extractor companies as profits, rather than to employees as wages.
Regional aggregate figures conceal further disparities. There are significant differences not only between regions, but within them. In the Central Federal Region, for instance, annual grp per capita stood at $4,350 in 2004, and the average yearly income at the end of 2006 was $6,120. But the gap between the region’s maxima and minima is vast: where the average annual income in Moscow is $13,440, in Ivanovo oblast’ it is a mere $1,860—a ratio of over 7 : 1. Lower, but nonetheless significant, ratios obtained elsewhere: in the Urals, the average income of the Yamalo-Nenets Autonomous okrug is nearly five times higher than that of Kurgan oblast’; inhabitants of Samara oblast’ on the Volga earn two-and-a-half times as much, on average, as those of Mordovia.footnote5 Given the aforementioned concentration of industry, and corresponding focus of investment and employment opportunities, the distance between well-fed regions and lean zones seems set to widen in the years ahead. In such a context, the gradual increase in domestic fuel prices that Popov recommends in his conclusion would have vastly disparate impacts in different parts of the country and on diverse social sectors—reinforcing the dynamic of growing territorial and social inequality.