Shocking Mother Russia : Democratization, Social Rights, and Pension Reform in Russia, 1990-2001 [1 ed.] 9781442679917, 9780802089304

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SHOCKING MOTHER RUSSIA DEMOCRATIZATION, SOCIAL RIGHTS, AND PENSIOlff REFORM IN RUSSIA, 1990-2001

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Shocking Mother Russia Democratization, Social Rights, and Pension Reform in Russia, 1990-2001

Andrea Chandler

UNIVERSITY OF TORONTO PRESS Toronto Buffalo London

www.utppublishing.com © University of Toronto Press Incorporated 2004 Toronto Buffalo London Printed in Canada ISBN 0-8020-8930-5

Printed on acid-free paper

National Library of Canada Cataloguing in Publication Chandler, Andrea, 1963Shocking Mother Russia : democratization, social rights, and pension reform in Russia, 1990-2001 / Andrea Chandler. Includes bibliographical references and index. ISBN 0-8020-8930-5 1. Old age pensions - Russia (Federation) 2. Democratization Russia (Federation) 3. Social rights - Russia (Federation) 4. Russia (Federation) - Politics and government- 1991- I. Title. HD7197.2.C42 2004

331.25'2'0947

C2004-902394-2

This book has been published with the help of a grant from the Canadian Federation for the Humanities and Social Sciences, through the Aid to Scholarly Publications Programme, using funds provided by the Social Sciences and Humanities Research Council of Canada. University of Toronto Press acknowledges the financial assistance to its publishing program of the Canada Council for the Arts and the Ontario Arts Council. University of Toronto Press acknowledges the financial support for its publishing activities of the Government of Canada through the Book Publishing Industry Development Program (BPIDP).

To Frederick

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Contents

Prefa ce

ix

1 Russia's Social Welfare Crisis in Theoretical Perspective

3

2 The Elderly in a Revolutionary Society: The Soviet Pension System, 1917-1956

24

3 Pensions and the Pressures of Democratization in the USSR under Perestroika, 1986-1990

44

4 The Origins of Post-Communist Russia's Pension Crisis, 1990-1993

60

5 Institutional Structure of the Russian Pension System, 1992-2001

72

6 The Politics of Pensions and the Evolution of Russian Parliamentarism, 1994-1999

87

7 Russian Laws on Old-Age Pensions and Veterans' Rights: Contending Understandings of Social Justice

109

8 The Evolution of Pension Reform in Russia, 1995-2001

124

9 Conclusion

154

viii

Contents

Appendix A: Detailed List of Sources for Figures 6.1-6.2

163

Appendix B: Detailed List of Sources on Special Pension Benefits and Exemptions

169

Appendix C: Disputes over Finances

173

Notes

177

Bibliography

225

Index

239

Preface

In early 1992, Russian president Boris Yeltsin's 'shock therapy' economic reforms began with an abrupt liberalization of consumer prices, which took effect on January 2. Overnight, just after Russia's New Year holiday, prices for many basic items tripled. I happened to be in Russia at that extraordinary time, completing the research for my doctoral dissertation. Like everyone else, I was accustomed to queuing up for bread and other groceries. On or around January 2, I found myself in a gastronom (grocery store) in northwest Moscow, where I saw an elderly lady buying potatoes. On learning the new price of the potatoes, as she fumbled in her purse for money, the woman burst into tears. The memory of that woman's pain is still with me more than ten years later; ultimately, if only indirectly, her pain is what inspired me to write this book. This study had its origins in the mid-1990s, when as a tenure-track assistant professor at Carleton University I was seeking a new research direction. My doctoral dissertation had examined the politics of border control in the Soviet Union, and was a case study of the evolution of a particular set of state institutions over the course of six decades. Fascinated as I was by that subject, I nonetheless found myself craving work that was more society-centred and more contemporary. The politics of Russia's old-age pension system since communism's collapse seemed an appropriate subject: the fate of pensions was an excellent illustration of how the dramatic, state-sponsored institutional change that accompanied Yeltsin's 'shock therapy' reforms triggered intense political controversy and social discontent. Ironically, however, as my study comes to a close, I find myself back where I started with my doctoral dissertation. Like border control institutions in the Soviet Union, Russia's old age pension system remains deeply influenced by the historical baggage of

x

Preface

its communist past, and by the needlessly complex structures that the state developed over time in its efforts to resolve social problems. My greatest intellectual debt is to the Social Sciences and Humanities Research Council of Canada (SSHRCC), which awarded me a three-year Standard Research Grant from 1999 to 2002 to research this study. The council's generous funding enabled me to pursue comprehensive research, to complete field work, to present drafts of my work at conferences both in Canada and abroad, and to hire four research assistants over the course of three years. I am also grateful for some other sources of support at both early and later stages of the research project. In 1994, I was awarded a small GR-6 Grant from the Faculty of Graduate Studies and Research at Carleton University (these grants are funded by SSHRCC). This grant enabled me to pursue general research on Russian state-society relations; that research eventually led me to an interest in old-age pension policy. I am also grateful to Carleton University's Faculty Exchange Program, with Moscow State University; this program made it possible for me to visit Moscow for six weeks in 1997 in order to conduct preliminary research on the topic and assess its feasibility. My preliminary research was further developed when I was given the opportunity to attend the Summer Research Laboratory on Russia and Eastern Europe at the University of Illinois, Urbana-Champaign, for two weeks in 1998.1 am also extremely grateful to the Kennan Institute for Advanced Russian Studies, in Washington, D.C. The institute awarded me a generous shortterm grant that enabled me to pursue research in Washington, DC, for one month in June 2000. I was fortunate to be able to spend time in Russia and Latvia to research the project. In Moscow, the Institute of State and Law of the Russian Academy of Sciences facilitated my stay in the city for approximately two-and-a-half months in the autumn of 1999. I thank Academician Villiam Smirnov for his invaluable assistance with these arrangements and for his helpful advice and suggestions. I am grateful to Riga Stradina University (especially to Janis Kapustans) and to Veiko Spolitis of the Civic Education Project's Baltic office for the opportunity to visit Latvia in January 2000. There, I was able to complete some comparative research on pension reform in Latvia and to explore further some aspects of Russia's pension reform. In the spring of 2001 I was also able to visit Moscow for a brief period to update my research, and I am grateful to the Institute of Economics of the Russian Academy of Sciences for its kind assistance in extending my stay in Moscow after I attended the IV International Kondratieff Conference hosted by the institute in May

Preface

xi

2001. Finally, I thank David Cameron and Tim Shaw of Dalhousie University's Department of Political Science for helping me access Dalhousie's Killam Library and for providing me with two opportunities to present my work informally during a visit to Halifax in 2000. I am especially grateful to Dr Norman Pereira of the Department of History at Dalhousie for his help. I was fortunate to have the opportunity to examine archival documents at the State Archives of the Russian Federation (GARF) in Moscow, Russia, and the Open Society Institute Archives in Budapest, Hungary. Between 1999 and 2002,1 was fortunate to have four talented research assistants: Peter Waisberg, Helen Belopolsky, Peter Szyszlo, and Yuriy Matashev. These promising students searched databases, gathered secondary source material, and helped me sort through Russian-language research materials. Peter Waisberg helped me compile the data used for analysis in Figures 6.3A-C in chapter 6. I was glad to have research assistants who approached their work with enthusiasm and persistence and who made refreshing observations. I want to acknowledge my heavy debt to those colleagues and experts in Canada, the United States, and abroad who provided me with valuable information, logistical assistance, contacts, copies of their publications, critical feedback, and/or suggestions that ultimately improved the quality of my research. In particular, I want to thank the following Russian experts: Marina Baskakova, Aleksei Avtonomov, Natalia Rimashevskaia, Valentina Bochkareva, El'vira Tuchkova, and Viktoria Antonova. In the West, I am grateful for the comments and advice I received from Barry Lesser, Linda Cook, Joan DeBardeleben, Nick Aylott, Anne White, Miriam Smith, Peter Konecny, Norman Pereira, and Timothy J. Colton. My apologies go to anyone I may have inadvertently omitted. This manuscript is based heavily on conference papers and presentations that I made in various venues: the National Convention of the American Association for the Advancement of Slavic Studies (AAASS) in St Louis, Missouri, in November 1999; the Annual Meeting of the Canadian Association of Slavists in Ottawa, Canada, in June 1998; the Annual Meeting of the Canadian Political Science Association in Quebec City, in July 2000; a 'brown bag' seminar I gave to the Institute of European and Russian Studies at Carleton University, in September 2000; the AAASS National Convention in Denver, Colorado, in November 2000; the IV International Rondratieff Conference of the Institute of Economics in Moscow, in May 2001; and the Joint Meeting of the Law and Society Association and Research Committee on Sociology of Law in Budapest,

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Hungary, in July 2001. I am grateful for the useful comments or questions I received at these meetings. My thanks also to several anonymous referees, who provided thorough constructive comments and valuable suggestions, which contributed greatly to the improvements I made in the final manuscript. I thank also Matthew Kudelka for his expert copy editing. Finally, during my research I conducted approximately twenty-four interviews with public officials, members of non-governmental and international organizations, and experts in Russia and Washington, D.C. The interviews provided useful background information as well as, in some cases, primary resource material. For reasons to be outlined in Chapter 1, and in compliance with the procedures for ethical research involving human subjects valued by SSHRCC and administered by Carleton University, I have generally chosen to keep interviewees' identities confidential. This commitment to confidentiality prevents me from thanking sufficiently those who gave freely of their valuable time in order to talk with me, share their views, correct some of my misconceptions, and point me in the right direction. I can only say that I greatly appreciate the generosity and professionalism of those I interviewed, and that these interviews significantly enhanced the quality and accuracy of my work. That being said, I alone am responsible for the views expressed in this work, and for any errors it contains. This book has been published with the help of a grant from the Canadian Federation for the Humanities and Social Sciences, through the Aid to Scholarly Publications Programme, using funds provided by the Social Sciences and Humanities Research Council of Canada. For transliteration of Russian-language words, I have generally followed the Library of Congress system, with occasional exceptions for commonly used alternative spellings (for example, I have used the spelling 'Yeltsin' instead of 'El'tsin,' oblast instead of oblast'). Most of my research was completed in 1999-2000, during a year's sabbatical from Carleton University. I am extremely thankful for the family support I received during this time, particularly from my tireless mother, Joan Chandler, and my heroic sister, Karen Chandler. I am also grateful to Wyn Millar, who read the entire first draft, and Bob Gidney, who provided morale-boosting comments on an early draft paper. Finally, I would like to thank my patient husband, Derek Baas. His insightful and meticulous comments on various drafts enabled me to make valuable improvements; his no-nonsense encouragement constantly inspired me to finish what I'd started.

SHOCKING MOTHER RUSSIA

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Chapter 1

Russia's Social Welfare Crisis in Theoretical Perspective

In an interview for Russian television, the famous exiled writer, Alexander Solzhenitsyn, asked a rhetorical question of the host, which was directed as well to the viewers, the whole country, and the president: 'would you treat your own mother with shock therapy?' Our mother is Russia, and we are her children. It is truly brutal to treat your mother with shock therapy and not something a good son would do. Yes, in some sense Russia is our mother, but at the same time, Russia is us. We are its flesh and blood, its people. I would use shock therapy on myself, and not just one time. Sometimes it takes a sharp break or rupture to make a person move forward or even survive at all. Boris Yeltsin, The Struggle for Russia

Despite its incoherence, the quotation above reveals a strong ambivalence in Russian political life regarding the high social cost of postcommunist reforms; it also demonstrates the emotional resonance of the plight of the elderly in Russia. In Russian political discourse after the break-up of the USSR in 1991, pensioners became a powerful symbol of the adverse consequences of change. Like the leaders of other postcommunist countries such as Poland, Russia's first president, Boris Yeltsin, had decided to pursue a rapid economic reform strategy known as 'shock therapy.' As the term implies, shock therapy, which began in 1992, involved the rapid and simultaneous pursuit of a package of reforms intended to privatize the economy and promote economic growth. It was assumed that these policies would create material difficulties for the citizenry in the short term, but would ultimately bring efficiency and prosperity that would promote the general good of society.1 Shock therapy proposed to reduce dramatically the role of the

4 Shocking Mother Russia

former communist state in the Russian national economy. However, few Russians anticipated that Yeltsin's reforms would lower the living standards of many citizens, while also profoundly changing state-funded social welfare benefits to society. As consumer prices skyrocketed in Russia in 1992 and 1993, old-age pensioners were among the most visible and vocal victims of the new government's economic policies. Russia's senior citizens depended heavily on government pensions and had been raised on Soviet values of socialism and patriotism. They seemed poorly equipped to benefit from a new economic order that prized youth, technological savvy, and individual initiative. The increasingly common sight of elderly women begging on the streets of Moscow enraged the growing Russian opposition. In the media, these women served as a powerful image of the downside of Russian reforms. The weakness of the social welfare system after the collapse of the Soviet Union was a problem that Russia shared with other post-communist countries. In many of these countries, market reforms were accompanied by inflation, increased unemployment and fiscal restraint. Privatization allowed wealthy elites to emerge, but the middle classes and vulnerable social groups often found themselves worse off than they had been under socialism.2 Price liberalization reduced the population's purchasing power and at the same time introduced new uncertainties such as fear of unemployment. As Adam Przeworski noted, these new social hardships created the potential for resistance to reform - a resistance that was all the more likely because under liberal democracy, opponents of reform were now able to openly air their views.3 In addition, Glaus Offe noted the need that states were confronting to reform the inefficient social welfare institutions inherited from communism, but without the sums of money and organizational skills required to develop a social welfare system more suited to a market economy.4 Furthermore, new, reformist leaderships in post-communist countries were promoting ideologies that called on individuals to take greater personal responsibility for their own well-being instead of relying on the state to provide all the amenities of life. The idea of removing or weakening the existing state-funded social safety net would inevitably prove to be controversial. After communism's collapse, citizens had come to expect forms of governance that were more democratic and inclusive than under the previous regime.5 Attempts to reduce the state's obligations to provide social programs to the citizenry seemed to contradict the widespread desire for a more responsive government. In the socioeconomic chaos that followed the collapse of communism, social

Russia's Social Welfare Crisis

5

welfare became a hot political issue. Radical market reformers, disenchanted with the bureaucratic structures of the communist state, sometimes advocated dramatic cuts in welfare state programs. Others favoured more ambitious moves toward a generous, Western European form of social security.6 Often however, post-communist leaders avoided social welfare reforms until their state budgets could no longer support the continuation of pensions and other benefits at existing levels.7 Amid the deepening economic crisis and the political uncertainty arising from the collapse of the former socialist elites, social welfare reform was only one of many problems facing postcommunist polities. The states of Eastern Europe and the former Soviet Union were struggling to reform their entrenched communist-era institutions. The development paths they chose became increasingly diverse. Some countries, including Poland, Estonia, and Hungary, moved decisively towards Western-oriented liberal democracy. Others, such as Belarus and the former Soviet republics of Central Asia, reverted to a more inward-looking authoritarianism.8 By the end of the 1990s, many observers were beginning to regard Russia as a country that had failed to cope effectively with the complex transition from communism.9 In December 1999, the president of the Russian Federation, Boris Yeltsin, resigned his post; this paved the way for the election of his chosen successor, Vladimir Putin, to the presidency in March 2000. These events ended a decade that had begun with the precursor of the Russian Federation, the Russian Soviet Federated Socialist Republic (RSFSR), issuing its surprising declaration of sovereignty in June 1990, effectively asserting its autonomy from the USSR. The quiet and sombre departure from office of the flamboyant Yeltsin seemed to symbolize the final end of the high hopes for reform and inclusive government that the charismatic president had once embodied in the eyes of many Russian citizens. Russia came to the end of its first decade of independence facing a litany of obvious problems. Among these were the emergence of a small, insulated elite that had benefited from a controversial privatization process; a chronic deadlock between the government and a left-leaning parliament over key legislation; chronic difficulties in collecting revenues and distributing them across Russia's convoluted federal system; and a political system in which top-down control was increasingly evident, especially under Putin's presidency. Meanwhile, Russian society had been affected strongly by the country's unrelenting political upheaval. In some ways, social changes in Russia since 1991 were more dramatic than in any of the other countries of the postcommunist world. The gap between the wealthiest and poorest

6 Shocking Mother Russia

members of society had increased greatly, and there had been a dramatic fall in life expectancy, especially for men. 10 By 1999-2000, postcommunist Russia was notorious for having failed, apparently, to institutionalize democratic and legal norms and for the disappointments of the market reform process. Scholars, international institutions, and reform experts sought to understand why Russia's transition had been especially difficult. Some analysts noted that in many ways Russia seemed worse off than other East European countries, many of which had emerged from communism with considerably fewer tangible advantages.11 An important cause of Russia's plight was its ongoing economic crisis, including the ruble crash of August 1998. Yet it had to be conceded that political and institutional factors were at least partly responsible for Russia's difficulties. A number of theories have been advanced to try to explain Russia's unique set of difficulties. These explanations variously place the emphasis on four separate factors: the process of post-communist transition; the legacy of an authoritarian and imperialist political culture; the failure to design and implement sound reforms; and the escalation of tensions between the executive and legislative branches. Those who examine the politics of transition tend to examine the power relationships between former communist elites and opposition reformers following the collapse of communism. The early interaction between these two groups established crucial patterns for later political development. Valerie Bunce contends that at the beginning of the transition in Russia, a stalemate developed between former Communist Party members (who dominated the Russian parliament) and Yeltsin's reformers. Both camps were strong, and neither could overpower the other. As a result, there was no decisive mandate for economic and democratic reform, and the clash between the two groups threatened to deadlock reform.12 Philip Roeder, Timothy Frye, and Joel Hellman make similar arguments, contending that entrenched elites from the communist era were strong enough to contain democratization and to limit reforms that would have threatened their own power.13 Steven Solnick argues that Russia's transition was complicated by the ways in which some Soviet elites exploited their positions during the Russian transition to increase their personal wealth, and thereby established a relatively independent entrepreneurial elite. Solnick writes about this elite: 'We might therefore reasonably expect that their top priority in the near term will be protecting the new property rights that they "stole fair and square." They are unlikely to acquiesce in any legal or organizational regime that forces them to surrender any of these hard-won property rights.'14

Russia's Social Welfare Crisis

7

A second approach to understanding Russia's exceptional problems emphasizes that the country inherited the institutional and cultural legacy of the Soviet Union, in some ways more so than other former Soviet republics. This authoritarian, imperialist baggage is making it difficult for Russia to make a clean break with the past. For example, the Russian Soviet Federated Socialist Republic (RSFSR, the Russian Republic) was a distinct federal republic within the Soviet Union. However, as the country's largest republic, the site of the Soviet capital of Moscow, and the birthplace of Lenin's Bolshevik Revolution, the RSFSR was closely identified with the USSR and never had some of the institutions established in the other Soviet republics.15 Marc Beissinger contends that Russia's identity developed through a historical process of imperial expansion across a broad territory; as a result, the post-communist transition in Russia has been impeded by an identity crisis, the consequences of a sudden separation from the other territories of the former Soviet Union, which have declared their independence. 16 Michael Urban argues that Russian political culture has the heritage of the MarxistLeninist ideology of class struggle. Post-communist governments and oppositions have found it difficult to reach a consensus because their political actors cannot help regarding people with opinions different from their own as enemies.17 A third approach locates Russia's transitional difficulties in the leadership's failure to adopt, or to implement, coherent reform policies.18 These arguments are often made by experts or former officials who advised or participated in the Russian reform process. These analyses variously emphasize the defects of the reform policy itself; the government's inconsistent approaches to reform; the government's lack of commitment to reform; and the failure of the West and international institutions to offer enough support for reform. One factor that has been identified as an obstacle to reform is the poor relationship between the Russian executive and the Russian parliament, especially during Boris Yeltsin's presidency between 1991 and 1999. After the 1993 elections, the parliament was known as the Federal Assembly and its lower house, the State Duma, was dominated by opposition deputies. As the largest political party in the Duma from 1995 to 1999, the Communist Party was well placed to oppose significant pieces of reformist legislation, such as tax reform and land reform; this caused the Russian government considerable frustration. Russia's 1993 constitution was adopted after a controversial referendum, which followed Yeltsin's dispersion of the Supreme Soviet - at that time the country's parliament. As a result of

8 Shocking Mother Russia

that referendum, Yeltsin's presidential powers - including his decreeissuing powers - were strengthened sufficiently that some analysts labelled the Russian political system 'superpresidentialism.'19 However, according to Eugene Huskey, the significant role of the president actually encouraged the Duma to take as active a role as it possibly could in order to defend the legislature's right to check and balance the executive.20 A study by Thomas F. Remington and colleagues demonstrates that the conflict between the president and the Duma was most evident when it came to economic reform legislation (and less evident in other policy areas).21 The Duma itself cannot be ignored as a factor in Russia's political decline. As Joel Ostrow argues, the Duma fragmented into weak political factions, and this limited its ability to play a constructive role in adopting legislation.22 (On the whole, the Duma's influence on the content of Russian legislation has been underresearched.) All of this should help us explain the 'basic problem' in Russian politics. So, what precisely is 'the problem'? Among analysts and international institutions, the consensus is developing that issues of governance have been a strong drag on postcommunist reform, and perhaps more so in Russia than in other transitional states.23 It is increasingly being recognized that because of its complicated federal system, postcommunist Russia has found it profoundly difficult to establish coherent legal frameworks, build effective government institutions, and divide powers clearly between levels of government. In her book on the development of the banking system in postcommunist Russia, Juliet Johnson ably points out that Russia's early attempts at reform underestimated the importance of building administrative and legal frameworks.24 Timothy Frye (2000) argues that the state failed to develop sufficient capacity to regulate markets and enforce laws with respect to the private economy. 25 In postcommunist countries, one of the weakest areas of governance relates to systems for collecting and distributing tax revenues. Since governments no longer monopolize economies, they can hardly be expected to function without tax collection and distribution schemes. Without central planning, states like Russia now have fewer levers for monitoring enterprises and compelling them to pay taxes, especially with so many businesses being privatized or being created from scratch.26 And in postcommunist states, we find other challenges besides this to the smooth operation of government bureaucracies. Guillermo O'Donnell has noted that former Soviet and East European countries have found it difficult to achieve 'horizontal accountability' - that is, to

Russia's Social Welfare Crisis 9

ensure that state institutions, including revenue collection agencies, work within the rule of law. 27 The assessments of Johnson and others have brought into sharp relief the importance of understanding the particularities of the institutionbuilding process in what was the Soviet Union's largest and most promising republic. Even so, although there has been a flourishing literature on the problems of Russia's postcommunist transition, to date there have been relatively few in-depth, empirical case studies of the Russian Federation's state formation process. In this study I hope to fill some of that gap by providing a comprehensive account of the politics of old-age pension reform. Pension reform provides an excellent example of the profound difficulties that Russia has faced in its efforts to achieve effective and inclusive reform and to develop sophisticated and accountable institutions of governance. Social welfare reform is an appropriate subject for investigation, for the following reasons. First, the essential purpose of a social welfare system is to provide a safety net during times of socioeconomic dislocation, so that groups in need will receive assistance from the state. Using T.H. Marshall's definition, a welfare state is a state that has accepted responsibility for the quality of life of its citizens, with welfare defined as 'a compound of material means and immaterial ends: it is located somewhere on the axis that runs between the poles of wealth and happiness.'28 Marshall admits that this is a vague concept that allows for wide variations among welfare programs across individual states. Nonetheless, after the Second World War the consensus developed that in a welfare state, the state would establish programs to alleviate poverty and would guarantee all citizens universal access to social welfare benefits.29 Old-age pensions must be considered central to any discussion of social welfare politics, since 'retirement pensions are the single most important element in modern welfare states.'30 The ability to maintain a social safety net during times of change (such as in Russia after 1991) is therefore an excellent test of a government's capacity to meet its own self-defined responsibilities. Russia's social welfare system occupied a unique place among the state institutions left behind when the Soviet Union collapsed. Anticommunist reformers gave no advance warning that market reforms might jeopardize social welfare. Admittedly, social welfare reform had begun a few years earlier under Mikhail Gorbachev, during the period of Soviet political reconstruction known as perestroika (1986-91). At that time,

10 Shocking Mother Russia

Gorbachev raised the possibility that government might expect more forebearance from citizens and offer fewer social benefits in return.31 Yet, the Soviet social welfare system was one of the regime's key claims to legitimacy: unlike other aspects of Soviet governance such as the centrally planned economy and the dominant role of the Communist Party, the Soviet social welfare system was never repudiated. Social welfare was an aspect of Soviet communism that the population valued. Why focus on pension reform, when other aspects of Russia's social welfare system (such as health care) are at least as troubled? As scholars have documented, the social welfare state in Russia (which includes many programs, ranging from medical care to unemployment benefits) is suffering severely from a shortage of funding and a lack of organizational capacity.32 Some international experts point out that Russian pensioners actually have lower poverty levels than some other social groups that are in greater need, especially single-parent families with more than one child. Yet, the same researchers note that not infrequently, elderly women must look after dependent children.33 Furthermore, as Cynthia Buckley's research has shown, Russian pensioners tend to give a significant amount of their monthly income and resources to their children and grandchildren, even if what they have left is meagre for their own needs.34 Buckley's research suggests that the pension crisis has affected not only pensioners but also the younger generations. In this study I make no claims that the pension system is worse off, or more worthy of study, than other aspects of Russian social policy. The fact that pensioners still retain relatively adequate social welfare benefits is one reason why I was drawn to this research. It is quite true that the old-age pension system has attracted more attention in the Russian political arena than other aspects of the social safety net. The growth in social activism among the elderly has helped maintain pension reform at the top of the formal political agenda. What is curious about the Russian pension crisis is that it has consistently been identified as among the top priorities and concerns of the country's politicians. Yet the attention paid to the pension system in the 1990s did not translate into tangible, coherent solutions; instead, the pension crisis worsened during that decade. Cuts in social welfare services can inspire strong negative reactions when past reforms are rolled back - reforms that supposedly were irreversible. The Soviet social welfare system was developed in response to terrible hardships experienced by Soviet society in its formative decades. The pension system's development was closely linked to the

Russia's Social Welfare Crisis

11

recognition of the immense sacrifices that Soviet citizens had made during the Stalinist era. The major Soviet pension law of 1956, adopted a little more than three years after Stalin's death, constituted one of the Soviet Union's first major post-Stalin reforms. For this reason the pension system was widely perceived as a form of fair payment for the unselfish toil of the country's workers. A move away from that system could have symbolic repercussions extending well beyond the parameters of a debate over public policy. Furthermore, the Russian pension system is an especially good choice for a study of postcommunist state-building, because at the precise moment of Russia's transition to independence in 1992, the pension system was suspended in a state of semi-reform. A 1990 reform amounted to a partial break from the Soviet welfare state model, but it had not been implemented by the time the Soviet Union collapsed. Apart from a few ad hoc measures, Russian reformers had not thought much about how to coordinate the pension system with Russia's new market reform program (i.e., the shock therapy). As the 1990s progressed, Russia's pension system arguably became de facto neither comprehensive nor universal, notwithstanding the 1993 constitution's commitment to a minimum of social security for elderly citizens. As the Soviet Union collapsed, Russia's half-reformed social welfare system, inherited from its predecessor state, quickly became inadequate to protect citizens from the shocks of unemployment, price liberalization, and inflation. As prices skyrocketed, the real value of pensions fell, and the country's government could not reach a consensus with parliament regarding how pensions could be indexed. The plight of elderly pensioners quickly became a flash point for the opposition to Yeltsin that emerged in 1992 and 1993. Throughout the 1990s, the pension crisis continued to grow, and increasingly polarized Russian politics: it divided president and parliament, the federal centre and the regions, younger and older generations. As the pension crisis deepened between 1995 and 1998, pensioners themselves became more active in politics, as voters, demonstrators, and even as activists. Ilian Cashu and Mitchell Orenstein note that Russia's pensioners resorted to the courts to improve their pensions, and used that venue to demand what they perceived as their social right to old-age benefits.3:> As of 2001, Russia still had not addressed the underlying causes of the pension crisis, nor had it accomplished comprehensive pension reform. In 2002, Russia finally implemented a major pension reform, but its hasty introduction and relative inattention to detail raised as many questions as it answered.

12 Shocking Mother Russia Theoretical Explanations for Difficulties in Transforming Social Welfare Systems in Post-Communist Countries

There are various possible answers to this question: What are the causes of the pension crisis? The partial answer is that Russia's social welfare difficulties are the product of economic weakness. As Glaus Offe and Bob Deacon have argued, today's states are facing growing pressure from the international system to reduce their social welfare expenditures. This imperative to scale back state commitments is emanating from international investors and corporations, which favour competition, economic growth, and fiscal restraint,36 as well as from the international institutions that provide assistance (i.e., aid and loans) to countries in transition.37 Bringing this perspective to the domestic situation in Russia, economic crises and falling production have led to difficulty collecting tax revenues (specifically, compulsory social welfare contributions collected from workers and enterprises by autonomous extrabudgetary social funds). 38 As a result of the shortage of revenue, the state has lacked the capacity to grant and index pensions according to the Russian people's demands. In an article on pension reform in Russia, Cynthia Buckley and Dennis Donahue point to the growing gap between budgetary resources and pensioners' needs as the most obvious cause of Russia's pension crisis: 'The pay-as-you-go structure of the Russian pension system is particularly ill-suited to the rapidly aging population of the federation. Regardless of political or economic change, the Soviet pension system would by now have been faced with solvency problems.'39 Clearly, Russia's pension crisis had structural causes, and we must understand these if we are to understand the challenges facing its social welfare system. Yet structural factors alone cannot explain why Russia's crisis became especially severe (as demonstrated by the growth of arrears in pension payments between 1995 and 1998). Nor can they explain why Russia hesitated to pursue reform policies, even while dramatic pension reforms were being embraced in countries as diverse as Chile, Poland, and Latvia. According to a recent comparative study of pension reforms, in many countries the accumulation of significant financial and demographic pressures on an existing pension system has served as an incentive for pension reform.40 Given these pressures, we must look deeper into politics to explain why pension reform in Russia proceeded slowly until 2001. Furthermore, weaknesses in collecting revenues cannot simply be

Russia's Social Welfare Crisis

13

considered a consequence of a weak economy. To be effective, a state must be able to collect taxes. It is an exercise of power to collect and distribute revenue; a coherent and well-functioning administration is one that has the power to extract wealth from citizens.41 An effective tax system - one that combines persuasion with coercion - constitutes a litmus test for developing states.42 Democratic governments are facing increasing pressure to deliver social welfare benefits in exchange for the revenues they collect from taxpayers.43 So if a state is finding it difficult to fund its pension system, we must look at the political and institutional reasons why. We need to ask: If the Russian state lacked the fiscal capacity to meet its commitments to pensioners, why did it not scale back those commitments? As Peter Hauslohner and LindaJ. Cook have both noted, the Soviet Union depended on a 'social contract,' whereby the state provided considerable social benefits to the citizenry in return for social stability.44 Many of these social benefits continue to exist, on paper (i.e., in law) if not in practice; the Russian constitution of 1993 guarantees that the state will provide considerable social rights. Why did Russia wait so long to substantially revise the relatively extensive, if modest, set of pension benefits that citizens are entitled to claim? When social welfare reforms reduce the government's obligations toward its citizens, policy changes can inspire debates over constitutional rights.45 Indeed, social welfare reform has become a source of political discord in post-communist countries. Social disenchantment combined with economic chaos has breathed new life into leftist opposition parties and trade unions, which had been severely weakened by the time the transition process began.46 In post-communist countries such as Hungary, social welfare benefits were traditionally regarded as citizens' constitutional rights, and citizens have been able to halt radical reforms by appealing to the courts.47 As John Ishiyama notes, pensioners have been among the groups most likely to vote for socialist and former communist parties, and the powerful Communist Party of the Russian Federation is among the most intractable of the leftist parties in the former communist world.48 So it is understandable that a post-communist government would pause before undertaking an endeavour as potentially volatile as pension reform, especially in light of the pressures now facing political leaders to win public support in regular competitive elections. Given the obstacles to social welfare reform, what factors influence the success or failure of a reform effort? Governments that are united in their resolve and that actively build support for social welfare reforms are the most likely to succeed.49 As Tomasz Inglot argues in the case of

14 Shocking Mother Russia

Poland, opposition to social welfare reform must be considered a given: the key variable in achieving results is whether the government is determined to sustain a reform notwithstanding the presence of opposition.50 Political resolve is an important factor also according to Peter Gedeon, who notes that in Hungary, politicians initially hesitated to implement a social welfare reform advised by the International Monetary Fund (IMF) and World Bank; they were reluctant to impose new difficulties for society during a period of recession.51 Another reason why social welfare reform is difficult in postcommunist countries is that the citizenry have little awareness of alternative models of social welfare, such as schemes that would generate new revenue through investments.52 However, citizens' attitudes are not an insurmountable problem, as was demonstrated by a public opinion survey carried out by a group of economists in Hungary. They found that once people were fully informed about the costs and benefits of various kinds of social welfare systems, they were more likely to favour an arrangement that would reduce the role of the state and that would incorporate private initiatives into the provision of social benefits.53 These arguments emphasize the role of political leadership in social welfare reform. Going beyond the issue of social welfare, the literature also suggests that institutional factors have a crucial influence on the outcome of a reform process. Leading political scientists have argued that presidential systems can be especially prone to intergovernmental disputes. Since the executive and the legislature are elected separately and may have different mandates, tensions between a president and a parliament with diverging agendas can thwart the cooperation that is so necessary to secure the passage of legislation.54 As Thomas Hammond argues, the likelihood that legislation will be blocked increases when there is a bicameral parliament within a presidential system (as in Russia) ,55 Indeed, Russia under Yeltsin experienced especially sharp conflict between its president and its parliament; this contentious relationship was an obstacle to the smooth passage of laws and budgets.56 In these circumstances, we might reasonably hypothesize that social welfare reform can suffer from this executive-legislative struggle. The Politics of Pension Reform in Russia To describe Russia's pension system clearly, I must introduce some key concepts. A pension system is often categorized by the way it is financed. In a pension system based on social insurance, individuals pay compul-

Russia's Social Welfare Crisis

15

sory social contributions (basically, taxes earmarked for social spending) . The revenues collected are then channelled directly into pensions instead of being merged into the general state budget. In a social insurance system, the size of an individual's old-age pension is determined (wholly or in part) on the basis of his or her lifetime contributions to the pension system. A related but technically distinct term is a pay-as-you-go (PAYGO) system. In this kind of system, old-age pensions are paid using recently collected revenues. This is called 'pay as you go' because, in effect, the today's workers and enterprises are providing the revenue to support today's retirees. A PAYGO system can be contrasted with a funded system, in which pensions are financed with the proceeds from invested revenue, usually from social insurance contributions that are set aside in a reserve fund. 57 The Soviet Union used the term 'social insurance' to describe its pension system, but actually pensions were financed primarily by taxes on enterprises and from state budgetary revenues. '8 Until 2002, Russia had a purely PAYGO system; many Western countries still do.59 Funded pension system models came into vogue among countries considering pension reform alternatives in the 1990s, but PAYGO pension systems are not necessarily inferior.60 It is important to understand that many of the essential characteristics and problems of Russia's pension system were not unique. Many countries, including Western countries, have financially strained pension systems that are difficult to reform - although they are not as strained as Russia's. A country's social welfare system reflects its society's broad understanding of the balance between individual and state responsibilities. Russia's social welfare system has a unique historical context that helps explain why pension reform became an especially sensitive issue. The Soviet Union's 1956 pension reform institutionalized the old-age pension as a benefit paid from the state budget, with funds provided from enterprises in proportion to the size of their payrolls.61 From that point on, the state was obliged to finance pension benefits. It was a point of pride that workers paid only a token amount into the system. Soviet propaganda denounced the 'bourgeois' notion of social insurance, whereby workers were required to pay mandatory contributions. To Soviet ideologues, that was a false system of social welfare, because the workers themselves were compelled to bear the costs of their own protection.62 In Soviet society, workers paid into the pension system with their labour - by contributing to socialism, they had earned the right to a quiet old age. In this sense, old-age pensions were a genuine state

16 Shocking Mother Russia

entitlement. Furthermore, the state was implicitly committed to making, ongoing and irreversible improvements to pension benefits. As a matter of national and ideological pride, Soviet officials took pains to show that social expenditures were always on the rise - until they suddenly acknowledged in the late 1980s that there was a new imperative to keep costs under control. Yet at the same time, old-age pensions were not an automatic right of citizenship: they were available only to the working people, and thus to a considerable extent they were conceived as an earned reward available to a deserving social class.63 In the words of N.A. Bulganin, head of the Soviet government in 1956, the provision of adequate pensions to those who had been productive members of Soviet society was a 'sacred duty of our state.'64 Bernice Madison, who completed a survey of emigre Soviet old-age pensioners in the 1980s, found that 91 per cent of them believed they had earned their pensions as a direct result of their participation in the workforce.65 Besides old-age pensions, other kinds of pensions were available to other groups disability pensions and survivor pensions, for example. But such pensions were very modest and required that a daunting array of bureaucratic criteria and conditions be met. Old-age pensions were different, because they represented a fundamental legitimizing statement about the Soviet system: unlike the masses of tsarist Russia, Soviet workers would never again have to work themselves into the grave. It would be easy to assume that Russian reformers considered social welfare a low priority and that this policy neglect allowed a social welfare crisis to escalate. But the evidence does not support the notion that pension reform issues were left on the back burner. Indeed, Russia's pension reform effort was proactive and appeared on the political agenda early (in 1990). In what has often been described as the 'parade of sovereignties,' the Soviet Union in its final two years unravelled in large part because of its component republics' insistence on claiming authority at the expense of the Soviet central government.66 Pension reform was no exception: in 1990, it became embroiled in the struggle between the USSR and the RSFSR regarding which level of government held the preponderance of state sovereignty on the territory of the Russian republic. After the Soviet Union collapsed, Russia's pensioners found themselves in crisis. The value of their pensions plummeted as prices continued to skyrocket, and they could not count on collecting fully indexed pensions. They could only hope that Yeltsin would either approve legislated pension increases or grant ad hoc increases by executive decree.

Russia's Social Welfare Crisis

17

Thus, what had once seemed a fairly stable and predictable system suddenly required the periodic emergency interventions of the country's head of state. This concentration of power in the hands of one person seemed at odds with the democratization that reformist leader Boris Yeltsin had once promised. Russians had cast their votes in their country's first competitive presidential election in 1991 without giving any mandate to social welfare reform. Although they were warned that 'shock therapy' would bring about economic hardships, they were given no warning that the social safety net would be significantly affected. As a result, the pension crisis was broadly perceived as a violation of pensioners' social rights. Throughout the 1990s, legal and constitutional rights to a pension continued to be generous on paper, but they could not be guaranteed in practice. The Russian government complained of rising pension costs relative to available revenues, but its leaders did not openly renounce the state's formal obligations to provide pensions. Instead, they tried to convince citizens that controlling expenditures was the best means to guarantee that all pensioners would receive some degree of benefits. This pragmatic argument was perhaps plausible and realistic, but it skirted the issue of the government's responsibility. Most pensioners weren't asking a cash-strapped government to support a lavish lifestyle; this was about much more modest expectations, namely, being able to live adequately throughout the whole month, without always having to queue up for one's pension. Between 1995 and 1999 some reforms were adopted, but the system's overall structure and institutional problems were not comprehensively addressed in the legislative arena. All political actors agreed that the status quo was intolerable; even so, they postponed action at a time when pensioners were seeing dramatic changes in the quality of their pensions. It is noteworthy that when Russia did consider pension reform (as it did in 2001-2), it adopted a radical model relatively quickly. Notwithstanding the involvement of international institutions in advising and supporting Russian pension policy, Russia's social policy effort has been internally driven and is relatively autonomous vis-a-vis globalizing pressures. Recent pension reform in Russia has amounted to an abrupt departure from the earlier pension system, and this reform has constituted more than a change in policy - it has dramatically altered wellentrenched notions of the state-society relationship. First of all, the state is no longer solely responsible for providing pensions. The new social insurance system gives each individual greater responsibility to pay into

18 Shocking Mother Russia

the system, and ties future benefits to lifetime mandatory contributions. In effect, people are being asked to accept a system that, until fairly recently, Soviet propaganda depicted as inadequate - as the sort of social safety net they would have found under capitalism. At the same time, employers and businesses have benefited from recent pension reforms in that they no longer have to be as involved in the system as they were in Soviet times. Furthermore, private pension funds can look forward to new opportunities to benefit from increased investments. Second, the new system will determine the size of individuals' retirement incomes on the basis of individual contributions, private workplace pension plans, and savings. Crudely put, the highest pensions may end up going to the highest earners, who enjoy the most generous employer benefit schemes, rather than to the hardest workers. This arrangement may be hard to swallow in a country so long accustomed to egalitarian norms. Third, the notion of a funded system has introduced the element of uncertainty into what for decades was a stable, guaranteed pension system. Russia is a country where the banking and investment climate has been turbulent at best for the last decade. It may be difficult to convince ordinary citizens that they could benefit from new investment opportunities, since many of them have had unhappy experiences with savings and investments under Russia's market reform.67 Despite the profound implications of pension reform, major policy change ultimately was accepted in Russia with relatively little controversy; this likely indicates a consensus that the status quo had proved itself untenable. Russia's pension crisis is as interesting in how we interpret its significance as in how we explain its causes. The political controversy over pension reform illustrates the 'permanent growing pains' of a state that throughout the past century has been constantly rebuilding itself, discarding its past, only to reclaim its historic values later on. The postcommunist era's drive to promote individual responsibility for providing for one's own needs conflicts with the norms of equality that were shared by many Soviet citizens under communism. Unexpectedly, the pension crisis exposed a nerve in Russian society's ambivalent attitude toward its communist past. Catherine Merridale argued that in the 1990s, pensioners and veterans found their economic plight to be an unfair surprise, because they linked the hardships and heavy workload they endured during the Second World War and the Soviet Union's formative years directly to the social benefits they received from the state.68 The question of the state's responsibility toward its elderly citizens uncovered painful issues of patriotism: Should the builders of the

Russia's Social Welfare Crisis

19

discredited Soviet Union be honoured with high pensions? And what about the victims of the Soviet Union's political repressions - should they be compensated with special benefits for their sufferings? Are pensions to be earned through sacrifice, or rewarded through merit, or established in the democratic 'social contract,' or doled out according to need? Similar difficult questions arise in many countries, postcommunist or not, that are contemplating social welfare reform. However, pension reform has a particular emotional resonance in Russia, a country where the Soviet pension system was the cornerstone of the only social welfare state that Russians had ever known. Ironically, my research will reveal the Soviet social welfare system was in fact an idealized construction that in reality never lived up to its substantial claims of generous benefits and accessibility to all. Methodology This work draws on a comprehensive examination of a range of sources. Stenographic records of the Russian parliament were examined, in particular the records of the legislature's lower house, the State Duma, from 1994 to 2001. This research was supplemented by an examination of transcripts of sessions of the Upper House, the Federation Council (to which the author found access only to 1994-6), and of the stenographic records of the USSR Supreme Soviet in 1990 and those of the RSFSR/ Russian Federation Supreme Soviet from 1990 to 1993. The study incorporates an analysis of laws, decrees, and official statements passed on old-age pension issues, and of the social policy platforms of political parties (found on the Internet as well as in print). I paid close attention to the coverage of social welfare issues in the Russian press, especially in influential and relatively comprehensive newspapers such as Nezavisimaia gazeta, Moskovskie novosti, Trud, and Rossiiskaia gazeta. A third source of evidence in the study was archival research on the history of the Soviet pension system, especially in the formative period of the 1920s and early 1930s, and in the era when the Soviet pension reform was being planned, from 1953 to 1956. The research also draws on an evaluation and analysis of secondary source literature, on documents and reports produced by international organizations, and on published statistics. One further source of research insights was personal interviews. Between 1999 and 2001, I conducted around twenty-four interviews with experts, officials, parliamentary deputies, and members of organizations variously in Russia and Washington, DC. I conducted these interviews

20 Shocking Mother Russia

personally, in Russian or in English, according to the respondent's preference. I did not use a tape recorder; instead, I took detailed notes of the respondents' answers to general, open-ended questions. These interviews ranged in length from twenty minutes to almost four hours, with a rough average of one hour. These interviewees were offered confidentiality on ethical grounds, but a number of them were willing to be named. I believe that generally, details of the old-age pension system were considered by most interviewees to be neutral matters of social or economic policy rather than sensitive matters. Still, because of the changing atmosphere in Russia since 1999, I have chosen to preserve the confidentiality of all interviewees. I defend this decision on the grounds that interviews proved to be less significant to the overall research than originally anticipated. Quite often, they provided general information that was already easily available in published sources in greater detail. Interviews were helpful in giving an indication of elite perceptions of policy issues, and the reform process. Ultimately, though, the interviews were most useful for providing background information, for drawing my attention to useful information or resources, or for clarifications that could be confirmed from existing published sources. Readers who want more information about the interviewees are invited to contact me for further details. Interviews themselves are only one instrument in a very deep tool box of research sources. The interviews constituted one source of evidence for the project, and thus I will cite them occasionally. Nonetheless, I emphasize that I alone am responsible for the findings and conclusions in the study. This study is organized along historical and thematic lines. Chapter 2 examines the historical origins of the Soviet Union's pension system, which was one of the cornerstones of the social welfare system of the world's first Marxist-Leninist state. The chapter draws on archival and documentary source materials to trace the institutional origins of the Soviet system, placed in the context of the Russian Bolsheviks' ideological debates over the role the state should play in providing social benefits to its people. Relatively little historical work has been written on the Soviet pension system, and there is a widespread perception that this system was pioneering and generous in its social benefits to elderly people. The chapter shows this assumption to be a myth. The system could not have been as generous as the myth claims, because the Soviet Union was too weak in financial and legislative terms; furthermore, during the 1930s the Stalinist leadership was reluctant to use state funds to finance pensions. Determined to mobilize all of society to the twin

Russia's Social Welfare Crisis

21

goals of increased production and national defence, the Soviet leaders who came after Lenin took a dim view of spending scarce resources on people who did not simultaneously contribute their labour to the state. In fact, the Soviet pension system did not reach its mature form until 1956. I did not expect to make this historical finding, which constitutes one of this study's most significant contributions. When the Soviet pension system did reach its mature form in 1956 legislation, political discourse at the time depicted this development as a significant achievement in the progress of socialist society, but also as a long-overdue reform that responded to accumulating social needs. This lasting sense of historic accomplishment helps explain why attempts to alter the values of the pension system have provoked so much anxiety in the Russian political arena. The chapter also reveals that in the early decades of the Soviet Union, the pension system was plagued by chronic problems of institutional harmonization, by revenue collection problems, and by arrears in payments - in short, the evidence paints a picture strikingly similar to that of the Russian pension system in the 1990s. Chapter 3 continues the study's historical perspective by examining the impact that Gorbachev's perestroika reforms had on the Soviet pension system from 1985 to 1991. It is interesting to note that pension reform was one of the reformist leadership's first priorities, just as it had been for the 'collective leadership' of the Communist Party between 1953 and 1956 following Stalin's death. Under Gorbachev's liberalization policies, pension reform aimed for greater efficiency of an increasingly overburdened system. At the same time, reformers promised greater responsiveness to the social and political demands for a more just and humane pension system. Chapter 3 reveals that these goals were contradictory. The pension reform process, like perestroika itself, became difficult to control as newly empowered legislatures imposed more demands for improved social benefits. When the Soviet Union collapsed in 1991, the newly independent Russian Federation inherited a convoluted and half-finished pension reform that had already been rendered obsolete by Yeltsin's rapid market reform policies. Chapter 4 discusses the attempts (ultimately unsuccessful) between 1991 and 1993 to manage the crisis in the pension system, as well as the politicization of the pension issue within the Russian government. Chapters 5 to 8 examine the growing pension crisis of the 1990s, as well as the sometimes contradictory attempts by Russian political actors to remedy the situation. Chapter 5 considers the basic institutional problems that were the essential root causes of the worsening pension

22

Shocking Mother Russia

crisis, which had become evident by the mid-1990s. Chapter 6 explores in depth the tormented relationship between the State Duma and the Russian government as a factor that affected pension policy. The chapter focuses in particular on struggles between the executive and legislative branches over three issues: pension increases, the financing of the pension system, and rudimentary reforms. Chapter 7 develops a thorough case study of the progress of one particular piece of legislation: the controversial Law FZ-113 on pension indexation. This chapter reveals just how contentious and confusing the Russian legislative process can be. The fate of FZ-113 demonstrates that if unpopular, a law that purports to offer solutions can create even more problems than those it was designed to alleviate. Finally, Chapter 8 examines the process of pension reform in Russia in the 1990s. The chapter focuses on the unfinished pension reform attempt of 1995-8 and on the more dramatic and radical reform push initiated by President Vladimir Putin and Prime Minister Mikhail Kasyanov. Russia in Comparative Perspective Any student of comparative politics who decides to write on postcommunist Russia always confronts the same question that once tormented specialists on the Soviet Union: Is Russia a special case, or can it be understood as revealing general political theories and trends? Now that Russia has adopted some of the trappings of competitive democracy and market reform, in many ways its challenges are more comparable to those of other countries than was the case for the Soviet Union, a country that throughout its dynamic history was trying to put a statist goal-oriented ideology into practice. Russia has faced the difficult task of bringing about institutional reform, developing a coherent policy to suit its economic reorientation, and responding to new political pressures in an environment of rapid social change. Other postcommunist states face similar demands. Nonetheless, Russia's immense size, its image as a declining but still powerful former superpower, and its mantle as the principal successor state of the Soviet Union combine to pose a particular set of post-imperial challenges that are shared by no other state. Furthermore, a convoluted federal system of eighty-nine republics and regions means that Russia has a complex organizational structure that is unique even among post-communist states. Writing about Russian politics challenges the writer to make sense of a complicated and in many ways revolutionary transformation. Most

Russia's Social Welfare Crisis

23

social science works that provide empirical studies of the politics of the post-communist transition are by definition assuming the existence of an evolutionary process in which events unfold through the interactions of causes and effects. However, a search for a clear and coherent narrative does not always fit Russian reality very well. In the chaos that precipitated, accompanied, and followed the collapse of the Soviet Union, many political issues seem to have emerged simply by chance and without the forethought of political actors. A researcher studying the workings of Russian state structures will struggle to understand opaque aspects of institutions, obscure and informal conventions of the federal system, and the legacy of a state apparatus whose historical workings are only now becoming better understood. In sum, the author must always keep caution that the act of writing, if it is intended to impose a sense of order on a social system in upheaval, can sometimes move too closely to the threshold of distorting reality. However, I could not have written this book if I did not believe that it was both possible and necessary to develop a deeper understanding of Russia's unhappy decade. The evidence I present here reveals a clear picture of the causes of one aspect of Russia's social and political difficulties. Because of the peculiarities of the Russian state-building process as outlined earlier, in this work I will generally treat the institutional politics of Russia as unique. However, the Russian case does provide some potentially valuable insights that offer lessons other for societies. As the population ages in many Western and non-Western countries, pension reform is becoming a topic of concern for many governments around the globe. Social welfare reform is often discussed by political leaders and rationalized by critics of generous government spending; less often are such reforms actually put into practice.69 Russia may have shyed away initially from making hard decisions about social reform, but so are elites in many other more 'advanced' countries are arguably equally reluctant. Surely, many observers will want to know about the challenges that pension reform has posed in Russia, if only to learn from a worst-case scenario the pitfalls that we should try to avoid.

Chapter 2

The Elderly in a Revolutionary Society: The Soviet Pension System, 1917-1956

'B Haiueft cxpaHe, crapocTb He B xarocTb, a pa^ocxb.' ('In our country, old age is not a burden, but ajoy.') Industrial worker for thirty-six years, age fifty, quoted in Trud3 November 1936 It's always youth, youth. They're always shouting about youth, promoting youth ... Youth brigades, making way for youth ... and what are we? Are we not proletarians? Well, now, let those young people try to keep up with us at work! Elderly cutter, Rostov factory, quoted in Trad 16 November 1929, p. 3 I've worked at the factory for 57 years ... I think I will keep working for many, many more years. I.I. Tsvetkov, steelworker, Trud, 3 November 1936

To understand the post-Soviet pension crisis, we must consider the historical context of Russia's pension reform: the social welfare system of the Soviet Union. As the world's first socialist state, the USSR throughout its history propagandized the quality of its social welfare system as proof of its progressive historical role in improving the well-being of its citizens. The market-oriented pension reform proposals of the 1990s threatened the well-established principles of the Soviet pension system, and the Russian opposition showed a strong attachment to the communist-era values of the welfare state. It is quite true that after the Russian Revolution of 1917, Russia's Bolshevik Party created the country's first national old-age pension system, and that the Soviet Union improved the pension benefits it offered to elderly people over the decades of its

The Elderly in a Revolutionary Society, 1917-1956 25

existence. These achievements were real, and the perception of the Soviet pension system as a precious, irreversible entitlement for citizens is a valid one. However, the historical evidence reveals facts that will help explain the politicization and turmoil surrounding pension reform in post-communist Russia. Throughout Soviet history, the Marxist-Leninist leaders expressed mixed feelings about the desirability of supporting retired workers. This equivocation provoked an ideological debate that was difficult to resolve. In the 1920s, a decade after the revolution, the right of people over sixty to receive a pension after spending many years in the workforce became recognized as a benefit separate from the right to receive poor relief or a disability pension. This new right embodied the notion that people who had reached a certain age would no longer be required to work, but should not be obliged to prove incapacity or indigence in order to receive a pension from the state. The principle that people could retire from paid work with a pension was a significant innovation in a country where old people traditionally had to rely for support on either charity or their families. However, as Bernice Q. Madison wrote, under Joseph Stalin, the Soviet state expected people to work unless they were demonstrably incapable of doing so. Social welfare policy was strongly and forcefully oriented towards encouraging labour rather than addressing social needs.1 Although the right to an old-age pension was publicly lauded as a humane accomplishment of Soviet socialism, pension rights were very fragile in Stalinist times. In fact, elderly people were encouraged to stay in the workforce to help meet the goals of the early Five-Year Plans. There is evidence of a shake-up in the Soviet social welfare bureaucracy in the early 1930s, which suggests that the notion of providing universal benefits to vulnerable groups clashed with the Stalinist maxim that social programs should be directed toward those whom the state regarded as the most loyal and productive, and therefore 'deserving.' In short, there was a clash of views over how providing old-age pensions would serve the interests of the state. This debate still echoes in postcommuriist Russian discourse. A systematic, comprehensive old-age pension system was established in the Soviet Union only in 1956, to replace existing pension programs that the regime admitted were inadequate. Immediately after Stalin's death in 1953, the Soviet leadership quietly prepared a comprehensive reform to introduce a more or less universal pension system. This reform effort was inspired in part by the recognition that Western 'capitalist' countries were establishing their own old-age security systems. This late development calls into question the Soviet Union's claims through-

26 Shocking Mother Russia

out its history to be a pioneer in the development of the comprehensive welfare state. There is some evidence that considerable pressure to expand pension benefits came from below, from the middle-aged and elderly Soviet citizenry. This observation seems to reinforce the arguments of Linda Cook, Peter Hauslohner, and Vera Dunham that in the aftermath of the Second World War, post-Stalinist leaders forged a 'social contract' to promote social calm, in light of the population's considerable sacrifices since the First Five-Year Plan (1928-32) .2 The hardships of the Second World War helped legitimize the contributions that older people had made to Soviet society. By the 1950s, it was difficult to ignore the fact that a generation of citizens had now spent their entire working lives as Soviet workers. Soviet-type pension guarantees continued to be valued after the Soviet Union's collapse precisely because they were seen as a hard-won, long-awaited system for providing compensation for workers who had made a significant contribution to society. In this chapter I argue that the debates and crises that accompanied the development of the Soviet pension system in the 1920s are echoed in the problems the Russian pension system has faced since 1992. In the 1920s, as in the 1990s, authorities struggled to support rising social welfare expenditures with revenues that were scant, in part because both enterprises and individuals evaded social contribution taxes. As a result, the needy often received inadequate benefits, or received them late. In the early Soviet Union, authorities sought short-term solutions to social problems through administrative reorganizations or personnel improvements, but these solutions proved just as inadequate as they have been in post-communist Russia. Similarly, just like social welfare authorities in Yeltsin's Russia, Soviet bureaucrats found it difficult to decide who should receive social benefits under conditions of scarce resources, and to determine which level of government should be responsible for looking after groups in need. Institutional habits are difficult to break, and contemporary reforms can reinvent the wheel by reproducing the defects of reforms introduced decades earlier under radically different circumstances. The Old-Age Pension: Ideological Dilemmas, Ambivalent Commitments The first old-age pensions in the Soviet Union were established ten years after the October Revolution of 1917. In the eyes of the new Bolshevik regime, led by radical revolutionary Vladimir Ilyich Lenin, the elderly

The Elderly in a Revolutionary Society, 1917-1956 27

were basically invisible. In part, this was because there were so few old people in Russia. In 1926-7 the average life expectancy was 41.9 years for men and 46.8 for women; 40 per cent of men and 49 per cent of women lived to 60.3 The elderly have received relatively little attention in the social history of the Soviet Union. Scholars have neglected the USSR's treatment of its older generation perhaps because in the years following the October Revolution, the Soviet Communist Party's gaze was directed sharply toward a youthful image of the Soviet worker. The USSR's depictions of the elderly in its propaganda were often unflattering: uneducated peasants, die-hard religious believers, or superstitious grannies. As Christine D. Worobec and Lynne Viola have pointed out in their respective works, in tsarist times as well as in the Soviet 1920s and 1930s, negative attitudes toward peasant women were common. Authorities quite often regarded the baba as an uneducated, meddlesome troublemaker.4 Daniel Peris's book on the early Soviet campaign against religion reproduces a political poster in which a grimacing, kerchief-clad woman who seems to be in her sixties is snatching a young girl - presumably her granddaughter - in order to force her to attend church.5 Many elderly people were both women and peasants, so we can read from this that attitudes toward the pension issue were perhaps influenced by the common images of elderly people. In 1921, following on apolozhenie (legal declaration) of October 1918, a resolution of the Soviet government, the Council of People's Commissars (Sovnarkom) established the principle of social insurance. The social insurance system was to provide support for waged labourers who lost their ability to work, who became unemployed, or who died leaving behind dependants. This scheme was to be financed by contributions paid by enterprises on behalf of their employees. The social insurance benefits were to be paid by the People's Commissariat for Social Protection (Narkomsotsobespechenii), which claimed a monopoly over all the social insurance mechanisms in the country. The provision of social welfare benefits thus became the exclusive domain of the state. This assertion of state control over social insurance benefits officially prevented the private sector and religious institutions from becoming involved in social assistance.6 Clearly, the humanitarian goal of providing redistributive programs to raise the standard of living for people in need inspired the creation of the Soviet social insurance system. But at the same time, there was also a politically motivated desire to block private and independent charitable initiatives.

28 Shocking Mother Russia

At this time, the nascent Soviet welfare state only recognized the needs of people who could not work because they were orphaned, ill, or disabled. Able-bodied old people were not considered to be entitled to pension benefits. The Bolshevik social insurance principle entided workers to protection commensurate with the value of the work they had contributed to society. Individuals would receive benefits as a function of their class status as workers, rather than in accordance with rights based on their identity as Soviet citizens. Soviet propaganda always took pains to distinguish the USSR's social welfare system from the social insurance schemes found in 'bourgeois capitalist' countries, where ostensibly the burden of paying social insurance fell on the workers themselves rather than on the enterprises.7 Two further distinctions were drawn. First, the Soviet regime did not restrict itself to providing benefits for workers injured in the workplace. Second, Soviet social insurance operated according to the principle that no one should receive disability benefits higher than ordinary workers' salaries.8 Perversely, then, the Soviet Union prided itself on its low social benefits. At this time, the criteria for eligibility and the distinctions between different kinds of social benefits were only vaguely defined. Also, the responsibility for distributing social benefits was assigned in a rather casual manner. It seems that the various administrative regions had the power to distribute benefits to the needy as they saw fit. As the 1920s wore on, the social insurance system was gradually consolidated. The All-Russian Social Insurance Fund was established in 1922 to collect and distribute social insurance revenues. This fund was empowered to collect fines from enterprises that delayed paying their social contribution taxes.9 An all-Soviet centralized fund (Vsesoyuznyi zapasnyi fond sotsstrakha) was established in 1924 to coordinate a network of local and regional funds. The revenues collected were to be subdivided into separate accounts for pensions and social assistance, and medical expenses. Local fondy were required to collect and distribute revenues within their regions, while passing 10 per cent of their revenues upward to the central fund.10 Certain kinds of enterprises, including cooperatives, agricultural enterprises, and some publishers, were allowed to pay social insurance contributions at lower rates.11 The centralization of this fund coincided with a desire to improve the administration of social insurance. Lower-level social insurance organs were instructed to merge funds for temporary workers' disability, invalid pensions, unemployment, and medical assistance into a single account.12 In this early period, two separate yet interrelated problems challenged

The Elderly in a Revolutionary Society, 1917-1956 29 the new social insurance mechanisms. The first issue was the struggle to find adequate funds to pay social benefits to all who were entitled to them. Regions were given a degree of autonomy to determine the size of pensions and social assistance benefits within their respective jurisdictions.13 Localities sometimes lacked sufficient funds to pay their commitments for pensions and benefits, and were instructed to find ways to cut corners. For example, they could exclude people who had an independent source of income or who were involved in a private business.14 A resolution in 1930 entitled invalids to claim reimbursement for pension payments that were not paid on time.15 This tacit admission of the existence of pension arrears demonstrates that a disabled person had recourse if she considered herself unfairly treated, although this measure could not provide a sense of security for long. It is interesting to note that the pension delays that made headlines in post-communist Russia in the 1990s were not isolated in history, nor were they solely the product of neoliberal market reform policies. Rather, pension arrears in the 1990s were part of a recurrent twentieth-century problem in funding social welfare in Russia - a problem that began under conditions of socialism, when spending commitments exceeded revenue capacities. Apart from the funding constraints, the second problem in the system was the Bolsheviks' own ambivalence. How were they to balance a humane concern for the needy with a proletarian identity? Granting social welfare support to people who didn't work for wages clashed with the idea that all of society was expected to participate actively in the building of socialism. As socialists, the Bolsheviks declared themselves opposed to poverty, but they also considered it objectionable for people to live off others' labour. According to those who held especially rigid views, only workers ought to be rewarded with state funds. In such a climate, recipients of social welfare benefits could be all too quickly and crudely labelled idlers. A 1927 text produced by the Narkomsotsobes perfectly illustrates the ideological quandary in which the Bolsheviks found themselves. Cn the one hand, the text praised the Soviet state for promising cash assistance to 'socially weak elements' - namely, the people who were unable to work (invalids, the unemployed, single mothers, and the infirm elderly). The text contrasted the state's substantive benefits with what it considered to be the paltry social protection offered by the Russian Orthodox Church. However, the authors emphasized the importance of constant vigilance against 'parasitism,' and declared it a priority to build rehabilitation facilities and begin special programs to help

30 Shocking Mother Russia

women and the disabled enter the workforce.16 In this world view it was labour, and not state-run redistribution programs, that constituted the best solution to the problem of poverty. A significant step - and a precedent for the Soviet old-age pension system - was the decision in 1928 to grant pensions to textile workers who had worked twenty-five years in the industry, at age sixty for men and fifty-five for women, 'regardless of their capacity for work and without medical documentation of invalidity.'17 This step institutionalized the notion (still prevalent in Russia) that women should have the right to retire younger than men. A year later, social insurance benefits were established on a similar basis to allow coal and metal workers, miners (who could retire at fifty after twenty years), electrical workers, and rail and water transport workers to collect old-age pensions equal to half their previous salary.18 A 1930 polozhenie declared that pensions were to be provided to invalids, to the elderly, and to families that had lost their principal breadwinner.19 Clearly, the Soviet old-age pension system was being driven by the principle that the regime was morally bound to provide benefits to groups who were both needy and deserving: first disabled veterans, then single mothers, and finally older workers. This polozhenie was significant because it described old-age and disability pensions as social rights rather than as acts of state benevolence. This set an important precedent for the Soviet welfare state, if only on paper. Even today, the postcommunist Russian Federation declares that citizens have the right to state support in their old age: it is considered a basic civil right that exists alongside other basic rights such as freedom of speech and assembly.20 The second source of the Soviet pension system was a separate decision to grant privileges and rewards to people whom the Bolsheviks considered especially deserving. The Communist elite (known as the nomenklatura) developed a parallel system of 'personal pensions.' These were granted on a case-by-case basis to individuals deemed to have performed 'distinguished service in the areas of revolutionary, state, social, economic or cultural activity, or in defense of the USSR.'21 Personal pensions were granted by a Central Commission that had been formed expressly for this purpose; this commission included representatives of the Commissariat of Social Protection, the Bolshevik party's Central Committee, the trade unions, and the Commissariat of Labour. Pensions were determined on the basis of individuals' accomplishments and could run as high as 140 rubles in the 1920s. It is worth noting that pensions were sometimes refused, and sometimes even taken away, in

The Elderly in a Revolutionary Society, 1917-1956 31

the course of the decision process.22 Trade unions could bestow the title 'hero of labour' on wage labourers who had spent thirty-five years in the workforce; recipients of this title would receive a variety of social welfare benefits and privileges.23 Personal pensions were not without controversy, even at this time: the Russian Republic and the Ukrainian and Uzbek SSRs complained to the Central Executive Committee (TsIK) of Sovnarkom about personal pensions, contending that they imposed a heavy financial burden on republic-level governments and that they lacked a sufficient legal and constitutional basis.24 Indeed, the Commissariat of Labour (Narkomtrud) itself argued to TsIK that social insurance offices should not be obliged to pay for personal pensions; since the latter were not granted according to the social insurance principle, they should be financed separately from the state budget.25 The response from Sovnarkom was a rebuke to Narkomtrud, disparaging the appearance of 'formalism' in the social insurance administration. This communication also claimed that many deserving recipients of personal pensions, who had performed exceptional services to the Soviet republic, were ineligible for regular social insurance benefits according to bureaucratic criteria.26 The social insurance organs were ordered to continue paying personal pensions.27 Old-age pensions may have been linked to another objective: to open jobs in industry to younger people. Although available evidence is insufficient to confirm that this was a systematic policy, it stands to reason that providing pensions to older workers would have been one remedy for high unemployment, which at the time was the main preoccupation of the Commissariat of Labour. Certainly, it is possible that people over fifty faced discrimination in the workforce. As much is hinted by a document in the archives of the USSR Central Administration of Social Insurance. A dozen Kiev postal workers wrote to complain that they had been dismissed en masse on reaching - or shortly before reaching - the age of fifty-five, on the grounds that they were disabled. Yet, they did not meet the criteria for receiving a disability pension and were having trouble making ends meet while waiting for a commission to determine their pension eligibility.28 The Politicization of Public Policy: Social Insurance in the 1920s Subordinated to the People's Commissariat of Labour, the social insurance administration and its local offices (Tsusstrakh and sotsstrakh) got off to a shaky start. Throughout the 1920s, sotsstrakh institutions experi-

32 Shocking Mother Russia

enced financial and administrative problems. In 1926, owing to 'significant debt' in the social insurance fund, the People's Commissariat of Finance called on localities to enforce rules properly and to avoid accumulating debts.29 It does not seem to have occurred to the central Soviet leadership that these two directives were contradictory: it is well possible that localities simply lacked enough money to pay benefits to all who were entitled to them. Nor does it seem that the Soviet authorities thoroughly considered the possibility that the regions - especially the less economically developed ones - might require subsidies from the centre if they were to meet their social insurance obligations. Between 1924 and 1927, social insurance expenditures increased by 113 per cent, and within this, pension expenditures increased 18 per cent.30 Between 1927 and 1932, social insurance expenditures tripled.31 The Commissariat of Finance noted with disapproval the appearance of pension arrears in 1931, but it refused to allocate any additional revenues to the social insurance administration. Instead, the commissariat suggested that pensions owed for 1931 be paid from revenues earmarked for 1932.32 Intergovernmental disputes like these fit the pattern described by historian R.W. Davies, who reported that the Soviet budget system assigned significant responsibilities to localities to fund their own needs. Davies noted that during the 1930s, disagreements often arose between the central government and lower levels over how much financial support the centre should provide to the regions.33 The budgetary difficulties faced by the social insurance funds are strikingly reminiscent of the pension arrears that periodically plagued postcommunist Russia from 1995 to 1998. In the late 1920s and early 1930s, Soviet social insurance organs came under official scrutiny. So did enterprises: krai and oblast procurators were directed to investigate possible instances of evasion, or late payment, of social insurance contributions. Also, the regions were ordered to adopt a strict attitude toward social protection personnel who did not try sufficiently hard to overcome their 'shortcomings.'34 In 1927 the central trade union office and the Commissariat of Labour called on social insurance authorities to educate workers and children about their social insurance rights and duties, in order to assist with the 'struggle against red tape' in the system.35 Courts and law enforcement agencies were exhorted to work harder in 'the struggle with delinquent payment of social insurance contributions,' and to consider bringing up tax evaders on criminal charges.36 Local social insurance organs were criticized for not doing enough for invalids and pensioners. In particular,

The Elderly in a Revolutionary Society, 1917-1956 33

localities were urged to create self-sustaining projects, such as gardens and self-help organizations, instead of simply doling out cash benefits.37 In short, social insurance organs found themselves faced with several impossible tasks: to provide extensive social benefits without the capacity to do so; to collect revenue without sufficient organizational and financial support from the central government; and to administer an increasingly complex set of government policies while anticipating and responding to the changing political winds in Moscow. The administrative challenges faced by the social insurance organs were not unique in the Soviet bureaucracy. As Merle Fainsod documented in his classic work Smolensk under Soviet Rule, regional government institutions were always having to juggle the contradictory demands of their powerful local elites and the Soviet Communist Party leadership, which was in flux after Lenin's death in 1924. In the 1930s, lower-level government administration became especially chaotic, as leadership turnover and social dislocation disrupted local routines and relationships.38 The social insurance institutions became particularly vulnerable when their mandate became suspect after Joseph Stalin gained control of the Soviet leadership. As society was conscripted into a full-scale massive industrialization campaign, Soviet ideologues began to take a dim view of allocating state resources toward people who were not active in the workforce. Under Stalin, the personnel of the social protection administration came under a critical eye, along with many other aspects of the state bureaucracy. In 1929 the Commissariat of Labour decided to train five hundred new social insurance employees, demanding that 30 per cent of them be recruited from the ranks of factory workers.39 A campaign was announced for greater 'socialist competition' in the social insurance offices. Officials were urged to obey orders more quickly, treat pensioners in a more civil manner, reduce absentee rates, and cut down on bureaucratic red tape.40 Later in the year the social insurance administration was taken to task for 'not always observing a sufficiently clear class line.' In particular, the administration was accused of granting pensions to lishentsy. Lishentsy were people whom the Bolsheviks had stripped of their voting and other rights because of their alleged bourgeois class status, their past employment in the tsar's civil service, or their counterrevolutionary past. The lists of pensioners were to be purged of these people, even if they met the objective eligibility requirements for pensions, so as not to waste social insurance monies intended for genuine workers.41 As Stalin consolidated his personal power as General Secretary of the

34 Shocking Mother Russia

Communist Party - a position that allowed him to become de facto top Soviet leader - the social welfare system became a casualty of high politics. Stalin's rise to the top was the end result of a bitter power struggle during which other Bolshevik leaders were cast into disfavour — a process that prominent historians have already documented thoroughly.42 As Stalin consolidated his power, the social insurance organs fell under suspicion of 'right opportunism,' and of operating according to the 'Menshevist tendency' of granting equal access to social insurance instead of favouring industrial workers. As a proposed remedy, the trade unions were to be given greater control over social insurance in order to bring them closer to the working people.43 Of course, this shift would erode the autonomy of the social welfare system and make it less accessible to some people who needed it desperately. The so-called 'Menshevist tendencies' in social insurance ostensibly included the idea that gradual improvements could be made for workers in the movement toward socialism. (The Mensheviks, the rival Marxist party, became the bitter enemies of the Bolsheviks after they opposed the latter's forcible seizure of power in 1917.) The pursuit of steady improvements in workers' social benefits was considered reminiscent of the tactics of the Western bourgeoisie, who were said to be using social insurance principles in order to 'trick' workers into thinking their plight could improve under capitalism.44 Thus, in a strange twist of logic, the very principle of social insurance was tarred with the brush of anti-Bolshevism and identified with capitalism. Dismissals of social insurance as 'Menshevik' amounted to fighting words which implied that social welfare advocates were hostile to Bolshevik authority. The blame for these so-called ideological deficiencies in social insurance fell on Mikhail Tomskii, the trade unionist leader from the Commissariat of Labour,45 who along with Rykov and Bukharin was removed from the Soviet leadership in Stalin's 1929 campaign against the 'right deviation.' Bukharin's 'New Economic Policy' of tolerance of limited private market activity and individual peasant initiative had been launched in the early 1920s; by late in the decade, it had fallen out of favour. In its place, Stalin established policies of rapid industrialization and the collectivization of agriculture. While these policies were being launched, social insurance organs were to reorganize themselves so as to avoid 'levelling,' which was understood to mean 'indiscriminate provision with each and everybody considered as having equal value.'46 Social insurance work was restructured to create more social insurance offices in the enterprises, to encourage enterprises to become more active in provid-

The Elderly in a Revolutionary Society, 1917-1956 35

ing social benefits to their workers, and to concentrate more on providing recreation, holidays, and resorts to enterprise workers.47 The changed orientation toward social welfare was accompanied by the Soviet Union's adoption of full employment in the service of rapid industrialization. During the Great Depression, full employment would be constantly compared favourably with the rampant unemployment in the West. The implication was that under full employment, there would be less need for social welfare. Stalinism and the Elderly Worker

As Sheila Fitzpatrick has noted, the Soviet Union under Stalin featured systematic 'social exclusion.' If the regime considered an individual to have a bourgeois class background or suspect political loyalties, that person was stripped of rights and subject to various forms of political persecution.48 Withholding access to social benefits was one way to punish society's scapegoats. Just as the old-age pension was being established as a basic right, administrative loopholes were being created that allowed cash-strapped social insurance bureaucracies to deny pensions to individuals. A basic principle, which became increasingly important in the 1930s, was that pensions were a benefit to be extended to workers with bona fide class credentials. As such, pensions were not a universal benefit available to all. By 1923, republic-level social insurance institutions were being instructed to deny disability pensions to people who had been injured while committing a crime or who had wounded themselves deliberately.49 Certain people were explicitly excluded from the pension system: a person who profited from another's labour; any businessperson who owed taxes to the state; clergy and monks; and those members of the 'exploiting classes' who had been stripped of their voting privileges.50 Soon after, pensions were also denied to former tsarist police and officials.51 'Counterrevolutionaries,' former White Army members (who had fought against the Bolsheviks in the Russian Civil Wt.r of 1918-21), and people who submitted false information to the social insurance administration could also be denied a pension.52 Class restrictions of this sort were extended and reinforced in the 1930s. The 1930 polozhenie denied pensions to people convicted of a crime.53 In order to conserve hard currency, the social insurance administration was given the power to attach 'particular terms and conditions' on the granting of pensions to people living abroad.54 In 1932 the agencies were also instructed to carry out a proverka (re-evaluation) of

36 Shocking Mother Russia

the pensioners on their books, to remove from the ranks of pensioners 'alien elements' or people who were capable of holding down a job.55 A similar check had already been carried out in the RSFSR to screen out lishentsy.56 In 1933, social insurance organs were instructed to exercise extreme caution in granting pensions to people without internal passports, as they might belong to 'alien class elements,' while those who had lost their jobs could conceivably be 'disorganizes of production' who had been fired for good reason.57 It is likely that as Stalinism developed, many people fell through the cracks of the Soviet social welfare system. Among archival documents one can find letters from former railway workers to social insurance kassy describing how difficult they found it to collect their pensions, and citing the inadequacy of pensions that were as low as eight rubles a month. These appeals were quite often denied for bureaucratic reasons - such as the person's absence from his permanent residence - or simply because of a lack of funds.58 In 1924 an invalid and his wife were reported to have been refused a pension because they had a cow, a horse, and about two acres of land.59 Archival records, poorly organized and in poor condition, contain a number of desperate letters from local social insurance offices, and from pensioners themselves, suggesting that the massive social disruptions accompanying the collectivization of agriculture were contributing to severe hardships for the rural elderly. Old people claimed that they were losing social benefits and were becoming deprived of means of sustenance. A letter from disabled people in Luhansk claimed that they were being refused social benefits on the grounds that they were not workers.60 This is not surprising, since kolkhozniki (collective farmers) were not included in the general Soviet pension system until 1964. Meanwhile, the social insurance organs continued to face criticism of their methods. For example, it was reported in 1936 that pensioners were complaining of delayed payments and of having to walk ten kilometres to receive their pensions.61 As Peter Konecny pointed out in the case of higher education, Soviet social policy in the 1930s was in turmoil; the decrees and goals of the top leadership were changing constantly. The socialist idea of egalitarian access for all clashed with two related desires: to punish politically suspect individuals, and to provide incentives for the most valued, productive, and loyal servants of the Soviet regime.62 This ideological and policy turmoil affected social welfare mechanisms as well. In the 1930s the regime began expressing reservations about the very idea of granting pensions, because by definition pensions gave state funds to people

The Elderly in a Revolutionary Society, 1917-1956 37

who were not active in the workforce. This may explain why although in 1931 there were plans in the works to pass a general law on old-age pensions and disability benefits,63 I could find no record of the fate of this legislative initiative. During Stalin's Five-Year Plans, the Soviet state became more concerned about achieving full employment (or appearing to have achieved it) than about providing social assistance to the elderly. Old-age pensioners were permitted to work while collecting their pension, and working pensioners were granted bonuses.64 Increasingly, the idea of the right to an old-age pension - and more generally, the idea of social welfare for groups unable to work - lost prominence as a theme in social policy discourse. It was replaced instead by the declared goals of improving conditions and benefits for active workers, and providing privileges to reward groups that the regime considered worthy of special recognition. Elderly people were seen as potentially capable and disciplined workers, but this praise undermined the rationale for providing old-age pensions. One tract claimed that the objective of the state's social protection policy should not be to support 'parasitic' elements, but rather to support particular priorities in social development. These priorities should include rewarding the following people: those who had completed 'distinguished service'; veterans of the Red Army; those who had fought off counterrevolutionaries and 'kulaks'; disabled industrial workers, transport workers, civil defence workers, and students; those wounded while fighting 'bandits' and 'hooligans'; family members of the above; and those who were both homeless and disabled.65 In this list, the elderly were conspicuous in their absence. At the same time, newspapers and propaganda began to honour the elderly as a distinct group of workers. In 1929 an article about elderly cutters at a factory in Rostov praised the unique contributions to Soviet society that senior workers could make as educators of younger workers. The cutters claimed that although they were not worried that they would be laid off simply because of their age, they felt that they were not recognized as visible and needed to remind their superiors of their existence.66 It was reported in 1930 that old people were clamouring to join the Communist Party.67 One wonders whether old people might have begun to feel that their jobs and pensions were at risk, especially since they were by definition alive and working during tsarist times, when a different system of social values prevailed. For example, the elderly Rostov cutters pointed out that they were all Jews who were working on the holiday of Yom Kippur as proof that they had renounced their former beliefs.68 Newspapers such as Trud began featuring stories and

38 Shocking Mother Russia

photographs of elderly workers, who reminiscenced about their lives as workers before the revolution. Citizens were exhorted to treat old people with respect.69 Men were instructed to give up their seats on the tram to women, children, and old people.70 In short, discussions of the elderly in the Soviet press emphasized that they should be respected as active senior workers rather than as retirees. Increasingly, social welfare was depicted as a benefit that would be created naturally as a result of socialism, rather than distributed deliberately through the welfare state. According to one text, Soviet socialism would provide social protection more or less automatically, by destroying the bourgeoisie and thereby reclaiming wealth for the masses that capitalists otherwise would have stashed abroad through capital flight.71 Another text went further, arguing that the social insurance system should be directed specifically toward meeting the social needs of udarniki (the 'shock workers,' who were especially productive and who thus contributed to the wealth of the state), in particular workers in heavy and military industries. The same source argued that social insurance organs should struggle against 'fakers, loafers and do-nothings' while striving to find ways to draw the many purportedly labour-loving disabled people and women with small children into the workforce.72 If carried to extremes, a system that is oriented toward the needs of the most vigourous members of the workforce can no longer be considered a social welfare system, because it ceases to offer an effective safety net for people who lack the physical capacity to work. Nonetheless, official sources continued to insist that 'the old-age pension is awarded independent of the person's capacity for work and health.'73 A new, 'Stalinist' constitution was adopted with great fanfare in 1936. Significantly, it linked old-age pensions with democratic rights. The article in question read as follows: 'Citizens of the USSR have the right to material security in their old age, in case of illness or loss of capacity to work.' Oddly, however, the speeches by Soviet leaders on the adoption of the constitution downplayed any recognition of the rights of the elderly. Stalin's speech mentioned the importance of the social progress of the constitution. He noted the right to work, to enjoy leisure, to receive an education, and to be free of poverty, but he did not mention old-age security.74 An exception was N.M. Shvernik's speech on Red Square, which mentioned that the elderly would enjoy support under the constitution.75 With the passage of the Stalinist constitution, newspapers published stories and testimonies from elderly people who reminisced about the

The Elderly in a Revolutionary Society, 1917-1956 39

poor working conditions of the tsarist period, and who expressed their deep gratitude to the Soviet regime for allowing them a worry-free old age.76 At this time it was fairly common to consider people in their fifties as old, and to refer to the older generation as crapHKH ('oldsters') rather than the more neutral noxwibie JIKD^H ('elderly people'), which is more commonly used in Russia today. The 1956 Pension Law as Overdue Reform: 'xeJiaHHe CoBCTCKOro npaBHTejibCTBa ycjibimaTb Mnemie napo^a'77 ?

From the mid-1930s until Stalin's death in 1953, there were few changes in the Soviet social welfare system, except to apply it to new territories. With the forcible annexation of the Baltic states, Western Ukraine, and Western Belarus in 1939-40, the pension system, such as it was, was extended to the occupied areas. Wage labourers from those territories would be eligible for pensions, but proof of time spent in the workforce would have to be provided, and people who had worked in the police and civil service would not be eligible. After the Second World War, people could be deprived of a pension if there was evidence that they had collaborated with the Nazi occupiers.78 In 1946, pensioners across the Soviet Union were granted a supplement of sixty rubles a month to help offset post-war price increases.79 The static nature of the Soviet pension system at the war's end contrasted with the expansion of welfare state measures in a number of Western countries in the 1940s. In Great Britain, the Beveridge Report of 1942 ushered in a comprehensive universal old-age pension system in that country. The British model became among the important influences on social welfare on the European continent, where Bismarck's principle of social insurance (benefits based on workers' and employers' contributions) had been already been well established in Central Europe.80 Soviet sources grudgingly admitted that some Western countries were improving their social insurance systems and that the United Nations and other international institutions were calling for international standards for social insurance.81 Was the Soviet Union's already dubious claim to a progressive social policy becoming even more precarious? Shortly after Stalin's death in 1953, the Soviet elite decided that the old-age pension system was in need of improvement. In July 1953 the Communist Parry's Central Committee Presidium established a commission to consider proposals for redesigning the social protection system. The commission's proposals were not brought forward until 1955, when

40 Shocking Mother Russia

they were reworked so as to improve benefits for most pensioners. According to high-ranking communist Lazar Kaganovich, the draft law would compare favourably with the pension legislation in capitalist countries.82 The commission called for a single, uniform pension law for the country, to replace the existing melange of separate schemes of pension benefits for various occupational categories.83 Archival documents indicate that behind the scenes, there were a variety of contending views as to what should be included in the new pension law. Many letters were sent to the Council of Ministers from government agencies, trade unions, enterprises, and individuals. In many cases, individual occupational groups, such as doctors and teachers, wanted to be eligible for service pensions (whereby they could go on pension after a certain number of years of service) or for special pension privileges.84 Others - ballet dancers for example - feared that the draft pension law would leave them worse off than before, insofar as they would be treated as workers rather than as artists.85 Significant attention was paid to determining the eligibility of pensions for Baits and Western Belarussians (who might have worked for decades but only lived a decade under Soviet occupation), and for people who could not prove their eligibility for pensions because of the destruction of documentary records during the recent war.86 Another question that arose even after the 1956 law was adopted was whether the descendants of rehabilitated victims of Stalinism would now become eligible for pensions that had formerly been denied them.87 In general, the answer to this question was yes.88 But people who, because of the social upheavals of the 1930s and 1940s, lacked proper documentation of their years in the workforce continued to have problems in proving their eligibility for pensions. This issue continued to be a concern well into Boris Yeltsin's postcommunist tenure as Russian president.89 There were other controversial questions relating to the new pension law. Under Stalin, a sort of hierarchy of pensions had evolved, so that there was a considerable discrepancy between the highest and lowest pensions. The Committee of Labour of the Council of Ministers resolved that the lowest-paid pensioners should get the greatest increases; however, no pension should be lowered as a result of the law.90 The Ministry of Finance tabled concerns about the heavy burden that such a law would impose on the state budget.91 The law went through various revisions, until in September 1955 a draft law on welfare for elderly and disabled people cranked up the ideological rhetoric. The draft stated that the USSR was the first country in the world to extend a broad social

The Elderly in a Revolutionary Society, 1917-1956 41

welfare network to workers, and that pensions were being increased in accordance with Lenin's maxim that the well-being of the workers would continuously improve under socialism.92 Social security measures for aging collective farm workers (kolkhozniki), were another concern on the agenda, but this continued to be regarded as a separate issue from the overall Soviet pension system. The Ministry of Agriculture was instructed in 1955 to draft proposals for improving social welfare measures for elderly and invalid kolkhozniki.^ The Deputy Minister of Agriculture claimed before the USSR Council of Ministers that the social safety net in rural areas was inadequate, and reported that many old people simply had no means of assistance. Supposedly, there were mutual assistance kassy in the kolkhozy, but these often functioned poorly or not at all; meanwhile, the proportion of elderly and disabled in the rural areas had increased. Some kolkhozniki claimed that their kolkhozy refused to help them in illness or old age.94 In response, the USSR Council of Ministers instructed the republic, oblast, and local governments to send kolkhozy sufficient funds and resources to meet social needs, to provide services to the needy free of charge, and to instruct kolkhoz management to help the sick and infirm track down deadbeat relatives.95 Collective farm workers were brought into the Soviet old-age pension system only in 1964. According to the 1964 law, pensions for kolkhozniki would be calculated on a different basis than those of workers, and would be financed by a central fund to be set up to provide social protection for collective farms, to which the kolkhozy would contribute.96 Notwithstanding these unresolved matters, the Soviet Union's 1956 pension reform was depicted as an important post-Stalinist reform. At the 20th Congress of the Communist Party of the Soviet Union - the same congress where Nikita Khrushchev read his 'Secret Speech' containing criticisms of Stalinism - the party pledged to increase expenditures on pensions and other social benefits by 36 per cent over the next five years.97 The draft law on pensions was published on 9 May 1956 and was hailed in the Soviet press as a great milestone because it clearly defined workers' rights to a pension.98 The symbolism could not have passed unnoticed: it was Soviet Victory Day, celebrating the end of the Second World War. This timing underscored the Soviet authorities' increasing awareness that war veterans and behind-the-lines workers were aging. Again, the Soviet newspapers were filled with stories about older people expressing their gratitude to the Soviet Union in hyperbolic terms. For example: 'It is hard to express in words the feelings that fill me today. Joy, gratitude, pride in my native state.'99 A textile worker

42 Shocking Mother Russia

from Ivanovo claimed that enthusiasm about the pension law would inspire her and her colleagues to work even harder.100 The press admitted with surprising frankness that the pension law would provide needed improvements to the status quo. In a statement that implied veiled criticism of the previous regime, one person wrote: 'I understood the publication of the draft law as the desire of the Soviet government to listen to the people's opinion, and consult with them.'101 One editorial criticized the 'great inadequacies' of past legislation and praised the new law for allowing more people to collect pensions and for narrowing the gap between the lowest and highest pensions.102 When Chairman of the Council of Ministers N.A. Bulganin presented the draft pension law to the USSR Supreme Soviet, he contended that the reform addressed a number of problems. First, pensions had been too low, reflecting levels established in the 1930s. Second, there were discrepancies between higher and lower pensions, meaning that some pensions needed to be capped at maximum levels. Finally, pensions for all workers should be established on the basis of a similar formula rather than the previous complex mechanisms.103 The final, adopted law on pensions included a preamble that hailed the October Revolution and socialism for making possible the great progress of the new pension system.104 As comprehensive as the Soviet welfare system may have been after 1956, it was nonetheless a late bloomer. Until then, the pension system had been evolving piecemeal rather than as a comprehensive and inclusive set of benefits. The controversy over how to create a social welfare system during the 'dictatorship of the proletariat' reveals that Bolshevik leaders were profoundly uncertain how to reconcile an inclusive social welfare policy with the desire to promote industrial development by providing incentives to workers. This reminds us that neoconservative Western leaders did not invent negative stereotypes of social groups they considered undeserving of 'handouts.' Even in the state that claimed to be the pioneer of socialism, leaders could have difficulty perceiving social welfare as a policy issue in politically neutral terms. Pension policy consciously excluded some social groups from the system while including others. Although the old-age pension was now established as a right in the Soviet Union, it was a right that was difficult to realize as long as bureaucratic criteria could deny individuals access to social benefits. But as the workers of the Russian Revolution reached middle age or older, it became increasingly awkward to avoid the pension question. With the 1956 law, the Soviet Union had established a relatively univer-

The Elderly in a Revolutionary Society, 1917-1956 43 sal old-age pension system. Generally speaking, it provided a decent if not lavish social safety net for Soviet workers to look forward to at the end of their working lives. The pension system would not be reformed again until 1990, just before the disintegration of the Soviet Union. It is significant that the 1956 Soviet pension reform was presented as an achievement of democracy, signifying the consolidation of old-age security as a basic human right. As a reform linked with the beginning of deStalinization, the new pension law purported to correct some of the inadequacies of the past. The Soviet regime did not live up to its claims of guaranteeing democratic human rights; that said, it is important to understand that pensions constituted part of an ideal of social democracy that was regarded as compensation for historical sacrifices. This insight helps us understand why the erosion of the old-age pension system in postcommunist Russia has aroused such bitter feelings today. The plight of pensioners in Russia, in the 1930s and again in the 1990s, reveals the dilemma of the elderly in a revolutionary society: since the older generation by definition sustained itself during the ancien regime, elites in a time of upheaval may choose to turn their gaze away from a generation that they identify with the cast-off past.

Chapter 3

Pensions and the Pressures of Democratization in the USSR under Perestroika, 1986-1990

After the 1956 reform, the Soviet pension system continued to operate as a reasonably comprehensive social welfare institution. The pension mechanism was capable of meeting the basic needs of retiring workers. It contained an underlying assumption that socioeconomic conditions could improve, but not worsen, under socialism. The Soviet pension system changed little for decades. The long tenure of General Secretary Leonid Brezhnev (1964-82) later became commonly referred to as the 'years of stagnation' because plodding authoritarianism and minimal reform were dominant themes of that era. In 1985, Mikhail Gorbachev came to power as the General Secretary of the Communist Party of the Soviet Union (CPSU), following the brief time in office of two successive ailing leaders, Yurii Andropov (1982-4) and Konstantin Chernenko (1984-5). Within a year of assuming his post, Gorbachev declared his intention to undertake substantial political changes. As in 1956, the 'pension question' was raised almost immediately after socioeconomic reform was initiated. Alleviating the hardships of older people was identified as one of the goals of the new reform program of perestroika (restructuring). Under Gorbachev's leadership, the Communist Party began preparing a more generous, up-to-date pension law. As in 1956, the prominence given to pension reform reinforced a historic pattern in which improvements to the pension system were linked with democratization. Reform was depicted as a redress of past inadequacies. But in the late 1980s the pressures 'from below' in Soviet society were more difficult to control than in 1956, and pension reform became more complicated than Communist Party elites originally anticipated. Gorbachev's policy of glasnost (openness) expanded the parameters of open public debate and allowed the creation of informal groups that

Pensions and the Pressures of Democratization, 1986-1990 45

were independent of the state. The demands of pensioners and veterans burst onto the political scene, and the publicity these demands received compelled the CPSU to place pensions at the top of the social policy agenda. To some extent, demands for pension reform came from the 'left' - from conservative Communists and veterans, who became influential within the reformed Soviet legislature but whose goals did not always reflect the reformist government's agenda. The debate over oldage pensions points to one of the least explored aspects of perestroika: that reform empowered people from the left and increased their demands, instead of simply generating anticommunist independent oppositions.1 During the time of perestroika, reform proposals raised the expectations of pensioners; this helps explain the bitterness that resulted when the values of pensions plummetted in 1992 after the Soviet Union collapsed. During perestroika the Soviet government recognized that the existing Soviet pension system was economically unsustainable. Nonetheless, the regime made explicit and generous promises to an ever-increasing elderly population. This means that any analysis of postcommunist Russia's pension crisis must allocate to the Gorbachev leadership - and to the USSR legislature elected in 1989 - a share in the responsibility. Perestroika laid bare competing perspectives on social rights and social welfare. Should the social welfare system be oriented toward providing handouts to the needy, or privileges to the Soviet elite, or equal social rights to citizens? Instead of choosing a single coherent vision, Gorbachev and his government engaged simultaneously in contradictory discourses. Ultimately, the leadership failed to reconcile inconsistent reform goals. During Gorbachev's tenure, social welfare reform became prominent on the social policy agenda for several reasons. First, as some have noted, Gorbachev's goals of encouraging economic growth and labour productivity had social implications, in that the economic reform program offered workers incentives to work more efficiently and produce higherquality goods. The Communist Party leadership even considered granting unemployment benefits to people whose jobs might be displaced during the economic transition. Also, Gorbachev's policy of encouraging small-scale private initiatives included a proposal that would allow individual workers to pay into a plan for supplementary pension benefits.2 These changes, although they did not threaten the welfare state, gave workers more responsibility for meeting their own future social needs.

46 Shocking Mother Russia

Second, beginning in 1986, Gorbachev's liberalization of the media and public expression, known as glasnost, encouraged more open demands for social change, including pension improvements. Between 1956 and 1986 the Soviet regime had not been very responsive to social welfare demands from the citizenry. The Action Group for the Rights of the Disabled was formed in the USSR in the late 1970s to demand better conditions for disabled people. This group requested official recognition as a social organization, but the regime treated it as an outlaw dissident organization.3 After 1979, the return of wounded veterans from the Soviet invasion of Afghanistan and the publicity that the war received under glasnost helped draw attention to the inadequacies of programs and social benefits for the disabled. This encouraged some veterans to join social movements.4 Archival documents indicate that some citizens expressed discontent with the shortcomings of the regime's pension system. During the Brezhnev era the Soviet authorities showed little tolerance for open criticism of the regime, and informal social movements resorted to samizdat (documents that were informally reproduced and circulated) to articulate their views and to distribute information about their activities. One samizdat document criticized the paltry levels of the lowest pensions, claiming that the lowest old-age/disability pension amount - eleven rubles, twenty-five kopeks - was inadequate to meet a citizen's basic needs. This document also claimed that some 800,000 people had fallen through the cracks of the pension system and were receiving nothing from the state. The disadvantaged included former collective farmers (kolkhozniki) who relocated to cities upon retirement, former political prisoners, and ex-convicts. Victims of Stalin's political repressions also faced obstacles in claiming pensions, because it was difficult for them to produce documents verifying their employment.5 The Initiative Group for the Defense of the Rights of Invalids was the most active group in criticizing the pension system. Although this group focused mainly on disabled people, it also criticized the overall low levels of old-age pensions, and it described the pension system as 'unjust' and 'discriminatory.' The group claimed that it had been denied permission to register as an organization; the Ministry of Social Protection of the Russian Republic was claiming that the Soviet welfare state already cared sufficiently for the disabled.6 This group's allegations were controversial during the Brezhnev era; years later, similar criticisms would be expressed openly in the media under Gorbachev's glasnost.1 In 1985 an official newspaper reported the sad cases of two women who were ineli-

Pensions and the Pressures of Democratization, 1986-1990 47

gible for pensions: a mother of three who could not produce documentary proof of the death of her husband in armed combat, and an elderly woman whose husband had left her. The USSR Council of Ministers finally declared that people not otherwise eligible for pensions could receive a monthly posobie (social benefit) of thirty rubles a month.8 A third impetus for pension reform was the structural pressure on the social welfare system caused by increasing expenditures and declining budgetary revenues. Eventually these economic pressures would threaten the system's capacity to index pensions to the rising cost of living that accompanied the course of perestroika.9 The USSR's financial pension obligations had increased. After the 1956 law, modest steps had been taken to expand some kinds of pension benefits. In 1967 the pension age was lowered by five years for workers who had spent at least fifteen years working in the Soviet Far North. 10 High-ranking military personnel were given special additional pension benefits in 1972,11 and working pensioners were given annual bonuses often rubles per month for every year over pension age that they stayed in the workforce.12 In 1983 a pension supplement was introduced for workers who had a continuous lifetime record of employment in a single workplace.13 Communist Party members who had belonged to the CPSU for thirty years or more were extended special privileges, such as transportation and vacations, along with their pensions.14 In the early 1980s, minimum pensions were raised for workers and kolkhozniki. There were additional top-ups for people who had been on pension more than ten years and for those who had an uninterrupted career of service.15 By 1975, 13.3 per cent of Soviet citizens were over sixty, compared to 6.8 per cent in 1939.H> Soviet social policy experts well knew that the ageing of the population was driving up pension expenditures. These experts began debating whether the Soviet system could sustain both relatively low pension ages and the granting of benefits to pensioners who continued to work for wages while collecting a pension.17 Anne White contends that by the time Gorbachev came to power, there was a growing 'crisis' in the Soviet welfare state. The quality of social programs varied considerably among the USSR's constituent republics; social security was chronically under-funded; and pensions and other benefits had not risen along with wages.18 Is it possible to ascertain just how much pension spending increased over time? Although it is extremely difficult to assess the reliability of Soviet published statistics, some general figures can be found.19 Between the 1950s and the 1980s, budgetary expenditures on social programs

48 Shocking Mother Russia

increased greatly. With the passage of the 1956 pension law, the annual cost of old-age pensions rose from 8.7 billion rubles in 1955 to 34.2 billion rubles in 1958.20 By 1968, planned spending on all pensions was 9.7 billion rubles - a threefold increase in spending when one considers that the ruble was revalued in 1961.21 By 1988, total spending on pensions was 54.9 billion rubles, compared to 24.4 billion in 1975.22 These spending increases reflected the growing elderly population in the USSR. In 1957 there were 2.7 million old-age pensioners; by 1975 there were 28.8 million, and by 1988 there were 43 million.23 The average monthly pension was 62.7 rubles in 1975 and 93.9 rubles in 1988.24 Between the mid-1970s and the late 1980s, every time a budget was presented to the Soviet parliament, it was boasted that social spending on pensions and other benefits was rising constantly. However, the figures were not presented in a consistent way. In 1979, when V.F. Garbuzov presented the budget to the Supreme Soviet, he noted that pension expenditures would rise to 29.9 billion rubles.25 But when the 1988 budget was presented, the Supreme Soviet heard only the total of 70.5 billion for all social benefits, including pensions. The same budget speech contained a rare admission that the country was experiencing financial strain, and spoke of the importance of introducing economies in overall spending.26 The following year, pensions were raised and spending on them increased 6 per cent.27 By 1985, 20 per cent of Soviet citizens were pensioners, and the cost of pensions in the state budget had risen to 45 billion rubles compared to 7.1 billion in 1960. Because of this expense, the Gorbachev regime began considering proposals to create a self-financing fund to cover future increases in pension expenditures.28 The Soviet regime was not simply responding to demands for pension improvements; they were taking a proactive role in bringing pensions onto the reform agenda. But instead of preparing citizens for the prospect that the government might have to make unpopular policy choices, the Gorbachev regime offered lofty promises to pensioners and reaffirmed the principle that old-age pensions were a basic right of citizens. The First Pension Changes: An Elite-Led Process

Gorbachev's first Communist Party Congress as General Secretary was the twenty-seventh congress, held in 1986. There he followed the footsteps of the de-Stalinizing reformer Nikita Khrushchev by promising to alleviate the lot of pensioners and create opportunities for mobilizing

Pensions and the Pressures of Democratization, 1986-1990 49

pensioners' interests. In his remarks to the congress, he stated that the situation of pensioners and veterans would improve 'along with the increased wealth of society,' and he declared that pensioners and veterans needed more opportunities to participate actively in society. He announced that all of the basic types of pension amounts would be increased and that kolkhozniki pension levels would more closely approximate those of workers. Finally, the Soviet Union would initiate the formation of a national organization of veterans; the purpose of this body would be to assist elderly people.29 Indeed, the attention to kolkhozniki was long overdue. The 1964 law on pensions for kolkhozniki had finally established a national system for financing social benefits for collective farm workers. But peasants were initially only eligible for pensions if they remained on the kolkhoz throughout their lives, so this measure had to be amended by a 1965 resolution. In addition, the calculation of farm workers' pensions was complicated by the fact that peasants' work records were diversely calculated to take into account the seasonal changes in their work. Kolkhoz pensions were relatively low: the minimum was 12 rubles, the maximum R102.30 The 27th Congress spelled out ambitious plans for improving social welfare. It was resolved: 'Great resources would be directed toward the improvement of pension benefits, strengthening the duty of society to veterans of war and labour, and families of soldiers killed while on duty.'31 The party also declared an ongoing commitment to improve pension benefits and create more social facilities and services for the elderly.32 At the January 1987 CPSU Central Committee plenum, Gorbachev claimed that socialism had achieved a high level of development of social welfare guarantees for the population.33 Eventually the party began to regard its own social policy more critically. While still affirming the superiority of socialist social welfare measures to those found under capitalism, it admitted that in the past, Soviet social policy had suffered from 'elements of over-simplification, subjectivism and voluntarism, passivity and compromising attitudes towards its shortcomings.'34 A new phrase had been coined to describe the new direction of social policy: 'social justice' (sotsial'naia spravedlivost*). Gorbachev's vision of social justice was understood as having a particular meaning, associated with increasing incentives and rewards for the hardest workers and for the most productive and efficient members of society.35 Social justice thus was understood as providing not greater equality, but greater differentiation of pensions and other social benefits. The phrase was often contrasted with 'levelling' (uravlenie); the

50 Shocking Mother Russia

latter term was seldom used under perestroika because of the notion that equal social welfare protection for everyone would discourage the work ethic. It was scarcely noted that this debate echoed in many ways the rhetoric (admittedly much harsher) of the 1930s. Glasnost

In 1987 the new policy of glasnost allowed the media to report on Soviet society more candidly. Citizens were encouraged to make constructive criticisms and proposals to improve public life; elites were expected to be more responsive and accountable. Public discourse under glasnost revealed a general consensus that the state's pension system should be maintained, and that if anything it ought to provide more generous benefits. However, all other details were open to debate. One view, expressed early on, was that the thrust of the economic reform (uskorenie, or acceleration) would lead to more efficient employment policies, which could eventually require some workforce reductions and relocations. Thus the state should try to encourage pensioners to retire completely from the paid workforce so that more jobs would be available for the young. In the view of one scholar who made this argument, people of pension age would not be able to meet the higher labour standards that would be necessary to improve the economy.36 Not everybody concurred with this blanket dismissal of the capacities of the older generation. For example, to help alleviate the city's labour shortage, the Moscow City Soviet adopted measures to encourage greater participation of pensioners and the disabled in the capital's economy; this included facilitating arrangements for part-time work, flex-time, and work at home.37 Evidently, glasnost was bringing to the surface diverging attitudes towards the value of elderly people in the workforce. The regime's supposedly generous protection of old-age pensions was called into question. Under glasnost the hidden weaknesses in the Soviet welfare system were exposed. A survey of pensioners published in 1980 found that 36 per cent of pensioners claimed they were facing 'material difficulties' since going on pension; 9 per cent said they now depended on their relatives for subsistence; 46 per cent cited difficulties in making ends meet as being the main reason they kept working. The figures cited were higher for women than for men.38 Under glasnost, pensioners wrote to newspapers with complaints about low pensions, lack of access to housing and other benefits, and difficulties obtaining deficit consumer goods.39 A highly placed Soviet social welfare official admitted that

Pensions and the Pressures of Democratization, 1986-1990 51 although minimum pensions had been raised periodically, pensions on the whole had not kept up with rising wages since 1956. As a result, the gap between the highest and lowest pensions had considerably narrowed and 'the prestige of pensioners has fallen.' 40 Under glasnost, reports of mistreatment and discrimination against elderly people came to light. Officially, the Soviet Union claimed that it had eliminated biases against older people, who were regarded as fully productive members of society.41 Yet newspapers reported instances of bureaucratic neglect and ill treatment of elderly people; for example, one reported that many received health care in medical facilities only after young people were treated.42 The USSR prosecutor's office initiated an investigation of conditions for the elderly and cited evidence of poor conditions in nursing homes. These conditions were blamed on underfunding and on the failure of the republics' Ministries of Social Security to monitor social welfare institutions properly.48 In 1987 a Soviet law was passed to provide home care for the elderly who lived alone, and Second World War veterans were placed at the top of the priority list.44 New facilities providing services and amenities to the elderly were opened.45 Under glasnost, pensioner organizations began to form. In 1988 the All-Russian Society of the Disabled was formed, with the goal of helping disabled people find employment.46 According to Anne White, the official veterans' organizations were dominated by the Communist Party and were often regarded sceptically by the population. However, the organizations' local branches were effective in extending assistance to the elderly and involving the elderly in their programs.47 According to White, Gorbachev initially encouraged the formation of charities and voluntary societies in order to encourage social participation and ease pressure on the welfare state. However, the party and the regime became uncomfortable when some independent social groups (such as the charity Miloserdie and the human rights group Memorial) criticized the weaknesses of Soviet social programs.48 In 1990 the USSR Procuracy (responsible for monitoring government institutions' compliance with the law) created an office to oversee social welfare organs' observation of social rights. This made it possible to punish officials who violated these rights.49 Perestroika and Pension Reform, 1989-1990 The Soviet reform effort was initiated following the decision of an 11 September 1986 meeting of the CPSU Politburo. When the Soviet authorities first began preparing pension reform in 1988, their purpose

52 Shocking Mother Russia

was to promote 'social justice.' Their goal was to use pensions more effectively to reward workers' performance during their years on the job, while acknowledging the loyalty of workers who had spent long periods of time in a single workplace. A second goal was to bring peasants' pensions up to the levels of workers, and a third was to create 'social pensions' for people who, because of insufficient time in the workforce, could not complete the conditions of eligibility for pensions.50 The popular magazine Ogonek noted that the law was taking longer to draft than expected.51 An official from the State Commission on Labour (Goskomtrud) hinted in a magazine interview that the many competing demands and pressures were partly responsible for the delay in drafting the law. One concern was that reform would involve a steady and longterm increase in expenditures, because of projected increases in the elderly population.52 In 1989, elections were held for a recently-restructured Soviet legislature. These elections provided, for the first time, a measure of multicandidate competition for seats in the Soviet parliament. This mechanism provided a limited opportunity for society as a whole to have its concerns recognized by elected representatives. So in the same year, when Gorbachev addressed the larger of the two interconnected legislative bodies - the first Congress of People's Deputies - the discourse on pensions reflected a broader social debate. Gorbachev's remarks included patriotic themes that emphasized the importance of recognizing the particular contributions of veterans: Our moral duty and responsibility is to care constantly for veterans of war and labour, those who defended the independence of our Motherland in the Great Patriotic War, who in the difficult years supported the economy of the country, strengthened its industrial capability, those to whom we are grateful for everything we have. Among the people's deputies there are our elder colleagues who better than anyone understand the hopes and needs of veterans. And we must listen to their voices, and correctly resolve the questions that life puts before us.53

To the applause of deputies, Gorbachev also proposed that the system of I'goty (special benefits granted on a privileged basis for certain social groups or individuals) in social welfare be re-examined.54 Perhaps more than anticipated, pensions became a heated subject of debate at the congress; clearly, the Communist leadership could no longer maintain exclusive control of reform. Four hundred seventeen

Pensions and the Pressures of Democratization, 1986-1990 53 deputies elected from rural areas presented an appeal on behalf of the peasantry; among their grievances was that peasants received lower pensions than other workers.55 According to Bernice Madison, war veterans were actually a privileged group and since 1956 had been entitled to receive considerably higher pensions than non-veterans. Similarly, disabled veterans were entitled to higher pensions than disabled nonveterans.56 But in the congress, a deputy from the All-Union Council of Veterans who claimed to speak on behalf of seventy-five deputies who fought in the Second World War lamented the meagre pensions received by millions of veterans. In his view, the lack of resources illustrated 'the deficit in gratitude towards veterans, who secured victory in the Great Patriotic War, securing for us and our children a peaceful life. And they live in very difficult conditions.'57 A deputy from the All-Russian Society for the Blind spoke to the congress about the 'miserly' pensions granted to the disabled.:)8 Perhaps in response to these sharp criticisms, Prime Minister Nikolai Ryzhkov assured the congress that pensions would henceforth be the top priority in social welfare. In announcing a broad set of planned pension increases, he promised. 'Here we hold a strong position: we must wait a little to resolve other social questions, but the problems of pension security we will resolve in the Thirteenth Five-Year Plan.'59 Notwithstanding the substantial expense of Ryzhkov's proposed increases, the congress declared that pensions should be increased even further and that additional social benefits for veterans should be implemented.60 The Congress of People's Deputies drew urgent attention to the draft Soviet pension law, which in 1990 would come before the parliament's legislative body, the Supreme Soviet. Pensions were one of the first issues on the legislative agenda for the newly constituted Supreme Soviet when it began to sit in 1989. Already in August of that year, Finance Minister V.S. Pavlov had introduced changes to the pension law that would increase pension levels for the poorest levels of pensioners (who had held low-paying jobs during their working lives), for people receiving disability pensions, and for kolkhozniki. Kolkhozniki had not even been eligible for state pensions until 1964 and had always been at a disadvantage in their pension benefits relative to industrial employees, since agricultural collectives were assumed to be more self-sufficient.61 The draft law of 1990 proposed to introduce greater parity between rural and urban workers. Throughout the discussion, deputies highlighted the importance of the pension increases for advancing 'social justice,' while in the same breath raising new concerns

54 Shocking Mother Russia about other social groups in need of protection, such as disabled children and veterans. For his part, Pavlov noted that the law would involve considerable new expenditures. At that time, pensions were still being financed from the state budget. Although he claimed that the CPSU and its youth organization Komsomol were expected to help fund the pension increases in the short term, he cautioned that revenue sources would need to be found for any additional social welfare costs. He remained optimistic, however, that under perestroika social spending would be the government's first priority.62 Pavlov received his fair share of probing questions from deputies; after all, pension policy in the Soviet Union had remained relatively unchanged since 1956, and the new atmosphere of frankness was making it possible to challenge the very basis of present social policy. One deputy noted how difficult it was to qualify for a pension (based on years of employment) in areas where it was difficult to find a job; at the same time, social benefits for those who were unable to work were clearly insufficient to provide a decent standard of living.63 Such a public admission of inadequacy would have been almost unthinkable before glasnost. The debate over the pension law illustrated the competing discourses on social welfare issues under perestroika. On the one hand, the discussion reflected Soviet deputies' confidence that the social welfare system was grounded in a generally productive economy, one that was capable of supporting ever more generous benefits. Noted one deputy, the Armenian L.A. Arutiunian: 'We can raise the question, where will the money come from, to sponsor the provision of old age pensions and the raising of the well-being of the strata of society who receive them? First of all, without a doubt, from the state. The state is obliged to support its citizens in the third stage of life.' But Arutiunian went on to point out that there were new opportunities for charities and churches to assume some of the burden for social welfare from the state.64 As a result, in August 1989 the Supreme Soviet passed a 'little pension law' (malyi pensionnoi zakon) in advance of the general pension reform law, which would not be ready for discussion until the spring of 1990. The malyi zakon proposed to raise minimum pensions, to eliminate differences in pensions between workers and kolkhozniki, and to add additional pension benefits for veterans and disabled people. The Communist Party, trade unions, Komsomol (Communist Youth League), and Soviet Peace Fund were each reported to have turned over funds so that the legislation could be brought quickly into effect.65

Pensions and the Pressures of Democratization, 1986-1990 55 The 1990 Soviet Pension Law

The adoption of the 1990 USSR pension law was a revealing moment in the Soviet Union's attempt at liberalization. It is striking how much attention Soviet legislators paid to the concerns of Soviet citizens, who were constantly referred to as 'voters' rather than the more traditional 'toilers' or 'Soviet people.' For once, the Soviet authorities openly changed the timing and content of a key piece of legislation in response to voters' concerns and the moral suasion of elderly veterans. The law also is a good example of how perestroika enabled a basically elite-led pension reform to become an exercise in reconciling the demands of contending interest groups and passionate citizens. Between 1989 and 1990, some 500,000 citizens wrote letters about the pension law to the Soviet authorities.66 Incredibly, the Supreme Soviet commission claimed that 260,000 of these proposals ultimately influenced the content of the law.67 The Council of Ministers, the trade unions, and Goskomtrud participated in drafting the legislation, and the draft law was published in the press. The Supreme Soviet formed a special commission to consider the law, which included all of the heads of committees and commissions in the legislature as well as experts and scientists. Furthermore, the government claimed to have conducted a public opinion survey of 50,000 people to solicit their opinions on the issue.68 These facts show that the Soviet authorities attached extreme importance to the law. The labouriousness of the legislative process also suggests why the law took so long to reach the legislature. As introduced in the Supreme Soviet, the law's main commitments included the following: to increase pensions to the standard of living and to raise pensions to adequate levels; to provide more benefits for war veterans; to introduce social pensions for those who didn't have sufficient years in the workforce; and to create a self-financing autonomous pension fund, funded by enterprise contributions and (more controversially) by individual citizen contributions.69 To all of this there were stumbling blocks, each involving people who might be entitled to claim special benefits or exemptions from the general law. The first was the matter of I'goty (privileged entitlements) granted to particular occupations and professions. The second involved re-evaluating the longstanding Soviet practice of granting generous 'personal pensions' on an individual basis to people who had served in the Communist Party elite. The granting of personal pensions, and their traditional secrecy, came under scrutiny. A common view was that special pensions should be maintained

56 Shocking Mother Russia

for exemplary contributions or sacrifices to the nation, but not for services to the Communist Party, and that they should be based on a more transparent set of merit criteria.70 Personal pensions had their defenders; for example, one personal pensioner claimed that her pension barely covered her subsistence and medical costs. She agreed, though, that personal pensions should not be available exclusively to CPSU members; rather, they should be open to veterans or other nonparty people who had made 'honest contributions to the well-being of society.'71 Similarly, USSR Supreme Soviet Deputy Anatoly Sobchak (who later became mayor of St Petersburg) decried the expense of paying for 600,000 of these sometimes excessive personal pensions, some of which he claimed went to people who had brought harm to the country, such as former Stalinist NKVD (secret police) agents.72 When the draft pension law was introduced, the head of the Supreme Soviet Commission on Matters of Labour, Prices, and Social Policy, N.N. Gritsenko, declared that the practice of granting personal pensions to CPSU members was to be abolished and that the power to bestow personal pensions was to be taken away from the USSR Council of Ministers. Instead, the Supreme Soviet would be able to grant special pensions to individuals who had performed extraordinary service.73 But reformers, such as Ella Pamfilova and N.V. Fedorov, sharply criticized the draft law for failing to eliminate personal pensions altogether. Pamfilova claimed that the law ought to improve benefits for the poorest social groups and should concentrate on creating a uniform legal standard for all citizens, rather than on maintaining existing pension privileges for the elite. Pamfilova charged that the government had failed to respond to the Supreme Soviet's request for a full accounting of the number and amount of personal pensions received by Communist Party members.74 The issue of personal pensions was the subject of heated debates in the USSR Supreme Soviet. At the same time, veterans as a group were claiming special pension benefits on the basis of merit. It was agreed that the Soviet law on pensions would be phased in gradually by 1992, but that Second World War veterans would enjoy the benefits of the law as of October 1990 and other veterans as of January 1991.75 Indeed, a separate law on pension benefits for armed forces personnel was introduced in the Supreme Soviet in April 1990, and was hailed as a significant and long overdue piece of legislation.76 As V.I. Shcherbakov of the State Committee on Statistics (Goskomstat) publicly lamented, the debate on the law revealed that it would be impossible to satisfy all demands.77 At the same time, the main national

Pensions and the Pressures of Democratization, 1986-1990 57 trade union organization, VTsSPS (All-Soviet Central Council of Trade Unions), came out against the law's novel proposal to increase revenues by collecting compulsory pension contributions from individuals as well as from enterprises. According to VTsSPS, this measure deviated from the 'Leninist' principle (discussed in chapter 2) that workers should not have to pay for their own social insurance.78 Many deputies lobbied for additional pension benefits for particular occupational groups, Afghan war veterans, or working pensioners, or for certain regions. Among its concessions, the commission consented to revise the draft to bring the law into effect sooner, but reminded the deputies that the law would commit the USSR to the world's highest percentage of pension spending in terms of gross domestic product (GDP) for a constantly increasing future number of pensioners.79 On the whole, though, deputies showed little interest in the budgetary implications of the law. The USSR Supreme Soviet debated the new law on pensions in advance of the national holidays of 1 May and 9 May, but the lack of a quorum prevented its passage. There continued to be some dissension over the need to collect supplementary financial resources for pensions beyond state budget allocations, and over the question of l'goty.m It is interesting that just as in 1956, the goal had been to pass the new pension law in time for the anniversary of the end of the Second World War. Hundreds of armed forces veterans reportedly sent telegrams asking the legislature to pass the law in time for Victory Day, 9 May.81 Following revision of the draft law by a conciliatory commission in the legislature, the USSR pension law was passed on 15 May 1990.82 The final pension law included the controversial Article 98, which allowed the Supreme Soviet considerable discretionary powers in determining pensions for people who had performed 'exceptional services for the USSR.' Article 98 gave the power to grant special privileges to people who had won the USSR's highest awards, but also 'in recognition of other citizens who had made outstanding contributions to the Soviet state in government, social or economic activity, culture, science, education, health care or sport. , o o As the next chapter will demonstrate, the Soviet pension law was never actually implemented: by the time it was supposed to take full effect in 1992, the USSR no longer existed. Indeed, the Russian Republic (RSFSR), as a unit of the Soviet federal system passed its own pension law at the end of 1990. The RSFSR law, adopted by the new Russian parliament chaired by reformer Boris Yeltsin, became the basis for the post-Soviet pension system of the newly independent Russian Federation in 1992.

58 Shocking Mother Russia

For the most part, the RSFSR's provisions followed the Soviet legislation. Both laws created the same types of pensions with similar elibility requirements, and each resolved to create an independent pension fund to finance them. However, the RSFSR's provisions deviated in some important ways from the Soviet legislature's. Unlike the Soviet law, the Russian law avoided ideological language about the pension rights of citizens who engaged in 'socially useful labour.' Instead it resorted to more neutral language about the conditions for pension eligibility and the creation of a single system of 'stable' pensions. The RSFSR law also created more specific and streamlined criteria for early retirements and special pension benefits, provided more generous recognition of working pensioners, and more explicitly stated that pensions must keep up with a basic standard of living as determined by the state's subsistence minimum calculation. Significantly, the RSFSR law included no equivalent of the USSR law's Article 98. However, it did allow for pension increases in varying amounts for certain categories of people, including Heroes of the USSR, Heroes of Socialist Labour, combat veterans of the Second World War, and former victims of political repression. The Russian law also provided considerable discretionary power to grant vaguely defined nadbavki (supplements) to existing pensions.84 Before the Soviet Union collapsed in 1991, food shortages and lineups were common as the Soviet command economy weakened, and consumer prices were still controlled and subsidized by the state. This explains why the public debate on pension benefits showed more concern with the availability of consumer products for the elderly than with the need to develop a system of pension indexation to compensate for possible inflation. The latter possibility wasn't discussed very much. By the end of 1991, pensioners were writing to Ogonek to complain that price increases were beginning to strain their pensions. More often, however, pensioners' letters reflected concerns about unreasonable amounts of time spent standing in line for scarce foods and medicines.85 This helps us understand why the pension system was so poorly equipped to respond to the rapid inflation that post-communist Russia faced in 1992. In conclusion, there are a number of reasons why pensions were brought to the forefront of Gorbachev's political agenda. First, the elites now saw that it was necessary to increase pensions, to 'activate' pensioners within Soviet society, and to honour the patriotic contributions of veterans. Second, there was a desire to stimulate the economy by offering pension incentives to productive people who had a strong work

Pensions and the Pressures of Democratization, 1986-1990 59 ethic. Third, pensions were increasingly being thought of as a social safety net for the needy rather than an earned reward for certain groups of people who were considered especially deserving. Fourth, democratization was leading to demands to break with the elitism and secrecy of Communist Party practice, as reflected in the proposition to rationalize pensions based on a clearly defined open standard, in which every citizen was recognized as equal before the law. Finally, the Soviet government acknowledged the high cost of pensions to the national budget, and foresaw a need to increase revenues and limit expenditures. Obviously, all of these objectives contradicted one another. Instead of choosing and sticking to a coherent set of realistic goals, the Soviet pension reform process of 1986 sidestepped the economic realities of constrained fiscal resources. At the same time, Soviet leaders committed themselves resolutely to the irreconcilable principles of equality for all and privileges for some. Meanwhile, populist politicians such as Boris Yeltsin achieved high office in large part by convincing voters that they were sensitive to the need for improvement in people's everyday lives. Pensioners were perhaps especially receptive to these kinds of messages. In 1991, Yeltsin (who was elected the Russian Republic's first president in 1991) achieved the peak of his popularity. Initially, he said little to suggest that his market-oriented economic reform program of shock therapy would bitterly disappoint the average citizens who constituted his most loyal supporters. As the Soviet Union collapsed at the end of 1991, the newly independent state of the Russian Federation, led by Yeltsin, declared its priorities. Shock therapy was high among these; the standard of living of pensioners was not.

Chapter 4

The Origins of Post-Communist Russia's Pension Crisis, 1990-1993

When the Soviet Union collapsed in December 1991, the Russian Republic (renamed the Russian Federation) suddenly became an independent state. Under President Boris Yeltsin's leadership, the country's government had to scramble to adjust to the new demands and responsibilities of independent statehood. Notwithstanding the adjustments that accompanied Yeltsin's economic reform program of 'shock therapy,' the country's pension system could have been relatively well equipped to handle the transition. While still a constituent Soviet republic in 1990, Russia had adopted a reasonably well-intentioned and foresightful reform, and the old-age pension system consistently remained at the top of the political and legislative agenda when economic reforms were being rapidly introduced in 1992 and 1993. If old-age pensions were such a priority, when did the pension system begin to go awry? The evolution of pension policy during the initial post-communist transition (1992-93) demonstrates how quickly reform became inadequate to deal with rapidly changing events. Pensions were one of the first issues to be raised in the opposition critique of Yeltsin's economic reforms. Old-age pension policy was one of the first issues to focus attention on the growing confrontation between reformers in the government and opposition within the parliament. Dissension between the Russian executive and legislature over the pension question became highly politicized, and pension policy suffered as a result. Deteriorating executive-legislature relations generated a clash of opinions over control of pension finances and prevented progress in social welfare reform. In short, pensions became a focal point of escalating political tensions in Russia. The government's responses to the erosion of pensioners' living standards tended to rely on reactive measures rather than on systematic reform. Thus a pattern was set for the future.

Post-Communist Russia's Pension Crisis, 1990-1993 61

The pension debate illustrates themes raised in recent theoretical literature on the problems of the postcommunist transition. It has often been argued that executive-legislative relations in Russia from 1992 to 1999 were bitterly polarized; a pattern of presidential vetoing and sparring with the legislature over reform policy impeded the passage of legislation.1 This no doubt is due in part to the competition that is inherent in all presidential systems, in which the executive and legislature are elected separately and therefore may have competing political agendas. In Russia, however, executive-legislative relations have been especially contentious; this was most obvious when Yeltsin attempted to dissolve the parliament in October 1993. Pension policy can be seen as a factor influencing political struggles in Russia, rather than simply as a symptom of those struggles. In post-communist Russia the intention was for the pension system to be financed by an independent extrabudgetary fund; this would require financial adaptation. There is nothing more political than the collection and distribution of revenue: Russia's pension reform was proposing a new mechanism for doing just that. Perestroika and the Initiation of Pension Reform

Shock therapy aggravated but did not initiate the controversy over the implications that economic reform would have for the welfare state. As chapter 3 outlined, under Gorbachev's perestroika old-age pension reform plans had already provoked significant controversy. Janet Chapman has argued that the 'social contract' changed under Gorbachev. On the one hand, he emphasized the merit principle - that people should be rewarded for hard work; on the other, he emphasized that the needs of vulnerable groups had to be a high priority.2 So on the one hand, Gorbachev's reforms sent the message that citizens should be empowered to claim their right to a full pension from the state; but on the other hand, they suggested that the state could now begin to escape the burden of exclusive responsibility for providing for social needs. Meanwhile, leaders also pondered the reality that sources of revenue were finite. Perestroika introduced the discourse of fiscal responsibility - a discourse that came to dominate the rhetoric of pension policy in the 1990s. This concern with cost effectiveness remained, however, a fairly minor theme until market economic reform was well underway. Adequate resources and stable pension expenditures were still taken as a given, since at the time price controls and full employment still officially existed. The starting point of post-communist Russia's pension policy was the

62 Shocking Mother Russia

Soviet pension reform law of 1990. To review, this law had several important features. First of all, it embraced the notion of a truly universal pension system, to which all Soviet citizens had an equal right regardless of their occupation, ability to work, or quality of work. It proposed two types of pensions: old-age pensions based on employment (trudovye), and 'social' (sotsial'nye) pensions distributed to people who were unable to work (such as people born with serious disabilities). For retiring workers, pensions would be based on years of service and salary upon retirement. Second, old-age pensions would no longer be paid from the state budget: the law would create an ostensibly self-financing, extrabudgetary pension fund that would collect revenues from employer and employee contributions, which would then be used to pay pensions. (Separate legislation introduced extrabudgetary funds also for unemployment insurance as well as medical and social insurance). Third, the law allowed for enterprises, localities, and social organizations to create their own pension plans or elderly benefits to supplement the protection of the state.3 The law allowed for the possibility of continuing market reform, insofar as it explicitly addressed the possibility that people working in the private sector would be eligible for state-administered pensions, as well as the need for the pension system to accommodate people who changed their locality of residence (such as refugees or migrants). Within a few months of the Soviet pension law's passage, the Russian Republic (RSFSR) had adopted the main outlines of that pension reform, effectively 'nationalizing' the USSR Supreme Soviet's good intentions. However, amid criticism that the Soviet pension law didn't constitute a substantial enough change, the drafters of the RSFSR legislation proposed a more comprehensive reform that would reflect what they regarded as a more democratic pension policy. A cornerstone of this reform effort would be the removal of 'personal' pensions - that is, the ones granted on a privileged basis to individuals.4 The head of the Russian Supreme Soviet's social policy committee, M.L. Zakharov, explicitly spelled out the reasons why the Russian republic should adopt its own law on pension reform: 'On January 1, an All-Union Pension Fund is being created. We must do everything that we can do today, but no later. Once a Union Pension Fund is created, 20 billion rubles will leave Russia.You should at least think about this. We would like to adopt this law as quickly as possible, to prevent 20 billion rubles leaving Russia.'5 Optimistically, Zakharov thought that if Russia created its pension fund quickly, it would build up a surplus that would provide a sound base for the pension system by 1992. If pensions were increased annually, the

Post-Communist Russia's Pension Crisis, 1990-1993 63

surplus would permit sufficient resources to compensate for expected price increases. Significantly, the proposed law (passed when Boris Yeltsin was still the chairman of the Russian parliament) placed the new Pension Fund under the control of the parliament; the government was only empowered to organize and carry out the reform.6 This decision created the conditions for the future disagreement between the Supreme Soviet and the government over the Pension Fund, as relations between Boris Yeltsin and the Russian Parliament deteriorated in 1992 and 1993. The debate over Russia's 1990 pension law foreshadowed some issues that would later become crucial. Some deputies asked whether enterprise pension contributions (i.e., the taxes earmarked for the Pension Fund that enterprises paid on their payrolls) were too high, at 26 per cent of payroll; another asked whether the Pension Fund was not simply going to be a 'big bank.' 7 In later years, enterprise pension arrears would mount, with the argument often made that given the slump in production since the collapse of the Soviet Union, tax levels were indeed too high. Indeed, the Pension Fund was originally designed simply as a sort of 'bank,' a revenue-collecting organization that was removed from the actual process of implementing pension policy, which was the responsibility of the Ministry of Social Protection and its local organizations. For the drafters of Russia's pension reform law, it was extremely important for the pension system to be self-financing and accountable to the parliament, and that the pension system be firmly entrenched as an institution operating on an egalitarian basis for all citizens.8 The very notion of universality was problematic in Russia: on the one hand, the pension reform lauded the idea of a simplified, equitable pension system in which pensions would be decided on the basis of clear criteria; on the other hand, some parliamentary deputies called for additional privileges and entitlements for particular categories of workers who had performed acts of patriotism and made wartime sacrifices that were valued in the Soviet regime. Notwithstanding the debate, the law was passed unanimously.9 Later it was argued that pensions were to be considered both a reward for high-quality work, but also a symbol of the right to a guaranteed social safety net. As enterprises changed along with economic reform, the state needed to ensure that vulnerable groups such as the elderly would continue to receive social protection.10 If Russian parliamentary deputies in 1990 expressed unease over many potential problem areas, why couldn't they prevent the escalation of these problems in the pension system between 1992 and 1993? To some extent, the abrupt collapse of the Soviet Union had unavoidable

64 Shocking Mother Russia

consequences. One complication was that the original Soviet pension law provided that people who emigrated abroad were not eligible for pensions.11 Former Soviet citizens who found themselves in newly independent states (especially Estonia and Latvia, which adopted exclusive citizenship policies that extended automatic citizenship only to people whose families had lived in those republics prior to the Soviet invasion of 1940) often found themselves suddenly being treated as foreigners in their place of permanent residence. As a result, they could not necessarily count on having a right to a state-funded pension. Russia's moral obligation to provide pensions for Russian Federation citizens residing in other former Soviet republics became the focus of significant attention in the 1993 parliament. For citizens in those Soviet successor states who joined the Commonwealth of Independent States (CIS) - the organization created on the initiative of Russia, Ukraine, and Belarus in December 1991 to maintain economic and military cooperation between most of the Soviet successor states - there was some protection. CIS member states signed an agreement in March 1992 whereby the member states pledged to recognize each state's responsibility for the payment of pensions on its soil, and each state agreed to grant pensions to permanent residents as well as to citizens.12 In contrast, the status of Russian non-citizen residents in Latvia and Estonia became a controversial topic in Russia's relations with those two countries. Within Russia, the economic reform program of shock therapy forced a sudden acceleration of the pension law's original schedule at the end of 1991. While the Soviet Union was collapsing, leaders quickly established the follow-up procedures and institutions for the Russian pension reform, which at the time had not yet been very well prepared for implementation. Deputies seemed aware of how important it was to ensure the continuity of pensions, especially in light of consumer prices, which were about to rise steeply. A polozheniewas passed to establish the pension fund's basic operating structure. Yet the parliament's discussion of the pension matter in 1991 was vague and inconclusive. Although some deputies expressed concern about the fiscal challenges of setting up a whole new system for collecting and distributing revenue, Speaker Ruslan Khasbulatov urged the Supreme Soviet to approve the proposed resolutions, on the assumption that further details could be hammered out in 1992. Another issue that arose was that the new Pension Fund was de facto delivering certain pensions (primarily for civil servants, army personnel, and people ineligible for a regular worker's pension) that it was not obligated to pay for, since these pensions were formally the

Post-Communist Russia's Pension Crisis, 1990-1993 65

responsibility of the Soviet state budget. Then-Finance Minister Egor Gaidar assured the legislature that the Russian government's difficulties paying state-sector pensions were temporary; he also promised that by the beginning of 1992 the Pension Fund would be operating 'normally.'13 (The matter of finances will be discussed in more depth in the next chapter.) But by 1992, the government and legislature were beginning to dispute pension issues in a heated manner that hampered constructive cooperation. For years to follow, the issue of the Pension Fund paying for pensions outside of its competence would be a sore point for the government. Inflation began to skyrocket, and as a result, by March 1992, the decline in pensioners' living standards was commanding the legislature's attention. President Yeltsin proposed allowing the government more power to set pension levels. He presumed that this measure would enable him and social welfare officials to respond more quickly to the changing socioeconomic situation. Yet the Supreme Soviet's social policy commission opposed granting the executive greater discretionary power to set pension rates, on the grounds that expanding government powers would undermine parliament's authority over the Pension Fund and more significantly, could inhibit the development of coherent legislation to underpin the new system.14 As consumer price increases mounted in 1992, the Supreme Soviet moved quickly to pass legislation that would tie pension levels to the minimum wage.1:> A law passed in October 1992 raised pensions by 250 per cent and provided for them to be increased every three months in accordance with changes in consumer price levels.1() There was a 'levelling' effect: the previous distinctions between pensioners' incomes became less significant because the real value of pensions declined across the board. Higher-level pensioners lost their sense of being relatively well off, especially when presidential compensation payments awarded lump-sum supplements to lower-income pensioners. In the government's view, there were insufficient financial resources to maintain significantly differentiated pension benefits amid high inflation.17 But at the time, any anticipated fiscal problems with the Pension Fund were seldom publicly discussed. The issue of how to determine the size of pensions continued to evoke strong responses and heated debate. The 1990 law differentiated maximum and minimum pensions based on years of service and previous salary. This standard was relatively neutral. However, it did not necessarily satisfy those who thought that pensioners should be rewarded not just

66 Shocking Mother Russia

for these numerical indicators, but also for the quality of their work, for their patriotic contributions to the nation, and for doing especially difficult jobs (such as mining). Finally, the approach exemplified by Yeltsin's compensation payments presented itself as the most egalitarian, because it made lump-sum payments that especially helped the poorest pensioners. But this policy evoked significant criticism on the grounds that compensation payments undermined the standard of living for those with higher pensions. The compensation payment had its own historical precedent: a lump sum supplement, the khkbnaia nadbavka (bread supplement), was paid to urban pensioners in Stalin's day.18 An executive-legislative struggle erupted over the control of the Pension Fund. According to the polozhenie that came into effect in January 1992, the Pension Fund was an independent fund accountable to the Supreme Soviet.19 In February 1992 the Supreme Soviet passed a resolution that among other things reminded the government it could no longer grant personal pensions.20 In the spring of 1992, Yeltsin returned a draft law on the Pension Fund budget to the Supreme Soviet. The parliament's control over the Pension Fund was causing friction, amid complaints by the Ministry of Finance (then led by Vasilii Barchuk) that it needed greater access to Pension Fund resources in order to adequately plan the state budget.21 These events illustrated a growing constitutional controversy over the extent of legislative control over the pension system and over the president's right to veto legislation. In an escalating struggle for control of the pension system, each side painted itself as the friend of the elderly. By October 1992, dissenting views had emerged between the executive and the legislature's social policy commission as to how an adequate standard of living could best be maintained for pensioners during the economic crisis. The legislature's plan was to introduce a systematic legal procedure for indexing the pension system at regular intervals to correspond to increases in the cost of living. The legislature's arguments were normative; that body was calling for a clearly codified framework with the goal of guaranteeing individual pensioners an inalienable right to a decent living standard. The executive's argument was that it would be better to delay a law on indexation and instead continue short-term, ad hoc cash supplements to pensioners. The government feared that indexation would disrupt the authorities in the various branches of the Ministry of Social Protection, as officials would have to constantly recalculate an already complex set of pension regulations. The government argued that furthermore, pension increases needed to be properly harmonized

Post-Communist Russia's Pension Crisis, 1990-1993 67

with wage increases.22 By October 1992 the legislature's leading social policy advocates and members of the government were exchanging sharp words over these matters.23 At the 7th Congress of People's Deputies in December 1992, parliamentary Speaker Ruslan Khasbulatov called for a reform model based less on the extreme model of the United States and oriented more toward social harmony. He congratulated the Supreme Soviet for having raised wages and pensions.24 A few days later the Congress of Peoples' Deputies adopted a resolution calling for more attention to social welfare, contending that the difficulties in social protection were due in part to issues of constitutional governance: that a clear division of responsibilities was lacking among the federal, regional, and local branches of government.25 The executive's arguments at this time were not revenue oriented; concerns about the fiscal health of the Pension Fund were not voiced. Rather, the executive invoked the need for a simple administrative solution to the problem of inflation that could respond quickly to rapid change - but that also presented a built-in rationale for increased executive involvement in pension finances. Nor was the executive at this time objecting to the content of legislation. Consistent with its shock therapy discourse, the executive was simply asking the parliament for more patience in dealing with a difficult short-term situation whose length of time became progressively protracted. By 1993 the legislature and the government were working more overtly at cross purposes, setting in motion a vicious circle. The parliament passed legislation asserting its right to increase pension levels as necessary, and called for quarterly review of pension levels. Zakharov argued that this interventionist approach was necessary because the government was not cooperating with existing legislation on the matter.20 In 1992—3 the Supreme Soviet and the government were still able to work out their differences over legislation through conciliation commissions. But Yeltsin's occasional refusals to sign pension laws, and his continued presidential decrees on compensation payments, had by 1993 become one of the irritants in the executive-legislative relationship. By May 1993, members of parliament were voicing their suspicion that Yeltsin wanted to absorb the Pension Fund into the sphere of executive control.27 Yeltsin began passing more presidential decrees (ukazy) on pensions (e.g., in a September 1992 decree he authorized the formation of private, non-state pension funds). 28 In this way, the executive-legislative views on pensions became polarized: dissension focused less on the content of pension policy than on the method for increasing pensions

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and on the overall control of the Fund's resources. This polarization is further illustrated by the fact that the Supreme Soviet's votes on pension legislation were typically unanimous. Meanwhile, pension policy became more convoluted, as the impulse to recognize certain groups' special contributions to society clashed with the pension system's intended universality. In February 1993 the parliament passed a law raising pensions for certain groups, including Second World War veterans, former prisoners of war, recipients of prestigious awards and medals for patriotism, and Leningrad blockade survivors.29 Similarly, another law provided lower rates of payroll pension contributions for certain types of enterprises, mainly agricultural enterprises and enterprises that employed invalids and pensioners.30 The tensions between Yeltsin and the parliament reached their height on 21 September 1993, when the former tried to dismiss the latter and call new elections. This complicated conflict involved disputes over a broad range of constitutional, budgetary, and economic issues. However, pension issues immediately became part of the executive-legislative standoff. As the parliament faced dissolution, a presidential ukaz offered parliamentary deputies elected in 1990 generous social benefits and, for those nearing retirement age, pensions.31 On 22 September 1993, a resolution of the Russian government called for the consolidation of the executive's control over finances, including the Central Bank. This resolution, signed by Prime Minister Chernomyrdin, subordinated Russia's Pension Fund to the Russian government.32 Two days later, a presidential ukaz dismissed the head of the Pension Fund, Alexander Kurtin, and replaced him with a former finance minister, Vasilii Barchuk.33 Yeltsin's move was portrayed by some reporters as a means for the government to gain greater control over Pension Fund resources.34 The government was said to be concerned about the Pension Fund's accounts.35 Shortly after this, new criticisms of the parliament's behaviour became prominent: increasingly, the government argued that the parliament had been irresponsible in approving pension increases that the Fund could not afford.36 However, this discourse was new to the October 1993 crisis before then, the Pension Fund had seldom been depicted as facing dire fiscal straits. In the parliament (e.g., in the Federation Council), the government was asked whether it had borrowed Pension Fund revenues after it took control of the fund in October 1993. Barchuk repeatedly denied that any inappropriate diversions had taken place. Rather, the federal budget's debt to the Pension Fund was the result of the delay in reimbursing fully the Pension Fund for the payment of social pensions

Post-Communist Russia's Pension Crisis, 1990-1993 69

and other public pensions that were the responsibility of the federal budget.37 The culminating moment in the period 1992-3 was the December 1993 parliamentary elections. After 1993, political realities would impel greater recognition of the importance of including the elderly in leaders' visions of society. The December 1993 elections for the new lower house of parliament, the State Duma, revealed an important development: the elderly were now a significant part of the voting population. They had become one of the important bases of voter support for Russia's opposition Communist Party.38 The size of the pension-age population - thirty-seven million people by 199639 - ensured that pensions would continue to be an important issue on the Russian political agenda. Election day included a referendum on the so-called 'Yeltsin constitution'; citizens were to vote to approve a new constitution that would greatly expand the powers of the Russian president. If one reads this constitution closely, it reveals ambivalence regarding the state's responsibility for supporting the elderly members of society. Articles 7 and 39 posit that the state remains obliged to provide adequate pensions for its elderly and disabled citizens; but Article 38 states that adults have the duty to look after their aged parents.40 Hence, two different institutions are accorded primary responsibility for the aged: the state (which implies a continuation of generous welfare guarantees) and the family (which implies that people are expected to look after their own dependants) . The controversy over pensions in Russia reflects a clash of attitudes toward elderly people. The rhetoric of shock therapy left elderly people marginalized in the reformers' gaze. When Russia's reformers talked about the need to reduce the role of the state, they tended to avoid the issue of social welfare. In hindsight, experts and economic reformers in postcommunist states have conceded that they erred in paying insufficient attention to the social welfare sector during the initial transition from communism.41 As early as 1993, Russia's deputy prime minister, V.F. Shumeiko, acknowledged in a speech to the Council of Ministers that the government should have paid more attention to social welfare at the outset of the economic reform, and admitted that pensioners had been one of the groups especially affected by the rapid fall in the population's standard of living. Yet he offered no reform proposals in his remarks; instead he maintained that the government should continue with privatization and that fiscal restraint would ultimately help the population by arresting inflation. 42 Shock therapy assumed that society would

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need to make a rapid adjustment to reform - but what about those groups, such as the elderly, who may have been the least equipped to adjust to rapid change? Often those who spoke out in favour of protecting the rights of pensioners echoed the Soviet-era assumption that the people who had built and defended the Soviet Union were entitled to protection from the state. However persuasive this argument may have been in normative terms, at this time it was difficult for Russian leaders to recognize actively the achievements of those who built the Soviet Union, which in 1992 was a discredited and defunct system. Indeed, the welfare state did not fit comfortably into the vision of shock therapy, which advocated the rapid abandonment of communism and its replacement with capitalism. Yet generous social welfare systems were an entrenched part of many of the Western states that were models for the Russian reform effort. Some might argue that the American influence over Russia's reform was the predominant one and that this helps explain why Russia's vision - if not its practice - favoured a relatively radical orientation in its early transition.43 In some ways the pension system seemed to work better in 1993 than it did in 1997 and 1998. Delays in paying pensions on time were reported as early as 1992, but administrative glitches and bottlenecks, not a lack of funds, were cited as the source of this problem.44 After the 1993 election of the new Duma, pensions would emerge as a sore point, and the head of the Pension Fund, Vasilii Barchuk, would constantly face questions from parliament regarding whether the government was borrowing from the Pension Fund for its budget needs.45 (He would repeatedly deny it.) For years to come, the Duma would argue with the government over pension increases, producing a spiral dynamic that contributed to the politicization of the pension crisis. The pension issue had become a lightning rod for all the tensions in executive-legislative relations. In future years, this politicization would solidify into a pattern of confrontational, ad hoc responses to the pension crisis. Conclusion Despite its vagueness with regard to implementation, the 1990 pension reform was a first start toward a comprehensive new social policy. It was an attempt to establish a potentially independent, investment-oriented pension fund. Furthermore, it addressed the possibility of future unemployment, envisaged a social safety net for people who were unable to work, and foresaw the need to adjust pensions for inflation. But as the

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71

pension issue became a divisive topic within political discourse, it became difficult to build the sophisticated institutions and revenue-building capacities required to separate old-age pensions from the federal budget without disruption. With the collapse of the Soviet Union, the state-planned economy finally came to an end and industrial production declined throughout Russia. In these circumstances the prospects for collecting sufficient revenue to support pensions in the long-term were slim. Moreover, the orderly functioning of institutional mechanisms for coordinating the pension system's operations across the Russian Federation were not very well developed in Russian legislation, even though they were recognized as an important priority. These institutional and fiscal aspects of the pension system will be discussed in detail in the next chapter. The pension issue in Russia between 1990 and 1993 illustrates the extent to which social welfare was seen at that time as mainly the responsibility of the state. The difficulties in delivering pensions were often attributed to the state's weaknesses. This is, of course, largely because the state committed itself to upholding an obligation to maintain universal old-age pensions and to honouring considerable social rights for citizens in Russia's 1993 constitution. But this crystallization of the state's role also reflects two other realities of the post-Soviet transformation: the changing role of the enterprises in social protection, and the fact that the government remained the main provider of social welfare. In Western welfare states, state pensions are often supplemented by employer benefit plans and by individual savings. In Russia, the debate on the role of the private sector in pension reform was only beginning in 1990-3. As a result, those who were alarmed by the disruption of the pension system placed most of the blame on the government.

Chapter 5

Institutional Structure of the Russian Pension System, 1992-2001

As we have observed, the Soviet Union's incomplete reform effort destabilized Russia's pension system just as 'shock therapy' was making basic goods less affordable to pensioners. The government disagreed with parliament over how best to improve the lot of pensioners in the short term. But while politics played an important role, a significant cause of Russia's emerging pension crisis was its weak institutional base, including the blurry delineation of federal responsibilities for maintaining consistent universal pension standards across Russia's eighty-nine republics and regions. These organizational problems existed in the early years of the post-communist transition and were perhaps an inevitable result of the Russian government's decision to transform the pre-existing Soviet sociopolitical order. Between 1994 and 1999 the two houses of Russia's newly restructured parliament (the State Duma and the Federation Council) consistently drew attention to the pension system's institutional flaws, with calls for improved administration. Even so, reform of the pension system continued to stall. This inaction contributed to the increasing prevalence of pension arrears throughout Russia between 1995 and 1999, a period when many pensioners experienced delays in receiving their pensions. The pension crisis generated a backlash of discontent from pensioners, opposition political parties, social movements, and regional governments; by 1999 this was one factor that had eroded support for President Boris Yeltsin's administration. Plagued by instability and indecisiveness, a series of weak Russian prime ministers attempted to remedy some of the underlying structural ills of the pension system, but they lacked both the will and the capacity to proceed with comprehensive reforms until 2000, when Vladimir Putin replaced Yeltsin as Russia's president.

Institutional Structure of the Russian Pension System

73

Cynthia Buckley has aptly described the Russian pension system as of 1998 as characterized by 'extreme delays in payment, poor indexing to the cost of living and high levels of tax evasion.'1 In her view, that system was a Soviet-era legacy that remained relatively consistent in its formal guarantees to pensioners, regardless of the institutional weaknesses that have limited the government's capacity to fulfil these obligations.2 This argument correctly identifies Soviet values as potential obstacles to change; however, it underemphasizes the degree of transformation that the system has undergone since 1990 and its accompanying uncertainties. Indeed, a number of Russian experts on social policy have argued that institutional remedies, rather than market-oriented policy shifts, ought to be the main priority of pension reform.3 Institutional Legacies of the Pension System

In the Soviet era, pensions were paid directly from the USSR state budget. The 1990 pension reform provided for the creation of a Pension Fund separate from the budget. As noted in previous chapters, the new pension system envisaged by the 1990 Russian pension law was adopted ahead of schedule in December 1991, on the assumption that further institutional details would be developed as time permitted. The 1991 polozhenie on the Pension Fund established that institution's independence. It established the Fund's authority to collect and manage revenue to finance pensions through a combination of payroll taxes (specifically earmarked for the Pension Fund) and mandatory social insurance contributions (vznosy) paid by individual workers. The Fund was to report to the Supreme Soviet annually, and its revenues were to be used exclusively for funding pensions and for administering the pension system. The polozhenie established the Pension Fund as an autonomous, centralized fund that would operate uniformly throughout the entire Russian Federation. There was an explicit intention to create within the fund a reserve to be directed toward investments that would ostensibly yield future revenue.4 But the polozhenie had little to offer regarding various important matters of governance. It contained little about the following: the relationship between the central Pension Fund and its regional branches; the exact relationship between the Fund (as the collector of revenues) and the Ministry of Social Protection (which made pension policy and was responsible for pension expenditures); and finally, the procedures for ensuring efficient flows of pension revenues and expenditures. Until

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2001, there was no comprehensive Russian law on the Pension Fund, even though this institution constituted a whole new system. The consequences of this legislative vagueness will be discussed below. From the beginning, the extrabudgetary status of the Pension Fund and its responsibility to the Supreme Soviet - made it difficult for the Russian government to coordinate pension finances with its overall fiscal objectives. Some scholars have noted that in 1992 and 1993, apparent disputes over economic policy masked an underlying constitutional struggle over the respective powers of the legislature and executive.5 As early as the spring of 1992, the Russian Finance Ministry (led at that time by Vasilii Barchuk) was expressing concern that it had little access to information about the finances of the Pension Fund. At the time, the Fund's finances seemed healthy enough that pension spending could be increased in response to the higher cost of living that had already accompanied shock therapy. The Fund was subordinated to parliament, and the government wanted more channels for receiving financial information from it, but parliamentary deputies bristled at this.6 Control of the Fund became an issue as relations deteriorated between the executive and the legislature. The government raised questions about the Pension Fund's administration; at the same time, some individuals in the parliament feared that the government might gain control of the fund. In 1993 the chair of the Supreme Soviet's social policy commission, Mikhail Zakharov, asserted that the question of whether the Pension Fund was misusing funds was being overstated; he claimed that the government was seeking to gain control of the Fund from parliament.7 According to Zakharov, on 24 May 1993, Yeltsin issued an ukaz (decree) proposing to abolish the Pension Fund and turn pension responsibilities over to the federal government.8 Perhaps Zakharov was referring to Ukaz no. 787 of 29 May, which did indeed call for the consolidation and reinforcement of government control over the pension system, including the establishment of a unified pension administration. In fairness to Yeltsin, this ukaz affirmed that the Fund would still be subordinated to the Parliament and governed by law.9 Shortly before Yeltsin dissolved parliament in the crisis of September-October 1993, the Fund's head, Aleksandr Kurtin, spoke to the parliament regarding some of the growing concerns about relations between the government and the pension fund. Kurtin rebutted a radio report that had claimed that the Fund had 'colossal' reserves of revenue, noting that the reports did not take into account all of the Fund's projected expenditures.10 In the wake of Yeltsin's ultimately successful attempt to dissolve the

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Russian parliament in September-October 1993, the Pension Fund was decreed, by government resolution, to be henceforth subordinated to the government; its accounts would now be overseen by the Finance Ministry.11 The fund's new head, Vasilii Barchuk, was the former minister of finance. When Barchuk replaced Kurtin, critics wondered if the government intended to use Pension Fund resources to help finance Russia's federal budget deficit.12 Yeltsin's assertion of presidential authority to hire and fire the head of the Pension Fund was questionable, since legally it was the Supreme Soviet (not the executive) that was responsible for the fund's personnel.13 In 1993 there was no comprehensive Pension Fund budget for the whole year. The budget for the last half of 1993 was not passed by parliament; instead it was adopted exclusively by the government.1'1 In such politicized circumstances, deputies in the Russian legislature must have found it difficult to see the pension system as a relatively neutral instrument of policy. When the newly elected State Duma began sitting in 1994, some of its members inquired about the government's recent actions with respect to the Pension Fund. Barchuk admitted that the federal government was continuing its pattern of owing money to the Fund for those pensions within the federal budget's sphere of responsibility (this aspect will be discussed in detail below). When asked whether the parliament should regain control over the Fund, Barchuk responded that at that time, the Fund was not subordinated to any branch of government. 1 ' To whom, then, was the Fund accountable? Similar questions were also raised in the upper house of parliament, the Federation Council, to which Barchuk baldly replied: T can say with full responsibility that the Government made no direct appropriations from the Pension Fund after 4 October [1993] nor were there any direct appropriations before 4 October.'16 By the end of 1993, bitter political contestation over the Pension Fund would impede the development of organizational capacities that were badly needed by this young institution. Over the next three years, political debates over budgets and indexation would overshadow the resolution of institutional problems in the pension system. Unresolved Problems in the Pension System

The first problematic institutional issue related to the division of responsibility between the Pension Fund and the Ministry of Social Protection of the Population (and after 1996, between the Fund and the Ministry of

76 Shocking Mother Russia

Labour and Social Development). A statement from the Ministry of Social Protection attempted to clarify the respective spheres of competence of the two: the Pension Fund was a revenue collection body that organized pension finances, whereas the Ministry for Social Protection was responsible for carrying out pension legislation.17 Meanwhile, citizens actually picked up their pensions from branches of the national Savings Bank.18 The result was that Russia's pension system did not have a single, coordinated institution with a clearly defined procedure for collecting pension revenues and then paying out pensions. Instead, the system was divided between administrative structures at various levels. Although it was the responsibility of the Pension Fund to collect pension revenue, the Fund had no direct control over the actual delivery of pensions; furthermore, it had few levers for ensuring that pension revenues were being spent appropriately. The implementation of pension policy, including the actual payment of pensions, was totally separated from the Pension Fund, in the hands of the Ministry of Social Protection. Meanwhile, it was regional government offices for social protection that were actually entrusted with paying out pensions to citizens. These regional offices were more closely affiliated with regional governments within the federation than with the central government; this had the effect of weakening the supposedly centralized pension system's capacity to operate uniformly across the territory of the Russian Federation. As will be detailed in chapter 8, these problems in the pension system's institutional design ultimately drew concerns from Russia's Constitutional Court in 2001.19 Not only this, but regional governments (which had relatively little status and power in Soviet times) were ill equipped to handle the rapidly changing needs of a sophisticated welfare-state mechanism in a transitional society. The division of pension responsibilities encouraged the autonomy of the system's component parts rather than their interdependence. This turned out to be one of the fundamental problems of the pension system. As one official pointed out, the collection of pension revenue by the Pension Fund on the one hand, and the delivery of pensions on the other, involved separate 'verticals': the fund had its own centralized hierarchy, and the regional pension fund offices, which collected revenue at those levels, were subordinated to it. Yet, the regional social protection offices that paid out pensions were responsible to - and funded by - regional governments.20 In 1992 the local social protection agencies were already having difficulty coping with their responsibilities for delivering pensions. Indeed, weak regional capacities help explain some of the disputes between the

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Russian parliament and the executive over pension policy. The government's initial argument for issuing lump-sum compensation payments by executive decree was that the social protection offices lacked the necessary sophistication to process any indexation that involved recalculating every pension according to a formula. Pension arrears were appearing in 1992, not so much because of a lack of funds, but because of bugs in the pension delivery system.21 Parliament agreed to compensation payments as a temporary response to rapid inflation.22 These compensation payments became an entrenched part of the system throughout the 1990s. Fairly early on, political discourse and the Russian media noted that an unwieldy mechanism involving too many government institutions posed serious problems for the pension system. Critics claimed that there was too little overarching control of this complex network of institutions and that there were too many opportunities for regions to claim funds intended for pensions for other purposes.23 V. Tselykh, a consultant to the Control Administration of the President, contended that pension responsibilities had been divided among several government agencies and levels of government: the Pension Fund itself, the Ministry of Social Protection, local social protection offices, the Ministry of Communications (post offices), and Sbergbank, the national consumer savings bank, where citizens could pick up their monthly pensions. This division of labour diluted the responsibilities of each individual component in the chain and created opportunities for delays in paying pensions. According to Tselykh, weak regulation of the pension system's financial flows was an important cause of pension arrears.21 In 1993, Aleksandr Kurtin claimed that the Fund was having difficulty recovering all the sums owed to it by enterprises and individuals. As the fund's head at the time, he admitted that regional social protection organs 'didn't quite succeed' in applying all sums earmarked for pensions specifically to that purpose. At the instigation of Mikhail Zakharov, head of the social policy commission, the Russian parliament passed a resolution cautioning these administrative organizations not to use Pension Fund resources for other than their intended purpose.25 In 1994, after assuming responsibility for the fund, Vasilii Barchuk stated that some regional governments had been using Fund resources collected on their soil for regional government needs that did not directly involve pensions. As a consequence, the federal government took those governments to arbitration courts.26 Such were the administrative difficulties that had developed in the new pension system in 1992-3. To a certain

78 Shocking Mother Russia

extent, bureaucratic weaknesses were understandable - they were the growing pains of a country in political transition. Yet similar concerns persisted throughout the 1990s. Why, then, weren't these problems more promptly addressed? One reason already mentioned is that clashes between the executive and the legislature tended to impede the search for institutional solutions. Another reason is that political actors often considered the pension system's shortcomings against the backdrop of the Russian economy as a whole, and the Russian administration under Yeltsin was more proccupied with these broader issues than with the mechanics of governance. Pension arrears - that is, delays in the payment of pensions caused by shortfalls in revenue - became increasingly common in Russia in 1995 and would continue to occur episodically until 1999. Because pension arrears reflect very well the more general weaknesses in the country's economic and fiscal situation, it is easy to overlook the institutional causes. Pension Crisis, 1995-8 Pension arrears can be defined as the occurrence of occasional delays in the payment of pensions, caused by insufficient available revenues at the time that pensions are due to be paid. Since arrears are basically about shortfalls in cash, their economic cause in Russia was obvious: there was not enough revenue from employer and worker contributions to meet the pension system's needs. It follows that pension arrears (like wage arrears, interenterprise debt, and shortfalls in tax revenue) were to a significant extent the result of the declining production and enterprise insolvency that had plagued the Russian economy since the Soviet Union's collapse. According to official figures, at the beginning of 1994, enterprises owed 1.73 trillion rubles to the Pension Fund in unpaid vznosy and the Fund was able to collect only 75 per cent of the vznosy due to it.27 By 1 January 1995, enterprises owed 7 trillion rubles in vznosy to the Fund. Especially delinquent were enterprises whose key client was the state: the coal, fuel, and defence sectors along with agriculture.28 When introducing the Pension Fund's budget for 1994 to the Federation Council, Barchuk claimed that 99 per cent of Fund revenues were going directly towards the payment of pensions and that fifty-five regions were then having difficulties paying pensions on time.29 In 1995, sixty-three subjects of the Russian Federation ('subjects' is the Russian constitutional term for republics and regions) were reported by the Minister of Social

Institutional Structure of the Russian Pension System 79

Protection to be in pension arrears, by an average of twenty to thirty days; enterprises owed 23 trillion rubles in vznosy and 17 million rubles in fines.30 Barchuk in 1997 claimed that pension arrears were 16.3 trillion rubles by February. In these circumstances, the Pension Fund was compelled to borrow money from banks in order to meet pension obligations; the resulting interest payments exacerbated the revenue crunch.31 By 1998 the government was claiming that the Pension Fund was responsible for 16 billion rubles a month in pensions while taking in only 11.5 billion rubles in revenue.32 Pension arrears stood at 30.5 billion rubles as of October 1998.33 There was a widespread view that the main cause of Russia's pension crisis was a lack of revenue, a result of the country's overall economic crisis combined with its inability to cope with the expenditure demands of a growing population of pensioners. Yet other factors were also at work, such as tax evasion.34 So our analysis must go beyond the country's economic crisis to consider the difficulties of establishing a functioning system for collecting revenue. Instances of enterprises using barter for their operations and payrolls, and thereby reporting less cash flow on the books to use as the basis for calculating vznosy, constituted a problem for the Pension Fund.35 As Russia's production crisis deepened, some indebted enterprises - especially those in agricultural and energy-related fields - were trading with one another using an informal barter or gift system rather than cash. In this way, they were able to avoid keeping precise accounts, and to avoid paying taxes and compulsory social insurance contributions.36 In 1999, 0.2 per cent of enterprises - including defence industries, machine-building factories, and natural resource companies - owed 30 per cent of uncollected vznosy.37 It should be mentioned that payroll contributions for the Pension Fund (vznosy) were very high: 28 per cent for industrial enterprises and 20.6 per cent for agricultural enterprises (with exemptions for enterprises that employed disabled people and pensioners).38 Some argued that these rates constituted a built-in disincentive for taxpayers to declare their full obligations. In 1993, Aleksandr Kurtin, who still headed the Pension Fund, proposed measures for improving the registration and collection of Pension Fund vznosy. Advance payments of vznosy would be required, and fines would be imposed for delayed payments. Kurtin singled out some small businesses in particular as neglecting to register for compulsory social insurance contributions for their employees. A resolution on the proposed measures was adopted in parliament, although some deputies sympathized with the difficulties many enter-

80 Shocking Mother Russia

prises were facing in meeting their legal obligations.39 Several years later, as Minister of Labour and Social Development, S.V. Kalashnikov argued that the existing system encouraged the grey economy, because the heavy payroll taxes were burdensome for employers. Increased contributions from individuals would be preferable, because in a system based on social insurance, individuals' pensions would be calculated on the basis of their own lifetime contributions.40 The logic of this pragmatic argument would ultimately influence. Russia's emerging pension reform. A variation on the argument that economic factors were the main cause of the pension crisis was that unrealistically high commitments for pension expenditures were the problem. Since available revenues were inadequate to meet the government's existing obligations to an aging population, some claimed that expenditures should be reduced. Indeed, this argument inspired a good deal of the direction of Russia's pension reform plans in the mid-1990s. The need to keep expenditures manageable was a powerful counterargument to the Duma's generous indexation schemes. Government spokespeople often argued that unaffordable pension indexations were contributing to pension arrears and requiring the Pension Fund to take out bank loans to meet expenditures. For example, Barchuk made this argument in 1994 when he headed the fund, but at that time, the Duma's Labour and Social Support committee head Sergei Kalashnikov argued that the Fund actually had a surplus.41 For its part, the government often blamed the pension crisis in part on 'populist decisions by legislative bodies' (such as the Law on Veterans, discussed in chapter 7).42 For example, Barchuk asserted in August 1995 that pension delays were the result of an unrealistic indexation of 20 per cent adopted by parliament in June of that year.43 Similarly, Prime Minister Chernomyrdin traced pension arrears to the indexation of May 1995, placing the blame for them on the legal requirement for quarterly indexations.44 Available evidence indicates other causes and earlier manifestations of arrears. Furthermore, as the next chapter will show, pension increases in practice were likely to come from the executive, whereas the Duma's attempts to increase budgetary expenditures on pensions were often vetoed. It can be seen from the above discussion that throughout the 1990s the pension system showed various weaknesses in infrastructural capacity and responsiveness. In particular, the national Pension Fund as an institution was subject to considerable scrutiny. After 1993 the Fund faced persistent questions and criticisms regarding how it was managing its affairs. The Fund maintained that it was using its revenue appropriately.

Institutional Structure of the Russian Pension System 81

It had a review commission that every month conducted checks on the accounts and procedures of regional branches of the Fund.45 The deputy finance minister told the Duma in 1995 that the Finance Ministry had examined the fund's finances and discovered no serious problems.46 So in fact, the fund did have in place mechanisms for monitoring its spending. On the other hand, in 1995 a Federation Council deputy asked the Fund's head, Barchuk, why pension arrears existed at the same time that the Pension Fund had allegedly used 2.5 per cent of its revenue from fines and penalties on building construction and housing for its staff. Barchuk replied simply that this sum amounted to a relatively small amount of the Fund's resources.47 In 1995 a report of the Ministry for Social Protection of the Population made recommendations for improving the pension system's accountability. The report recommended that the Pension Fund be monitored by a council formed from interested government ministries, enterprises, and trade unions, and that the Fund should report annually to the Duma. Also, the Fund should invest any surplus monies in a reserve.48 (In fairness, the Pension Fund already made regular reports to the houses of parliament, insofar as it introduced annual Pension Fund budgets and laws on their implementation for legislative approval). Barchuk admitted that the Fund was forgiving some fines and penalties owed by some large enterprises that were dependent on state funding because their debt in fines for late payment of vznosy was starting to exceed their actual debt in vznosy.49 But the auditing of the Pension Fund remained an ongoing subject of debate. In 1997 the World Bank made an independent audit of Pension Fund finances a condition for its proposed financial assistance program for Russia's pension reform.50 In 1999 the Russian Procuracy released an audit of Pension Fund financial practices, citing 'gross violations' of law. As an example, it was alleged that the Fund was allowing debtor enterprises to repay owed vznosy over a five to ten year period - considerably longer than the one year provided for by an earlier presidential decree.51 Yet in the Duma it was being claimed that the lower house had never received a copy of the report of the Schetnaia Palata (Audit Chamber) and General Procuracy that cited the 'shortcomings' in the Fund's activities.52 In autumn 2000, V.R. Pashuto of the Duma's social policy committee claimed that the Fund was not transparent enough; in his view the Fund was essentially responsible for auditing itself, and there was no institution empowered to check its finances regularly.53

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The Federal Budget's Role in the Pension Crisis A peculiarity of the post-1990 pension system in Russia is that although old-age pensions were separated from the federal budget, the federal government retained responsibility for paying certain pensions outside of the Pension Fund, including social, military, police, and civil service pensions. However, it was initially decided that all pensions - including those to be financed by the federal budget - would be paid up front with Pension Fund monies, with the federal government to reimburse the Fund later for those pensions within its sphere of responsibility. Why was this arrangement established? In 1992, Yeltsin apparently wanted to separate these two payment systems. He proposed that the federal government pay separately for social and military pensions out of the national budget. Parliament opposed this proposal on the grounds that a single system for delivering pensions would avoid the disruption, duplication, and inefficiencies that might accompany the division into two separate systems.54 Hence the decision was made that the federal budget would reimburse the Pension Fund. Already by October 1992, the chair of the Supreme Soviet's social policy committee was complaining that the government was behind schedule in its reimbursements to the Pension Fund.55 By 1994, Barchuk was telling the Federation Council that the federal government had not provided in its budget for reimbursement of sums owed to the Fund.56 In 1995 he claimed that the government owed 18 billion rubles to the Fund for 1992-3, and 3.2 trillion rubles for 1994-5.57 Sergei Kalashnikov, head of the Duma's Labour and Social Policy Committee, complained in 1995 that the government owed the Fund 1.2 trillion rubles and had failed to respond adequately to requests for reimbursement.58 Barchuk confirmed that the sums had not been calculated in the federal budget, but he also noted that the Duma itself had not raised the issue in budget discussions.59 To some extent the federal budget's failure to reimburse the Fund was perhaps in part a result of the passage of the Law on Veterans. The Law on Veterans arranged for the Pension Fund to fund some additional social benefits to veterans, again to be reimbursed by the federal budget.60 Barchuk went so far as to argue in 1996 that the reimbursement problem was one reason why pension arrears had developed.61 In 1997 the federal government committed itself to repaying its debt to the Fund by 1 July, but considered that sum still insufficient to meet the Fund's revenue needs. So it proposed an increase in vznosy, which was rejected

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by the Duma.62 In 1998, Yeltsin vetoed the Pension Fund's budget. The budget would have required the federal government to give additional sums to the Fund beyond what it owed, although the Duma claimed that this was only intended to be a stopgap measure to avoid borrowing from banks on those occasions when there was not enough money to pay pensions on time.63 A November 1998 law required the government to repay its federal budget pension responsibilities every month to the Fund.64 In the fall of 1998 the federal government again appeared to be in debt to the Fund. The Federal Assembly passed a law requiring the government to repay the debt; this law was vetoed by the President.65 The law would have required the government to pay the Pension Fund in advance instead of reimbursing it after the fact.66 In addition, the Pension Fund loaned money to the Employment Fund (the Fund that pays unemployment benefits); in 1999 the Duma demanded that this loan be repaid.67 Defects in Federal Governance and Regional Compliance

A dimension of Russia's pension arrears crisis worth noting was its regional variations. These variations illustrate both the diverging economic situations of the Russian Federation's subjects and the incomplete centralization of the pension system. With the introduction of economic reform in Russia, disparities between regions increased sharply. A gap emerged between a set of relatively wealthy regions with abundant natural resources and the generally poorer industrial and agricultural regions, and the central government was no longer providing predictable subsidies sufficient to meet the regions' budgetary needs.68 Alastair McAuley contends that the Russian federal budget system does a poor job of redistributing wealth between the well-off regions and the poorer ones.69 Tax revenue collection declined after 1992, and the budgetary system lacked a well-defined system of redistribution. Furthermore, the system permitted regions to collect revenues and then turn them over to the federal government; this enabled them to withhold funds from Moscow.70 As Daniel Treisman has pointed out, the most generous budget subsidies tended to go to those regions or republics which demanded political concessions (e.g., by declaring sovereignty); such subsidies were not awarded according to a clearly defined formula.71 Within the Russian pension system, regions came to be identified as either 'donor regions' (net contributors of pension revenue to the system as a whole) or regions dependent on dotatsii (subsidies) from the

84 Shocking Mother Russia

central Pension Fund. The donor-dotatsiia terminology came into use as soon as the Russian Federation's new system was implemented in 1992. Pension Fund head Kurtin reported in September 1993 that in the pension system there were only twenty-six donor regions; sixty-three others depended on central dotatsii.72 This was the first mention I found of die term dotatsiia in discussions of the pension system. It is worth noting that the language of 'donor' and 'subsidy' regions was used by administrators of the pension system. In a centralized pension system, it really should not have been relevant whether regions individually collected revenues sufficient for the needs of their own pensioners, since funds collected nationwide were supposed to constitute a central pool of resources for maintaining a consistent national policy. Rural areas in Russia tend to have higher percentages of pensioners than urban areas; this means that the former have a greater need for resources for the elderly.73 According to government statistics, the percentage of people of pension age in the overall population was 20.8 per cent. Yet in the regions of the Russian Federation, this figure varied from 5.1 per cent in Yamal-Nenets autonomous okrug, to 7.2 per cent in Chukotka autonomous okrug, to 17.4 per cent in the Kabardino-Balkar republic, to 24.1 per cent in the city of Moscow, to 27.4 per cent in Tula oblast'. In mainly agricultural regions in central Russia and the Black-Earth Zone, approximately one-quarter of Russians were of pensionable age; in sparsely populated, resource-rich areas of Siberia and the Far East (such as Sakha or Tiumen' oblast'), the figure was 15 per cent or even less.74 Obviously, these regional variations reflected differing ratios of the working (tax-paying) population relative to pensioners. How, then, could it possibly be useful to categorize this demographic diversity using labels such as 'donor' and 'dependent' regions? Legally and constitutionally, the pension system was a national state responsibility and a universal right of every citizen. The donor-dotatsii linguistic terminology seemed to be promoting divisions and competition between regions, and to be labelling some regions as not 'pulling their weight,' rather than promoting constructive federal-regional cooperation in a universal system. In some regions and republics, genuine administrative difficulties worked against the effective delivery of pensions. Pensions were not being paid in the secessionist republic of Chechnia in 1994 because the federal government lacked confidence that the funds would reach the pensioners. Chechen pensioners were allowed to collect their pensions in Dagestan or Stavropol' krai, if they were able to make the trip themselves.75 In other regions, pension arrears arose simply because a lack of

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sufficient revenues was becoming a persistent problem. In Altai, the regional branch of the Pension Fund convened those major enterprises in the region that owed money to it to discuss ways to end arrears.76 In Dagestan, enterprise pension arrears were reported in 1997 to be 350.3 billion rubles - enough to fund three months of pensions within the republic and rendering the republic dependent on dotatsii.77 In Vladimir oblast, January 1997 pensions were paid in full only in April; it was reported that the oblasfs Fund paid 44.8 billion rubles out of 144.8 billion from its own funds, with dotatsii paying the rest.78 Regional non-compliance with the national system also contributed to the national pension crisis. Bashkortostan and Yakutia (Sakha), both donor republics, refused at various times to turn over surplus revenues of vznosy collected in the republic to the central Fund. Bashkortostan abolished its republic Pension Fund in 1993 and directed its tax service to collect pension revenues, while Sakha developed its own pension institution. It was reported that the governments of both republics were disposing of their surplus Pension Fund revenues as they saw fit. The Fund signed an agreement with Bashkortostan, but complained to the federal government about Sakha's behaviour.79 In 1996, Russia's prime minister, Viktor Chernomyrdin, claimed that some Russian Federation subjects were trying to create additional pension benefits for residents of their territories and inappropriately financing them using Pension Fund revenues collected on their soil.80 A Communist Party member of the State Duma alleged that during gubernatorial election campaigns in Arkhangel'sk oblast, it 'rained pensions' when the oblast government acted to pay two months' worth of pensions at once.81 In sum, the underlying problems of governance in the pension system were a complex result of the legacy of the Soviet Union and the difficulties inherent in adapting to the new socioeconomic realities of postcommunist Russia. The defects of the pension system were rooted in the broader difficulties of the Russian economy and the challenges faced by the postcommunist Russian government in its project of building new tax capacities. However, the pension crisis was also the product of a number of chronic institutional causes, most of which remained uncorrected throughout the 1990s. First, the division of responsibilities between the Pension Fund and the Ministry of Social Protection affected the smooth flow of funds from the revenue side to the expenditure side; that same division also contributed to the separation of policy from resource capacities. Second, the Pension Fund itself was weak and inefficient. To a considerable extent, the Fund's problems were rooted in the

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lack of a coherent legal framework that would have bolstered its claim to be a centralized organization with a hierarchical structure. Without an appropriate institutional framework, and without sufficient carrots and sticks, the Fund remained dependent on chance and persuasion - hardly the basis for a predictable social safety net. Third, the fund was incompletely centralized, and it lacked sufficient autonomy from regional governments within the federal system so that it could function as an appropriately universal pension system. There were few concrete incentives for 'donor regions' to contribute to the well-being of all, and for 'dotatsiia regions' to realize their rights for universality; the very use of this donor-dotatsiia terminology promoted tension and confusion within the Federation. Finally, the chronic problem of federal budget reimbursement was never addressed properly, simply by having the Pension Fund stop paying for items within the federal government's budgetary responsibilities. The Russian pension system is an exemplar of general problems of governance in postcommunist Russia: it illustrates the weak cohesion of the federal system, the difficulty organizing efficient institutions, and the slow progress in developing mechanisms for ensuring compliance with the taxation system. The need for institutional reform was consistently acknowledged by Russian political actors; the delay in adopting such reforms permitted the pension crisis to escalate.

Chapter 6

The Politics of Pensions and the Evolution of Russian Parliamentarism, 1994-1999

The pension crisis highlights the role that the Russian legislature has played in that country's post-Soviet political transition. In the Soviet Union in the late 1980s, Mikhail Gorbachev's reforms emphasized the importance of the rule of law, albeit more in principle than in practice. Since parliaments are by definition representative institutions that make law, strengthening the legislature's role was generally seen as crucial to democratization, since it would make government less arbitrary and more responsible to the public.1 Somewhat competitive elections in 1989 and 1990 ensured that Soviet legislatures gave voters more of a choice in their elected representatives than previously. Yet there is debate over whether the Russian parliament has been able to play a constructive role in the country's political life. In October 1993, President Boris Yeltsin's constitutional confrontation with the Russian Supreme Soviet ended bitterly: force was used to disperse those parliamentary deputies who resisted Yeltsin's order for dissolution; and the referendum of December 1993 strengthened Yeltsin's powers relative to the new parliament, the Federal Assembly, which was elected at the same time. According to Maxwell A. Cameron, Yeltsin's moves resembled those of Peruvian President Alberto Fujimori, who also was able to expand his own power at the expense of the legislature.2 As a result of the 1993 events, observers often perceived the Russian parliament as a relatively weak and ineffective institution.3 In the view of the Russian executive under Yeltsin, the Duma could not be counted on to pass legislation in a constitutional or constructive manner.4 Quite often, the Duma has been regarded as a feisty yet unwieldy institution in which radical Communists and nationalists play the predominant role.5 Research on the Russian parliament has tended to examine the consoli-

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dation of political parties within the Duma,6 rather than the parliament's effectiveness at producing legislative outcomes. Mainstream publications such as the Economist have often depicted the Duma as dominated by Communist partisans who obstruct reform.7 But not all scholars share the view that the Duma is weak: Eugene Huskey contends that the very strength of the Russian presidency encouraged the Duma to become increasingly active in asserting its available powers to counter the executive.8 As legal expert William Butler argues, the most 'controversial' and time-consuming matters in the Duma relate to budgetary issues.9 The relationship in Russia between the executive and the legislature is often correctly considered especially contentious relative to other countries with presidential forms of government. Particularly so between 1992 and 1999. Many scholars regard the hostile deadlock between a reformist president and his opposition in parliament as being a key reason why Russian political development stagnated under Yeltsin (who served two consecutive terms as head of state, from 1991 to 1999). How does the literature explain this confrontation? Some experts blame the state of affairs on a constitutional struggle to define the respective powers of the executive and legislature.10 Others blame ideological differences between the Yeltsin regime and the hardline leftist opposition.11 Still others regard an overpowerful executive as the key impediment to democratization in Russia.12 Yeltsin's frequent resort to presidential decrees and veto powers meant that the executive was able to encroach on the legislature's powers.13 Aleksei Avtonomov noted that Russian legislation can be initiated by either the legislature or the executive, and generally comes from one or the other; rarely is a joint effort made to work out legislation.14 Post-communist political parties lack strong party discipline and organization, and society for its part is often sceptical that parties sufficiently represent or respond to citizens' interests.15 Nor do political parties necessarily present distinctive political platforms.16 These approaches in the literature emphasize the unique problems inherent in the postcommunist transition. A second perspective holds that presidential systems - especially those with a bicameral parliament - are inherently flawed. Delays and tension over legislation can result when the president and the legislature come from opposing political parties.17 In a presidential system the president and parliament have distinct, independent functions. Neither can remove the other from office except in rare circumstances. Parliament can, however, obstruct or revise drastically bills initiated by the government; in Russia as in the United States, the president can veto legisla-

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tion.18 The often dysfunctional relationship between the president and Congress in the United States during the presidency of Bill Clinton (1993-2000) illustrates that 'mature' democracies are not immune from executive-legislative crisis. This argument suggests that the post-communist transition is less significant in explaining conflict than the choice of a conflict-prone political system. A third approach might argue that when there is a political stalemate between a president and a parliament, it is the result of a lack of consensus regarding accepted constitutional values. To revive a concept from the now old-fashioned literature on political development, a 'crisis of legitimacy' results when a regime has cast off an ideology that is no longer considered credible but has not yet made a commitment to a new set of principles.19 Instead, one finds 'the tendency for competition to become raw power struggles where there are no stable institutions for channeling and ordering politics.'20 Political theorist Robert Dahl contends that an important test for a new democracy is whether political actors can tolerate their rivals. It is vital, albeit difficult, for a new democratic regime to accept that opposition movements have a useful role to play.21 Constitutions are important because they provide 'rules of the game' for competing opponents to manage their conflicts peacefully. The protagonists are expected to honour these rules and respect their opponents.22 In Russia, ten years of debate over pension reform did not show much executive-legislative cooperation. That said, the research on pension policy reveals some unexpected findings: the Duma proved to be somewhat more cooperative with the government than expected, whereas the government seemed relatively reluctant to engage in dialogue and compromise with the Duma. Indeed, the government lacked a constructive base of supporters within the Duma, and this further strengthened the power base of the Duma opposition. The Duma was keenly interested in pension legislation, and its members showed increasing frustration with the government's actions and responses; as a result, many deputies seemed to lose confidence in the government's intentions. By the end of the Duma session of 1999, the government and the legislature were engaging in behaviour which suggested that each was questioning the very legitimacy of the other's involvement in pension reform. The Evolution of the Pension Debate in Russia Yeltsin's dissolution of the parliament in October 1993 brought a dramatic end to the executive-legislative tensions in the short term, but it

90 Shocking Mother Russia

also left a legacy of continuing concern regarding the scope of presidential power.23 Elections for the new parliament, the Federal Assembly, were held in December 1993. The new electoral system elected half of Duma deputies by proportional representation (which allocated seats to party lists of candidates according to parties' proportions of the nationwide popular vote) and half by first-past-the-post elections (in which candidates who won a plurality of votes within regional districts were elected as deputies). In these elections the militant opposition Communist Party (KPRF), its ally on the left the Agrarian Party, and the unpredictable, extreme nationalist Liberal Democratic Party of Russia (LDPR) did extremely well, while the progovernment Russia's Choice gained a disappointing number of seats.24 At first this outcome was commonly interpreted as a protest against the government; however, the trend continued. In 1995 Duma elections the KPRF garnered about 30 per cent of the seats, the LDPR about 11 per cent, the opposition proreform party Yabloko about 10 per cent, and the progovernment Our Home Is Russia about 13 per cent.25 Independents and other party factions also gained a significant number of seats. In short, the Duma became an important centre for Russia's political opposition. When the newly elected Duma began sitting in 1994, its debates on pension issues demonstrated that opposition deputies had remembered the history of the Pension Fund. The Duma's social policy committee mentioned old-age pension policy as an example of an issue in which the executive had interfered in the past. For example, in an April 1994 Duma session attended by the Minister of Social Protection of the Population, Liudmila Bezlepkina, the head of the Duma social policy committee, Sergei Kalashnikov, said: Tt seems to me that at present the State Duma cannot fully trust the government to regulate the pension system in its full capacity.'26 The Duma was confronted with three pressing issues relating to old-age pension legislation: first, how to establish an effective mechanism for indexing pensions so that they would keep up with inflation; second, how to improve revenue collection for the pension system; and third, whether to adopt a more substantial pension reform, such as was being considered in other postcommunist countries such as Latvia and Hungary. Of course, these issues were closely linked: conflicts over pension increases generally revolved around the Duma's desire to keep pensions above the poverty line, while the government argued that any such increases had to be supported with available revenues. This is precisely the reason why pension reform came onto the political agenda in 1995; it was of paramount importance to design a

The Politics of Pensions, 1994-1999 91

system for efficiently raising, managing, and distributing pension revenues. That said, it was indexation that would dominate the Duma's pension discourse. An analysis of the executive-legislative relationship between 1994 and 1999 reveals that there are three basic reasons why dialogue on old-age pensions broke down: first, a particular sequence of events led to a spiral of actions and reactions (see figures 6.1 and 6.2). Second, weak party discipline in Duma voting - especially on the progovernment side heightened polarization within the Duma regarding social policy issues (see figures 6.3A to 6.3F); and third, there was a notable lack of consensus and momentum on pension reform. Perhaps a constructive, joint, and systematic approach to improving the pension system would have helped prevent the escalation of political tensions by addressing the problems of the pension system in a more timely way. Sequences of Events: The Chain Reaction Effect In assessing the progressive deterioration of executive-legislative relations, we will examine three related aspects of old-age pension legislation: pension increases and indexation; pension privileges for special interest groups; and the budget of the Pension Fund. A list of the relevant laws and decrees can be found in Appendix A. Figures 6.1 and 6.2 illustrate clearly the difficulties that the executive and legislature experienced in reaching agreement on pension indexation. Because such agreement was not forthcoming, the pension increases were often achieved through presidential decrees. President Yeltsin at times vetoed pension legislation, and the Federal Assembly found it difficult to muster the necessary two-thirds majority in each of the Duma and Federation Council to overturn his veto. When the Duma was considering a pension indexation in July 1995, a deputy asked a rhetorical question: 'If the government doesn't agree with this law, why are we proposing it? It will not take effect. We adopt it in the first reading, then work on it some more, in October adopt it in the second reading, and will end up with yet another law, that does not meet with the approval of the government, which won't have any effect.' 27 Similarly, after the president vetoed a pension indexation, V.B. Isakov, head of the Duma committee on legislation and judicial-legal reform, spoke of his dread of explaining the fate of the pension law to his constituents: 'Well, what can we do, there is lawlessness in the government, we pass laws, they are sent to the garbage can, and instead decrees are adopted.'28

92 Shocking Mother Russia

This deputy's remarks no doubt reflected the frustration felt by many members of the Duma regarding their legislative mission. The legal requirement to adjust pensions quarterly meant that indexation was more or less an ongoing struggle until 1997, when an institutional mechanism was finally defined. Figures 6.1 and 6.2 show that the use of compensation payments, which were occasionally raised on an ad hoc basis without any permanent commitment of funds, persisted despite strong opposition in the Duma to unilateral executive actions to increase pensions. These figures illustrate the evolution of a political struggle in which the moves of one actor produced a sharp and often negative response from the other. For each step taken by the executive or by the legislature, there was a corresponding response from the other. As a result, pension policy was reactive, improvisational, and focused on the short term. Pension increases - which legally were supposed to occur every three months dominated the discussion, while pension reform took a back seat. At times the process resembled a confrontational bargaining process rather than an effort to achieve compromise. Figure 6.2 demonstrates that the relationship between the Duma and the government further deteriorated in 1998 over the old-age pension issue. Figures 6.1 and 6.2 also demonstrate that despite the obvious conflict, compromise between the executive and legislature was possible, although this became less evident in the final two or three years (1997-9) of the Duma's Second Convocation. This cooperative dynamic is further demonstrated by the following facts. First, the Duma did not often reject outright a piece of legislation inspired by executive initiative. Second, the longtime head of the social policy committee, Sergei Kalashnikov, became Minister of Labour in September 1998, and his successor, Oksana Dmitrieva, also came from the Duma, formerly from the budget committee and from the opposition reformist party Yabloko. Third, reformist laws were eventually passed on three important matters, including individual social insurance registration and non-state pension funds (to be discussed below). These three observations point to conciliatory tendencies within the Duma. We have seen how pension increases provided a vicious a'rr/g between the parliament and the government. Two other related pension matters irritated executive-legislative relations: pension privileges (I'goty), and the matter of Pension Fund finances. We will examine each of these in depth. The debate over pension privileges (Vgoty) arose in the context of escalating tensions over pension indexation and compensation payments. In the government's view, the

Figure 6.1 Chronology of the Politics of Pension Increases in Russia, 1991-5

Key. Shaded boxes indicate actions by the legislature, unshaded boxes those taken by the executive. Solid borders indicate laws that were passed. Dotted borders indicate bills that were passed in one or both houses of parliament but did not make it all the way through the process. Curved boxes indicate that the outcome was not clear. Sources: See Appendix A.

Figure 6.2 Chronology of the Politics of Pension Increases in Russia, 1996-9

Key. Shaded boxes indicate actions by the legislature, unshaded boxes those by the executive. Solid borders indicate laws that were passed. Dotted borders indicate bills that were passed in one or both houses of parliament that did not make it all the way through the process. Curved boxes indicate that the outcome was not clear. Sources: See Appendix A.

The Politics of Pensions, 1994-1999 95

advantage of compensation payments was that each pensioner would receive a lump-sum supplement to help offset increases in the standard of living. The government would thereby avoid the fiscal commitments of a permanent pension indexation, while at the same time protecting the poorest pensioners from outright impoverishment.29 In contrast, the Duma contended that indexation should increase pensions in a proportional manner reflecting the existing differentials in the distribution of pensions. The Duma's labour and social policy committee argued that compensation payments were obliterating the differences between the highest-paid and lowest-paid pensioners. This tendency towards equalization was eroding the merit principle in the pension system, which had since 1956 related the size of one's pension to the years that one had worked and to one's salary at retirement. Advocates of this position in the Duma objected to what they perceived as the impoverishment of pensioners who had worked hard throughout their lifetimes; furthermore, they objected to the humiliating destitution inflicted on those pensioners who had served their country during the Second World War. To quote Duma committee head Sergei Kalashnikov: The government has adopted a course of paying social subsidies without considering the contribution of each individual.'30 In the opinion of some Duma deputies, certain groups of people such as veterans, industrial and agricultural workers, and war victims deserved better pensions than those they received under the compensation payment system. As a result, the Duma passed a long series of laws and amendments granting special benefits (I'goty) to various categories of the citizenry who were considered deserving. These benefits might include special pension increases, earlier retirement ages, or benefits in kind such as access to medicines, transportation, or consumer products. Appendix B lists the fate of nineteen pieces of legislation on I'goty. The most notable of these laws was the controversial Law on Veterans (discussed in more detail in chapter 7), which granted extensive benefits to armed forces veterans, many of which were to be financed by local governments that could ill afford them. Laws on I'goty tended to dismay the government, because its leaders saw pension privileges as adding further complications to an increasingly convoluted pension law; at the same time, the extension of special benefits or exemptions to certain groups further increased the costs of the social welfare system.31 Because of their expense, I'goty reduced the state's capacity for granting a proper indexation. L'goty also made pension reform more difficult to contemplate, because advocates of pension reform generally argued that the

96 Shocking Mother Russia

pension system should apply the same criteria when calculating the pension of each person.32 However, Appendix B also shows that many of the proposed special exceptions were eventually signed into law rather than vetoed, so in that sense, I'goty were more palatable to the executive than pension indexation. This is surprising, since the granting of benefits to special groups seemed to contradict the government's stance on compensation payments - that pension increases should be distributed according to need rather than according to merit. Pension Finances Parliamentary deputies and opposition groups lamented the inadequacy of pensions and the impoverishment of pensioners. That said, the basic underlying problem in the system was a worsening revenue crunch. The Russian government, and the Pension Fund itself, argued that the Fund had to stay within its means. Even if the result was low pensions for all, fiscal prudence was assumed to be preferable to accumulating a deficit and risking pension arrears.33 These arrears peaked in 1997-8 and resulted in delays in the receipt of pensions for some unfortunate Russian citizens. In the Duma, problems of pension finances were regarded as inextricably linked with political disputes, dating back to the crisis of September-October 1993. In 1994 the Pension Fund's finances were in the black according to government's own reports to the parliament.34 There was a common view in the Duma that pension indexations were affordable; Kalashnikov declared as much in October 1994 on the basis that the Pension Fund had already collected 61 per cent of its projected annual revenues.35 Intermittently from 1992 until 1998, voices in the Duma alleged that the government was not meeting its obligation to reimburse the Pension Fund, and that this debt was contributing to the fund's growing financial problems. The issue of reimbursement from the federal budget became a chronic point of contention. In February 1995 the Duma rejected the 1995 Pension Fund budget at first reading, following Kalashnikov's criticism: 'The government is scooping out handfuls from the Pension Fund, and has not repaid its debts nor does it intend to pay them.'36 Appendix C shows the chronology whereby the adoption and implementation of the Pension Fund budget became a contentious issue between the executive and the Duma - an issue that was further inflamed by the Duma's reluctance to consider raising revenue by increasing the rates of mandatory Pension Fund contributions (vznosy). Ultimately, the Duma sought

The Politics of Pensions, 1994-1999 97

to pass legislation that would compel the federal budget to pay its share of pension expenditures in a more predictable manner. Perhaps more than any other area of governance, budgetary issues call for a pragmatic approach. Demands for spending generally exceed available funds. Yet compromise is essential: because a government drafts a budget annually, a good working relationship aids the smooth continuation of the budgetary process.37 In this regard, disputes over pension issues illustrated weaknesses of dialogue and cooperation between actors in Russia's political system. The politicization of the pension system's problems disrupted the system's continuity. Party Discipline in the Duma

Duma deputies spanned a range of political parties representing diverse ideological cleavages. Within these parties, contending perspectives existed regarding social policy, and it is worth examining the extent to which parties influenced the passage of legislation. Thomas Remington and colleagues argued that from 1990 to 1993 the Russian Supreme Soviet was composed mainly of traditional Soviet elites from the former Communist Party, whereas most of the reformers had moved to the executive. Thus, the executive and the legislature had sharply opposed ideologies.38 This does not explain, though, why this polarization seems to have continued in the Duma between 1995 and 1999, when the Duma represented a broader spectrum of political factions. The Duma was not a one-sided institution: as a body elected half by proportional representation, its members reflected a range of political parties, so it is somewhat surprising to encounter a Duma seemingly so at odds with the government. Since no one political party had anything close to a majority in the lower house, we might expect Duma debates on pension issues to reflect a balance of varying opinions on social welfare. Figures 6.3A to 6.3F are based on analyses of open votes in the Duma on selected pension issues. These figures illustrate the attendance records and voting behaviour of Duma deputies on selected pension laws. Some of these laws were initiated by the executive, some by the legislature; some were highly political, others routine. Ideally, we might prefer to look at more votes, but relatively few Duma roll-call votes have been published that identify individual deputies' votes. The votes of individuals are recorded only if the voting is open and the electronic method is used.39 The data in figures 6.3A to 6.3F show some clear patterns. First, attendance rates in the Duma are not impressive. According to Duma

98 Shocking Mother Russia

rules, all votes are supposed to require an initial registration to determine that there is a quorum of at least 50 per cent of members.40 However, it is not unheard of to have votes in which fewer than 50 per cent of members cast ballots. This can mean that an important piece of legislation must be abandoned, substantially delayed, or reworked because too few deputies were present to record their votes. Even when deputies attended, they often did not vote on particular laws, even to register a vote of abstention. It is striking how many pieces of legislation failed to pass not because they were voted down, but because of insufficient total votes. This is one reason why it was difficult to overturn a presidential veto, which requires a two-thirds vote in the Duma. Figures 6.3A to 6.3F also demonstrate that the most active and disciplined voters were affiliated with the left - the Communist Party of the Russian Federation (KPRF), the Agrarian Party, and to a lesser extent Narodovlastie ('Power to the People'). The reformist party Russia's Choice, originally a progovernment party, was active at first in pension legislation, as were the centrist political parties (such as Women of Russia, New Regional Policy, the Democratic Party, and the Party of Unity and Concord). However, figures 6.3A to 6.3F suggest that by late 1995, the left opposition and Yabloko had become more active voters on pension issues than the centre and the right. The least active voters on pension issues were deputies from parties associated with a membership that considered itself reformist and relatively sympathetic to the government. These parties included Our Home is Russia (NDR), headed by former prime minister Viktor Chernomyrdin, and the centrist Russia's Regions. As a consequence, the government increasingly lacked an active, engaged presence in the Duma to support its views. As a result, more extremist political parties, such as the KPRF and the unpredictable, controversial Liberal Democratic Party of Russia (LDPR), led by Vladimir Zhirinovsky, gained a more open playing field to dominate pension debates in the Duma. Indeed, at one point LDPR member Sergei Kalashnikov, Duma's social policy committee chair from 1994 to 1998, openly accused the reformers of systematically failing to vote on pension legislation.41 We could hypothesize that for public relations purposes, deputies might be reluctant to vote against pension legislation, since roll call votes identify each individual member's vote. Moreover, the Communist Party is arguably especially concerned about pension issues, because the elderly form a significant part of the party's committed voters.42 It is perhaps noteworthy as well that the KPRF is the 'greyest'

The Politics of Pensions, 1994-1999 99 Figure 6.3A 19 October 1994, first reading, two draft laws on pensions Percentage of deputies who voted

Voting rates in Duma by party (% of party members who voted)

Key: KPRF: Communist Party of the Russian Federation LDPR: Liberal Democratic Party of Russia VR: Russia's Choice (reformist)

APR: Agrarians Yabloko: opposition reformist party DPR: Democratic Party of Russia ZhR: Women of Russia PRES: Party of Unity and Concord NRP: New Regional Policy

A shaded bar indicates a left-wing party. Source: The two draft laws were 'O povyshenii minimal'nogo razmera pensii i poriadke indeksatsii i pererascheta pensii ustannovlennykh v sootvetstvii s Zakonom RSFSR o gosudarstvennykh pensiiakh v RSFSR' and 'O povyshenii minimal'nogo razmera pensii, poriadke indeksatsii i pererascheta gosudarstvennykh pensii v Rossiiskoi Federatsii' (first reading). Roll call vote published in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 57, 19 October 1994, 54-7. Result: 309 deputies voted for, 2 against the legislation. Deputies' party affiliation was identified following the list of Duma deputies by party published in A.S. Barsenkov and V.A. Koretskii, Federal'noe Sobranie Rossii (Moscow: Fond Foros, 1995).

party in the Duma. After the 1995 Duma elections, 45 per cent of KPRF deputies were over fifty, and 9 per cent were over sixty. In contrast, the reformist party NDR had 26 per cent of its deputies over fifty and 6 per cent over sixty. In comparison, the opposition reformist party Yabloko had only 15 per cent of deputies over fifty and only a single deputy over sixty.43 It is somewhat surprising that the government did not cultivate more enthusiastic advocates within the Duma; instead, it relied increasingly on

100 Shocking Mother Russia Figure 6.3B Draft law on veterans, first reading, 20 July 1994 Percentage of deputies who voted

Voting rates in Duma by party (% of party members who voted)

Key: KPRF: Communist Party of the Russian Federation LDPR: Liberal Democratic Party of Russia VR: Russia's Choice (reformist) APR: Agrarians

Yabloko: opposition reformist party DPR: Democratic Party of Russia ZhR: Women of Russia PRES: Party of Unity and Concord NRP: New Regional Policy

A shaded bar indicates a left-wing party. Source: Roll call vote published in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 50, July 20,1994, 72-4. Result: 332 deputies voted for the legislation, 2 against. Deputies' party affiliation was identified following the list of Duma deputies by party published in A.S. Barsenkov and V.A. Koretskii, Federal'noe Sobranie Rossii (Moscow: Fond Foros, 1995).

the frequent presence in the Duma of the president's representative Alexander Kotenkov. Figures 6.3A to 6.3F show a trend towards strong party discipline on the left, with less cohesion in the other political parties. This finding seems to confirm the argument of Russian scholar V.M. Sergeev and his colleagues that although Duma voting behaviour showed increasingly tight discipline in the KPRF and LDPR, Yabloko and especially NDR showed much less party solidarity.44 In contrast, Steven Smith and Thomas F. Remington argue that party discipline overall in the Duma increased over time.45 Figures 6.3A to 6.3F suggest that when it came to pension policy, the progovernment reform agenda lacked a cohesive group of vigourous advocates within the Duma.

The Politics of Pensions, 1994-1999 101 Figure 6.3C Duma vote to overturn veto on law for procedure for claiming damages for violations of the established procedures for paying pensions and other social benefits, 6 October 1995 Percentage of deputies who voted

Voting rates in Duma by party (% of party members who voted)

Key: KPRF: Communist Party of the Russian Federation LDPR: Liberal Democratic Party of Russia VR: Russia's Choice (reformist) APR: Agrarians

Yabloko: opposition reformist party DPR: Democratic Party of Russia ZhR: Women of Russia PRES: Party of Unity and Concord NRP: New Regional Policy

A shaded bar indicates a left-wing party. Source: The title of the draft law was 'O poriadke vozmeshcheniia material'nogo ushcherba v sviazi s narusheniem srokov vyplaty zarabotnoi platy, pensii, stipendii, posobii i drugikh sotsial'nykh vyplat grazhdanam Rossiiskoi Federatsii.' Result: 323 deputies voted for the override, 0 against. Roll call vote published in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 127, 6 October 1995, 60-3. Deputies' party affiliation was identified following the list of Duma deputies by party published in A.S. Barsenkov ancLV.A. Koretskii, Federal'noe Sobranie Rossii (Moscow: Fond Foros, 1995).

Pension Reform Members of both the Duma and the government were aware of the pension system's institutional and financial defects, and each side was spending a great deal of time enacting ad hoc, crisis management responses to pension difficulties. In these circumstances, there were incentives for each side to reach agreement on a systematic program of pension reform. Indeed, there was a consensus that substantive legislation was necessary in order to improve the old-age pension system.

102 Shocking Mother Russia Figure 6.3D Duma resolution of 17 March 1999, requesting that government re-examine the figure used to calculate pensions Percentage of deputies who voted

Voting rates in Duma by party (% of party members who voted)

Key. KPRF: Communist Party of the Russian Federation LDPR: Liberal Democratic Party (Zhirinovsky) NDR: Our Home Is Russia

APR: Agrarians Yabloko: Yavlinsky bloc NRDV: (Narodovlastie): Power to the People RR: Russia's Regions Ind.: Independent Deputies

A shaded bar indicates a left-wing party. Source: The roll call vote was published in Gosudarstvennaia Duma, Stenogramma Zasedanii, biulleten' no. 245,17 March 1999, 61-3. Party affiliation of deputies was identified using the list in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 261,15 May 1999, 49-62. The title of the resolution was 'Postanovlenie o realizatsii Federal'nogo zakona 'o poriadke ischisleniia i uvelicheniia gosudarstvennykh pensii.' Passed: 347 for, 1 against, 3 abstentions.

Legislation on the institutional development of the pension system was a priority. A Duma deputy remarked in 1994 that the Pension Fund existed in a 'legal vacuum' and was simply 'hangs in the air' without a clear chain of command.46 The government passed a basic pension reform 'conception' in 1995, which was a very general declaration of intent aimed at improving revenue collection and pension administration.47 The head of the Duma's social policy committee, Sergei Kalashnikov, criticized the pension reform concept, but his concerns related to details rather than to reform generally. For example, he argued that the reform concept did not commit itself sufficiently to the principle that for pensioners who had not spent enough time in the workforce to qualify for a regular pension, the social pension must be adequate for subsistence.48

The Politics of Pensions, 1994-1999 103 Figure 6.3E Yeltsin impeachment hearings, Allegation 5, genocide Percentage of deputies who voted

Voting rates in Duma by party (% of party members who voted)

Key. KPRF: Communist Party of the Russian Federation LDPR: Liberal Democratic Party (Zhirinovsky) NDR: Our Home Is Russia

A shaded bar indicates a left-wing party.

APR: Agrarians Yabloko: Yavlinsky bloc NRDV: (Narodovlastie): Power to the People RR: Russia's Regions Ind.: Independent Deputies

Source: The roll call vote was published in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 261, 15 May 1999, 36-62. Deputies' votes were recorded by party list. Result: 237 deputies voted for, 89 against the allegation.

In 1997 and 1998 the government prepared more radical, marketoriented reforms. Duma hearings in 1997 uncovered considerable opposition to the fundamental principles of these reforms.49 Deputies were often reluctant to consider any reform that might reduce benefits to pensioners. To quote Anna Vlasova, head of a subcommittee of the Duma social policy committee: Here 1 would like to ask the government: are there insufficient funds to feed our pensioners, who all their lives worked and gave service for a better life? What need do the pensioners have of our reforms? What's the point of reform to a pensioner? Today he simply needs to live. Above all, the government thinks about reforms, abovit the budget, the government should have

104 Shocking Mother Russia Figure 6.3F Yeltsin Impeachment Hearings, Allegation 5, genocide Voting in Duma on Allegation 5

Key:

KPRF: Communist Party of the Russian Federation LDPR: Liberal Democratic Party (Zhirinovsky) NDR: Our Home Is Russia

APR: Agrarian NRDV: Power to the People RR: Russia's Regions Ind.: Independent Yabloko: Yavlinskie bloc

A shaded bar indicates a left-wing party. Source: The roll call vote was published in Gosudarstvennaia Duma, Stenogramma Zasedanii, biulleten' no. 261, 15 May 1999, 36-62. Vote: 237 deputies in favour, 89 against.

been concerned about these people, who already put in their time and earned, and they should have a decent life.'50

Irrespective of such reservations, between 1995 and 1998 the parliament passed three substantial pieces of reform legislation. These reforms included the following: first, a law on individual pension registration. This law would grant each individual a social insurance card and number and incorporate all of his or her personal information in a computerized database. This was a very important reform, because it was a step toward a genuinely social insurance-based system whereby individuals' pensions would be calculated on the basis of their lifetime compulsory contributions to the pension system rather than according to their salary on retirement. The pension registration system would also simplify the bureaucratic procedures for pensioners who had changed jobs or localities during their working life.51 Second, a law was passed on non-state pensions. This encouraged and regulated private-sector pension funds so that individuals and employers would be able to make voluntary investments in private funds that would on retirement supplement their state-funded pensions.52 Third, the Federal Assembly finally

The Politics of Pensions, 1994-1999 105

passed a law on pension indexation in 1997 (this is discussed in the next chapter). This law aimed to end the ongoing controversy over ad hoc pension increases and compensation payments; however, it provoked a serious confrontation when the government interpreted its own powers to administer indexation differently from what the Duma had intended in the wording of the law (see figure 6.1). These reforms illustrated that although it was possible for the parliament and the government to cooperate on reform legislation, they could disagree seriously over details. The World Bank and the International Monetary Fund encouraged the Russian government to adopt a more systematic and more economically feasible pension reform to alleviate the system's financial difficulties. In response, in the spring of 1998 the new government of Sergei Kiriyenko adopted an ambitious pension reform plan, which proposed that the country make a fuller transition to a social insurance based system, encourage further development of voluntary, private-sector pension schemes, and work toward generating additional pension income by investing some of the Pension Fund's collected revenues.53 The plan was influenced by the ideas of the deputy labour minister, the economist Mikhail Dmitriev, who favoured strong shift toward an investmentoriented pension system. He argued that the government simply could not sustain its commitment to the existing 'pay-as-you-go' pension system, in which revenues collected for pensions were used immediately to pay benefits to the current generation of pensioners.54 The reform system had already been heavily criticized by the Duma's social policy committee and in Duma hearings. Some deputies - not to mention veterans' groups and other social organizations - were uncomfortable with the idea of the pension system moving away from rewarding people according to their work and contributions to society, and instead rewarding them according to how much money they had contributed to the system. This scepticism toward social insurance echoed the criticisms of Western welfare states that had dominated Soviet ideological discourse.55 Three factors delayed progress on pension reform in late 1998 and 1999. First, the Russian government became unstable. Yeltsin dismissed and replaced four prime ministers between March 1998 and August 1999.56 Second, the financial crisis of August 1998, during which the ruble was sharply devalued, led to the perception that the economy was a greater priority than social welfare reform. Third, the executive-legislative relationship was increasingly strained in 1998 and 1999. The Duma's reluctance to confirm Yeltsin's nominee for prime minister triggered

106 Shocking Mother Russia

government crises in March and April 1998 (over the confirmation of Sergei Kiriyenko) and August-September 1998 (over the failed candidacy of Viktor Chernomyrdin). Ultimately, the Duma launched a commission to prepare the legal case for impeaching the president. Impeachment hearings considering five allegations against Yeltsin were held in the Duma in May 1999. The weaknesses of the Russian social welfare system were mentioned in the case for impeachment that was debated in the Duma. The fifth allegation against Yeltsin was 'acts contributing to the genocide of the Russian people.' The framers of the case for impeachment were arguing that because Yeltsin had resorted repeatedly to presidential decrees to undermine legislation on social welfare, he bore substantial responsibility for the social hardships that accompanied Russia's reform transition.57 The chair of the Duma's security committee, Viktor Iliukhin, gave one of the two reports presenting the impeachment allegations to the assembly. He explained why, in his view, Yeltsin and his advisors had pursued policies that had adverse social consequences: The reason is the President's inclination to weaken society's well-established understandings of patriotism and social development. To weaken [this consciousness] through the destruction of certain groups of people, namely, those who held these convictions. This why the genocide above all affected people of pension-age or who were nearing retirement, and on workers in the fields of culture, art and education.58

Iliukhin's remarks demonstrate the degree to which polemic was prevailing over nuanced debate in the Duma. Nonetheless, the impeachment hearings failed to muster enough votes for the Duma to pursue the case further. The fifth allegation received 237 votes out of 450 deputies, which was fewer votes than for any of the four other allegations59 (see figures 6.3E and 6.3F). The impeachment hearings illustrate the frigid climate that characterized communications between the parliament and the president. In these circumstances it was difficult for the legislature and the executive to maintain a constructive dialogue on reform. Despite some cooperative achievements on pension reform, government-parliament relations over pension issues continued to deteriorate. This became obvious in 1998 and 1999. The pension crisis illustrates that the Russian government was facing a 'crisis of legitimacy' by 1999. To borrow from the concept used by political development theorist Leonard Binder, a 'crisis of legitimacy' can be described as a situation in which

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political actors do not accept the established political process, or do not cooperate with other recognized actors in the system, or in which their actions disrupt or challenge the political system.60 We can note the following. First, the executive was engaging in unilateral actions. While Yeltsin was attempting to dissolve the parliament, and resorting to force to end the parliament's resistance, measures were being taken to decouple the Pension Fund from the parliament, to which it was formally accountable.61 Second, the legislative process was impaired. Between 1996 and 1999 many pieces of pension-related legislation were vetoed by the president, vetoed by the upper house of parliament, or rejected at first reading at least once.62 Third, there was a weak capacity to compromise. Pension Fund budgets were sometimes rejected at first reading or vetoed. Budgetary disputes over pensions - most notably, over those pensions for which the federal budget had responsibility - remained unresolved for years on end.63 Fourth, political actors displayed reluctance to recognize the constitutional roles of other actors; this was reflected in the 'battle of moratoria' between the executive and the legislature. In May 1997 the government proposed to the Duma a moratorium on pension legislation. From the other side, in 1999, Yeltsin vetoed a proposed moratorium from the parliament on 'experiments' in social insurance, arguing that it is not clear whether such experiments applied to normal executive implementation of social insurance law.64 Was each side proposing a moratorium on the other's behaviour? Fifth, the judiciary was asked to intervene on policy disputes between the executive and the legislature. In August 1998 the Duma lodged a protest with the Constitutional Court regarding a government resolution to collect a supplementary pension levy. (The resolution was withdrawn after the government fell/'0) In another example, the Supreme Court rescinded a government resolution concerning pension indexation in December 1997, following the Duma's resolution of protest.66 In conclusion, a spiral evolution of differences of opinion over what were essentially ad hoc, short-term responses to the pension crisis served in the long term to make comprehensive institutional reform difficult. On reflection, issues such as pension indexation and the budgetary division of responsibilities were routine issues of government. These such matters did not reflect deeply antagonistic ideological divides and could have been resolved before they became chronic problems. Although both sides engaged in confrontational behaviour, recalcitrance was especially evident in the executive's responses. The Duma and the government became polarized in part because the government

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lacked a committed group of deputies to support its position and could not count on the active support of the progovernment parties in the Duma. The evidence shows that the Duma was strongly engaged in pension issues. But the slow progress on pension reform meant that the Duma was constantly reinventing the wheel; it focused on short-term, budgetary issues and pension increases, and meanwhile, substantive reform stalled. On social welfare issues at least, the opposition in the Duma was generally constructive; however, by 1998 the Duma seemed to be focusing less on policy issues and more on criticizing the overall quality of governance. It could be argued that the executive and the legislature were acting as if each doubted the very authority of the other. When it was alleged at the impeachment hearing that Yeltsin had engaged in 'genocide,' it was clear that the level of political discourse in Russia had reached a new low. Old-age pension policy may not be the most representative case study for examining executive-legislative relations: strong emotions must be expected when the issue is the plight of the elderly in a seriously challenged country in transition. The executive—legislative relationship in Russia affected the evolution of the country's old-age pension crisis; in turn, the pension crisis affected the harmony of the executive-legislative relationship.

Chapter 7

Russian Laws on Old-Age Pensions and Veterans' Rights: Contending Understandings of Social Justice

In June 1997, Russia's parliament adopted a law on the calculation and indexation of old-age pensions. This law provoked so much discussion in the country that it was commonly referred to simply by its number, FZ113 (federal law 113). It was basically technical in nature, as its objective was to recalculate pensions for some senior citizens and to define the formula for calculating pension increases. The very essence of the law was such that at first glance, it could be regarded as a milestone in the establishment of rule of law in the pension system. This long-awaited piece of legislation defined the mechanism for indexing old-age pensions so as to take into account regularly the sharply increased costs of living that were accompanying the introduction of market-oriented economic reforms. FZ-113 was meant to provide a systematic, universal formula for increasing pensions on a regular basis; it was supposed to replace the unsatisfactory status quo of provisional pension increases imposed through either executive decrees or ad hoc laws with only a short-term impact.1 Yet after its passage, FZ-113 became the subject of intense controversy in Russia. The Russian executive, parliament, judicial institutions, and subfederal governments, and even individual pensioners, engaged in a bitter struggle over how to interpret and apply this confusing law. The law had been passed in order to solve a social problem, but it quickly became a political problem in itself. After it was adopted, it continued to be the subject of a lively process of contestation for three years and left a legacy of sharp criticism of the Russian government's approach to social policy. This chapter examines the debate over FZ-113 as an example of the interaction between politics and law in the postcommunist era. The law's basic purpose was to address a problem that did not exist in Soviet

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times: the need for a procedure for indexation to adjust fixed incomes in response to inflation. As such, it was essentially a reactive measure to a new postcommunist problem. Furthermore, the law's fate illustrates how legal norms clash in a transitional economy. In its intent to index pensions systematically, according to a formula, it reflected the complex transition toward a market society. Also, the law was rooted in a demand for fairness; the Russian people expected a neutral law that would apply equally to all citizens. Yet, the law was so opaque that three years after it was passed, even Russia's highest court had difficulty interpreting it. Finally, although there are still strong doubts about the quality of rule of law in Russia, the case of FZ-113 does indicate that there is space for the judiciary to rule independently on the legality of government decisions. In the end, the controversy over the law compelled the government to defend it in public, even though the legislature bore its share of responsibility for passing the law in the first place. Russia's legislature passed voluminous amounts of pension legislation in the 1990s, but the quantity of laws passed provides no indication of the quality of results. FZ-113 reveals that law in Russia can sometimes become the focus of active engagement by myriad actors and citizens. The chapter will also contrast the experience of FZ-113 with that of another controversial social welfare law, the Law on Veterans. When examined side by side, these two laws reveal quite different approaches to the problem of postcommunist social welfare; furthermore, both laws reveal just how difficult it can be to to redefine the legal norms governing the state's obligations toward its elderly citizens. Both laws reveal a broader clash of competing ideas of 'social justice.' Pension legislation after 1990 accepted the principle that the state should provide a fiscally responsible social safety net that applied equally to all citizens. However, this vision clashed in the political arena with claims that particular groups were morally entitled to extra benefits. These special benefits were perhaps fair compensation for past contributions to society, or perhaps redress of past wrongs committed by the state. Both visions coexisted side by side in Russian legislation, where they generated inevitable contradictions. This chapter examines those contradictions. FZ-113 and Pension Legislation in Russia

FZ-113 arrived after a long period of turmoil in Russia's pension system. Russia's 1990 law on pensions did include a provision that pensions would be raised in accordance with increases in the cost of living; but it

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required this indexation only once a year, which was clearly inadequate after market reforms were introduced in 1992.2 FZ-113 was adopted in 1997 and implemented in 1998, six years after prices were liberalized and inflation appeared. The law had an unusual history in Russia's parliament, the Federal Assembly. What is remarkable is that unlike most other pension legislation, I have found no record that FZ-113 was ever discussed in depth in the Duma. It seems that at every stage, the law moved through the legislative process with very little debate. As a result, important opportunities were missed for troubleshooting possible problems in its details. The original draft for what became FZ-113 came before the Duma in July 1995, when it was presented by Anna Vlasova, the head of a subcommittee of the Duma's labour and social policy committee. The initial raison d'etre for the law was to alleviate the plight of pensioners who had begun collecting pensions in the years immediately before and after the collapse of communism, and whose pensions were especially low. At that time the vacuum in pension legislation meant that a set of pensioners who had similar work histories could find themselves receiving widely differing pensions. The brief debate on the law mainly featured a confusing three-way exchange of views between the Duma's Vlasova, a deputy prime minister (lu. F. Yarov), and a deputy minister of social protection (P.L. Raminskii), in which the three expressed differing opinions regarding the origin of the law and whether it had the support of the Russian government. The deputy prime minister seemed unclear about the existence of the law, while the deputy social protection minister claimed that the law was a 'fragment' of an unfinished body of joint governmentparliamentary pension legislation, which Vlasova had presented to the Duma out of its proper context. For her part, Vlasova argued that this was a carefully drafted piece of legislation that the government had had plenty of time to consider. These disagreements overshadowed any discussion of the law itself, and the Duma failed to muster the necessary votes to pass the law at first reading.8 Nonetheless, the following day the Duma voted on the law again - and adopted it in its entirety, without further discussion."1 It was unusual for a pension bill to receive such cursory treatment in the legislature; the haste is probably explained by the Duma's crowded agenda at that time and by its preoccupation with passing legislation in advance of December 1995 parliamentary elections. The law was rejected once by the Federation Council. After a conciliation commission was formed to work out a compromise between the two houses of parliament, the law was passed again in the Duma

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without any further discussion.5 The law was vetoed by Yeltsin. Thus it was left in limbo as the elections of December 1995 brought a new set of parliamentary deputies to office. Although the Duma's stenographic records reveal little about how FZ113 was adopted, its evolution was marked by a number of controversial issues, which help explain its complicated history. These sticking points included the following: • The debate over whether working pensioners should receive fully indexed pensions (Russian pensioners had since Soviet times had the right to work full-time while collecting a pension). • The difficulty of maintaining sufficient resources in Russia's centralized Pension Fund to cover the costs of indexation. • The question of whether the state had the bureaucratic capacity to recalculate pensions individually for each pensioner, as the indexation mechanism would require.6 The law was passed on 23 June 1997 after a joint executive-legislative commission was formed to work out a compromise version of the law. The government's main reservation was that it would be some time before it was realistically possible to put the law into effect. The government succeeded in delaying the law's implementation until February 1998; this delay would buy the government time to find the money in its budget to cover the costs of pension increases. The law was passed by a large majority (over two-thirds of the members of the Duma), again with very little discussion.7 Since the law was more than two years in the making, and since it had been introduced in a parliament that had a different membership composition than the legislature that approved the final version, it is surprising that there was so little discussion when the law was finally adopted. This may help explain some of the law's later difficulties. Compared to other pieces of legislation on old-age pensions in Russia (especially the lengthy FZ-340, 'Law on State Pensions,' of 1990), FZ-113 was brief and written in simple language. Notwithstanding this apparent simplicity, the law was vague and laced with apparent contradictions. The studies by Russian experts on social welfare such as Valentina Bochkareva, Natalia Rimashevskaia, A.S. Nazarov, El'vira Tuchkova, and Mikhail Zakharov are extremely valuable sources for gaining an understanding of the implications of this law and pension policy in general.8 The law's basic provisions were as follows. Pensions were to be indexed quarterly,

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using a formula known as the individual pension coefficient (IPK). The IPK would be used to calculate each pensioner's pension, taking into account length of time in the workforce (known as stazti), average monthly pension income, and the increase in national wage levels. The formula to be used for calculating the IPK was not specified in the law. However, the law stated that the indexation would maintain the level of the average pension at 70 per cent of the average wage, and that no pensioner's income would exceed 120 percent of the average wage.9 As will be discussed below, not all pensions would be indexed in this way. Some pensioners would continue to receive their pension increases in the form of the 'compensation payment' granted from time to time by presidential decree. Pensioners would be able to decide for themselves whether to opt into the new system or remain with the status quo. Probably the most important reason why the law passed is that it addressed the longstanding concerns of a diverse group of actors in society. It institutionalized a pension indexation mechanism. Furthermore, it provided a legislated solution to the indexation problem, which, basically, was to reduce the reliance on the compensation payments made by presidential decree. The law also had the potential to create a predictable means of stabilizing pension expenditures. It imposed a decision to tie pensions to wages, and perhaps most importantly, it brought to an end the quarterly haggling between the executive and the legislature over pension indexation. In theory, the law was providing for a neutral formula - the individual pension coefficient - that would allow pensions to be recalculated and increased, taking into account a worker's salary and work history. In this way, the system would avoid the 'levelling' effect whereby inflation rendered insigificant the differences between the highest and lowest paid pensioners' incomes. Instead, the indexation system would continue the principle already entrenched in the pension system: that one's pension was to be based on time in the work force and on salary. The law's defenders argued that it represented a move toward a social welfare system based on the social insurance principle, because it would calculate pensions for each individual according to a precise formula.10 According to one view, the law was 'civilized' because it was a step toward bringing the country up to the social insurance standards of Western countries.11 Without placing absolute limits on pensions, the law ensured that the highest pensions would not skyrocket above wages, and that pension increases would be coordinated with wage increases. This measure was regarded as important to overall economic stability.

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That being said, the law was vague in many ways. It did not specify how the IKP would be calculated. A pensioner who read the law would have no way of knowing what formula would be used to calculate his or her pension increase. Nor were there explicit instructions that would tell the local social policy official how to calculate the IPK. Since the law did not specify its own formula, of course it was liable to be misunderstood or interpreted arbitrarily. On top of all this, the law contained a basic contradiction: on the one hand, it said that the pension would be indexed individually for each pensioner according to work history and income; on the other, the law's Article 4 stated that the pension would be related to the average wage at 70 per cent, which implied that pension levels would be restricted - a point at odds with the law's intention to continually raise pensions. The latter norm was not consistent with the individual ratio implied in Article 1's definition of the IPK.12 After FZ-113 was passed, some aspects of it attracted particular attention in public debate and in the media. Pensions were in effect being limited by the law because they could not exceed 120 per cent of the average monthly wage. Conceivably, this stipulation could negate the effects of indexation for those entitled to relatively high pensions. In practice the law was implemented so that stazh (years employed) was calculated based on work time paying social insurance contributions, rather than on time actually counted in the workforce. This provoked controversy because it was a narrower definition of stazh than was the previous custom.13 The law placed less emphasis than before on preretirement wages and emphasized stazh in indexation; this also constituted a change from previous legislation.1'1 One concern focused on the possible consequences for women of a law that did not consider time spent caring for children as counting toward the calculation of pensions.15 For working pensioners, salary (total income) was taken into consideration when pension increases were being calculated; this meant that pension increases might be lower than anticipated. For this reason, many working pensioners did not opt into the new law, preferring to remain under the previous pension system (law no. 340, plus compensation payments granted by presidential decree).16 The law did not do away with the existing indexation, because not all pensioners, working or not, moved to the new system. Pensioners were given the choice: use the new system, or remain in the existing one. But in the circumstances it was difficult to gather the information necessary to make well-considered choices. For example, one summary of how to calculate the IPK - which was intended to give the public a more

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thorough explanation of how pensions would be calculated according to FZ-113 - left me even more mystified than I had been before reading the article in question. The main insight gained from that article was that the IKP would be a formula that determined the size of the pension according to the pensioner's stazh and salary on retirement, and that it would give higher pensions to those with a long work history and salary.17 It would be difficult for any pensioner to determine whether he or she would be better off under the new system, unless that person had the good fortune to encounter well-informed officials in the pension social welfare system who would be willing to explain all the options. Finally, the law gave the executive a great deal of discretionary power, because it allowed the government to determine the average wage using official statistics. The government was also expected to work within existing Pension Fund budgetary assignations. In practice, these stipulations allowed the government considerable influence over indexation, which invited controversy when the Duma accused the government of underestimating wage levels in order to limit pension increases. In fact, the Russian parliament bore responsibility for passing a law that delegated substantial interpretive powers to the executive. Consequences of the Law Once the law came into effect (in February 1998), two controversies developed regarding the way it was being implemented by the government. The first related to the way the average wage statistic was calculated, the second to the precise nature of the IPK ratio. FZ-113 and Executive-Legislative Relations While the law was being prepared for implemention, the government passed a resolution declaring that pensions would be indexed in relation to an average minimum wage of 760,000 rubles. The Duma passed a resolution of protest, claiming that the actual average wage according to state statistical figures was 1,080,000 rubles, and that the law required the government to observe the latter amount. In defending the government's decision, the deputy labour minister told the Duma that the government needed to consider more realistically the limited funds available for financing indexation. 18 In fairness, it should be noted that the Duma had passed a law, signed by Yeltsin in the autumn of 1997, that had provided substantial pension increases for 1 October and 1 December of

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that year, notwithstanding the pending implementation of the indexation law.19 Part of the problem was that the government's resolution had been passed quietly on 30 December 1997, just before the January Russian holidays. This was followed by an outcry from pensioners, with the head of the Duma's social policy committee, Sergei Kalashnikov, claiming that the government's move had further eroded citizens' confidence in the pension system.20 Claiming to have received many protests against the law, the Duma attempted to pass a set of modifications that would provide additional benefits and raise the pension ceiling. The government opposed these amendments. The Duma also criticized the way the law had reduced the importance of salary relative to stazh.2} The amendments failed to pass parliament's upper house, the Federation Council.22 What is odd about these proposed Duma amendments is that they undermined a law that had been initiated in the Duma itself. In a sharp exchange of views between the labour minister and the deputy head of the Duma's social policy committee, it was acknowledged that many pensioners were taking their grievances to court. In the government's view, the problem was the very inconsistency of the law's content; in the Duma deputy's view, it was the government's manner of implementing the law.23 In June 1999 the Duma was still pursuing the matter, claiming that the government was still calculating pension increases using a wage figure that was lower than the actual statistic; the government countered that the Duma's proposals, if enacted, would exceed the Pension Fund's resources.24 One can surmise from this that there was a poor fit between Russia's pension legislation and its planning of the pension budget. On 10 June 1999 a government initiative to resolve the contradictions in FZ-113 was rejected in the Duma.25 Instead the Duma passed a law that would require the government to use the state statistical figure for the minimum wage and to award back pay to pensioners. Once again this effort was rejected in Federation Council.26 A final attempt to revise the law was vetoed by Yeltsin in November 1999.27 The Regions The law provoked dissension in Russia's federal system, with some regional governments taking exception to the government's interpretation of the law. In Novosibirsk, complaints from more than a thousand pensioners led the oblast procuracy to demand that the regional branch

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of the Pension Fund pay pensions using an IPKof 0.7 (corresponding to the law's provision that the ratio of the average pension to the average wage should be 0.7:1), rather than the 0.525 figure, which the government had reportedly used in its first implementation of the law. The regional Pension Fund, which was accountable only to the central Pension Fund in Moscow, did not obey the instruction.28 In Samara, Governor Konstantin Titov also ordered the Pension Fund to pay pensions according to the 0.7 figure by using the resources that the regional Pension Fund had collected within the oblast's territory (which were sufficient to cover the pension increase, unlike in Novosibirsk). The regional branch of the Fund complied; this led the General Procuracy in Moscow to order Samara to follow the law according to the federal government's interpretation.29 Samara's governor complied, but also ordered the region's own budget to pay the difference so that pensioners would receive the higher ruble amount.30 Pensioners

Pensioners were allowed to choose whether or not to opt into the new system offered by FZ-113. Those who did so (by one estimate, 41 per cent of pensioners) surely expected that their pensions would increase as a result. At least some of those pensioners faced disappointment, especially those who had had average or relatively high pensions (based on their wage levels at retirement). 31 According to the Duma's website, its general Reception Hall (Priemnaia) received approximately 32,000 appeals or complaints from individual citizens between November 1997 and July 1998, and 8,000 between 22 February and 27 March 2000 alone. Pension questions were raised by 'a majority' of citizens, many of whom mentioned problems with FZ-113. Although many pensioners had initially supported a law on pension indexation, the perceived injustices of FZ-113 provoked many complaints. Many were concerned about how stazhwas being calculated, and some expressed the view that the ceiling imposed on pensions was unfair. According to the Priemnaia s own analysis, pensioners often invoked their constitutional and legal rights in their complaints.32 Complaints from pensioners took other forms as well, including harsh language. For example, a letter from seventy-six pensioners to the newspaper Veteran criticized the government's use of a lower wage figure for calculating the IPK when implementing of the law. The letter depicted

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the government's move as an example of attempts since 1992 to 'fool' the pensioners, and it called on the government 'to stop stealing from the old people.'33 In 2000, Russia's highest judicial and law enforcement bodies became involved in the disputes over the law. The Russian Procuracy had already in 1999 called on the labour and social development ministry (Mintrud) to clarify the intended purpose of the 0.7:1 ratio, in light of concerns that local pension offices across Russia were interpreting the calculation procedures in various ways.34 The subsequent Mintrud instruction confirmed that 0.7 was a minimum figure that would be used as the proportion when calculating the average indexed pension to the average wage, and did not apply to the IPK, which was to be determined individually for each pensioner.35 Following continued complaints by a number of citizens and veterans, Russia's Supreme Court ruled on the government's interpretation of the law, as advanced in a Mintrud instruction of December 1999. The pensioners argued that the government's interpretation fixed pensions unfairly, at a level of 0.7 of the average wage. The Supreme Court came down in favour of the government, ruling that the 0.7 figure was not being used to limit the value of pensions, but rather to calculate pension increases according to the increase in the average wage.36 This Supreme Court decision was challenged by one of its own deputy chairmen, who appealed (unsuccessfully) the Supreme Court's decision to the Court's Presidium, arguing that the Mintrud instruction transcended executive powers and was inconsistent with the law's wording.37 In Samara, pensioners and veterans demonstrated publicly against the decision, going so far as to block traffic in the city centre.38 The trajectory of this law is revealing for the following reasons. First, it is interesting that FZ-113 went all the way to the Supreme Court, and even there it defied consensus. Second, the case reveals that there was confusion about the meaning of formulas and ratios. Third, it reveals that differing interpretations within the government itself had provoked the Mintrud clarification in the first place. In 2000, just before and after the election that confirmed acting president Vladimir Putin as president, the Russian government announced its intention to increase pension coefficients gradually to 0.95 - beyond what the law provided.39 In part, this move was intended to clarify that the ratio was meant to refer to the ratio of the total pension to the total wage after indexation - and was not intended to be used as a ratio for calculating the IPK.40 FZ-113 continued to be a sore point in Russian politics well into 2001, even as the Mikhail Kasyanov government was preparing a new draft

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pension reform with the support of President Vladimir Putin. The Russian Duma kept trying to rectify the problems of the law through legislative means, but without success. Two attempts were made to amend the pension legislation so that stazh would include 'non-insured periods' (such as military service and maternity leave) and so that working pensioners would be eligible to recalculate their pensions using the IKP. Working pensioners had previously been barred from doing so under an amendment to the 1990 'Law on State Pensions'; this had the effect of limiting working pensioners' ability to receive regular pension increases. Many perceived this provision as an injustice against working pensioners, who had long been entitled to collect pensions without penalty. This issue highlighted a sharp divide between the government and the legislature regarding the entitlement of pensioners to collect a full pension while working full-time. For example, one Duma deputy claimed that existing legislation was discouraging pensioners from working for wages, rather than providing an incentive to them. In contrast, First Deputy Minister of Labour and Social Development lu. Z. Liublin claimed that 'pensions ought to be for those who cannot work.'41 In two separate versions, the amendments were vetoed first by the Federation Council and then by President Putin. In rejecting the amendments, Putin claimed that the state lacked the budgetary resources to bring them into effect immediately and that amending the pension laws would make it more difficult for the government to introduce pension reform legislation in the Duma, which it was planning to do in the near future. 42 In the executive-legislative sparring on the amendments, each side summoned a different memory of the law's origins. One Duma deputy claimed that in 1997 the government had made lavish promises to the Duma that the law would improve the lot of pensioners, which the Duma had 'naively' believed.43 Another deputy claimed that the government in 1997 had committed itself in writing to raise sufficient funds that the IKP could be set at O.7.44 For its part, the government claimed that the law had originated not with the government but with the Duma's labour and social policy committee.45 A Comparison: The Law on Veterans

The Law on Veterans provides another example of a law initiated in the Duma that provoked discord with the government. This law was introduced by the Duma in July 1994 and was then vetoed by Yeltsin. Ultimately it was adopted in January 1995. The Law on Veterans established

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an extensive set of social policy 'rights and guarantees' for war veterans, state employees with exemplary accomplishments, and workers decorated for their exceptional contributions to the workforce ('labour veterans'). These rights included tax breaks, supplementary pension benefits, and privileges for low-cost or cost-free transportation, medicines, housing, and utilities.46 This law was not strictly speaking a pension law, because it encompassed many diverse components of Russia's social safety net that fell under the various federal, regional, and local jurisdictions. However, since most veterans were also pensioners, veterans' and pensioners' issues were closely linked in political discourse. In 1997, pensioners and veterans were forming interconnected groups in some regions to demand improvements in their access to social benefits.47 The government's principal objection to the Law on Veterans was that the state could not afford it.48 The main problem with the law was its sweeping nature. It provided an extremely comprehensive set of supplementary social benefits, which were phrased as being the social rights of veterans (themselves quite a broadly defined category of people). The law was framed in quasi-constitutional terms. It established rights of access to social benefits, and it oudined the federal division of responsibilities for paying them. There was little mention of how these benefits were to be financed, let alone enforced across the entire Russian Federation. Nor did the law mention the three extrabudgetary funds (the Pension Fund, Social Insurance fund, and the Medical Insurance Fund) that are responsible for collecting most of the revenues to support Russia's social programs. By die end of 1995 the head of the Pension Fund was complaining that the Law on Veterans was increasing the financial burden on the pension system.49 Arguably, the law imposed an especially heavy responsibility on local governments, particularly in rural areas. The law thus became very political. When the Duma began impeachment hearings against Yeltsin in 1999, one of the alleged 'crimes' attributed to him was genocide; cited in this were the social hardships the Russian people encountered under shock therapy. Yeltsin's initial veto of the Law on Veterans was named as 'evidence' in this allegation.50 (The impeachment failed, as was discussed in chapter 6). The Law on Veterans was later amended so that it became more specific in designating the federal government and the regions, rather than localities, as responsible for financing the law.51 In both FZ-113 and the Law on Veterans, executive-legislative disputes hampered the progress of legislation. In both cases a lack of clarity in the

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law, especially with regard to funding, aggravated the difficulties in implementation. The Duma had constructed an elaborate set of social rights and privileges, but it had specified few mechanisms or details for realizing these rights. Consequently, state authorities were placed in the difficult position of interpreting vague laws that severely tested their revenue capacities. The contrast between the two laws is important as well, because they show the contradictory tendencies at work in the Russian pension system. On the one hand, the temptation to establish additional pension privileges or benefits for some categories of people, deemed to be worthy of reward, was evident in the Law on Veterans; on the other, the notion of a merit principle clashes with the desire to establish a pension system that treats citizens in a neutral, simple, and equal manner. This latter desire was reflected in FZ-113, although in practice the law fell far short of its proponents' goals. Implications of the Case Study for Law in Post-communist Society

The idea of equality for all citizens, including equal access to social benefits, was an important principle for the democratic reformers who organized in Russia in 1990 and after.52 At the same time, the argument that some groups were entitled to special protection was one that many Duma deputies found persuasive.The controversy over FZ-113 highlights the unstable coexistence of these two competing sets of norms. Should the pension system reward those who worked for a long time, or those who worked in prestigious (high-paid) occupations? Should pensioners be able to earn more than workers? Should pensions be decided on the same basis for everybody, or should certain groups of people (such as veterans) receive special benefits? Should the normative requirements of law take priority over available resources for pensions? And how should pensions be increased? With FZ-113, these questions remained matters of intense debate in Russia. This chapter has shown that many pensioners see social welfare benefits as rights to be defended, not gifts to be bestowed. Various actors in the system (the executive, the legislature, federal subjects, and citizens) recognized that the law's impact on people's day-to-day lives was considerable. The executive was called to account, even though the Duma was in this case at least partly responsibile for the brouhaha. Admittedly, this case may be an isolated incident. Perhaps not all Russian laws become ongoing struggles about justice. That said, this study confirms that social welfare is of great significance

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in Russian society and that controversy can ensue when visions of social welfare conflict in law. What can we learn from all this about the broader relationship between politics and law in Russia? The rule of law is usually understood to mean equality and impartiality before the law, as well as the requirement that the state itself work within the law. Establishing rule of law has been a difficult challenge in postcommunist states, partly because postcommunist leaderships tend to emphasize ideological and reform goals over building an institutional framework within which government works.53 Some experts contend that the rule of law is especially weak in postcommunist Russia. Indeed, when he became president, Vladimir Putin called for a 'dictatorship of law' in Russia, despite the criticism that this phrase is an oxymoron.54 The weaknesses in Russian law have been examined from various angles. One approach examines how inconsistent laws can create contradictions that impede uniform enforcement.55 On a similar theme, journalist Chrystia Freeland has noted that some wealthy or well-connected individuals in Russia have been able to avoid prosecution. Her observation implies that the principle of equality of treatment before the law cannot be guaranteed.56 Louise Shelley (2000) has noted that corruption remains an obstacle to the rule of law. Under Yeltsin, bureaucratic conflicts of interest were commonplace even in routine government functions.57 Alfred Stepan (2000) has pointed to Russia's federal system as the source of serious weakness, in light of the common deviations of Russia's eighty-nine federal subjects from federal and constitutional law.58 Weak and underfunded institutions, such as courts and law enforcement institutions, also limit the effectiveness of laws.59 Finally, although there is considerable evidence that Russian citizens value the notion of rule of law, there is a general lack of confidence in the ability of the government and legal institutions to apply law fairly.60 Because of these realities, the law in Russia is sometimes dismissed as a facade. Certainly, FZ-113, which can be interpreted in various ways, demonstrated some of the weaknesses of Russian law. Not all political actors accepted the law, even though it was legitimately passed by an elected legislature. Many experts contend that notwithstanding the bumps in the road, rule of law in Russia in recent years has made strong progress, with citizens becoming increasingly aware of their legal rights.61 Ilean Cashu and Mitchell Orenstein (2001) have written that FZ-113 provided grounds for optimism regarding Russia's legal development. They point out that the frequency of pensioners' court cases against the government, as well

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as senior citizens' success in challenging FZ-113 in the courts, illustrated that citizens in Russia are taking the law seriously and are willing to work to defend their legal rights.62 Their conclusions are challenged, however, by Kathryn Hendley, who contends that such court cases tell us more about the economic desperation of pensioners than about Russia's path to legal development.63 If the law provoked citizen activism, it did so because its content was flawed. The law was not repealed immediately, and there was no consensus on its interpretation, so of course it was challenged. From this perspective, FZ-113 primarily reveals the fate of a piece of failed legislation, one that remained on the books for years because the political actors responsible for it did not sufficiently reconcile its contradictions and clarify its ambiguities. FZ-113 was unpopular and inconsistently applied, and was ultimately challenged from within the judicial system. It did not resolve the problem it sought to address - how to provide a regular, predictable mechanism of pension indexation. It only raised new debates over how to establish an indexation system that was both fair and feasible. Law is indeed meaningful in Russia, but it is undermined by a number of factors. FZ-113 demonstrates that poor quality of legislation in Russia can contribute to the weakness of law and to inconsistencies in its implementation.

Chapter 8

The Evolution of Pension Reform in Russia, 1995-2001

The ongoing struggle over pension indexation, and the prevalence of pension arrears, led to the development of a broad-based political consensus that pension reform was necessary in Russia. To this end, laws on indexation and personal insurance records and the legalization of private pension funds were important, but these were only the first steps towards a more fundamental reorientation of the pension system. But how could Russia's political actors agree on the substantive details of pension reform? And if pension reform was to be geared toward fiscal restraint, how could cost effectiveness be consistent with the broader notions of 'social justice' that were institutionalized in the Gorbachev era? As Linda Cook has argued, social welfare reforms are difficult to pass in Russia because of powerful opposition to cuts in services.1 Certainly, by 1995, Russia's State Duma had already demonstrated that it was more inclined to increase pension benefits and privileges than to reduce the costs of entitlements. Nonetheless, the Duma has generally cooperated with the pension reform efforts introduced by the government. Indeed, reform efforts in 1995 and 1998 failed more because of the executive's weak commitment to sustaining reform than because of opposition to such reforms. The pension reform legislation passed in 2001 under the government of Mikhail Kasyanov may succeed in transforming the system where previous efforts failed. The 2001 reform enjoyed the firm support of President Vladimir Putin, and the government has made considerable efforts to develop a consistent model of pension reform that brings together the relevant elite stakeholders. However, lingering doubts remain as to whether the content of the reform offers effective solutions to the shortcomings of the old pension system, and whether the new system

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will be appropriate for Russia's particular circumstances. Despite the relatively radical nature of the 2001 pension reform, the debate surrounding its adoption has demonstrated considerable continuity with the past patterns of governance that contributed to Russia's pension crisis in the first place. The term 'reform' is commonly used to describe changes in postcommunist economic and political relationships, yet it can be understood in various ways. According to Samuel P. Huntington, there are two quite different aspects or understandings of reform. Reform can aim to make politics more fair and equitable, or it can introduce innovations in policy and government structures.2 Pension reform in Russia often declared itself to be oriented towards the second reform type: transforming an inefficient system in order to make it work better. Indeed, when we look at the substance of pension reforms, we find that they were oriented less toward improving directly the lot of pensioners than towards making the system more cost efficient. These reform schemes usually claimed that pensioners would eventually benefit from reform, but that they could not expect an immediate, direct benefit to their pocketbooks. Instead, pensioners would benefit indirectly in the long run from having a more effective and predictable system. These arguments did not find much sympathy in Russia. Instead, normative arguments about the nature of social justice and state obligations predominated in discourse about the pension system, and economic arguments carried less weight. This is probably one reason why pension reform was delayed in Russia under President Boris Yeltsin: under him, pension reform schemes drew on fiscal and economic rationales which failed to recognize that the pension crisis was widely perceived as a human rights issue. Russia's top leaders sometimes insufficiently acknowledged that pension policy in Russia has always been linked to historic struggles for democratization. Throughout the 1990s there was a poor fit between reformers' rationales and the norms of social progress embedded in the Soviet pension system's development. This poor fit represents more than a disjuncture of interests; it also constitutes a discursive gap in communication. Reform might have proceeded more smoothly if the parties concerned had all spoken the same language. As pension reform proceeded anew in 2001, government leaders changed the tone of their public relations. The principal aim of reform was still to bring about more efficient use of revenue, but now reforms were presented as a corrective to the chronic flaws of the existing system and as a means for alleviating the hardships of pensioners. This ap-

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proach perhaps helped convince citizens of the value of reform - at the risk, however, of raising their expectations higher than was appropriate at a time of limited fiscal resources. Since the collapse of the Soviet Union in 1991, there have been three major pushes for old-age pension reform in Russia; they took place in 1995, 1998, and 2001 respectively. Until 2001, the experience with pension reform followed a distinct pattern. First, reform was hampered by a lack of political commitment from the very top levels of the executive, even when there was clear agreement among political actors that such reform was necessary. Second, reform tended to emphasize policy over institutions, leaving vague the administrative details of reform, the mechanisms for the pension system's accountability, and the bureaucratic implications of successfully implementing reform across Russia's complicated federal system. Finally, as presented to the Russian public, arguments in favour of reform tended to focus on its structural imperatives - in which restructuring the pension system was depicted as a socioeconomic inevitability - rather than on addressing the normative attachments and legacies that had been inherent in the pension system since Soviet times. Cynthia Buckley and Dennis Donohue argue that traditional Soviet beliefs about entitlements, entrenched in citizens' perceptions of the pension system, constitute an obstacle to reform. For example, Soviet pensions were seen as a complement to wages, in that both were considered to be earned, while industrial workers were regarded as the main beneficiaries of the pension system.3 In a slightly different vein, Linda J. Cook had argued that pension reform in Russia suffers from a unique combination of elements of a developed and a developing economy: a state with poorly institutionalized capacities for regulation and tax collection confronts an aging population that has become accustomed to comprehensive pension benefits.4 These historical legacies need not necessarily be seen as an impediment to reform, even though they may be at variance with some of the contemporary Western assumptions regarding how to construct a pension system. History need not be the enemy of reform. A good reform can recognize the aspirations of the current generation of retirees while shaping the future expectations and incentives of those still in the workforce. But to their peril, Russian reformers often dismissed the population's attachment to the social welfare system as a matter of selfinterest rather than a reflection of deeper political beliefs. Unless reform efforts confront head-on the entrenched values of hierarchy, privilege, and 'social justice' in the pension system, they are likely to fail.

The Evolution of Pension Reform, 1995-2001 127 Pension Reform in Russia, 1995-1998 In 1995 the government of Prime Minister Viktor Chernomyrdin outlined its draft 'conception' of pension reform. This government document acknowledged the gravity of the pension crisis and admitted that the price liberalization introduced in 1992 had failed to account for the impact on the purchasing power of pensions. The document declared that weaknesses in collecting Pension Fund revenues, and deficiencies in the pension system's organizational apparatus, were the main sources of the problem. Thus, the program identified stricter revenue collection, more stringent standards of administration, and the deterrence of evasion of mandatory pension contributions as important components of pension reform.5 The draft conception correctly identified some of the system's weaknesses, yet it was vague as to the remedies and their timing. The conception was primarily a declaration that the government intended to prepare draft pension reform legislation in the future. Yet, there was relatively little progress on pension reform until 1997, and the pension crisis continued to worsen. The government and the parliament expressed conflicting opinions over how to resolve the pension crisis. For example, in discussions of the 1996 Pension Fund budget, the government wanted to give federal tax authorities, rather than the Pension Fund, responsibility for collecting the Fund's vznosy. This proposal encountered opposition in the parliament. The legislature was reluctant at that time to enact measures that might increase the government's involvement in pension revenue collection while reducing the Fund's autonomy. Another thorny issue was the collection of fines and penalties from biudzhetniki enterprises. These enterprises depended on funding and purchase orders from the central government and were often late in their vznosy because they received salary payments late from the federal government. Many parliamentary deputies had some sympathy for the plight of these enterprises, whereas the Pension Fund regarded fines as essential to encourage enterprises to pay their required sums on time. At this point the Pension Fund initiated a novel idea: deadbeat enterprises could negotiate with the Fund to repay their debts and thereby have part of their penalties reduced.6 Duma deputies showed hostility to the idea of raising vznosy, when in 1998 they rejected a government bill to lower vznosy on enterprise payrolls and raise them for individuals.7 Increases in vznosy for individuals were again rejected by the Duma in October 1998.8 Pension reform stalled partly because of diverging priorities: the gov-

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ernment tended to favour spending cuts, whereas the Duma focused on the need to improve the quality of pension administration and revenue collection. Duma debates often portrayed any measures that would reduce existing pension entitlements not as potential solutions to the pension crisis, but rather as antithetical to its resolution. In addition, the legislature devoted relatively little time to considering remedies for the inconsistencies in pension administration. As early as 1993, the government was talking up the desirability of a unified pension service (edinnaia pensionnaia sluzhbd). Beginning with a 25 May 1993 presidential ukaz, the government declared its intention to create a unified pension service.9 The idea here was to create a single institution that would be responsible for both collecting revenue and distributing pensions. The goal was to eliminate the fragmentation that was the result of the present division of responsibilities between the Pension Fund, the social protection ministry, and the regional governments. A unified pension service was created in some regions (beginning with Moscow oblast).10 Yet the Duma devoted little attention to this institutional solution and until 2001, no law was adopted to make it uniform across the Russian Federation. In 1997, pension reform gained new momentum with Yeltsin's appointment of the 'young reformers,' including new deputy prime ministers Anatoly Chubais and Boris Nemtsov, to the Russian government. The 'young reformers' set out to reinvigorate the cause of reform on a number of economic and social policy fronts. They adopted a confrontational stance toward the Duma, which they considered an obstacle to change. Pension reform was among the areas of governance that the 'young reformers' considered a high priority. The initiative gained further momentum in 1997 with the assistance of the World Bank, which made pension reform an important component of two large three-year projects to Russia: the Social Protection Implementation Loan and the Social Protection Assistance Loan. These two projects, approved in June 1997, committed to assistance totalling over US$800 million.11 With respect to pension reform, the loan's goals included implementing a system of individual pension registration and facilitating improvements in revenue collection; also, it would help draft a comprehensive, long-term pension reform program. The World Bank's disbursement of funds came attached to a timetable of goals and conditions for implementation. The Pension Fund would be required to undergo an audit of its accounts; progress would have to be made in ending pension arrears; indexation would have to take place within existing budgetary constraints; and pension reform legislation would have to be prepared promptly.12

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In its documents, instead of advocating a particular model, the World Bank emphasized the importance of developing a fiscally sound and efficient pension system. However, the bank's documents showed preferences for particular kinds of pension reform as being the most realistic for Russia. These included a 'targeted' approach that would provide a minimum safety net for the poorest pensioners and that would reexamine the policies that allowed pensioners to work and to retire at relatively early ages.13 These reform proposals have been politically controversial in Russia, insofar as they threaten the longstanding entrenched legacies of the Soviet pension system. Another feature of pension reform, announced in October 1997, was the consideration of a 'three-pillar' pension system. In its influential 1994 report on global challenges for old-age pension reform, the World Bank advocated that all pension systems include some combination of three 'pillars.'14 Under the 1997 proposal, the three levels of the pension system would have been as follows: first, a minimal pension, paid from the state budget, for those in need of basic support; second, social insurance based pensions for workers, calculated on the basis of their past social insurance contributions; and third, voluntary, additional pension plans created in the private sector, either by employers or by individuals. The proposal included a plan for at least part of the revenues of the Pension Fund to be invested.15 However, the reform plan seemed to lack committed support from the top levels of the Russian executive. It is reported that shortly after the announcement of the pension reform proposal, Prime Minister Chernomyrdin rejected the plan within his own government.16 The three-tier pension reform model advocated a greater role for the private market in the national pension system in two ways. It proposed giving the private sector a greater role through facilitating the creation of supplementary pension benefit plans. Although it provided few details, it also would make it possible to invest part of Pension Fund revenues in the market economy so as to generate future revenue. A system that reserves some revenue to be invested for further growth of pension funds is referred to in the West as a 'funded' system; in Russia, the term is a 'nakopitel'naia (accumulative) system. The controversial notion of introducing a nakopitel'naia system was revived in the spring of 1998, after Chernomyrdin's administration was replaced by the new government of Sergei Kiriyenko. In May 1998, Kiriyenko introduced a new pension reform program, which he planned to bring into effect by 1999. The new pension reform plan emphasized that reform was vital, not

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only because of the limited revenue capacity of the Russian pension system, but also because the proportion of retirees was growing relative to active workers. The reform plan stressed the importance of improving the administrative efficiency of the existing pension system. But it also went further, by advocating a three-tier model. It addressed the need to encourage individual citizens to participate in private pension insurance plans, and it sought ways to encourage people to retire later in life. The reform also raised the controversial issue of overhauling the entire system of pension privileges (I'goty).17 The plan sought to build on earlier tentative steps, such as the law on individual pension registration, to establish a system based on the principle of social insurance. The rationale of social insurance was that people would no longer receive pensions simply on the basis of their age and their years in the workforce. Instead, the size of pensions would be directly related to the social insurance taxes, or contributions, that people had made during their lifetimes. The assumed advantage of the social insurance system was that people would have an incentive to pay their taxes instead of avoiding them, because their pensions would depend on their doing so. Like the 1995 'conception' that preceded it, the 1998 pension reform remained a declaration of intent. An even more radical pension reform proposal was being advanced by economist Mikhail Dmitriev, who in 1997 had been appointed deputy minister of labour and social development. Dmitriev urged that a funded pension system be introduced quickly, arguing that if the investment principle was put into effect, it could augment the Pension Fund's scarce resources and stimulate the Russian economy as a whole. He also argued that if the reform was advanced immediately (between 1997 and 2000), a reserve of funds could be generated, because during that period there would be a favourable 'demographic window' of the ratio of new pensioners to workers. Workers could choose to invest part of their contributions in an individual account, which would be invested in private, regulated pension funds.18 The striking thing about Dmitriev's plan was its ambitious timetable for introducing pension reform quickly, although it offered few details about how pension investment would be regulated and how its risks would be managed. His ideas later surfaced, along with the idea of introducing a funded pension system, in the 2001 pension reform plan. However, as Linda J. Cook argues, his plan was rejected in 1998 in favour of a slower approach to introducing a funded system. Cook holds that the two key actors, the Pension Fund and the labour

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and social development ministry, felt excluded from Dmitriev's policymaking process.19 The cause of pension reform acquired even more urgency as a result of the uncertainty and confusion that FZ-113 (the pension indexation law) injected into the system. In 1998 the implications of this law were only beginning to be realized. By July 1998, however, the new labour and social development minister, Oksana Dmitrieva, was saying that pension reform plans might have to be slowed down because of the need to stabilize the Pension Fund. She noted that the World Bank considered it important to introduce the investment principle into the pension system.20 In August 1998 the Kiriyenko government fell in the aftermath of that month's financial crisis. Pension reform was shifted to the back burner, and the World Bank acknowledged that Russia would be unable to meet its timetable of goals for implementing social welfare reform.21 Alternative Pension Reform Proposals Some economists endorsed the idea of a funded pension system, with the proviso that the government must strictly regulate pension investment schemes.22 Other academic experts in Russia advanced alternative pension reform proposals. Recognizing the limitations of the current system, they raised concerns about radical market solutions to the pension system's ills. For example, a system that was based entirely on social insurance contributions could have negative consequences for women's pensions, since women were earning less than men overall, and since the careers of so many women are interrupted by child care responsibilities.23 Natalia Rimmashevskaia and Valentina Bochkareva contend that although the private sector could be encouraged to supplement the state pension system, attention must be paid to developing a betterorganized and more accountable system of pension finances, and to more clearly linking the pension system to the labour and social development ministry.2/t The sharpest and most powerful criticisms of the government's pension reform plans were launched from the Duma. For example, Duma hearings on pension reform in 1997 expressed concerns over any pension reform plans that might make pensions more vulnerable to the market risks, that might place women at a disadvantage, or that might make mandatory social insurance contributions, rather than value and duration of work, the basis for determining the size of one's pension. Notions about raising the pension age and ending full benefits for

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working pensioners also generated criticism in the Duma. Essentially, there was opposition to any reform that would weaken what were perceived as the government's moral obligations to its citizenry.25 Social insurance remained a controversial concept in Russia, insofar as it was presumed that the people with the highest salaries before retirement would receive the highest pensions. Voices within the Russian parliament have consistently argued that rather, the focus should be on tightening the organization of the pension system's institutions. In the Duma's labour and social policy committee, Vitalii Linnik emphasized the importance of improving the coordination of social welfare within the Russian government, of defining federal and regional activities clearly, and of better harmonizing the budget with social extrabudgetary funds.26 Notwithstanding all this, laws on social insurance registration, private pension funds, and indexation generally met with little resistance from parliament. The real legislative struggles with the government took place over short-term funding issues, not policy. In the pension reform story, the real question is why it took until 2001 for a body of new legislation to gain a hearing in the Duma. Here, the executive must accept a significant share of responsibility. Consequences of the Pension Crisis As the pension crisis deepened, pensioners voiced their discontent. In 1994 more than 200,000 Russian pensioners personally wrote to the Russian government with complaints, many of them having to do with social welfare benefits.27 As pension and wage arrears mounted betweeen 1994 to 1998, social opposition to the government rose among affected citizens. This opposition manifested itself in demonstrations and strikes and boosted the vote of Gennadii Ziuganov's Communist Party of the Russian Federation (KPRF) in the elections of 1995 and 1996.28 The vote tallies in these elections provide an indication of pensioners' political sentiments. Elderly Russians were among the most likely to vote for Communist or other left-wing parties.29 In a 1995 public opinion survey the elderly were less likely than younger generations to favour capitalism: 82 per cent disapproved of Russia's turn to a market economy, and 75 per cent answered 'yes' to this question: 'Would you like to return to the kind of life that existed in the Soviet Union before 1985?'30 According to another study, by 1995 the Communist Party enjoyed the support of 52 per cent of Russians over sixty-five and 42 per cent of Russians between fifty-five and sixty-four. These proportions contrast with an

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overall national average of about 34 per cent support for the Communists.31 A study of Russian voting in the 1996 election indicated that in regions with relatively more people of pension age, such as agricultural areas, voters were more likely to cast their ballots for Communist Party candidate Gennadiy Ziuganov than they were in areas where, on average, people were younger.32 The 1999 parliamentary election confirmed that elderly voters and agricultural residents were the Communist Party's key constituents and were relatively unsympathetic to the liberal parties, which were calling for market reforms. Fifty-three per cent of KPRF voters were reported to be age fifty-five or older, while only 15 per cent of voters for the Union of Rightist Forces (SPS), a reformist party, belonged to that age cohort.33 In addition, two recent studies have confirmed that pensioners' voting behaviour did much to decide the outcome of regional gubernatorial elections in Russia between 1996 and 2001. In regions where pensioners' purchasing power increased, their votes contributed significantly to the re-election of incumbents.34 On the whole, however, voters in 'older' regions (i.e., those with a high number of pensioners) were more likely to vote in favour of opposition leaders.35 Pensioners also became increasingly assertive in the political arena. There were incidences of civil disobedience relating to the delivery of pensions. In Mezhdurensk, local social protection offices were occupied by citizens protesting arrears in pensions and child benefits.36 The nationwide 'Days of Anger' mass demonstration called for 27 March 1997 prompted Prime Minister Chernomyrdin to declare that he would take action to alleviate wage and pension arrears.37 Pensioners participated in the miners' strikes that swept across Russia in 1998, helping blockade the railways.38 In Novosibirsk more than a thousand citizens went to city courts with grievances against their local Pension Fund.39 The government noticed quickly enough that the pension crisis was contributing to political discontent. Election campaigns became a time for the executive to make short-term efforts to improve the pension system. Just before the parliamentary elections of 1995, Yeltsin passed a decree calling on the Central Bank to better ensure that banks promptly and properly accounted for revenues deposited in the pension fund's accounts. The same decree asked the Fund to claim vznosy promptly to avoid pension arrears, and to collect fines from non-payers. Furthermore, the Fund would be expected to catch up with pension payments by 1 February 1996.40 Before the presidential elections of 1996, Yeltsin passed a presidential decree demanding that government bodies pay overdue pensions to citizens and that future pensions be paid on time.41

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But exhortations like these were more declarative than substantive. Also before the election, the government budget was ordered to help the Pension Fund pay what it owed the pensioners, and the Fund was ordered to develop a plan for redressing pension arrears and improving the collection of vzwosy.42 After the elections, however, a Pension Fund official claimed that the Fund only had enough revenue to pay 21 per cent of its current pension obligations.43 As the federal government's efforts to resolve pension arrears stalled, the regions continued to take matters into their own hands. In 1997, Sverdlovsk oblast adopted a law that would fine enterprise managers for delays in paying Pension Fund vznosy for their employees.44 One source claimed that regional governments sometimes pushed for lenient treatment toward regional enterprises, in that some regions declared that those firms owing contributions to the Pension Fund would be exempt from fines for late payment.45 The Altai Republic claimed that it was drawing on its own regional budget revenues in order to alleviate its pension arrears.46 Moscow mayor Yurii Luzhkov decreed that the city budget would pay additional supplements to pensioners in the city.47 And in Belgorod the oblast organized a charity marathon to collect funds for additional social benefits to the elderly.48 The federal government recognized that it needed to improve its communications with pensioners. Thus it set up a toll-free telephone number for pensioners to call the government to report any difficulties they were experiencing in collecting their pensions.49 Prime Minister Primakov declared in November 1998 that he would require Finance Minister Mikhail Zadornov to make a monthly TV broadcast reporting on the government's progress in improving the delivery of pensions, wages, and social benefits.50 But the underlying problems remained, and the August 1998 ruble crash exacerbated the pension crisis. That crisis by now was providing moments of outright embarrassment for the Russian government. For example, the American businessman and philanthropist George Soros claimed that he was extending loans of 'several hundred million dollars' to help the Russian government meet (temporarily) its publicly announced goal of paying off pensions owed to the population by July 1997.51 The resignation, at Yeltsin's request, of Prime Minister Chernomyrdin in March 1998 after more than five years in office provided a new opportunity to resolve the pension crisis. Events made this resolution difficult, however. Between March 1998 and August 1999, Yeltsin applied his presidential powers to dismiss four prime ministers in succession:

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135

Chernomyrdin, Kiriyenko, Primakov, and Stepashin. The latter was replaced by Vladimir Putin. Meanwhile, the fallout from the August 1998 financial crisis understandably attracted the lion's share of the government's attention between 1998 and 2000. In 1998-9, the executive experimented with a variety of sometimes unusual remedies for the pension system's ills. By the end of the millennium, these remedies seemed to be producing some results. Sceptics point out that pension arrears had been alleviated in part because of an overall decline in the purchasing power of pensions. In August 1999 the average pension was 455.90 rubles - 49.4 per cent less than its real value in August 1998 and 12 per cent less than in December 1998.52 It is worth noting that Russia was at this time preparing for the Duma elections of December 1999. Yeltsin's popularity was at an all-time low, with negative reports about the Yeltsin 'family' swirling in the media in the autumn of 1999. A new centre-reformist party, Fatherland-All Russia (OVR), led by two popular figures - Moscow mayor lurii Luzhkov and a former prime minister, Evgenii Primakov - seemed a formidable rival to the fragmented 'party of power' in the Kremlin.53 What were the government's proposed remedies for the pension system's defects? The Pension Fund began selling promissory notes (veksels) to raise cash for pension arrears following a reported 40 per cent increase in the amount of money that enterprises owed the Fund in 1998.54 In 1999, Russia, the United States, and the European Union agreed on a plan for Russia to receive food aid, which would be sold on the domestic market, with the proceeds to be assigned to the Pension Fund." By June, however, poor results were being reported in this program's delivery of funds to the Pension Fund.56 In 1999, fines for non-payment of vznosy were sharply increased, providing another potential source of revenue.57 One factor that perhaps had some impact on the pension system was a change in the Pension Fund's leadership. In April 1999, Yeltsin asked the fund's head, Vasilii Barchuk, to resign. Aleksandr Kurtin (former first deputy head) was made acting head. The reason for Barchuk's dismissal was never made clear, although the Pension Fund debt had reached 31 billion rubles by the time of the August 1998 ruble crash.58 In May, Mikhail Zurabov (formerly of the health ministry) was appointed Pension Fund head.59 Zurabov made a commitment to end pension arrears by September 1999. He claimed that he would accomplish this task by taking three measures: selling foreign food aid to domestic consumers to raise additional funds; appealing to regional governors for their support in solving the pension crisis; and

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negotiating agreements with debtor enterprises, such as Gazprom, to reschedule their owed vznosy.60 Shortly after being confirmed as Russia's prime minister in August 1999, Putin ordered Zurabov to speed up the repayment of pension arrears.61 In September, Putin declared that all pension arrears had been paid.62 According to Zurabov, the Pension Fund had 'mobilized' to pay off its debt in 1999 and had succeeded in collecting 95.4 per cent of its projected revenues.63 In the 1997 Duma hearings on pension reform, a number of deputies had argued that the government's record with the pensioners had been inconsistent, and that pensioners had been 'insulted' by the many hardships they had faced since 1992. Therefore, the public had no reason to place any confidence in the executive when it came to pension reform.64 In light of this, it was indeed difficult for reform to be contemplated as long as Boris Yeltsin was president - especially with the government leadership changing hands four times between March 1998 and August 1999. lurii Liublin, the deputy minister of labour and social development, stated that pension reform plans had not been abandoned; rather, they had been put on hold in the wake of the economic crisis caused by the ruble crash.65 However, pension reform was still on the government's agenda, even if changes were hardly immanent. Russians were often sceptical about reform plans when they were perceived to be based on Western models. For example, one Duma deputy argued that the World Bank favoured particular kinds of reforms that didn't necessarily meet the desires of Russia's pensioners, such as the recognition of veterans and longtime workers. As another example, raising the pension age was problematic because of Russia's significantly reduced life expectancy since the collapse of communism.66 Similarly, another respondent I interviewed criticized the role that international organizations such as the World Bank were playing in pension reform, in that they imposed formal demands for policy change without sufficiently considering Russia's particular context and difficulties.67 In fairness to the World Bank, governments themselves often play a significant role in designing their own policies when they seek international assistance for reform; also, the World Bank is sometimes inaccurately depicted as a Western body when in fact it is an international institution reflecting a global dialogue.68 But rightly or wrongly, the Bank was sometimes perceived as imposing a particular, Western-inspired pension reform agenda on Russia, and the readiness to accept 'Western' social welfare reform was becoming something of a political liability in the country. In 1999, as

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reform faltered, Russia was still suffering from the economic shock of August 1998. Regardless of pessimistic assessments, it was clear that organizations such as the World Bank, the International Labour Organization, and the European Union's TACIS program were still offering constructive advice and assistance on pension reform.69 But as a Pension Fund official argued, reform plans based on other countries' models would not necessarily suit Russia. Successful pension reform was going to require thorough consideration of postcommunist Russia's own historical experiences and unique circumstances.70 In 2000 and 2001, the government of Mikhail Kasyanov placed a great deal of emphasis on the Russian origins of its renewed pension reform effort. Pensions became a significant issue in the 1999 and 2000 election campaigns, as they had been in the 1995 and 1996 elections. The Communist Party promised in its election platform to restore the social benefit levels of the Soviet regime, and it criticized Yeltsin's 'democrats' for regarding social welfare as a 'black hole that requires a great and unrecoverable waste of state resources.'71 A new party, the Pensioners' Party, established itself with the goal of defending pensioners' rights in the Duma. That party openly admitted that it was aiming to draw pensioners' votes away from the Communist Party.72 Yet, there were doubts about whether the Pensioners' Party was a genuine opposition party, since it was reported to have praised Prime Minister Vladimir Putin as a worthy presidential contender.73 Furthermore, its program was heavy on populist rhetoric decrying the plight of pensioners, yet it endorsed a radical privatization-oriented pension reform involving a funded (nakopiteVnaid) pension system™ - the same kind of system that the government had considered in 1997 and 1998. In any event, the Pensioners' Party did not win any seats in the Duma. Pension increases were steadily introduced during Putin's tenure as prime minister (August to December 1999), acting president (January-March 2000), and president (from March 2000 on). In the 1999 parliamentary elections the Communist Party continued to draw strong support from rural and pension-age voters.75 However, according to a study by TimothyJ. Colton and Michael McFaul (2000), the pro-Putin party Unity attracted significantly more voters over fifty than had the progovernment party Our Home Is Russia in the 1995 election. McFaul and Colton assign Putin's personal popularity considerable credit for the electoral successes of Unity.76 According to a public opinion survey completed by the respected Russian polling organization VTsIOM, 47 per cent of people over fifty-five voted for

138 Shocking Mother Russia

Putin, compared to 40 per cent for the Communist Party candidate Gennadii Ziuganov; 46 per cent of pensioners voted for Putin compared to 42 per cent for Ziuganov.77 At the very end of 1999, after Yeltsin left the presidency, Putin and the new government began almost immediately to take steps to ensure that pensions forthwith would be paid regularly, and a series of pension increases were granted. This process actually began while Putin was still prime minister. Under the leadership of the Pension Fund's new chair, Mikhail Zurabov, significant progress in alleviating pension arrears was reported as early as September 1999.78 The Fund claimed that the practice of negotiating agreements with debtor enterprises was finally achieving results.79 In mid-November 1999, just before the parliamentary elections of the following month, the Russian government announced a 15 per cent pension increase.80 Prior to the presidential election campaign of March 2000, Putin as newly appointed acting president decreed a 20 per cent pension increase effective 1 February.81 What was interesting was the language the executive was using to discuss its commitment to improving the pension situation. One word often used was 'doverie (trust), in reference to the importance of regaining pensioners' trust. This reflected the government's understanding that it needed to earn the confidence of the citizenry as a whole if it was to succeed in accomplishing its goals. It is easy to be sceptical of a government that issues substantial pension increases before an election campaign. It is also appropriate to wonder why the apparently chronic problem of pension arrears seems to have been solved so quickly in 2000. Scepticism aside, pensions continued to increase steadily after the elections, and government officials even began criticizing publicly the past administration's handling of the old-age pension issue. For example, Deputy Prime Minister Valentina Matvienko, citing the government's improved track record in delivering pension increases and resolving pension arrears, told the Duma that 'the mentality of the government has changed, it came to understand that the population's patience had reached its limits, and it would be impossible to pursue reform further without the support of the people.'82 Putin himself began to talk about pensions in populist terms, emphasizing the right of individual pensioners to receive their due. Even as a new prime minister in September 1999, he was quoted as saying that the government 'had not fulfilled its moral duty to the pensioners.'83 In his 2001 speech to the Federal Assembly, Putin claimed that 60 per cent of the population supported 'cardinal reforms' in the pension system:

The Evolution of Pension Reform, 1995-2001

1391311

'Today, nobody among the workers knows exactly what kind of pension he will receive. Nobody! ... We need an approach to a comprehensible system of accumulating funds for the elderly. People must be sure that every ruble that they have earned is directly related to the size of their pensions.'84 The language, if not the substance, of Putin's intentions for pension reform differed dramatically from the sober vision of a 'realistic' social policy that he offered in his first presidential address to the Russian parliament, during which he declared: 'At present the policy of overall state paternalism is not possible economically, and not expedient politically. The necessity to drop it is dictated both by the need to most efficiently use financial resources and by the intention to include development stimuli, to free an individual's potential, to make people responsible for themselves and for the well-being of their nearest and dearest.'85 It seemed that the government had taken to heart the Duma's past warnings that if pension reform was to proceed, public confidence in the government would have to be restored. 2001 Pension Reform: New Political Features In the spring of 2000, the change in the country's executive leadership provided a new opportunity for the government to pursue a more comprehensive pension reform. As president, Putin at first seemed to be continuing Yeltsin's economic policies, while focusing on a more ominous national security agenda. In 2000-1, Putin's hard line on the war in Chechnia and the weakening of opposition groups and independent media brought forth criticism from many Russian democrats and Western analysts.80 However, notwithstanding the weakening of political pluralism, the new government led by Mikhail Kasyanov began pursuing a strong agenda of reforms in governance, privatization, and social policy.87 An important factor in the government's favour was that the political party Unity, which had been supportive of the government in 1999 parliamentary elections, gained a powerful position in the new Duma.88 There was also a new imperative for the government to revisit the pension issue, since it had signed an agreement with the World Bank in August 1999 on a new US$100 million loan for pension reform.89 In its documentation, the Bank stressed that the outlines of pension reform had been provided by the Russian government itself.90 The Bank seemed to be playing a low-key advisory role; eventually, it claimed that it had 'dropped' this project.91 After the elections, the trend toward modest improvements in the

140 Shocking Mother Russia

pension system's functioning apparently continued, even though the underlying systemic problems of the pension system still existed. In 2000, Prime Minister Kasyanov declared that pensions were now being paid regularly.92 A law passed in early 2000 provided more rigorous and detailed regulations for the payment of vznosy by enterprises, to the Pension Fund, with new fines for violations.93 One early social welfare reform, which emphasized the revenue side, was introduced by the new government in the spring of 2000. It proposed a draft law to consolidate all social welfare contributions paid by citizens into a single 'social tax,' which would be collected by the tax ministry. The funds collected would then be redistributed among the various extrabudgetary funds (one of which was the Pension Fund) ,94 This presumably would enable a more centralized and aggressive procedure for collecting pension fund contributions.95 The point of the single social tax was not simply to consolidate revenue collection in the extrabudgetary funds, but to lower the rates of vznosy so that enterprises would be more likely to pay them, and to give workers more responsibility for paying social taxes.96 Critics of the social tax law, including the Federation of Independent Trade Unions of Russia (FNPR), expressed concerns that the social tax would weaken the social insurance system by treating contributions as if they were taxes to go into the general budget.97 It was feared that as a result the unified social tax would make the pension revenue system more opaque.98 However, the law was part of the overall Tax Code reform which was adopted in the summer of 2000.99 The Duma adopted the social tax law in June.100 This proves again that the Duma has generally cooperated with government pension reform draft laws. A presidential ukaz of September 2000 to improve pension administration called for increased staffing in the Pension Fund; it also encouraged regional governments to transfer their regions' responsibilities for paying pensions over to centralized Pension Fund institutions.101 In 2001 the Constitutional Court heard a complaint from some Duma deputies that Putin's decree proposing a unified pension service was unconstitutional. The Court came down in favour of the president, ruling that this ukaz was consistent with his constitutional powers, and also that the principle of a unified pension service did exist in recent Russian legislation. But what was most telling in the Court's ruling was the strongly critical tone it adopted toward existing pension legislation, in noting that the Pension Fund played no formal role in the payment of pensions. The Court found it troubling that the regional governments were playing a role in administering a nationwide program that was meant to

The Evolution of Pension Reform, 1995-2001 141

apply to all Russians, while still claiming autonomous powers of government within their jurisdictions. According to the Court, this situation threatened every individual's constitutional rights to equality before the law.102 Thus, almost ten years after the 1990 Russian pension reform was implemented, the nation's highest court noted the negative consequences of its legal contradictions. One sign that more radical change was in the air was the Russian government's invitation to Chile's former social security minister Jose Pinera, to visit Russia in the spring of 2000. In an article in Foreign Affairs, Pinera insisted that Russia's pension system was unsustainable, and he argued that the country would be better off if it developed a system for investing pension revenues in the private sector. 'Privatizing' the pension system, he argued, could produce the same kinds of successes that had been enjoyed in Chile under his stewardship.103 Indeed, Chile's radical pension reform of the 1980s had attracted the attention of the World Bank, 104 and the role of the pension reform in the Chilean economic recovery was regarded by advocates of privatization as a model for pension systems of the future. Chile's reform streamlined its statecontrolled pension system so that the budget would provide direct payments only to the needy. Workers would continue to pay compulsory social insurance contributions, but were also encouraged to invest these contributions in private pension fund associations regulated by the state. Favourable assessments of these reforms emphasized the relatively favourable economic results of the reform. 10;> Critics of the Chilean reforms argued that existing economic elites were prominent in the private pension fund associations and therefore had been among the chief beneficiaries of reform. 106 Assessments of the reform over the longer term have been mixed, and the reforms have met with considerable opposition.107 But as an example of sustained pension reform within an overall market-oriented economic restructuring plan, Chile could not help but be a subject of interest for postcommunist states contemplating their own pension reform plans. Certainly, countries in transition faced circumstances quite different from Chile's. The World Bank's 1994 report on pension reform emphasized that Chile benefited from relatively favourable budget conditions at the outset of reform, which made an investment-oriented system potentially promising.108 Even the optimistic Pinera emphasized that the fragility of Russia's financial system was, to say the least, a drawback to a market-oriented pension reform. 109 Although Chile's reform was generally considered a rather radical model, a number of postcommunist countries, including

142 Shocking Mother Russia

Hungary, Latvia, and Poland, began pension reforms in the mid-1990s that included three 'pillars,' with at least a partial diversion of social insurance revenues to state-managed investments.110 In this regard, Russia was somewhat of a laggard among countries of the former Soviet bloc in introducing pension reform. Russia's reform effort finally picked up steam in the spring of 2000. Under the auspices of the Centre for Strategic Projects, headed by economist Germann Gref, plans were hatched for a comprehensive, market-oriented social reform program that would encourage moves toward an investment-oriented pension system.111 Moreover, the new involvement in the program of the economic development and trade ministry, led by Gref, indicated that pension reform would enjoy solid backing in the government and that this time greater attention would be paid to building a political consensus. The return of radical pension reformer Mikhail Dmitriev to government as Gref's first deputy minister signalled that an ambitious pension reform plan was returning to the national agenda. When pension reform was announced as a goal in 2001, it was a bold declaration that the government intended to introduce a nakopitel'naia pension system by January 2002. At the same time, Putin raised the minimum pension by 50 per cent through a presidential decree.112 This was a new approach: to improve existing pension benefits while planning a structural reform, one that would associate pension reform with a stated commitment to improving the lot of pensioners. Putin's approach differed dramatically from that of Yeltsin. Whether out of neglect or out of realism, Yeltsin's governments had rarely coupled pension reform with pension increases. Putin's strong endorsement of the pension reform contrasts with his predecessor's relative silence. Yeltsin showed bursts of indignation about the pension crisis, but his responses to it were limited mainly to sporadic presidential decrees. The details of the government's pension reform plan gradually crystallized. It was clear that the government would be proceeding further with the development of a system based on social insurance, the groundwork for which had already been laid through the law on individual pension registration and FZ-113. The social insurance principle would ensure that people's pensions would be based on their total lifetime compulsory contributions, or taxes, paid into the pension system. This would constitute a departure from the longstanding Soviet practice of basing pensions on time in the workforce, occupation, and salary prior to retirement. The second component of the reform would be to intro-

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143

duce the investment, or accumulative, principle into the pension system. This in turn would involve two subcomponents. First, there would be a mechanism for investing part of pension revenues collected from citizens' contributions in the private sector economy, presumably through close government regulation of non-state pension investment funds. Second, the reform plan would provide more incentives for individuals and firms to provide for their own needs through voluntary, supplemental investments in non-state pension funds. The reform also emphasized the word 'transparency'; this was understood to mean that the pension formula should be simple enough that each person could calculate his or her own pension. 113 Finally, plans for the pension reform would eventually come to include tentative re-examinations of some of the Soviet system's most cherished principles, such as relatively low retirement ages for all and early retirements for women in particular. The first new feature of the pension reform process was the creation of a National Council on Pension Reform, which Putin appointed in February 2001. The council would incorporate a broad range of views on changes to the pension system. The council included members of the national government, such as Prime Minister Mikhail Kasyanov, Deputy Prime Minister Valentina Matvienko, and Germann Gref; the head of the Pension Fund, Mikhail Zurabov; prominent members of political parties, such as Yabloko's Grigorii Yavlinskii, Boris Nemtsov of the Union of Rightist Forces (SPS), and the Fatherland-All Russia party's F.I. Gainullina; members of social organizations such as the All-Russian Society of Invalids, the Russian Committee of Veterans, the Union of Pensioners of Russia, and the Federation of Independent Trade Unions of Russia; the speakers of the two houses of the Russian parliament; and a number of leaders of regions and republics, including Moscow mayor lurii Luzhkov.114 This council was unique in that it symbolically demonstrated that pension reform would be generated as the result of a domestic, Russian national debate. Institutions such as the International Monetary Fund (IMF) and World Bank were pointedly absent from the media coverage of pension reform in 2001. It could be said that the council included the views of a spectrum of stakeholders in pension reform, including government, employers, and non-governmental organizations. However, as a body hand-picked by the executive, it remained an elite advisory body whose main purpose was to channel and aggregate debate. Far from being an open, representative structure, the council was essentially a corporatist institution built from above. At its first meeting in March, the council was criticized for con-

144 Shocking Mother Russia

ducting closed hearings outside the presence of the media. Indeed, the head of the council admitted that the council had decided not to release pension reform proposals until it had worked out a common position.115 At the end of the council's first session, the media noted that although the main principles of pension reform had been discussed, there were many outstanding details to be worked out. Among them, the reform needed to consider how to minimize the risks of investment so that pensioners' incomes could not be wiped out altogether by the whims of the market, and how to impose government regulations on the investment funds so that they would operate responsibly and consistently. The debate over whether to keep providing pension privileges to people in certain occupations again resurfaced.116 Questions like these pointed to continued uncertainty about the most fundamental features of the proposal for reform. The idea of a funded (nakopiteVnaid), insurance-based system proved to be controversial in 2001, as it had been in 1998. At a round table debate sponsored by the Federation of Independent Trade Unions, Mikhail Dmitriev and Pension Fund head Mikhail Zurabov offered two rationales for moving to the new system. First, new sources of revenue were needed to help finance the pension system, given the growth of Russia's pension-age population. Investments, both within die state pension system and in the voluntary private pension funds, would theoretically supplement existing funds. Dmitriev waxed optimistic, contending that the retirees of 2010 would benefit from such a system.117 Zurabov claimed that the system would provide another benefit: since the pension system would reward people on the basis of their lifetime social insurance contributions, it would create incentives for people in Russia to work harder and for well-off citizens to pay their social insurance contributions. Therefore, pension reform could encourage economic growth while discouraging tax evasion.118 It should be noted here that in their public remarks, government advocates of pension reform tended to make few distinctions between the expansion of the social insurance principle and the introduction of a partially funded, investment-based pension system, even though these two features represented separate reforms that were far from synonymous. It goes without saying that optimism regarding the proposed new system was predicated on the notion that in a matter of a few years, investment would lead to predictable growth of returns. It was precisely this prediction that critics of the funded system challenged. They debated whether Russia's economy and governance structures could confi-

The Evolution of Pension Reform, 1995-2001 145

dently promise a predictable funded system. A typical reaction was that of deputy head of the Duma's labour and social policy committee, V.B. Savost'ianova, who claimed that investment in the Russian economy was too risky and that the population had little faith in the financial system.119 Other critics raised concerns that if funds were channelled into investments for future retirees, fewer funds would be available for current pensioners. Furthermore, a funded system would involve the smooth coordination and regulation of the non-state pension funds, the banking system, and the government.120 All three of these spheres had been unstable from the start. M.V. Shmakov of the Federation of Independent Trade Unions noted that the monitoring of pension fund reserves would be a key question because of Russia's 'well-known negative experience' with savings and investments in recent years.121 The details of the pension reform proposals were clarified by the late spring of 2001, when the National Council formally adopted its program, including outlines for draft legislation, after consultation with the Trilateral Commission on Labour Relations (an advisory body that included representatives from government, industry, and organized labour). The council proposed a package of pension reform laws to be introduced to the State Duma for approval.122 Nine draft laws were presented, which the government hoped would be in place by January 2002 so that a reserve investment fund for the Pension Fund could be launched by this date.123 The first laws came before the Duma in the early summer of 2001. The government intended to follow up with several other laws that needed to be worked out in more detail: laws on the investment of pension revenues, on the regulation of the use of revenues, and on compulsory pensions for professionals.124 How did the Duma respond to the proposed pension reform? The government certainly hoped that the Duma would cooperate with the reform process by holding off on pension legislation until the draft reform was prepared. However, until the legislation was formally presented to the lower house, the Duma remained preoccupied with existing unfinished business in the pension system. Throughout the winter and spring of 2001 the Duma pursued its own goals for improving the pension system. On the agenda was a draft law to amend offensive features of the pension indexation law FZ-113, in order to return the socalled 'uninsured periods' (such as maternity leave) so that they would count toward time in the workforce in pension calculations, and to improve the eligibility for benefits of working pensioners. In the Duma, FZ-113 was denounced variously as 'amoral,' 'anti-social,' and 'discrimi-

146 Shocking Mother Russia TABLE 8.1 Pension reform plan, Spring 2001 Proposed reform

Features

Relevant law

Create 3-tier pension system

1st tier: basic minimum pension 2nd tier: social insurance 3rd tier: supplementary plans

'Law on labour pensions in the Russian Federation' (deals with first two tiers)

Indexation

Consumer price index, subsistence minimum (first tier); inflation, average wage (second)

'Law on labour pensions in the Russian Federation'

Revenue collection and management

Institutions/regulations for pension revenue; definition of pension system as a central federal responsibility

'Law on compulsory pension insurance in the Russian Federation'

Investment

Management, auditing of pension fund investments in private sector

'Law on compulsory pension insurance in the Russian Federation'

Working pensioners

To receive insurance-based portion of pension only when exit workforce

'Law on compulsory pension insurance in the Russian Federation'

Separate noninsurance-based pensions from Pension Fund

'Social,' military, and civil servant pensions paid from state budget

'Law on state pension protection in the Russian Federation'

Pension age

For 'social pensions' only, pension age raised to 65 for men, 60 for women

'Law on state pension protection in the Russian Federation'

Sources: S.A. Afanas'ev, 'Formiruetsiia pravovaia baza pensionnoi reformy,' Pensiia, no. 5 (May 2001): 39-43; Mikhail Zurabov, remarks to State Duma, Stenogramma zasedaniia, b. 112, part 2,13 July 2001, 2-7, 37-8.

natory toward women.'125 The government tried to discourage the Duma from passing the amendments pending the introduction of a more comprehensive pension reform.126 On its passage, the amendments law was vetoed, as was a law on pensions for kindergarten teachers passed by the Duma in July.127 The Duma also passed a law to increase pensions for residents of the Far North - a law that was again vetoed by Putin.128 The Duma also passed a law to allow higher pensions for disabled veterans, who previously had been subjected to a pension maximum.129 The Duma's busy if ultimately fruitless legislative activity was a sign that the government's pension reform plans would not prevent the legislature

The Evolution of Pension Reform, 1995-2001 147

from passing laws likely to be at odds with the upcoming reform. Insofar as the government's reform plans would include repeals of existing legislation, it would be a daunting task to secure the Duma's full cooperation. Notwithstanding the Duma's active pursuit of its own agendas, it was in no mood to block pension reform, and the Duma hastily adopted at first reading the government's three pension reform laws before beginning summer recess in July 2001. It is worth noting that even at this point, the pension reform program was not receiving unanimous support, even within the government. Variants were being proposed by the Ministry of Economic Development and Trade and by the Pension Fund, which differed slightly - for example, in the extent to which each was willing to' reduce pension benefits for working pensioners.130 An even more radical variant was proposed by SPS member Boris Nemtsov, who was a member of the National Council on Pension Reform. 131 As presented by Zurabov, pension reform was necessary in order to improve the unsatisfactory existing revenue base of the system, which was unsatisfactory. The reforms included some features palatable to the Duma: 'uninsured periods' in the workforce, such as maternity leave, would be considered as years in the workforce in determining pension eligibility; and pensions would be indexed annually in advance of anticipated increases in the cost of living. The 'basic pension,' which all workers would be entitled to receive on retirement, would exceed the existing minimum pension by more than 100 per cent. The government wanted the principal legislation approved by the end of 2001, to allow immediate progress toward creating a reserve investment fund. However, the full impact of the reform would be realized gradually over ten or fifteen years. By 2004, people would be given the option to either stay in the state pension system or move their accumulated pension to the third tier.132 Questions and concerns in the Duma followed predictable lines. Criticism was expressed about the potential negative impact of changes for working pensioners, invalids, northern workers, and veterans, as well as the fate of special pensions for professionals and people in dangerous occupations (which the government proposed to deal with later in a separate piece of legislation). As was to be expected, concerns were also expressed about the difficulty in regulating and managing investment funds. 133 Yet the laws passed first reading with little difficulty. As was pointed out by E.L. Ermakova of the labour and social policy committee, the laws being presented were quite rudimentary and departed little from well-established principles of social insurance reform.134

148 Shocking Mother Russia

The Duma needed little convincing that pension reform was necessary, and the most controversial aspects of the reform, although they were discussed, remained to be worked out for future approval. Yet, well into July the Duma continued to chisel away with piecemeal amendments to previous pension legislation, even as the new pension reform was being prepared for adoption.135 A group of Duma deputies actually presented a written appeal requesting Putin to withdraw the government's proposed pension reform legislation, charging that it would be detrimental to the interests of pensioners.136 Ultimately, the three principal draft laws of the pension reform process sailed through the Duma in the late fall of 2001. In fact, the final versions of the laws were brought before the Duma sooner than anticipated. This provoked a protest from the Communist Party that the parliament had had insufficient time to consider them.137 Some significant compromises were reached in the final outcome of reform, the product of a working group including members of the government and the Duma. In effect, the Duma passed the reform in exchange for the resolution of some longstanding demands. As El'vira Leonidovna Ermakova, deputy head of the Duma's labour and social policy committee, and Pension Fund head Mikhail Zurabov discussed in their presentations to the Duma, the compromises included an affirmation of the working pensioner's right to collect a full pension; the eligibility of invalid veterans to collect both a disability pension and a labour pension; the right of teachers and health care workers to collect pensions calculated according to their years of service rather than their age; and the inclusion of 'uninsured periods' such as maternity leave to count as time in the workforce for the purpose of calculating pensions. The compromises also included measures to 'grandfather' in the new pension system over a ten-year period, so that those preparing to go on pension within the next decade wouldn't be penalized for having insufficient time to benefit from a system that would rely on long-term investments.138 Compromise was also reached on the thorny issue of pension age. It was raised to sixty-five years for men and sixty for women in 'social pensions' (welfare pensions for people who had spent insufficient time in the workforce to qualify for labour pensions). However, for regular old-age pensions ('labour pensions,' granted to retiring workers who had paid social insurance contributions throughout their working lives), the pension age remained sixty for men and fifty-five for women.139 The executive also made some significant concessions in expanding the federal government's responsibility for the pension system. Pension

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Fund head Zurabov asked the Duma for legislation to enable the federal budget to provide supplementary revenues for the pension system.140 This was significant, insofar as the new pension system would commit the federal budget, not just the Pension Fund, to a share of pension expenditures - something that the Russian parliament had been demanding for years. Another key sticking point in reform was the risk involved in having pension revenues invested for an expected return. If investments failed, would pensioners suffer? In the final legislation, the government eased fears about the risks of failed investments by committing itself to ensuring the continuity of the pension system in the event that insufficient funds were available. Putin's role was decisive; he was quoted as saying that the state should assume 'full responsibility' for the security of funds invested in the pension system.141 There were additional contentious issues. How were pension revenues to be managed? And how were the private companies that would invest pension funds to be regulated so as to avoid unnecessary losses? The draft law on investment in the pension system and its regulation was still open for discussion as of the end of 2001, even though in the words of Mikhail Dmitriev, the first deputy minister for economic development and trade, its absence left a 'legal vacuum' in the pension reform.142 Dmitriev noted in September 2001 that it was 'irrational' for the legislation on the workings of the investment system to lag behind other draft reform laws; but nonetheless, there was not yet a consensus as to how to proceed with this difficult aspect of reform.143 It was difficult to reach a decision on the proportion of Pension Fund money that should be invested, and on how to choose investment funds that would be sound and trustworthy performers.144 As a member of the National Council on Pension Reform phrased it: 'Naturally, there are many who would like to get their hands on that money.'140 On 30 November, the three main pension laws that ushered in the pension reform easily passed their final reading in the Duma.146 They were signed into law on 17 December, to take effect in law on 1 January 2002. The first law, 'On Labour Pensions in the Russian Federation,' covered pensions for workers on retirement. It established the basic framework of the new pension system. Old-age pensions would consist of a minimum ('base') pension paid to all retirees. The second, social insurance component would be based on the worker's lifetime accumulated social insurance contributions and would reflect the growth in that part of contributions that would be invested. The law established social insurance as the primary basis of every Russian's entitlement to a pen-

150 Shocking Mother Russia

sion. Pensions would be based on a single formula that would consider the anticipated amount of time a person would be on pension. Pensions would be indexed quarterly; significantly, however, the law gave the government the power to set indexation levels.147 The second law affirmed the state's responsibility for paying pensions from the federal budget to civil servants, army personnel, police, Second World War veterans, nuclear accident victims, and people who were unable to participate in the workforce. These pensions existed outside the social insurance system and were simply paid by the government from the federal budget.148 The third law affirmed that the new pension law would be a three-tier pension system, consisting of a base part, a social insurance part, and an investment component, with the latter two portions based on each worker's compulsory individual lifetime contributions to the system. The law affirmed the Pension Fund as the institutional actor responsible for the second and third tiers, and empowered that fund to set aside a reserve for investment. The Fund was legally required to pay pensions on time, to manage its accounts properly, and to inform individuals clearly and regularly of the status of their individual accounts. The Fund was to be within the competence of the federal government alone and was to be audited by the Audit Chamber. The law required the federal budget to supplement Pension Fund revenues in the event that the latter had insufficient funds to meet its legal obligations.149 The content of reform was similar to the proposals introduced in 1998, but the executive's process for presenting it to the public and to the legislature was quite different. The role of the Ministry of Economic Development and Foreign Trade in the pension reform signalled that the new reform was intended to serve the interests of the economy first and foremost. The fact that the government went beyond declaring its intentions, and actually prepared legislation for pension reform, demonstrated a firmer commitment than had been evident in either 1995 and 1998. Furthermore, in rationalizing the reform, the government took pains to emphasize the imperative of demographic pressures, rather than fiscal pressures.150 Both sets of pressures contend with the same issue: the lack of sufficient revenues to support current pension expenditures. The demographic argument seemed relatively politically neutral, since an aging population was a trend common to most industralized societies by the end of the twentieth century. This argument made a more persuasive case for the inevitability of pension reform; a focus on fiscal imperatives would have been perceived as a sign that government .

The Evolution of Pension Reform, 1995-2001 151

did not include social welfare among its top spending priorities. The implementation of the pension reform continued throughout 2002 and 2003 and closely followed its established timetable. The law on regulating the non-state companies that would be participating in the investment of a portion of pension revenues was passed in 2002, and the legislation listed a broad range of mechanisms for overseeing the investment processes. These included annual reviews by the federal Audit Chamber, the setting of ethical guidelines for investment companies, and the creation of an appointed Societal Council that would involve trade unions, employers, and other social organizations in overseeing the new system.151 By September 2003 the finance ministry had selected fifty-five companies as meeting the criteria for participating in the new system.152 By the late summer of 2003 the government was preparing to mail to citizens information and application forms so that they would be able to direct the designated portion of their pension contributions to the registered company of their choice for investment.153 When the government announced that eventually individuals would begin receiving directly annual statements in the mail about their pension contributions, and that pensioners themselves would possess all of their own relevant pension documents,154 this was a step forward in empowering individual pensioners to receive a full accounting of their status within the system. A contrast - one that reminds us of the shortcomings of the old system - can be seen in the case of a recent media report of a group of women who had been denied more than the minimum pension because their salary documents had been destroyed in a fire in a factory in one of Russia's regions. The women, who went on a hunger strike, received some redress in 2002 when some documentation relevant to their case was found in a bank archive.155 Yet the pension reform continued to be controversial. In February 2003, some pensioners became upset when their base pension was increased but their insurance pension was not. In the Duma, Mikhail Zurabov pointed out that the outcry showed that people insufficiently understood the fact that their pensions now consisted of two parts, each of which was separately indexed.156 It seems clear that citizens' expectations had been raised by the relatively generous increases of late 1999 to 2002. The episode also demonstrated that the public - especially those already on pension - could stand to be better informed about the reform. Meanwhile, the uncertainties inherent in the investment component of the pension reform continued to be a concern, although the deputy finance minister said that the government would choose only

152 Shocking Mother Russia

those companies which were sound and prudent enough to produce reliable returns.157 For his part, Putin continued to change the lexicon of the state-society relationship. For example, he had this to say in reference to the pension reform: 'Consumers of a service must know where their money is going. This mechanism must be absolutely transparent.'158 The use of the word 'consumers' is telling. It rightly points out that citizens can make choices in a system in which private markets play a role. However, that word also downplays the state's role and responsibility in the pension system by emphasizing the interaction between the individual and the private sector. Concluding Analysis

The passage of a unified pension reform represented a decisive change from the tinkering and political struggles that had characterized changes in the pension system in the previous decade. Pension reform had become a top government priority, and considerable effort was directed toward achieving a consensus on the matter. The government's populist 'spin' on the reform was a key factor in its speedy and successful passage. Government remarks and media commentary on the legislation emphasized its advantages for the pensioners rather than its goal of introducing fiscal economies to the system. For example, one high official stated: 'The main goal of reform is to raise pensions and guarantee their steady increase in the coming decades, including of course those who will go on pension in the future.'159 Pension Fund head Mikhail Zurabov claimed that if the legislation was passed, many pensioners would benefit in cash terms immediately.160 In the leadup to the reform, the government continued to increase the size of pensions - for example, raising all pensions by 10 per cent in the last quarter of 2001.161 Continuing this approach, the government promised to increase pensions again if the pension reform package was approved in parliament.162 Also, reform was being presented as allowing greater 'transparency' (prozrachnost') and simplicity, by making the pension system ostensibly more accessible to individual citizens.163 This argument, attractive as it may be, confuses simplicity with transparency. Creating a system that is more uniform for each pensioner does not in itself involve higher standards of accountability. Media coverage tended to emphasize the accessibility of the new pension system and to downplay the potential risks for each citizen participant. As was the case with Russia's pension reform experiences since 1990, the institutional accountability mecha-

The Evolution of Pension Reform, 1995-2001 153

nisms were the least developed part of the reform, even though critics considered them essential for maintaining the system's viability. There seemed to be relatively little effort to stimulate sophisticated public debate. Pension reform was treated as mainly a matter for elites to discuss. Even though the reform's content was executive-driven, its final result acknowledged some of the Duma's concerns and put to rest the divisions over indexation that were seen most visibly in the uproar over FZ-113. The reform was also an improvement over past practice in pension legislation insofar as it was accomplished through formal consultation. Nonetheless, by the time the reform was passed, the government had gained significantly more control over the pension system; this weakened the ability of both the Duma and the regions to affect the policy's implementation. As of 2003, the reform's full effects have yet to be realized. Like the previous major reform of 1990, this reform was quickly put in place with only a rudimentary administrative framework. While low inflation promised in the short term to prevent a repeat of the crisis of the mid to late 1990s, there was no guarantee that the new system would work better than the previous one.

Chapter 9 Conclusion

Russia shares with many other countries the challenge of a rising pensioner population relative to the size of the working population whose taxes support pension expenditures. Pension reform is a difficult problem for any society, in terms of both its political fallout and the challenges of policy design. As Paul Pierson has pointed out, pension reform is a formidable task to accomplish even in democratic countries because it inspires intense opposition from those who might be directly affected by cutbacks in benefits.1 In 1994 the World Bank published a study with comprehensive proposals for softening the financial difficulties confronting many state-funded pension systems worldwide.2 Seven years later the World Bank published an edited volume that contained experts' sobering findings about pension reform. Their work showed considerable reflection about the desirability of market-oriented pension reforms.3 The contributors also confirmed the argument that successful pension reforms require internal support from society and must be constructed with attention to a country's domestic social context.4 So it is important to point out that Russia's pension crisis is not totally unique (although it may be more acute than what most countries have experienced). The policy solutions that Russia has found, in general terms, are similar to those adopted recently by other countries. Although there is great variation, most countries' pension reforms have used one or more of three basic options. The first alternative, where social insurance systems exist, is to supplement existing sources of revenues. For example, a simple way to increase revenue available for pensions is to increase the compulsory social insurance contributions that support the system. This solution has the advantage of bringing in additional revenue relatively quickly. For example, in 1997, Liberal prime minister

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Jean Chretien's majority government raised Canada Pension Plan contributions gradually over a five-year period.5 Some countries have taken creative measures to expand their revenue bases. In 1999, Germany launched an 'ecological tax' that increased the levies on fuel and electricity consumption. The resources collected were used to supplement social insurance contributions for pensions.6 But social insurance contributions are essentially taxes, and direct increases in individual taxes can be accompanied by a strong political backlash from taxpayers.7 In Russia, increases in social insurance contributions were rejected consistently by the Duma. Also, Russia's tax system was reformed in 2000 to introduce a lowered flat tax rate, intended to encourage more people to pay their taxes.8 So increasing social taxes really wasn't an option that Russia considered. A second reform option is to alter the range of pension benefits available from the state, perhaps by limiting the availability of entitlements to certain groups or by capping the size of pensions. For example, Brazil's government in 2003 pushed a major reform aimed at reducing the considerable pension benefits available to civil servants.9 And in Latvia a reform of 1999 introduced a plan to raise the pension age gradually over several years.10 Canada, under two different governments in the 1980s and 1990s, introduced cost-cutting reforms to its pension system. These measures slowly phased out the automatic right of highincome pensioners to collect full Old Age Security benefits (the portion of the Canadian pension system to which all seniors were entitled, as distinct from their social insurance based Canada Pension Plan benefits). 11 Such reforms can be appealing to government leaders because they can significantly reduce costs relatively quickly while leaving intact the state's overall commitment to the welfare state. But cutbacks in social benefits can generate a great deal of political opposition from key groups. In two of the cases mentioned, opposition to pension reform was considerable and there were angry demonstrations. In Brazil, hundreds of thousands of government workers went on strike in July 2003.12 In Latvia the government was compelled to hold a referendum on the pension reforms. The reform passed, but perhaps this was only because voter turnout was too low to defeat it.13 In Russia the idea of cutting particular pension benefits was never ruled out, but there was a general reluctance to introduce reforms that would disproportionately affect particular groups. The Duma's propensity to advance pension benefits for veterans showed that when it came to protecting special interest groups in the social welfare system, the legislature had the upper hand.

156 Shocking Mother Russia

The third reform option is to introduce a funded pension system in which a portion of social insurance revenue is invested in order to generate income to support future costs. The introduction of a funded system was one of the key components of the 'three-pillar' pension reform model that featured prominently in World Bank thinking in the 1990s.14 As chapter 8 noted, the Chilean experiment with pension reform attracted a great deal of international attention. A broad range of countries, including Sweden, Poland, Argentina, and Kazakhstan, introduced funded systems to varying degrees. Where they have been introduced, funded systems have generally been grandfathered in gradually or else cushioned with a basic guaranteed pension benefit. To be successful, a funded system requires sound investments and healthy economies.15 Because funded systems thus affect future retirees rather than current pensioners, such reforms don't necessarily provoke intense political opposition. As Joan Nelson argues, in Poland and Hungary, pension reforms were phased in gradually so that people already on pension were relatively unaffected and thus less likely to oppose reform.16 But funded pension systems have had mixed results in delivering their objectives. One study showed that in Chile - the country widely held up as the classic case of the successful introduction of a funded pension system the state's pension costs have actually substantially increased since the reform was introduced.17 Indeed, some countries have rejected the idea of funded pension systems, as their governments were not convinced that such reforms would be worth the considerable start-up costs and the political backlash.18 The risks associated with funded pension systems were clearly understood among elites in financially volatile Russia. Yet ironically, the funded system model has turned out to be politically palatable for Russia because like Marxism, it is predicated on the promise of future prosperity. Like Marxism, the funded system may ultimately prove disappointing, but by then it may be difficult to reverse the reform. Basic Findings of the Study

The pension crisis in Russia was not simply the result of economic crisis or a case of politicians' neglect of social welfare. Rather, it was the result of a combination of many different factors. First, the political polarization between the Russian executive and the parliament contributed to paralysis in pension reform. This is all the more striking when we consider that these political actors agreed that the pension crisis was a

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serious problem. There was basic agreement on the fundamental principle that the government should provide an adequate social safety net for elderly people. Conceivably, political parties could have played a role in bridging the gaps between Duma and government, but Russia's political parties were too weak and too poorly disciplined to do so. Second, the pension crisis was the product of a complex set of institutional failures - of difficulties in creating effective institutions, in harmonizing the goals and functions of various governmental branches, and in resolving the contradictions of the federal system of governance that were inherited from the Soviet Union. Third, although there had been a strong government push for pension reform since 1994, there was a shortage of commitment to pursuing and implementing reform - a shortage that began at the very top of the Russian government hierarchy. Russia's most recent reform effort may succeed where previous reforms have not. First, as two experts recently concluded in a comparative analysis of recent pension reforms in various countries, reform proceeds when there is no other alternative, when the existing pension system reaches a crucial threshold that is difficult to support financially.19 Russia, arguably, reached this critical point in 2000, at which point top elites recognized that the status quo was no longer sustainable. Furthermore, Putin and his government showed a greater commitment to reform than their predecessors, and paid some attention to cultivating support for pension reform from interested parties. These are the factors that Joan Nelson (2001) identified as critical to the success of postcommunist pension reforms.20 Yet even if Putin's more resolute leadership can change the pattern of inertia, it will be a formidable task to overcome a legacy of ten years of turmoil in the pension system. Whenever it has been undertaken, pension reform in Russia has tended to take an ideological approach that promotes a radical transition to the market, with the potential of undermining dramatically the basic features of the Soviet welfare state. This approach has several pitfalls. It emphasizes redistribution of resources away from the state in a manner that could benefit private market actors and reduce benefits available for the rest of society. In particular, pension reform plans tend to threaten not the least privileged in society, but the great numbers of the former Soviet middleclass and workers who have failed to benefit from the wealth generated for an elite few in the 'New Russia.' These classes of people have had powerful defenders among the Duma opposition. Another potential pitfall is that in emphasizing radical policy change over institutional improvements, Russian pension reform from 1990 to 2000 failed to

158 Shocking Mother Russia

address sufficiently the underlying problems of governance that had been consistently and articulately identified for ten years. Pension reform failed in Russia until 2001 not because Russian political actors did not attempt it, but because they failed to build the capacities for the reforms that were adopted in 1990. What trends does this case study reveal about Russian democratization? The pension reform debate clearly indicates that a dysfunctional executive-legislative relationship has impeded policy reform and institutional change. Parliament and government often worked at cross purposes to each other, and they took a confrontational approach in their relations as long as Boris Yeltsin remained president. Pension reform also shows that however important voters, citizens, and opposition movements can be in demanding change, ultimately the top executive leadership is the most important factor in advancing reform. The old-age pension crisis also reveals that since 1992, the relationships between the centre and the subfederal levels of government in Russia's federal system have been opaque and poorly defined. These findings will surprise no one: there is already a significant body of literature on Russian politics that discusses the conflictual nature of presidential-parliamentary interactions, the power of elite leadership, and the labyrinthine dilemmas of federalism.21 The fact that this study confirms these themes does not render banal its conclusions. Instead, this study makes a contribution simply by presenting a concrete case study of a specific problem of Russian governance. Furthermore, this study goes beyond existing literature to advance original findings. It reveals, for example, that the Soviet social welfare state, at least until the late 1950s, was not as generous as is often thought, and that there was never a unified social consensus on the Soviet welfare state. Much of the controversy surrounding Russia's current pension crisis reiterates similar ideological, normative, and institutional debates among the early Soviet Bolsheviks in the 1920s. Russia's market reform of the 1990s has not brought about a new vision of the 'social contract' so much as it has pointed to striking continuities with the attitudes of a radically different revolutionary regime. This study also offers insights into Russian parliamentarism. The Duma is shown here to be a vigorous, active body that has probably done more to advance the cause of improving the pension system than any other political actor in Russia. This is not to say that the Duma's corps of deputies were always responsible, consistent, or well informed about pension reform. It is understandable that the Russian government evi-

Conclusion 159 denced considerable frustration on the many occasions when the Duma showed greater concern with pension increases and special benefits than with managing the finances of the pension system. Still, the Duma showed itself to be on the whole surprisingly cooperative with government efforts to improve the pension system. The problem with the Duma was not that it blocked or impeded reform. Rather, the Duma's major negative role in the pension crisis was found in its tendency to promote pension legislation that either could not be realized in practice, or that contained contradictions with existing policy, thus rendering the system increasingly convoluted and incoherent. These patterns could conceivably change. Russia's parliamentary elections in December 2003 led to the creation of a Duma in which Unified Russia, a party supportive of the existing government, commanded a near majority, facing a significantly weakened opposition. As a result, the government may find the legislature more cooperative with its reform plans than previously, while the left may have fewer opportunities to defend the traditional values of the welfare state.22 Lessons of the Russian Case First, Russia shows that the political costs of pension reform are great, but the costs of inaction are arguably even higher. When a pension system deteriorates to the point where it cannot deliver what it promises, this can be perceived as just as much a violation of social rights as would be a radical reform that openly imposes cutbacks to entitlements. The comparative literature on pension reform cites many examples of countries that have postponed pension reform for political reasons. Russia shows how damaging political inertia on pension questions can be, both for political leaders and for the citizenry. Second, the research shows that the importance of developing sound laws and institutions cannot be underestimated. Much of the literature on comparative pension reform emphasizes policy options, reform design, and economic resources. Admittedly, policy design is a rewarding enterprise - one can experience the thrill of creating a newer, better, more efficient pension reform model. Somehow, it can seem more rewarding to create a new model than to improve the old one. But beautiful policies and economic models are useless if pension laws are inconsistent and contradictory, if legislators don't understand how the basic principles of social insurance work, if responsibilities between levels of government for social welfare are poorly defined, and if the tax

160 Shocking Mother Russia

collection system faces low levels of compliance. Without well-functioning institutional nuts and bolts, there is no way of ensuring that a beautiful policy will work as intended, and that it will work fairly for all. Finally, pension reformers must not ignore or dismiss the attachment that people may have to the existing pension system. This fondness transcends simple material self-interest. Pension systems make a normative statement about what the state owes its citizens, about how national history is remembered, and about the esteem a society has for its oldest members. Cost-cutting economic reforms can fail not just because they threaten people's standard of living, but because reformers don't speak the same language that was used to frame the country's original pension system. In Russia, pensioners are old enough to remember that the Soviet social welfare system was supposed to transcend short-term budgetary constraints. Perhaps the most serious problem with the capitalist approach to pension reform was that it insufficiently considered the importance of history. Discourse on the Russian old-age pension system, and even the content of its laws, is laden with symbolic themes of national patriotism and hard-won social progress, the baggage of its evolution during Soviet times. Pension reform has been associated over the past few decades with social empowerment and individual rights. It is very difficult, therefore, to promote a pension reform that proposes to roll back these rights instead of advancing them. Further complicating pension reform is the fact that after 1990, pension reform in Russia featured sharp debates over the conflicting goals of promoting greater equality of pension rights to all citizens, versus envisaging a merit-based system in which valued social groups would receive especially generous pension benefits. This tension in the pension system has existed since Soviet times but has become especially acute now that the postcommunist transformation has promoted diverging views over which groups are most worthy of special recognition. Pension reform is more likely to succeed when it honours the historical underpinnings of the pension system and when reformers take pains to demonstrate respect for the older generation. That being said, I do not wish readers to conclude that one should simply 'spin' pension reform so as to introduce spending cuts through a subterfuge of public relations. Russia's 2001 pension reform was packaged to appeal to pensioners, but its weaknesses and nuances were downplayed. A pension reform requires more than a successful package of legislation; it requires cooperation from society over the long term. In order to secure compliance, there is no substitute for frank discussion of the costs and benefits

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of reform. Although the 2001 pension reform acknowledged that pension security was an important obligation for the state to provide to its people, it did not end the longstanding debate over which criteria should be used to decide who deserves the best pensions. The discursive and symbolic importance of the Soviet pension system as a perceived hard-won national and social accomplishment is of greater significance than the author of this study realized at the outset of the research. This helps explain why Russian politicians prefer reforms that have indigenous origins rather than ones that seem to have been borrowed from the West. When governments (in the Soviet Union and the West alike) adopted state-supported pension systems in the 1940s and 1950s, they did so in part because they wanted to improve the well-being of society. States that participated in the Second World War often expanded their social welfare programs in the aftermath of that conflict; thus the welfare state was linked discursively to the recognition of citizens who had participated in the war effort.23 The revision of social programs is bound to be politically controversial when those programs were depicted at their formation as historic achievements linked to national patriotism. T.H. Marshall wrote that when states take on the obligations of welfare state programs, they create the perception that citizens have rights to social benefits: if the state tries to cut back social programs, citizens may protest that their rights are being violated.24 Today's governments often invoke economic rhetoric: policies are presented in the language of fiscal responsibility, promoting economic growth, and achieving budgetary efficiency.25 This rhetoric can meet with opposition because it de-emphasizes historical experience. Russian reformers' desire to create a new system based exclusively on present fiscal resources and future economic goals clashed with the sensibility of a generation of Russians who saw providing for elderly people as a way of honouring their society's history. As Catherine Merridale has written: 'Few old people, unlike the young, the new Russians, believe that material prosperity defines success. The society which shaped their values had always talked more grandly of sacrifice for the common good ... compensation, or at least the right to a living pension, is symbolic of their status and their rights.'26 Reformers in all countries can learn from Russia that a successful reform must consider how and why the existing pension system was created. When a society has long been accustomed to perceiving itself as playing a unique and progressive role among nations, it will continue to be tough to convince citizens that they cannot rise above the rigid laws of market economics.

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Appendix A

Detailed List of Sources for Figures 6.1-6.2: Chronology of Pension Indexation*

Basic Legislation Zakon, 'O pensionnom obespechenii grazhdan v SSSR' (Law on State Pensions in the USSR, May 1990), Vedomosti Narodnykh Deputatov SSSR i Verkhovnogo Soveta SSSR, no. 22, 30 May 1990, 531-69. Zakon, 'O gosudarstvennykh pensiiakh v RSFSR' ('On State Pensions in the RSFSR, November 1990), Vedomosti S'ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR, no. 27, 6 December 1990, 544-82. Tolozhenie o Pensionnom Fonde Rossiiskoi Federatsii' (legal status of the Russian Federation Pension Fund, December 1991), Vedomosti S'ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR, biulleten' 5, 30 January 1992, 236-8. Ukaz Presidenta Rossiiskoi Federatsii, 'O edinovremennykh vyplatakh za fevral'mart 1992 g. maloobespechennym gruppam naseleniia' (presidential decree, 'On one-time payments to groups of the population in need of social protection,' 29 February 1992). Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 11, 12 March 1992, 736-7. Zakon Rossiiskoi Federatsii. 'O dosrochnom vedenii v deistvie zakona RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (Law on immediate changes to the RSFSR law on state pensions, April 1992), Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, biulleten' 17, 23 April 1992, 1231-3. Zakon Rossiiskoi Federatsii, 'O povyshenii gosudarstvennykh pensiiakh v Rossiiskoi Federatsii' (law on raising state pensions in the Russian Federa-

*Note: zakon= law; postanovlenie = resolution; ukaz= decree.

164 Appendix A tion,' October 1992), Vedomosti S'ezda Narodnykh Deputatov RossiiskoiFederatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, biulleten' 44, 5 November 1992, 3262-3. Resolution, Ob indeksatsii minimal'nogo razmera pensii s uchetom izmen-eniia indeksa tsen na IV kvartal 1992 g' (On indexation of the minimum pension in consideration of changes in the price index for the fourth quarter of 1992), Passed in Supreme Soviet, Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, 15 January 1993, biulleten' 2, chast' 1, p. 14. Ukazno. 1445, 24 September 1993. Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39, 27 September 1993, 4032 (presidential decree, dismissing Pension Fund head Aleksandr Kurtin and replacing him with Vasilii Barchuk). Resolution no. 954 of the Council of Ministers - Government of the Russian Federation, 22 September 1993, 'O neotlozhnykh merakh po obespecheniiu finansovoi stabil'nosti' (government resolution 'on urgent measures for ensuring financial stability'), Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39, 27 September 1993, 4016-7. 27 October 1993, Yeltsin ukaz increasing the compensation payment, cited in Yuri Voronin, head of Pension Service of Ministry of Social Protection, 'Once more about the Indexation of Pensions.' Izvestiia, 10 November 1993, 7, translated in Foreign Broadcast Information Service, Central Eurasia, FBISUSR-93-150, 25 November 1993, 73-4. 22 April 1994, Duma passed draft law 'O poriadke indeksatsii i pererascheta pensii ustanovlennykh v sootvetstvii s zakonom RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (on procedures for indexing and recalculating pensions established by the RSFSR law on state pensions), Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 28, 22 April 1994, 15. Final law published in Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 2, 9 May 1994, 69. Ukaz Prezidenta. 'Ob indeksatsii gosudarstvennykh pensii v Rossiiskoi Federatsii s 1 avgusta 1994 i istochnikakh ee finansirovanii' (presidential decree, August 1994, 'On indexation of state pensions in the Russian Federation after 1 August 1994 and sources of its financing'), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 15, 8 August 1994, 2440. Ukaz Prezidenta, 'Ob indeksatsii gosudarstvennykh pensiiakh v Rossiiskoi Federatsii v sentiabre i oktiabre 1994 g. i istochnikakh ee finansirovaniia' (presidential decree, 'On indexation of state pensions in the Russian Federation in September and October 1994 and measures for its financing'), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 17, 22 August 1994, 2716-7. 19 October 1994: Duma failed to overturn president's August veto of pension indexation law (to increase pensions 51 per cent); Duma adopted government-initiated compromise law on indexation (to increase pensions 20 per

Sources for Figures 6.1-6.2 165 cent). Title of draft law: 'O proekte federal'nogo zakona o povyshenii minimal 'nogo razmera pensii i poriadke indeksatsii i pererascheta gosudarstvennykh pensii v Rossiiskoi Federatsii' (On the draft law to raise the minimum pension and the procedure for indexing and recalculating pensions in the Russian Federation), Gosudarstvennaia Duma, Stenogrammazasedanii, biulleten 57, 19 October 1994, 24-36. Zakon, 'O povyshenii minimal'nogo razmera pensii i poriadke indeksatsii i pererascheta pensii ustanovlennykh v sootvetstvii s Zakonom RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (Law 'on raising the minimum pension and on procedure for indexing and recalculating pensions as established in the RSFSR law on state pensions,' October 1994), Sobraniezakonodatel'stva Rossiiskoi Federatsii, no. 28, 7 November 1994, 4118. Ukaz prezidenta, 'O kompensatsionnykh vyplatakh pensioneram s 1 fevralia 1995' (presidential decree, 'On compensation payments to pensioners as of 1 February 1995'), Rossiiskaia gazeta, 1 February 1995, 1. Presidential veto of pension increase law, reported in OMRI Daily Digest, February 1, 1995, www.omri.cz. Duma's failure to overturn presidential veto of draft pension increase law, reported in ITAR-TASS 24 February 1995, translated in FBIS-SOV-95-037, p. 13, 24 February 1995, 13. February 1995: Duma failed to overturn president's veto of draft law, 'O povyshenii minimal'nogo razmera pensii, poriadke indeksatsii i pererascheta gosudarstvennykh pensii v Rossiiskoi Federatsii' (On raising the minimum pension, procedure for indexation and recalculation of state pensions in the Russian Federation.) The Duma also rejected the government's proposed version of the law, and passed a law increasing the amount of the minimum pension and compensation payments established by the president. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 89, 24 February 1995, 19-24. The law was vetoed by Yeltsin; the Duma failed to overturn the veto, and rejected the revised draft indexation law proposed by the president. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 92, 17 March 1995, 27. The Duma failed again to overturn the president's veto of the law, and rejected again the president's draft version of indexation law, Stenogramma zasedanii, biulleten' 93, 22 March 1995, 21. May 1995: Law rejected in Duma: 'O finansirovaniia indeksatsii pensii i povysheniia minimal'noi zarabotnoi platy za schet dopol'nitel'nykh dokhodov federal'nogo biudzheta na 1995 g' (On financing pension indexation and raising the minimum wage with supplementary funds from the federal budget for 1995), Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 104, 17 May 1995. Draft law, 'O povyshenii minimal'nogo razmera pensii, poriadke indeksatsii i

166 Appendix A pererascheta gosudarstvennykh pensii' (On raising the minimum pension, the procedure for indexation and recalculation of state pensions). Passed in Duma, Stenogramma zasedanii, biulleten' 107, 26 May 1995, 33. Federation Council rejected law on pension increase and indexation previously passed in State Duma on May 26. Sovet Federatsii, Stenograficheskii otchet, biulleten' 1 (71) 14June 1995,60. 19 July 1995. Duma rejected Duma-initiated draft law 'O poriadke ischisleniia i indeksatsii pensii' (On procedures for calculating and indexing pensions), Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 120,19 July 1995, 54. Draft law, 'O poriadke vozmeshcheniia material'nogo ushcherba v sviazi s narusheniem srokov vyplaty zarabotnoi platy, pensii, stipendii, posobii, i drugikh sotsial'nykh vyplat' (On the procedure for material damages in connection with the violation of the schedule for payment of wages, pensions, stipends, subsidies and other social benefits), Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 183, 4 November 1995, 22. Ukaz Prezidenta, 'O kompensatsionnykh vyplatakh pensioneram s 1 fevralia 1996 g' (presidential ukaz, 'On compensation payments to pensioners as of February 1,1996,' 25 January 1996), Sobraniezakonodatel'stva Rossiiskoi Federatsii, no. 5, 29 January 1996, 1367. Government resolution, no. 230, 6 March 1996, presidential ukaz, January 1996, 'O merakh po realizatsii ukazov Prezidenta Rossiiskoi Federatsii, napravlennykh na obespechenie svoevremennoi vyplaty zarabotnoi platy rabotnikam biudzhetnoi sfery.' (On measures to implement the decrees of the President of the Russian Federation to ensure the timely payment of salaries to workers in the budgetary sphere), Rossiiskaia gazeta, 13 March 1996, 6. Government resolution, 'O perechislenii i raskhodovanii sredstv, napravliaemye v gosudarstvennye i munitsipal'nye statsionarnye uchrezhdeniia sotsial'nogo obsluzhivaniia v sootvetstvii so stat'ei 122 Zakona RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (On the allocation of funds directed to state and municipal social service institutions in correspondence with article 122 of the RSFSR Law on State Pensions), 21 March 1996. Rossiiskaia gazeta, 3 April 1996, 4. Ordered that back pensions owed be paid promptly to pensioners. Presidential veto of pension increase law, March 1996. 'Prezidentskoe veto: priniatie zakona o povyshenii pensii pryvelo by k sryvu ikh vyplati,' Rossiiskie vesti, 28 March 1996, 2. The law was previously vetoed in the Federation Council before it was returned to the Duma, passed in the Federation Council and then vetoed by the president, Stenogramma zasedanii, biulleten' 21,17 April 1996, 34. Duma passed resolution protesting Yeltsin's use of the veto, Stenogramma zasedanii, biulleten' 15, 20 March 1996, 46.

Sources for Figures 6.1-6.2

167

Resolution of State Duma, 'O nekotorykh federal'nykh zakonakh, vozvrashchennykh Prezidentom Rossiiskoi Federatsii bez rassmotreniia' (On certain federal laws, returned by the President of the Russian Federation without examination, March 1996). Rossiiskaia gazeta, 3 April 1996, 6. Presidential ukaz, 'On Urgent Measures to improve Pension Provision for Russian Federation Citizens,' 15 April 1996. Translated in FBIS-SOV-96-077, 19 April 1996, 31. Ukaz Prezidenta, 'O edinovremennoi kompensatsionnoi vyplate pensionerov' (presidential decree, 'On the one-time compensation payment to pensioners,' 30 March 1999), Sobraniezakonodatel'stva Rossiiskoi Federatsii, no. 14, 5 April 1999, 3246. Zakon, 'O povyshenii minimal'nogo razmera pensii, poriadke indeksatsii i pererascheta gosudarsfvennykh pensii v Rossiiskoi Federatsii s 1 maia 1996 g' (law 'on raising the minimum pension, indexation procedure and recalculation of state pensions in the Russian Federation since 1 May 1996'), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 22, 27 May 1996, 5417. Passed Gosudarstvennaia Duma, 17 April 1996, Stenogramma zasedanii, biulleten 21, p. 37; Federation Council, May 15,1996, Stenograficheskii otchet, biulleten' 1 (103), 20. Draft law, 'O povyshenii minimal'nogo razmera pensii, poriadke indeksatsii i pererascheta gosudarstvennykh pensiiakh v Rossiiskoi Federatsii' (On raising the minimum pension, procedure of indexation and recalculation of state pensions in the Russian Federation), rejected in Federation Council, Stenograficheskii otchet, biulleten' no. 2, 8 August 1996, 21. Draft law, 'O povyshenii minimal'nogo razmera pensii, poriadke indeksatsii i pererascheta gosudarstvennykh pensiiakh v Rossiiskoi Federatsii.' Presidential veto of law, which proposed increasing pensions by 10 per cent, reported in OMRI Daily Digest, 18 December 1996, on-line www.omri.cz. Duma overturned the presidential veto, Stenogramma zasedanii, biulleten' no. 67, 25 December 1996, 42, but the Federation Council did not (Duma, Stenogramma zasedanii, biulleten' no. 82, 7 March 1997, 31). Yeltsin veto of draft law, 'O povyshenii miniinal'nogo razmera pensii, pori-adke indeksatsii i pererascheta gosudarstvennykh pensii v Rossiiskoi Federatsii' (On increasing the minimum pension, the procedure for indexation and the recalculation of state pensions in the Russian Federation), Rossiiskie vesti, ^uly 2,1997,1. Federal'nyi zakon, 'O poriadke ischisleniia i uvelicheniia gosudarstvennykh pensii' (Law 'on the procedure for calculating and increasing state pensions'), Sobraniezakonodatel'stva Rossiiskoi Federatsii, no. 30, 28 July 1997, 5845-7. Government initiative, draft law to increase pensions for the remainder of 1997. Passed Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 117, 19 September 1997, 46.

168 Appendix A Government resolution of 30 December, 1997, adjusting the minimum wage figure to be used for calculating pension indexation. Discussed in Vitaly Golovachev, 'Juggling the Figures,' Trud, 16 January 1998, p. 2, translated in CurrentDigest of the Post-Sffviet Press, vol. 50,18 February 1998,15-16. Duma resolution of protest of government resolution, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 147,16January 1998, 51. Postanovlenie Pravitel'stva Rossiiskoi Federatsii, 'O merakh po obespecheniiu svoevremennoi vyplaty gosudarstvennykh pensii' (Resolution of the Russian Federation Government, 'On measures to guarantee the timely payment of state pensions,' 21 July 1998), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 30, 27july 1998, 6894. Postanovlenie Gosudarstvennoi Dumy, 'Ob obrashchenii v Konstitutsionnyi Sud Rossiiskoi Federatsii' (Resolution of the State Duma, 'On appeal to the Russian Federation Constitutional Court,' 21 August 1998), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 35, 31 August 1998, 8160. October 1998: Federal Assembly passed law 'on Amendments and Addenda to Russian Federation Law on Government Pensions and the Federal Law on the Procedure for Calculating and Increasing Government Pensions.' Reported Interfax, 13 October 1998, in FBIS-SOV-98-287, 14 October 1998. Duma overturned Federation Council veto of law 'O vnesenii izmenenii i dopolnenii v stat'iu 7 zakona Rossiiskoi Federatsii o gosudarstvennykh pensiiakh v Rossiiskoi Federatsii i federal'ny zakon o poriadke ischisleniia i uvelicheniia gosudarstvennykh pensii' (Law on the adoption of changes and additions to article 7 of the Russian Federation Law on state pensions and the federal law on the procedure for calculating and increasing state pensions), Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 292, 27 October 1999, 27. The law was vetoed by the President, November; Stenogramma zasedanii, biulleten' no. 298, 23 November 1999, 30-1. 'S 1 noiabria povyshaetsia minimal'naia pensiia,' Nezavisimaia gazeta, 16 October 1999, p. 4. Increase in compensation payment, November 1999. Elena Lashkina, 'Zurabov obosnoval vozmozhnost' uvelicheniia pensii,' Nezavisimaia gazeta, 13 January 2000, 2 (Acting President Putin pension increase, to take effect February 1).

Appendix B

Detailed List of Sources on Special Pension Benefits and Exemptions (1'goty)

Zakon Rossiiskoi Federatsii, 'O vnesenii izmenenii i dopolnenii v Zakon RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (law on changes and additions to the RSFSR Law on State Pensions), Vedomosti S'ezda NarodnykhDeputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 5, 4 February 1993, 301-3. (Amendments to the law on state pensions, January 1993: provided pension increases for Heroes of the USSR and Heroes of the Russian Federation, Heroes of Socialist Labour, Second World War veterans, former prisoners of Nazi concentration camps, exemplary workers and workers in the rear during the Second World War, formerly unjustly repressed persons, and survivors of the Siege of Leningrad). Zakon 'O pensionnom obespechenii lits, prokhodivshikh voennuiu sluzhbu, sluzhbu v organakh vnutrennykh del, i ikh semei' (law 'on pension benefits for members of the armed forces, police and their families'), Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 9, 4 March 1993, 533-49. Zakon 'O gosudarstvennykh garantiiakh kompensatsii dlia lits, rabotaiushchikh v raionakh Krainego severa i priravnennykh k nim mestnostiakh' (law 'on state guarantees and compensation for people, working and living in regions of the Far North and comparable localities'), February 1993. Included benefits for pensioners. Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 16, 22 April 1993,916-24. Zakon 'O vnesenii izmenenii v stat'iu 8 zakona RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (law, 'Amendments to article 8 of the law on RSFSR state pensions,' March 1993), Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 16, 22 April 1993, 921-8. Established lower levels of Pension Fund contributions for agricultural enterprises, farms; exemptions for organizations that hire invalid or pensioner workers).

170 Appendix B Zakon 'O pensionnom obespechenii roditelei pogibshikh voennosluzhashchikh, prokhodivshikh voennuiu sluzhbu po prizyvu' (law 'on pensions for parents of people killed while carrying out compulsory military service,' May 1993). This law was passed by the Supreme Soviet in its original version after being returned to the Parliament with comments from President Yeltsin. Verkhovnyi Sovet Rossiiskoi Federatsii, Stenogramma zasedanii, 21 May 1993, 5-8. Zakon, 'O razmerakh pensii, naznachennykh v sviazi s podzemnoi rabotoi, rabotoi s vrednymi usloviami truda i v goriachikh tsekakh' (law, 'on the size of pensions, designated in connection with mining or dangerous work'), Opensiiakh. Sbornik zakonodatel'nykh i normativnykh dokumentovpo sostoianiiu na aprel' 1997 g (Moscow: Bukvitsa, 1997), 62-3. Ensured that workers from mining and dangerous occupations had maintained higher pensions at specified proportions relative to minimum pensions, September 1993. Zakon, 'O vnesenii izmeneniia v stat'iu 110 zakona RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (law, 'Amendments to article 10 of the RSFSR law on state pensions,'June 1994). Provided pension increases for people honoured for their contributions to the defence of Leningrad during the siege. Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 7, 13 June 1994,1015. Zakon, 'O vnesenii izmenenii i dopolnenii v Zakon RSFSR' (amendments to the pension law, August 1994), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 15, 8 August 1994, pp. 2394-5. Provided pension increases for pensioners caring for dependants or invalids, or pensioners who were wounded as children during the Second World War). Zakon, 'O veteranakh' (law on veterans, January 1995), Rossiiskaia gazeta, 25 January 1995, 9-11. Zakon, 'Ob uluchshenii pensionnogo obespecheniia uchastnikov Velikoi Otechestvennoi Voiny i vdov voennosluzhashchikh, pogibshikh v Velikuiu Otechestvennuiu Voinu, poluchaiushchikh pensii po zakonu RSFSR 'o gosudarstvennykh pensiiakh v RSFSR' (law 'on improving pensions for participants in the Second World War and widows of armed forces servicemen killed in the Second World War, receiving pensions according to the RSFSR Law on State Pensions,' May 1995), O pensiiakh, Sbornik zakonodatel'nykh i normativnykh dokumentov po sostoianiiu na aprel' 1997 g (Moscow: Bukvitsa, 1997), 63-5. Zakon, 'O vyplate pensii za vyslugu let rabotnikam obrazovaniia, zaniatym pedagogicheskoi deiatel'nost'iu v shkolakh i drugikh uchrezhdeniiakh obrazovaniia dlia detei' (law 'on the payment of pensions for service to workers in education,' granted the right of a service pension to schoolteach-

Sources on Special Pension Benefits and Exemptions

171

ers, February 1996), Opensiiakh. Sbornik zakonodatel'nykh i normativnykh dokumentovpo sostoianiiu na apreV 1997g (Moscow: Bukvitsa, 1997), 143. Presidential veto of amendments to 'Law on veterans,' Rossiiskie vesti, 9 April 1996,1. Zakon 'O vyplate pensii za vyslugu let rabotnikam zdravookhraneniia, zaniatym lechebnoi i inoi rabotoi po okhrane zdoroviia, naseleniia v sel'skoi mestnosti' (law 'on the payment of pensions for service to workers in health care in rural areas.' April 1996), Opensiiakh. Sbornik zakonodatel'nykh i normativnykh dokumentov po sostoianiiu na apreV 1997 g (Moscow: Bukvitsa, 1997), 159. The law was vetoed by Yeltsin, February 1996; veto overturned in Duma, 20 March 1996. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 15, 20 March 1996, 13. Presidential veto of changes to Article 7 of law on veterans, Rossiiskie vesti, 2 July 1997, 1. Presidential veto of law, 'O vnesenii izmenenii i dopolnenii v otdel'nye zakonodatel'nye akty po voprosam pensionnogo obespechenii rabotnikov gosudarstvennoi protivopozharnoi sluzhby' (law 'on changes and additions to certain legal acts on the question of pension benefits for workers in the state firefighting service'), Rossiiskie vesti, 21 March 1997, 1. Presidential veto of law, 'O vnesenii izmenenii i dopolnenii vstat'iu 87 zakona Rossiiskoi Federatsii o gosudarstvennykh pensiiakh v Rossiiskoi Federatsii' (law 'on changes and additions to article 87 of the RSFSR State pensions,' to extend service pension rights to certain health care workers). Rossiiskie vesti, 17 February 1998, 1. Law, 'O vnesenii dopolneniia v stat'iu 110 zakona 'o gosudarstvennykh pensiiakh v Rossiiskoi Federatsii' (law 'on additions to article 110 of the law on state pensions in the Russian Federation,' March 1997; pension benefits for Heroes of the Soviet Union, Heroes of the Russian Federation, and Heroes of Socialist Labour), Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 12, 24 March 1997, 2378. Law, 'O vnesenii izmenenii i dopolnenii v Zakon Rossiiskoi Federatsii o pensionnom obespechenii lits, prokhodivshikh voennuiu sluzhbu, sluzhbu v organakh vnutrennykh del, i ikh semei' (law, 'On changes and additions to the Russian Federation Law on pension benefits for people who served in the military, internal affairs organs, and their families,' December 1997). On pension benefits for Heroes of the Soviet Union, Heroes of the Russian Federation, and Heroes of Socialist Labour who served in the armed forces or police, Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 51, 22 December 1997, 10158.

172 Appendix B Law, 'O vnesenii izmeneniia i dopolneniia v stat'iu 112 zakona Rossiiskoi Federatsii 'o gosudarstvennykh pensiiakh v Rossiiskoi Federatsii' (law 'on changes and additions to article 112 of the Russian Federation law on state pensions in the Russian Federation,' March 1998). Pension benefits for people who worked in the Far North, Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 13, 30 March 1998, 2821-2.

Appendix C

Disputes over Finances

May 1992. President returned to the Supreme Soviet the draft law on the Pension Fund budget for second quarter of 1992. Among the concerns was a desire that the government responsibility for pensions be folded into the state budget, rather than the government reimbursing the Pension Fund. Then-Minister of Finance Barchuk argued that the government would benefit from having more data about Pension Fund finances, but the budget was adopted in its original version. (Verkhovnyi Sovet Rossiiskoi Federatsii, Stenogramma zasedaniia, biulleten' 59, 22 May 1992,17-21.) February 1995. Duma rejected 1995 Pension Fund budget, first reading. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 87,17 February 1995,41. Duma rejected 1995 Pension Fund budget in third reading, after debate showed disagreement between the government and social policy committee over the exact amounts of expenditures. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 120, 19July 1995, 55. November 1995. Federation Council rejected draft law, 'O poriadke vozmeshcheniia material'nogo ushcherba v sziazi s narusheniem srokov vyplaty zarabotnoi platy, pensii, stipendii, posobii, i drugikh sotsial'nykh vyplat grazhdanam Rossiiskoi Federatsii' (On the procedure for material damage in connection with violations of the schedule for payments of wages, pensions, stipends, subsidies, and other social payments to Russian Federation Citizens.) Sovet Federatsii, Stenograficheskii otchet, biulleten' no. 2 (87), 15 November 1995, 18. Presidential veto, law 'O poriadke finansirovaniia vyplaty gosudarstvennykh pensii' (On procedures for financing the payment of state pensions), Rossiiskievesti, 28 February 1997, p. 1. Veto overturned in State Duma, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten no. 84,14 March 1997,16.

174 Appendix C Duma rejected in first reading government initiative draft law, proposing to increase Pension Fund payroll contributions by 0.5 per cent, but in same session voted to increase the pension by 20 per cent. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 97,14 May 1997,16-25. Presidential veto, law 'Ob ispolnenii biudzheta Fonda Sotsial'nogo Strakhovaniia Rossiiskoi Federatsii za 1996 g' (law, 'On the implementation of the budget of the Social Insurance Fund of the Russian Federation for 1996'), Rossiiskie vesti, 12 March 1998,1. (Law would have returned to the Pension Fund money borrowed from the Social Insurance Fund). Presidential veto of'Implementation of Pension Fund budget for 1996,' Sobranie zakonodatel'stua Rossiiskoi Federatsii, no. 21, 25 May 1998, 4249-50. Veto overturned by Gosudarstvennaia Duma, law passed May 1998, Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 22,1 June 1998, 4450-2. The law included extensive discussion of the federal budget's debt to the Pension Fund in 1996 and measures for paying it off for 1997. Presidential veto of Pension Fund budget for 1997, 29 March 1998, veto overturned in Duma, 13 May 1998; objection was to amount of money budget required to pay to reimburse the Pension Fund. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 174,13 May 1998,17-21. Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 22, 4452-7. Duma overturned Federation Council veto of law, 'O poriadke finansirovaniia gosudarstvennykh pensii, vyplata kotorykh po zakonodatel'stvu Rossiiskoi Federatsii osushchestvliaetsia za schet sredstv federal'nogo biudzheta' (On the procedure for financing state pensions, the responsibility for which lies with the federal budget according to Russian Federation legislation), Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 170,16 April 1998, 10. Duma rejected in first reading government initiative law to lower payroll pension tax and increase individual pension contributions. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 194,17 July 1998, 26. Duma passed amended version of law, 'O poriadke finansirovanii gosudarstvennykh pensii, vyplata kotorykh po zakonodatel'stvu Rossiiskoi Federatsii osushchestvliaetsia za schet sredstv federal'nogo biudzheta' (On the procedure for financing state pensions, for which the federal budget is responsible according to Russian Federation legislation). Previously vetoed in Federation Council (16 April), veto overturned, then vetoed by the president. The law required the federal budget to reimburse the Pension Fund for sums owed; the amended version delayed the schedule until 1999. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 203,18 September 1998,15, 30. The law was finally passed in November 1998: 'O poriadke finansirovaniia

Disputes over Finances 175 gosudarstvennykh pensii, vyplata kotorykh po zakonodatel'stvu Rossiiskoi Federatsii osushchestvliaetsia za schet sredstv federal'nogo biudzheta.' Veteran, no. 42, November 1998, 2. 21 August 1998. Duma resolution, to appeal to Constitutional Court about a government resolution of 21 July to extract a temporary tax to alleviate the Pension Fund deficit. Vedomosti Federal'nogo Sobraniia Rossiiskoi Federatsii, no. 26, 11 September 1998, 96-8. October 1998. abolition of 2 per cent tax to raise money for the Pension Fund. Announced Interfax, 5 October 1998, published in FBIS-SOV-98-278, 5 October 1998. Duma rejected in first reading government initiative, draft law to increase Pension Fund contributions for individuals to 3 per cent. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 209,16 October 1998, 38-9.

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Notes

1. Russia's Social Welfare Crisis in Theoretical Perspective 1 See the classic essay in favour of shock therapy by Jeffrey Sachs, 'What Is to be Done?' Economist, 13 January 1990, 21-6. 2 See, for example, Gil Eyal, Ivan Szelenyi, and Eleanor Townsley, 'The Theory of Post-Communist Managerialism,' New Left Review 222 (March-April 1997): 60-92. 3 Adam Przeworski, Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America (New York: Cambridge University Press, 1991). 4 Glaus Offe, 'The Politics of Social Policy in East European Transitions: Antecedents, Agents and Agenda of Reform,' Social Research 60, no. 4 (1993): 649-83. 5 See Jon Elster, Glaus Offe, and Ulrich K. Preuss, Institutional Design in PostCommunist Societies: Rebuilding the Ship at Sea (New York: Cambridge University Press, 1998); Adam Przeworski, Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America (New York: Cambridge University Press, 1991). 6 Elster, Offe, and Preuss, Institutional Design, 206. 7 Roger Charlton, Roddy McKinnon, and Lukasz Konopielko, 'Pensions Reform, Privatization and Restructuring in the Transition: Unfinished Business or Inappropriate Agendas,' Europe-Asia Studies 50, no. 8 (1998): 1413-17. 8 M. Steven Fish, 'Postcommunist Subversion: Social Science and Democratization in East Europe and Eurasia,' Slavic Review 58, no. 4 (1999): 794-823. 9 See, for example, Joseph E. Stiglitz, 'Who Lost Russia?' in Globalization and Its Discontents (New York: Norton, 2002), 133-65.

178 Notes to pages 6-8 10 Valerie Bunce, 'The Political Economy of Postsocialism,' Slavic Review 58, no. 4 (winter 1999): 768. 11 'Flickers of Economic Light,' The Economist, 5 September 1998. 12 Bunce, 'The Political Economy of Postsocialism,' 756-94. 13 Philip G. Roeder, 'Varieties of Post-Soviet Authoritarian Regimes,' Post-Soviet Affairs 10, no. 1 (1994): 61-101; Timothy Frye, 'A Politics of Institutional Choice: Post-Communist Presidencies,' Comparative Political Studies 30, no. 5 (1997): 523-52;Joel S. Hellman, 'Winners Take All: Politics of Partial Reform in Postcommunist Transitions,' World Politics 50 (January 1998): 203-34. 14 Steven L. Solnick, Stealing the State: Control and Collapse in Soviet Institutions (Cambridge, MA: Harvard University Press, 1998), 251. 15 Thomas F. Remington, Politics in Russia (New York: Longman, 1999), 25. 16 Mark R. Beissinger, 'The Persisting Ambiguity of Empire,' Post-Soviet Affairs 11, no. 2 (1995): 149-84. 17 Michael Urban, 'Remythologizing the Russian State,' Europe-Asia StudiesSO, no. 6 (1998): 969-92. 18 For example, Jose Pinera, 'A Chilean Model for Russia,' Foreign Affairs (September/October 2000): 62-73. 19 Stephen Holmes, 'Superpresidentialism and Its Critics,' EastEuropean Constitutional Review 2, no. 4/vol. 3, no. 1 (1993/4): 123-6. 20 Eugene Huskey, Presidential Power in Russia (Armonk, NY: M.E. Sharpe, 1999), 163-82. 21 Thomas F. Remington, Steven S. Smith, and Moshe Haspel, 'Decrees, Laws and Inter-Branch Relations in the Russian Federation,' Post-Soviet Affairs 14, no. 4 (1998): 305-7. 22 Joel M. Ostrow, 'Procedural Breakdown and Deadlock in the Russian State Duma: the Problems of an Unlinked Dual-Channel Institutional Design,' Europe-Asia StudiesbQ, no. 5 (1998): 793-816. 23 For example, Michel Camdessus, then managing director of the International Monetary Fund (IMF), speech in Poland, 10 December 1999, referred to Russia as being a country that posed a dilemma for the IMF, as having inherited some of the most damaging effects of communism and as requiring uniquely complex improvements in governance, www.imf.org/ external/np/speeches/1999/ 121099.htm, accessed 7 May 2003; see also Peter Rutland and Natasha Kogan, 'Corruption and the Russian Transition,' HarnmanReviewU, no. 1 (1999): 1-10; CharlesH. Fairbanks,Jr, The Feudalization of the State,' pp. 47-53, and Anders Aslund, 'The Problem of Fiscal Federalism,' in 'What Went wrong in Russia? 'Journal of Democracy 10, no. 2 (1999): 83-7; Louise I. Shelley, 'Corruption in the Post-Yeltsin Era,' EastEuropean Constitutional Review 9, no. 2 (2000): 70-4.

Notes to pages 8-12 179 24 Juliet Johnson, A Fistful of Rubles: The Rise and Fall of the Russian Banking System (Ithaca: Cornell University Press, 2000), 18-19. 25 Timothy Frye, Brokers and Bureaucrats: Building Market Institutions in Russia (Ann Arbor: University of Michigan Press, 2000). 26 See Vito Tanzi, 'Creating Effective Tax Administrations: The Experience of Russia and Georgia,' in Janos Kornai, Stephan Haggard, and Robert R. Kaufman, eds., Reforming the State: Fiscal and Welfare Reform in Post-Socialist Countries (New York: Cambridge University Press, 2001): 53-74. 27 Guillermo O'Donnell, 'Horizontal Accountability in the New Democracies,' Journal of Democracy 9, no. 3 (1998): 112-36. 28 T.H. Marshall, The Right to Welfare,' in Marshall, The Right to Welfare and Other Essays (New York: Free Press, 1981), 83. 29 Ibid.; T.H. Marshall, 'Welfare in the Context of Social Policy,' pp. 56 and 73, in Marshall, The Right to Welfare and Other Essays. 30 John MacNicol, 'Beveridge and Old Age,' in John Hills, John Ditch, and Howard Glennerster, eds., Beveridge and Social Security: An International Retrospective (Oxford: Clarendon Press, 1994), 73. 31 See Janet G. Chapman, 'Drastic Changes in the Soviet Social Contract,' in Jan Adam, ed., Economic Reforms and Welfare Systems in the USSR, Poland and Hungary: Social Contract in Transformation (London: Macmillan, 1991): 2639; Aaron Trehub, 'Perestroika and Social Entitlements,' in John E. Tedstrom, ed., Socialism, Perestroika and the Dilemmas of Soviet Economic Reform (Boulder, CO Westview, 1990): 208-29. 32 See Mark G. Field and Judyth L. Twigg, eds., Russia's Torn Safety Nets: Health and Welfare during the Transition (New York: St Martin's Press, 2000). 33 Peter Lanjouw, Branko Milanovic, and Stefano Paternostro, 'Poverty and the Economic Transition: How Do Changes in Economies of Scale Affect Poverty Rates for Different Households?' (World Bank, Development Research Group, Poverty and Human Resources, November 1998, Policy Research Working Paper 2009): 3-4, 26. 34 Cynthia Buckley, 'Obligations and Expectations: Renegotiating Pensions in the Russian Federation,' Continuity and Change 13, no. 3 (1998): 334-5. 35 Ilian Cashu and Mitchell A. Orenstein, 'The Pensioners' Court Campaign: Making Law Matter in Russia,' East European Constitutional Review 10, no. 4 (2001): 67-71. 36 Glaus Offe, Contradictions of the Welfare State (Cambridge, MA: MIT Press, 1984). 37 Bob Deacon with Michelle Hulse and Paul Stubbs, Global Social Policy: International Organizations and theFuture of Welfare (London: Sage, 1997). 38 For example, see Vladimir Mikhalev, 'Social Security in Russia under Economic Transformation,' Europe-Asia Studies48, no. 1 (1995): 5-25.

180 Notes to pages 12-14 39 Cynthia Buckley and Dennis Donahue, 'Promises to Keep: Pension Provision in the Russian Federation,' in Field and Twigg, eds., Russia's Torn Safety Nets, 261. 40 Estelle James and Sarah Brooks, 'The Political Economy of Structural Pension Reform,' in Robert Holzmann and Joseph E. Stiglitz, eds., New Ideas about Old Age Security (Washington, DC: World Bank, 2001): 133-70. 41 See B. Guy Peters, The Politics of Taxation: A Comparative Perspective (Cambridge, MA: Basil Blackwell, 1991). 42 See Gabriel Ardant, 'Financial Policy and Economic Infrastructure of Modern States and Nations,' pp. 164-242, and Rudolf Braun, Transaction, Sociopolitical Structure and Statebuilding: Great Britain and Brandenburg Prussia,' pp. 243-327, in Charles Tilly, ed., The Formation of National States in Western Europe (Princeton, NJ: Princeton University Press, 1975); Margaret Levi, Of Rule and Revenue (Berkeley: University of California Press, 1988). 43 Sven Steinmo, Taxation and Democracy: Swedish, British and American Approaches to Financing the Modern State (New Haven, CT: Yale University Press, 1994). 44 Linda J. Cook, The Soviet Social Contract and Why It Failed: Welfare Policy and Workers'Politics from Brezhnev to Yeltsin (Cambridge, MA: Harvard University Press, 1993); Peter Hauslohner, 'Politics before Gorbachev: De-Stalinization and the Roots of Reform,' in Seweryn Bialer, ed., Politics, Society and Nationality Inside Gorbachev's Russia (Boulder, CO: Westview, 1989), 73-5. 45 Ulrike Getting, 'Destruction, Adjustment and Innovation: Social Policy Transformation in Eastern and Central Europe. 'Journal of European Social Policy 4, no. 3 (1994): 182. 46 Linda J. Cook and Mitchell Orenstein, 'The Return of the Left and Its Impact on the Welfare State in Poland, Hungary and Russia,' in Cook, Orenstein, and Marilyn Rueschemeyer, eds., Left Parties and Social Policy in PostcommunistEurope (Boulder, CO: Westview, 1999), 47-108. 47 Andras Sajo, 'How the Rule of Law Killed Hungarian Welfare Reform,' East European Constitutional Review 5, no. 1 (1996): 31-41. 48 John T. Ishiyama, The Sickle or the Rose: Previous Regime Types and the Evolution of Ex-communist Parties in Post-communist Politics,' Comparative Political Studies 30, no. 3 (1997): 299-330. 49 Salvatore Pitruzello, 'Social Policy Implementation of the Maastricht Fiscal Convergence Criteria: The Italian and French Attempts at Welfare and Pension Reforms,' Social Research 64, no. 4 (1997): 1589-636. 50 Tomasz Inglot, The Politics of Social Policy Reform in Post-Communist Poland: Government Responses to the Social Insurance Crisis during 19891993,' Communist and Post-Communist Studies 28, no. 3 (1995): 361-73.

Notes to pages 14-15 181 51 Peter Gedeon, 'Hungary: Social Policy in Transition,' East European Politics and Society 9, no. 3 (1995): 433-4. 52 Roger Charlton, Roddy McKinnon, and Lukasz Konopielko, 'Pensions Reform, Privatization and Restructuring in the Transition: Unfinished Business or Inappropriate Agendas,' Europe-Asia Studies 50, no. 8 (1998): 1419-22. 53 Lazlo Csontos, Janos Kornai, and Istvan Gyorgy Toth, 'Tax Awareness and Reform of the Welfare State: Hungarian Survey Results,' Economics of Transition 6, no. 2 (1998): 287-312. 54 Alfred Stepan and Cindy Skach, 'Constitutional Frameworks and Democratic Consolidation: Parliamentarism versus Presidentialism,' World Politics 46 (October 1993): 1-22; Matthew Soberg Shugart and John M. Carey, Presidents and Assemblies: Constitutional Design and Electoral Dynamics (Cambridge: Cambridge University Press, 1992). 55 Thomas H. Hammond, 'Formal Theory and the Institutions of Governance,' Governance^, no. 2 (1996): 107-85. 56 Eugene Huskey, Presidential Power in Russia (Armonk, NY: M.E. Sharpe, 1999); Thomas F. Remington, Steven S. Smith, and Moshe Haspel, 'Decrees, Laws and Inter-Branch Relations in the Russian Federation,' Post-Soviet Affairs 14, no. 4 (1998): 301-15; Scott Parrish, 'Presidential Decree Authority in Russia, 1991-95,' in John M. Carey and Matthew Soberg Shugart, eds., Executive Decree Authority (New York: Cambridge University Press, 1998): 62-103. 57 'Retiring the State Pension,' in The Economist, 24 October 1998, 14-16 of Survey: Social Insurance; World Bank, Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth (Washington, DC, and New York: World Bank and Oxford University Press, 1994), xxi-xxiii, 12-16; Robert Holzmann and Joseph E. Stiglitz, eds., New Ideas about Old Age Security: Toward Sustainable Pension Systems in the 21st Century (Washington, DC: World Bank, 2001); Emanuel Reynaud, 'Introduction and Summary,' in Emanuel Reynaud, ed., Social Dialogue and Pension Reform (Geneva: International Labour Office, 2000): 1-10. 58 Bernice Madison, 'The Soviet Pension System and Social Security for the Aged,' in Gail W. Lapidus and Guy E. Swanson, eds., State and Welfare, USA/ USSR: Contemporary Policy and Practice (Berkeley: Institute of International Studies, University of California, Berkeley, 1988): 163-4, 173-6. 59 Emanuel Reynaud, 'Introduction and Summary,' in Reynaud, ed., Social Dialogue and Pension Reform (Geneva: International Labour Office, 2000), 1. 60 So argued Joseph E. Stiglitz, former chief economist of the World Bank, who became a critic of the role that the International Monetary Fund and World

182 Notes to pages 15-27 Bank was playing in transitional countries. Peter R. Orszag and Joseph E. Stiglitz, 'Rethinking Pension Reform: Ten Myths about Social Security Systems,' in Robert Holzmann and Joseph E. Stiglitz, eds., New Ideas about Old Age Security (Washington, DC: World Bank, 2001): 28-9. 61 V. Lavrov, The Soviet Budget (Moscow: Foreign Languages Publishing House, 1959), 48. 62 D. Antoshkin, VKP(b) iprofsoiuzy o sotsial'nom strakhovanii (Moscow: Nauchnoissledovatel'skii institute professional'nogo dvizheniia, 1934), 13-15; K.S. Batygin, Sotsial'noestrakhovanie v SSSR (Moscow: Profizdat, 1973), 14. 63 Andrea Chandler, 'Democratization, Social Welfare and Individual Rights in Russia: the Case of Old-Age Pensions,' Canadian Slavonic Papers 43, no. 4 (2001): 409-35. 64 N.A. Bulganin, in Zasedanie Verkhovnogo Soveta SSSR, Stenograficheskii otchet, 4-ogo sozyva, 5-aia sessiia, July 1956,18. 65 Madison, 'The Soviet Pension System and Social Security for the Aged,' 176. 66 Jeff Kahn, 'The Parade of Sovereignties: Establishing the Vocabulary of the New Russian Federalism,' Post-Soviet Affairs 16, no. 1 (2000): 58-69. 67 Thane Gustafson, Capitalism Russian Style (Cambridge: Cambridge University Press, 1999): 33,179-80. 68 Catherine Merridale, Night of Stone: Death and Memory in Russia (London: Granta, 2000): 398-99. 69 Peter Taylor-Gooby, 'Welfare State Regimes and Welfare Citizenship, 'Journal of European Social Policy 1, no. 2 (1991): 93-105. 2. The Elderly in a Revolutionary Society: The Soviet Pension System, 1917-1956 1 Bernice Q. Madison, Social Welfare in the Soviet Union (Stanford, CA: Stanford University Press, 1968): 48, 57, 60. 2 Linda J. Cook, The Soviet Social Contract and Why It Failed: Welfare Policy and Workers'Politics from Brezhnev to Yeltsin (Cambridge: Harvard University Press, 1993); Peter Hauslohner, 'Politics before Gorbachev: De-Stalinization and the Roots of Reform,' in Seweryn Bialer, ed., Politics, Society and Nationality Inside Gorbachev's Russia (Boulder, CO: Westview, 1988), 91-119; Vera Sandomirsky Dun-ham, In Stalin's Time: Middleclass Values in Soviet Fiction, rev. ed. (Durham, NC: Duke University Press, 1990). 3 D. Antoshkin, VKP(b) iprofsoiuzy o sotsial'nom strakhovanii (Moscow: Nauchnoissledovatel'skii institut professional'nogo dvizheniia, 1934), 6. 4 Christine D. Worobec, 'Temptress or Virgin? The Precarious Sexual Position of Women in Postemancipation Ukrainian Peasant Society,' 41-53, and

Notes to pages 27-30 183

5 6 7 8

9

10 11 12

13

14

15

16

17

Lynne Viola, 'Bab'i Bunty and Peasant Women's Protest during Collectivization,' 189-205, in Beatrice Farnsworth and Lynne Viola, eds., Russian Peasant Women (New York: Oxford University Press, 1992). Daniel Peris, Storming the Heavens: The Soviet League of the Militant Godless (Ithaca, NY: Cornell University Press, 1998), 80. 'Postanovlenie SNK o sotsial'nom strakhovanii lits, zaniatym trudom,' Biulleten'trudovogofronta, no. 27 (3 December 1921): 2. K.S. Batygin, Sotsial'noe obespechenie v SSSR (Moscow: Profizdat, 1973): 12-14. 'Raz'iasnenie Plenuma Verkhsuda RSFSR ot 17 ianvariia 1927 g. po voprosu o raz'iasnenii st. 413 Grazhdanskogo Kodeksa,' hvestiia Narodnogo Kommissariata Truda [NKT] SSSR, no. 29 (16 July 1927): 425. 27 April 1922, 'Postanovlenie o zachislenii vsekh shtrafov, nalagaemykh na predpriatiia za narushenie zakonov i pravil po okhrane truda, vo vserossiiskoi fond sotsial'nogo strakhovaniia,' hvestiia NKT SSSR, no. 1/10 (15 April 1922): 2. Tolozhenie o fondakh sotsial'nogo strakhovaniia,' hvestiia NKT SSSR, no. 6-7 (20 February 1924): 23-6. 'Resolutions,' 16June 1927, hvestiia NKT SSSR, no. 30 (23 July 1927), 437. Instruktsiia Narkomtruda SSSR, 'O poriadke provedeniia polozheniia o fondakh sotsial'nogo strakhovaniia,' Gosudarstvennaia arkhiva Rossiiskoi Federatsii (State Archives of the Russian Federation, hereafter GAR), fond 5528, op. l.ed.khr. 2): 55-7. Circular no. 163/69, 'To all guberniia and oblast social insurance administrations, to all insurance kassy,' from Narkomtrud, Secretary of the All-Union Central Council of Trade Unions (VTsSPS) and the Central Administration of Social Insurance, 24.4.1923, 'O prave strakhorganov uvelichivat' normy pensii, a ravno posobii dopolnitel'nykh i po bezrabotitse,' hvestiia NKT SSSR, no. 15-16 (8 May 1923): 9. Circular no. 166/41, 'To all guberniia and oblast administrations of social insurance and all insurance kassy, 'Ob ucheta zarabotkov i dokhodov lits', poluchaiushchikh pensii organov sotsial'nogo strakhovaniia.' hvestiia NKT, no. 15-16 (8 May 1923): 9-10. 'Postanovlenie Soiuznogo Soveta sotsial'nogo strakhovaniia no. 174 o poriadke vyplaty nedopoluchennykh summ pensii,' 21 April 1930, hvestiia NKT SSSR, no. 19 (10 July 1930): 439. Sotsial'noe obespechenie v RSFSR k desiatoi godovshchine oktiabr'ia, Moscow: Izdanie Narodnogo Komissariata Sotsial'nogo Obespecheniia RSFSR, 1927): 4-12. 'Postanovlenie Soiuznogo Soveta Sotsial'nogo Strakhovaniia pri NKT SSSR ot 5 January 1928 g. no. 5 o predostavlenii pensionnogo obespecheniia

184 Notes to pages 30-3

18

19 20 21 22 23 24 25 26 27 28 29

30 31

32 33 34

35

36

37

prestarelym rabochim predpriiatii tekstil'noi promyshlennosti,' Izvestiia NKT SSSR, no. 3 (18 January 1928): 40-1. Tostanovlenie TsIK i SNK SSSR ot 15 maia 1929 ob obespechenii v poriadke sotsial'nogo strakhovaniia po sluchaiu starosti.' Izvestiia Narkomtruda SSSR, no. 25-6 (28 June 1929): 403. R.R. Rats, ed., Pensiipo gosudarstvennomu sotsial'nomu strakhovaniiu, Moscow: Izdatel'stvo Ministerstva Sotsial'nogo Obespecheniia RSFSR, 1948: 8-9. Constitution of the Russian Federation (1993), Article 39. Tostanovlenie TsIK i SNK SSSR ot 20 maia 1928 g. o personal'nykh pensiiakh,' Izvestiia NKT SSSR, no. 30-1 (31 July 1928): 469. GARF, f. 5528, op. 1., ed.khr. 2, c. 1924. GARF, f. 5528, op. 1, d. 11, pp. 6-7. 'Spravki o personal'nykh pensii,' 4 August 1927, GARF, f. 5528, op. 1, d. 72, pp. 26-7. 'Spravka from Narkomtrud SSSR and Narkomtrud RSFSR,' 28 December 1927, GARF, f. 5528, op. 1, d. 92, pp. 1-3. Letter, 10 December 1928, GARF, f. 5528, op. 1, d. 92, p. 4. Letter, 19 October 1928, GARF, f. 5528, op. 1, d. 92, p. 8. 'Appeal to Narkomtrud,' 6June 1925, GARF, f. 5528, op. 1, d. 11, pp. 3-4. 'Tsirkuliar NarKomFina SSSR ot 24 avgusta 1926 no. 736 o pogashenii zadolzhennosti po sotsial'nomu strakhovaniiu,' Izvestiia NKT SSSR, no. 35 (23 September 1926): 9. A.I. Rykov, Ten Years of Soviet Rule (London: National Committee of Friends of Soviet Russia, 1928), 44. D. Antoshkin, VKP(b) iprofsoiuzy o sotsial'nom strakhovanii. Sbornik dokumentov (Moscow: Naucho-issledovatel'skii institut professional'nogo dvizheniia, 1934) ,6. Letter, 7 January 1932, GARF, f. 5528, op. 4, d. 7, p. 13. R.W. Davies, The Development of the Soviet Budgetary System (Cambridge: Cambridge University Press, 1958), 74, 304. 'Izymlenie iz tsirkuliara NKIu RSFSR ot 4.8.1930 no. 94 o bor'be s zadolzhennost'iu po sotsial'nomu strakhovaniiu,' Izvestiia NKT SSSR, no. 312 (20 November 1930): 685. 'Direktivnoe pis'mo VTsSPS i NKT SSSR ot 13 avgusta 1927 g. no. NKT-279 ob usilenii rabotypo strakhovomu prosveshcheniiu,' Izvestia NKT SSSR, no. 40-1 (10 October 1927): 599-600. Tsirkuliar NKIu RSFSR ot 13 aprelia 1927 no. 69 o meropriiatiiakh po bor'be s zaderzhkoi strakh vznosov,' Izvestia NKT SSSR, no. 23 (11 June 1927): 351. Letter, GARF, f. 5528, op. 1, d. 266, p. 1.

Notes to pages 33-5

185

38 Merle Fainsod, Smolensk under Soviet Rule (Cambridge: Harvard University Press, 1958). 39 Terepodgotovka strakhovykh rabotnikov,' Trud, 14 August 1928,1. 40 VTsSPS and Central Administration of Social Insurance (Tsusstrakh), 'O provedenii sotsial'nogo sorevnovaniia v strakhovykh kassakh,' Trud, 16 August 1929,4. 41 'Klassovaia liniia v sotsial'nom strakhovanii,' Trud, 23 October 1929, 1. 42 Robert C. Tucker, Stalin in Power: Revolution from Above, 1928-1941 (New York: Norton, 1990); Stephen F. Cohen, Bukharin and the Bolshevik Revolution: A Political Biography (London: Oxford University Press, 1980); Roy Medvedev, Let History Judge: The Origins and Consequences of Stalinism (New York: Columbia University Press, 1989); Isaac Deutscher, Stalin: A Political Biography (New York: Oxford University Press, 1966). 43 A. Sklianskii, Sotsial'noe strakhovanie na povorote (Moscow: Sovetskoe zakonodatel'stvo, 1931): 15-17. 44 D. Antoshkin, VKP(b) iprofsoiuzy o sotsial'nom strakhovanii. Sbornik dokumentov (Moscow: Nauchno-issledovatel'skii institut professional'nogo dvizheniia, 1934): 11-13. 45 Antoshkin, VKP(b) iprofsoiuzy, 32. 46 'Vyplatnoi punkt—osnova perestroiki sotsstrakha,' Trud, 21 June 1931, 3. 47 'Slovopreniia zaderzhivaiut perestroiku sotsstrakha,' Trud, 17 May 1931, 1. The article discusses social insurance restructuring in Moscow oblast. 48 Sheila Fitzpatrick, Everyday Stalinism: Ordinary Life in Extraordinary Times: Soviet Russia in the 1930s (New York: Oxford University Press, 1999), ch. 5, 'Insulted and Injured,' 115-38. 49 Tsiurkuliar Narkomtruda SSSR, [c. 1923] GARF, f. 5528, op. 1., d. 2, p. 82. 50 'Utverzhdennye Soiuznym Sovetom Sotsial'nogo Strakhovaniia pri NKT SSSR 23 maia 1929 g. za no. 179 pravila obespecheniia v poriadke sotsial'nogo Strakhovaniia po starosti.' Izvestiia Narkomtruda SSSR, no. 25-6 (28June 1929): 406. 51 Postanovlenie USSR TsIK i SNK, 'O dopolnenii polozheniia ob obespechenii v poriadke sotsial'nogo Strakhovaniia po sluchaiu invalidnosti i po sluchaie poteri kormil'tsa.' 18 July 1929, GARF, f. 5528, op. 1, d. 158, pp. 60-1. 52 Postanovlenie TsIK i SNK SSSR, 'Ob izmenenii i dopolnenii zakonodatel'stva o pensiiakh i posobiiakh,' 21 November 1929, GARF, f. 5528, op. 1, d. 158, p. 46. 53 R.R. Kats, ed. Pensii po gosudarstvennomu sotsial'nomu strakhovaniiu (Moscow: Izdatel'stvo MSR RSFSR, 1938), 15. 54 Postanovlenie n. 45/388, TsIK i SNK SSSR (Central Executive Committee

186 Notes to pages 36-9

55

56 57 58 59 60 61 62 63

64

65

66 67 68 69 70 71 72 73

74 75 76

and Council of People's Commissars of the USSR), 3 October 1930, GARF, f. 5528, op. l,d. 166, p. 1. Tostanovlenie NKT USSR o proverke sostava pensionerov poluchaiushchikh pensiiu v poriadke sotsial'nogo strakhovaniia,' GARF, f. 5528, op. 1, d. 266, p. 1. 'Chto pokazala proverka pensionerov,' Trud, 18 October 1929, 3. Instruction from Narkomtrud, Moscow, to Social Insurance Kassy, GARF f. 5528, op. l,d. 266, [c. 1933]. Terepiski iz dorkassoi Riazano-Ural'skoi zheleznoi dorogi po voprosam raboty kassy,' 1924-7, GARF, f. 5528, op. 3, d. 83. Letter of 9 July 1924, GARF, f. 5528, op. 3, d. 87, p. 231. GARF, f. 5528, op. 1, d. 262 [c. 1932]. 'Mytarstva pensionerov,' Trud, 15 December 1936, 3. Peter Konecny, Builders and Deserters: Students, State and Community in Leningrad, 1917-1941 (Montreal: McGill-Queen's University Press, 1999). Tostanovlenie SNK SSSR ot 17 marta 1931 g.o edinom biudzhete sotsial'nogo strakhovaniia na 1931 g.,' Izvestia NKT SSSR, no. 16-17 (20 June 1931): 317. Tostanovlenie Soiuznogo Soveta Sotsial'nogo strakhovaniia pri NKT SSSR ot 26 maia 1931 no. 125 o 1'gotakh dlia lits, imeiushchikh prodolzhaiushchikh rabotat' po naimu,' Izvestiia NKT SSSR, no. 16-17 (20 June 1931): 318-19. P.K. Tokareva, Sotsial'noe obespechenie v g. Leningrade. Spravochnik dlia obrashchaiushikhsia zapomosh'iu v organy sotsial'nogo obespecheniia (Leningrad: Sotsial'nyi otdel sotsial'nogo obespecheniia, 1933), 5-6. lurii Volin, 'Dvinulis' stariki,' Trud, 16 November 1929, 3. 'V partiiu vstupaiut starye kadry rabochikh,' Trud, 21 January 1930, 3. lurii Volin, 'Dvinulis' stariki,' Trud, 16 November 1929, 3. Trava ob'iazannosti grazhdanina SSSR,' Trud, 23 December 1936,1. A. Antonov, 'Ob ob'iazannostiakh grazhdanina,' Trud, 31 December 1936, 2. Zinaida Tettenborn, Sovetskoe sotsial'noe obespechenie (Moscow: Voprosy Truda, 1929), 15-16. V.A. Skliarskii, Sotsial'noe strakhovanie napavorote (Moscow: Sovetskoe zakonodatel'stvo, 1931), 4-9. G. Iniutin and R. Rats, Pensii rabotnikam osnovnykh otraslei narodnogo khoziaistva (Moscow: Gosudarstvennoe izdatel'stvo iuridicheskoi literatury, 1949), 19. I.V. Stalin, 'O proekte konstitutsii SSSR,' Trud, 26 November 1936, 2. 'Rech' tovarishcha N. M. Shvernika,' 6 December 1936, Trud, 1. For example, S.I. Churanin, Tiazhelyi trud,' Trud, 12 December 1936, 2;

Notes to pages 39-40

187

Lidzhiev Andra, 'Starost' ne strashit,' Trud, 30 September 1936, 2: P.L. Lavrent'ev, 'Bespravie,' Trud, 12 December 1936, 2. 77 Translation: 'the desire of the Soviet government to hear out the people's opinion.' This is a quotation from V. Petrov, who wrote that the publication of the draft pension law was evidence that the Soviet government was willing to listen to the people, Trud, lOJune 1956, 2. 78 Rats, Pensii po gosudarstvennomu sotsial'nomu strakhovaniiu, 145-6 and 176-7. 79 Iniutin and Kats, Pensii rabotnikam osnovnykh otraslei narodnogo khoziaistva, 84. 80 See John MacNicol, 'Beveridge and Old Age,' 73-96,' and Fritz Grundger, 'Beveridge Meets Bismarck: Echo, Effects and Evaluation of the Beveridge Report in Germany,' 134-53, in John Hills, John Ditch, and Howard Glennerster, eds., Beveridge and Social Security: An International Retrospective (Oxford: Clarendon Press, 1994). 81 V.V. Karavaev, Sotsial'noe strakhovanie v SSSR (Moscow: Gosiurizdat, 1955): 30-1. 82 Letter from L. Kaganovich to CPSU Central Committee, GARF, f. 9553, op. l,ed. khr. 93, pp. 250-67. 83 'Protokol soveshchaniia u Predsedatel'ia Gosudarstvennogo Komiteta Soveta Ministrov SSSR po voprosam truda i zarabotnoi platy tovarishcha Kaganovicha L.M.' no. 3, 27June 1955, GARF, f. 9553, op. 1, ed. khr. 91. 84 GARF, f. 9553, op. 1, ed. khr. 62. 85 Letter [c. 1956] from a group of ballet dancers to Chairman of USSR Council of Ministers Bulganin, GARF, f. 9553, op. 1, ed. khr. 63, pp. 3-5. 86 For example, letter from Deputy Minister of Social Protection, 2 October 1956, GARF, f. 9553, op. 1, ed. khr. 290, pp. 2-9; document from Ministry of Social Protection of Estonian SSR, 12 October 1955, GARF, f.9553, op. 1, ed. khr. 93, pp. 39-45. 87 Letter from Deputy Minister of Social Protection of Belarussian SSR, 8 December 1956, GARF, f. 9553, op. 1, ed. khr. 290, pp. 15-20. 88 Goskomtrud, 'Raz'iasnenie nekotorykh voprosakh pensionnogo obespecheniia reabilitirovannykh,' April 1957, GARF, f. 9553, op. 1, ed. khr. 290, pp. 71-3. 89 For example, Ukaz no 2123, 10 December 1993, 'O povyshenii pensii v sootvetstvii s punktom 'zh' stat'i 110 Zakona RSFSR "o gosudarstvennykh pensiiakh RSFSR grazhdanam, rodivshimsia do 31 dekabr'ia 1931 g."' Pensionnoe zakonodatel'stvo RossiiskoiFederatsii, ukazy Prezidenta ipostanovleniia Pravitel'stva (Moscow: 'Sotsial'naia zashchita,' 1997), 15. 90 'Protokol soveshchaniia u Predsedatel'ia Gosudarstvennogo Komiteta Soveta Ministrov SSSR po voprosam truda i zarabotnoi platy tovarishcha Kaganovicha L.M.,' 13 September 1955, f. 9553, op. 1, ed. khr. 91.

188 Notes to pages 40-6 91 'Rezul'taty finansogo-ekonomicheskikh raschetov po popravkam k proektu zakona o pensionnom obespechenii,' [n.d.] GARF, f. 9553, op. 1, ed. khr. 93, p. 78. 92 'Zakon o material'nom obespechenii grazhdan SSSR v starosti i pri netrudosposobnosti,' 8 September 1955, GARF, f. 9553, op. 1, ed. khr. 92, pp. 115-34. 93 'Rasporiazhenie,' from N. Bulganin to Ministry of Agriculture, 15 February 1955, GARF, f. 9553, op. 1, ed. khr. 90, p. 119. 94 V. Matskevich, 'O praktike material'nogo obespecheniia kolkhoznikovinvalidov, a takzhe prestarelykh i detei sirot v kolkhozakh.' [n.d.] GARF, f. 9553, op. 1, ed. khr. 90, pp. 123-7. 95 USSR Council of Ministers Resolution [n.d.] GARF, f. 9553, op. 1, ed. khr. 90, after p. 128. 96 Zakon SSSR 'O pensiiakh i posobiiakh chlenam kolkhozov,' 15 July 1964, in B.O. Maevskaia, ed. Pensionnoe obespechenie v SSSR. Sbornik zakonodatel'nykh aktovpo sostoianiu na 1 October 1976 (Moscow: Goskomitet po trudy i sotsial'nym voprosam, 1976), 89-96. 97 'Direktivy 20 s'ezda KPSS po 6-omu piatiletnemu planu razvitiia narodnogo khoziaistva SSSR na 1956-60 godu.' Trud, 15 January 1956, 4-5. 98 'Velikaia zabota o blage naroda,' Trud, 9 May 1956, 1. 99 'Uverennost' vzavtrashnem dne,' Trud, 11 May 1956, 2. 100 N. Korataeva, 'Budem rabotat' eshche luchshche,' Trud, 12 May 1956,1. 101 V. Petrov, 'Spravedlivost: vot chto glavnoe v zakone,' Trud, 10 June 1956, 2. 102 'Dlia blaga naroda,' Trud, 15July 1956, 1. 103 Verkhovnyi Sovet SSSR (Supreme Soviet of the USSR), Stenograficheskii otchet, 4 sozyva 5-aia sessiia, ll-16July 1956, 20-1. 104 'Zakon o gosudarstvennykh pensiiakh,' in M.L. Zakharov and V.M. Piskov, eds., Sotsial'noe obespechenie i strakhovanie v SSSR (Moscow: luridicheskaia literatura, 1972), 179. 3. Pensions and the Pressures of Democratization in the USSR under Perestrvika, 1986-1990 1 See, for example,Joan Earth Urban and V.D. Solovei, Russia's Communists at the Crossroads (Boulder, CO: Westview Press, 1997). 2 Janet G. Chapman, 'Drastic Changes in the Soviet Social Contract,' in Jan Adam, ed., Economic Reforms and Welfare Systems in the USSR, Poland and Hungary: Social Contract in Transformation (London: Macmillan, 1991), 26, 39. 3 Paul D. Raymond, 'Disability as Dissidence: The Action Group to Defend the Rights of the Disabled in the USSR,' in William O. McCagg and Lewis

Notes to pages 46-7 189

4

5

6

7 8

9

10

11 12

13 14 15 16 17 18 19

Siegelbaum, eds., The Disabled in the Soviet Union: Past and Present, Theory and Practice. Pittsburgh, PA: University of Pittsburgh Press, 1989, pp. 235-52. Jim Riordan, 'Disabled "Afghantsy": Fighters for a Better Deal,' in Walter Joyce, ed. Social Change and Social Issues in the Former USSR: Selected Papers from the Fourth World Congress for Soviet and East European Studies, Harrogate, 1990 (New York: St Martin's Press, 1992), 136-57. Open Society Archives, Budapest, Fond 300, subfond 85, series 14, Box 30, AS no. 3860, Vsevolod Kuvakin, 'Sotsial'noe obespechenie ili zaprogrammirovannoi bespechnost'?' (Moscow, February 1978). Open Society Archives, Fond 300, subfond 85, series 14, Box 15, AS3496, Initiative Group for the Defense of the Rights of Invalids in the USSR, 24 August 1978, 'O polozhenie invalidovvSSSR.' See Alexander Zaichenko, 'Pensioners and Pensions,' Moscow News, no. 2 (8 January 1989): 10. Irina Korchagina, 'Kak zhit' babushke Klare?' Nedelia, no. 37 (1989), in Open Society Institute Archives, Budapest, Fond 300, subfond 85, series 12, box 242, USSR Today: Radio Liberty Monitoring, no. F475-28,19 September 1989. Aaron Trehub,' Perestwika and Social Entitlements,' in John E. Tedstrom, ed. Socialism, Perestwika and the Dilemmas of Soviet Economic Reform (Boulder, CO: Westview, 1990), 225. Ukaz of the USSR Supreme Soviet Presidium, 26 September 1967, in M.L. Zakharov and V.M. Piskov, eds. Sotsial'noe obespechenie v SSSR (Moscow: luridicheskaia literatura, 1986), 212. Resolution of USSR Council of Ministers, 3 August 1972, in Zakharov and Piskov, eds., Sotsial'noe obespechenie v SSSR, 215. Resolution of CPSU Central Committee and USSR Council of Ministers, 11 September 1979, 'O meropriatiiakh po materiarnym stimulirovaniiu raboty pensionerov v narodnom khoziaistve,' in Zakharov and Piskov, eds., Sotsial'noe obespechenie v SSSR, 305-7. K.I. Mikul'skii, V.Z. Rogovin, and S.S. Shatalin, Sotsial'naiapolitika KPSS (Moscow: Izdatel'stvo politicheskoi literatury, 1987), 213. M. Lekhtman, 'Sokratit' kontingent personal'nykh pensionerov,' Trud, 11 May 1990, 1. Pravda, 9 March 1986, 1. V.D. Shapiro, Chelovek napensii (Moscow: Mysl', 1980), 22-3. V.E. Gordin, Chem starost'obespechim? (Moscow: Mysl', 1988), 71. Anne White, Democratization in Russia under Gorbachev, 1985-91 (New York: St Martin's Press, 1999), 21-5. I had to rely on Soviet published budgetary figures here, which should be

190 Notes to page 48

20 21

22

23

24

25 26

27

taken with a grain of salt for a number of reasons. First, these data were often presented in a self-congratulatory manner, to demonstrate the success of Soviet socialism in providing benefits to the masses. Second, the figures that I found sometimes wrote about planned spending on social benefits, with few details of how the budgets were subsequently implemented. Third, there is considerable scholarly controversy over the value and reliability of Soviet budgetary data. Experts note that it was often inconsistently presented and incomplete, giving only a partial picture of financial realities. See Raymond Hutchings, The Soviet Budget (London: Macmillan 1983), 11-12; Donna Bahry, Outside Moscow: Power, Politics and Budgetary Policy in the Soviet Republics (New York: Columbia University Press, 1987), 175-85; Donna Bahry, 'Measuring Communist Priorities: Budgets, Investments and the Problem of Equivalence,' Comparative Political Studies, vol. 13, no. 3 (1980): 267-92; and Valerie Bunce, 'Measuring Communist Priorities: A Reply to Bahry,' in ibid., 293-8. V. Lavrov, The Soviet Budget (Moscow: Foreign Languages Publishing House, 1959), 47. V.V. Lavrov and K.N. Plotnikov, Gosudarstvennyi biudzhet SSSR (Moscow: Izdatel'stvo 'Finansy,' 1968), 327. Raymond Hutchings confirms that although the ruble was adjusted so that 1 new ruble = 10 old rubles, the budget amounts were presented at face value so that if you didn't know about the revaluation, you would think that spending had dramatically declined. Hutchings, The Soviet Budget, 14. Gosudarstvennyi Komitet SSSR po Statistike, Informatsionno-Izdatel'skii Tsentr, Sotsial'noe razvitie SSSR: statisticheskii sbornik (Moscow: 'Finansy i statistika,' 1990), 13. Central Statistical Board of the Council of Ministers of the USSR, The USSR in Figures for 1974 (Moscow: Statistika Publishers, 1975), 196; and State Committee of the USSR on Statistics, Information and Publications Centre, The USSR in Figures for 1988 (Moscow: 'Finansy i Statistika,' 1989), 65. Gosudarstvennyi Komitet SSSR po Statistike, Informatsionno-Izdatel'skii Tsentr, Sotsial'noe razvitie SSSR: statisticheskii sbornik (Moscow: 'Finansy i statistika'1990), 107. V.F. Garbuzov, O gosudarsvennom biudzhete SSSR na 1979god i obispolnenii gosudarstvennogo biudzheta SSSR na 1977god (Moscow: Politizdat, 1978), 21. B.I. Gostev, O gosudarsvennom biudzhete SSSR na 1988god i ob ispolnenii gosudarstvennogo biudzheta SSSR na 1986god (Moscow: Izdatel'stvo politicheskoi literatury, 1988), 15, 20-3. State Committee of the USSR on Statistics, Information and Publications Centre, The USSR in Figures for 1989 (Moscow: Finansy i statistika, 1990), 75.

Notes to pages 48-51 191 28 K.I. Mikul'skii, V.Z. Rogovin, and S.S. Shatalin, Sotsial'naiapolitika KPSS (Moscow: Izdatel'stvo politicheskoi literatury, 1987), 39, 212. 29 Toliticheskii doklad Tsentral'nogo Komiteta KPSS XXVII S'ezd Kommunisticheskoi Partii Sovetskogo Soiuza. Doklad General'nogo Sekretara TsK KPSS tovarishcha M.S. Gorbacheva,' in Materialy XVIIS'ezda KPSS (Moscow: Izdatel'stvo politicheskoi literatury, 1986), 52-3. 30 G.S. Shederova, Pensii byvshim chlenam kolkhozov, zemli kotorykh peredany sovkhozam i drugim predpriatiiam i organizatsiiam (Moscow: Rossel' khozisdat, 1966), 3-25. 31 'Postanovlenie 27-ogo s'ezda KPSS ob osnovnykh napravleniiakh ekonomicheskogo i sotsial'nogo razvitiia SSSR na 1986-90 gody i na period do 2000 goda,' Materialy 27-ogo s'ezda KPSS (Moscow: Izdatel'stvo politicheskoi literatury, 1986), 260. 32 'Postanovlenie 27-ogo s'ezda KPSS ob osnovnykh napravleniiakh ekonomicheskogo i sotsial'nogo razvitiia SSSR na 1986-1990 gody i na period do 2000 goda,' Materialy 27-ogo s'ezda KPSS (Moscow: Izdatel'stvo politicheskoi literatury, 1986), 312. 33 M.S. Gorbachev, report to the CPSU Central Committee plenum, 27 January 1986, 'O perestroike i kadrovoi politike partii,' Pravda, 28 January 1987, 1. 34 Mikul'skii et al., Sotsial'naia politika KPSS, 24. 35 Ibid., 31-5. 36 V. Kostakov, 'One Person Must Work Like Seven,' Sovetskaia kul'tura, 4 January 1986, trans, in Current Digest ofthe Soviet Press 38, no. 3 (1986): 5. 37 L. Mariyeva, 'Job for Pensioner,' Izvestiia, 4 October 1986, 3, trans, in Current Digest of the Soviet Press 38, no. 40 (1986): 22. 38 Shapiro, Chelovek napensii, 41. 39 Yu. Rytov, 'How the Pensioner Is Faring,' Izvestiia, 20 August 1988, 1, trans, in Current Digest ofthe Soviet Press 40, no. 33 (1988), p. 16. 40 Remarks of V. Mikhalkevich, head of the Main Administration of Pension payments of the RSFSR Ministry of Social Welfare, reported in Mikhail Mamaev, 'Ozhidanie: kak gotovitsia novyi zakon o pensiiakh,' Ogonek, no. 7(February 1989): 31-3. 41 Such sweeping claims were made in Shapiro, Chelovek napensii, 24—6. 42 See, for example, Yury Makartsev, 'Unexpected Old Age?' Sobesednik, no. 48, (November 1986): 4-5, trans, in Current Digest oj the Soviet Press 38, no. 48 (1986), 29-30. 43 L. Ivchenko, 'Old Age Stripped Bare,' Izvestiia, 21 October 1990, 2, translated in Current Digest oj the Soviet Press 42, no. 42 (1990), 29. 44 A. Diatlov, 'Care Is on the Way,' Sovetskaia Rossiia, 28 May 1987, 4, translated in Current Digest of the Soviet Press 39, no. 21 (1987), 25.

192 Notes to pages 51-3 45 Ye. Arakelian, 'Service for Veterans,' Izvestiia, 9 November 1987, 2, translated in Current Digest ofthe Soviet Press 39, no. 45 (1987), 26-7. 46 O. Belikova, 'A Noble and Beneficial Endeavour,' Izvestiia, 9 January 1990, 3, translated in Current Digest of the Soviet Press 42, no. 2 (1990): 32. 47 White, Democratization, 122. 48 Ibid. 49 L. Ivchenko, 'Obobrannaia starost',' Izvestiia, 21 October 1990, 2, in OSI Archives 300/85/12 box 242, USSR Today: Radio Liberty Monitoring, 25 October 1998, no. 888-23. 50 T. Khudyakova, 'Guarantee to Each Person - on the Outlook for Social Security,' interview with M. Kravchenko, Vice-Chairman of USSR State Committee on Labour and Social Questions, Izvestiia, 27 April 1988, trans, in Current Digest of the Soviet Press, 25 May 1988, 21. 51 Mikhail Mamaev, 'Zatianuvhseesia ozhidanie: Kak gotovitsia novyi zakon o pensiiakh,' Ogonek, no. 7 (February 1989): 31. 52 Ibid., 32. 53 M.S. Gorbachev, 'Ob osnovnykh napravleniiakh vnutrennei i vneshnei politiki SSSR,' 30 May 1989, Pervyi s'ezd Narodnykh Deputatov SSSR, Stenograficheskii otchet, t. 1 (Moscow: Izdatel'stvo Verkhovnogo Soveta SSSR, 1989), 447. 54 Ibid., 448. 55 V.A. Gontar, 31 May 1989, Pervyi s'ezd narodnykh deputatov SSSR, Stenograficheskii otchet, t. 2 (Moscow: Izdatel'stvo Verkhovnogo Soveta SSSR, 1989), 10-13. 56 Bernice Madison, 'Programs for the Disabled in the USSR,' in William O. McCagg and Lewis Siegelbaum, eds., The Disabled in the Soviet Union: Past and Present, Theory and Practice (Pittsburgh, PA: University of Pittsburgh Press, 1989), 185-6. 57 K.T. Mazurov, Chair of the All-Union Council of Veterans, 1 June 1989, Pervyi s'ezd narodnykh deputatov SSSR, Stenograjicheskii otchet, t. 2,179. 58 A. la. Neumyvakin, 1 June 1989, Pervyi s'ezd narodnykh deputatov SSSR, Stenograjicheskii otchet, t. 2, 204. 59 N.I. Ryzhkov, 'O programme predstoiashei deiatel'nost Pravitel'stva SSSR,' 7 June 1989, Pervyi s'ezd narodnykh deputatov SSSR, Stenograjicheskii otchet, t. 3 (Moscow: Izdatel'stvo Verkhovnogo Soveta SSSR, 1989), 17. 60 9 June 1989, Resolution of USSR Congress of People's Deputies, 'Ob osnovnykh napraveleniiakh vnutrennei i vneshnei politiki SSSR,' Pervyi s'ezd narodnykh deputatov SSSR, Stenograjicheskii otchet, t. 3, 410-15. 61 Cynthia Buckley and Wayne Hickenbottom, 'Elderly Support and In-Kind Transfers: Taxation Options in Rural Russia,' Comparative Economic Studies 37, no. 1 (1995): 21-2.

Notes to pages 54-7 193 62 See debate on the draft law, 'O neotlozhnykh merakh po uluchsheniu pensionnogo obespecheniia i sotsial'nogo obsluzhivaniia naseleniia,' Verkhovnyi Sovet SSSR, Pervaia sessia, Stenograficheskii otchet, chast' X, biulleten' no. 42, 1 August 1989, 8-26. 63 Verkhovnyi Sovet SSSR, Pervaia sessia, Stenograficheskii otchet, chast' X, biulleten' no. 43, 1 August 1989, 62-3. 64 Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 1st session, chast' X, biulleten' no. 42, 1 August 1989, 20-1. 65 VS. Pavlov, USSR Minister of Finance, introducing to Supreme Soviet draft law 'O neotlozhnykh merakh po uluchsheniiu pensionnogo obespecheniia i sotsial'nogo obsluzhivaniia naseleniia,' Verkhovnyi Soviet SSSR, Stenograficheskii otchet, 1'aia sessiia, biulleten' 44, 1 August 1989, 8-12. 66 White, Democratization, 68. 67 N.N. Gritsenko, chair of the Council of the Union commission on questions of labour, prices and social policy, remarks in Verkhovnyi Soviet SSSR, Stenograficheskii otchet, biulleten' 35, 27 April 1990, 122. 68 N.N. Gritsenko, chair of commission of the Council of the Union on questions of labour, prices and social policy, introducing draft law 'O pensionnom obespechenii grazhdan v SSSR' (second reading), Verkhovnyi Soviet SSSR, Stenograficheskii otchet, biulleten 28, 19 April 1990, 15-16. 69 N.N. Gritsenko, introducing draft law in the Supreme Soviet, Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3-aia sessiia, biulleten 28, 19 April 1990, 8. 70 M. Lekhtman, 'Sokratit' kontingent personal'nykh pensionerov,' Trud, 11 May 1990, 1. 71 K. Yakutova, letter to Ogonek, no. 34, (19-26 August 1989), in OSI Archives, fond 300, subfond 85, series 12, box 242, Radio Liberty Monitoring, USSR Today: Soviet Media Features Digest, 31 August 1989 No. F439-38. 72 A.A. Sobchak, 'Komu poluchat' personal'nye pensii,' Leningradskaia pravda, 21 December 1989, 2, in OSI archives, 300/85/12, box 242. 73 N.N. Gritsenko, introducing draft law in the Supreme Soviet, Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3-aia sessiia, biulleten' 28, 19 April 1990, 14. 74 Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3-aia sessiia, biulleten' 28, 19 April 1990,34-5. 75 V. Karpov, interview with Galina Sukhoruchenkova, secretary of VTsSPS, Tensiia - po spravedlivosti,' Trud, 17 May 1990, 2. 76 Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3-aia sessiia, biulleten' 30, 21 April 1990, 101-17. 77 V.I. Shcherbakov, Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3-aia sessiia, biulleten' 29, 19 April 1990, 90-3. 78 G.F. Sukhochenkova, secretary of VTsSPS, remarks in Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3-aia sessiia, biulleten' no. 28, 19 April 1990, 27.

194 Notes to pages 57-63 79 N.N. Gritsenko, Verkhovnyi sovet SSSR, Stenograficheskii otchet, 3 sessiia, biulleten' 35, 27 April 1990,115-18. 80 V. Karpov, 'Dela pensionnye: zatianuvshiesia debaty,' Trud, 5 May 1990,1. 81 N.N. Gritsenko, Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 3 sessiia, biulleten' 35, 27 April 1990,122. 82 Verkhovnyi sovet SSSR, Stenograficheskii otchet, Chast XIII, 15-22 May 1990, 6-25. 83 'Zakon o pensionnom obespechenii grazhdan SSSR,' Vedomosti Narodnykh Deputatov SSSR i Verkhovnogo Soveta SSSR, no. 22 (30 May 1990): 559. 84 'Zakon o pensionnom obespechenii grazhdan SSSR,' Vedomosti Narodnykh Deputatov SSSR i Verkhovnogo Soveta SSSR, no. 22 (30 May 1990): 531-74; 'Zakon o gosudarstvennykh pensiiakh v RSFSR,' Vedomosti S'ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR, no. 27 (6 December 1990): 45583. 85 See, for example, Ogonek, no. 32 (3-10 August 1991): 7; no. 9 (23 February2 March 1991): 2; no. 26 (22-9 June 1991): 5. 4. The Origins of Post-Communist Russia's Pension Crisis, 1990-1993 1 See for example Thomas F. Remington, Steven S. Smith, and Moshe Haspel, 'Decrees, Laws and Inter-branch Relations in the Russian Federation,' PostSoviet Affairs 14, no. 4 (1998): 287-322. 2 Janet G. Chapman, 'Drastic Changes in the Soviet Social Contract,' in Jan Adam, ed., Economic Reforms and Welfare Systems in the USSR, Poland and Hungary: Social Contract in Transformation (London: Macmillan, 1991), 26. 3 Zakon SSSR, 'O pensionnom obespechenii grazhdan v SSSR,' Vedomosti Narodnykh Deputatov SSSR i Verkhovnogo Soveta SSSR, no. 22 (30 May 1990): 531-69. 4 Author's interview No. 4 with former participant in the drafting of the legislation, Moscow, 30 September 1999. 5 Verkhovnyi Sovet RSFSR (Supreme Soviet of the RSFSR), Stenograficheskii otchet, Sovmestnogo zasedania Sovet Respubliki i Soveta National'nostei, 1st session, biulleten' no. 38,14 November 1990, 8. 6 Verkhovnyi Sovet RSFSR, Stenograficheskii otchet, 2nd session, Sovmestnogo zasedania Sovet Respubliki i Soveta National'nostei, biulleten' no. 38,14 November 1990,9-15.

7 Ibid., 18, 24-6. 8 M.L. Zakharov and E.G. Tuchkova, 'Pensionnaia reforma v Rossi 1990 g.: khoroshee nachalo i pechal'nye rezul'taty,' Gosudarstvo ipravo, no. 3 (1998): 20.

Notes to pages 63-6 195 9 See Zakharov's remarks, Verkhovnyi Sovet RSFSR, Stenograficheskii otchet. 2nd session, Sovmestnogo zasedania Sovet Respubliki i Soveta National'nostei, biulleten' no. 40, 20 November 1990, 7-9. 10 Remarks by lurii Vasilevich Roshchin, deputy RSFSR Minister of Labour. Verkhovnyi Sovet RSFSR, Stenograficheskii otchet, 3rd session, biulleten' no. 6, 6 February 1991,3. 11 Zakon SSSR, 'O pensionnom obespechenii grazhdan v SSSR,' Vedomosti Narodnykh Deputatov SSSR i Verkhovnogo Soveta SSSR, no. 22 (30 May 1990): 565. 12 'Soglashenii o garantiiakh prav grazhdan gosudarstv-uchastnikov Sodruzhestvo Nezavisimykh Gosudarstvvoblasti pensionnogo obespechenii,' 13 March 1992, 18-21, and 'Soglashenie mezhdu pravitel'stvom Rossiiskoi Federatsii i pravitel'stvom Respubliki Moldovy o garantiiakh prav grazhdan v oblasti pensionnogo obespecheniia, in Pensii vyezhaiushchim zagranitsu, Sotsial'naia zashchita daidzhest no. 6 (1996) Moscow: 1998, 22-5. 13 Verkhovnyi Sovet SSSR, Stenograficheskii otchet, 4th session. Sovmestnogo zasedanii Soveta Respubliki i Soveta Natsional'nostei, biulleten' no. 27, 27 December 1991, ch. 1, pp. 15, 60. 14 Verkhovnyi Sovet RSFSR, Stenograficheskii otchet, 4th session, Sovmestnogo zasedanii Soveta Respubliki i Soveta Natsional'nostei, biulleten' no. 52, 3 April 1992, 12-13. 15 Zakon Rossiiskoi Federatsii (Law of the Russian Federation), 'O vnesenii izmenenii i dopolnenii v zakon RSFSR o gosudarstvennykh pensiiakh v RSFSR,' Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 11 (12 March 1992), 719-22. 16 Zakon Rossiiskoi Federatsii, 'O povyshenii gosudarstvennykh pensiiakh v Rossiiskoi Federatsii,' Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 44 (5 November 1992): 3262-3. 17 S.Iu. Mochnova et al., Pensionnaia reforma (Moscow: Ministry of Social Protection of the Population, 1996), 9. 18 This was abolished in the 1956 reform. Gosudarstvennyi Arkhiv Rossiiskoi Federatsii (GARF), f. 9553, op. 1, ed. khr. 93, 'Razmer pensii po starosti po deistvuiushchemu zakonodatel'stvu i po proektu' [c. 1955], p. 110. 19 'Polozhenie o Pensionnom Fonde Rossiiskoi Federatsii,' Vedomosti S'ezda Narodnykh Deputatov RSFSR i Verkhovnogo Soveta RSFSR, no. 5 (30 January 1992): 236-8. 20 Postanovlenie Verkhovnogo Soveta Rossiiskoi Federatsii, 'O nekotorykh voprosakh, sviazannykh s wedeniiem v deistvie zakona Rossiiskoi Federatsii o vnesenii izmenenii i dopolnenii v zakon RSFSR o gosudarstvennykh pensiiakh v RSFSR,' Vedomosti S'ezda narodnykh deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 11(12 March 1992): 723.

196 Notes to pages 66-8 21 Verkhovnyi Sovet Rossiiskoi Federals!!, Stenograficheskii otchet, 4th session, biulleten' no. 59, Sovmestnoe zasedanie, 22 May 1992,17. 22 Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, 5th session, biulleten' no. 9, Sovmestnoe zasedanie, 21 October 1992, 20-35. 23 See exchange between Zakharov, Gaidar (then acting Prime Minister), and Barchuk (then Finance Minister), in Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, 5th session, Sovmestnoe zasedanie, biulleten' no. 9, 21 October 1992, part 1, pp. 20-6. 24 Ruslan I. Khasbulatov, Vo imia cheloveka (Moscow: Tsentr delovoi informatsii, 1992), 6-8. 25 'O khode ekonomicheskoi reformy v Rossiiskoi Federatsii,' adopted 5 December 1992, in Sbornik dokumentovpriniatom sed'mym S'ezdom Narodnykh Deputatov Rossiiskoi Federatsii, (Moscow: Izdanie Verkhovnogo Soveta Rossiiskoi Federatsii, 1992), 18. 26 Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, biulleten' no. 2, Sovmestnoe zasedanie, ISJanuary 1993, part 1, pp. 10-17. 27 Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, 6 session, 4June 1993, p. 10. 28 ITAR-TASS, 24 September 1992, translated in Foreign Broadcast Information Service, FBIS-SOV-92-187, 25 September 1992, p. 21. 29 Zakon Rossiiskoi Federatsii, 'O vnesenii izmenenii i dopolnenii v Zakon RSFSR 'o gosudarstvennykh pensiiakh v RSFSR.' Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 5 (4 February 1993): 301-3. 30 Zakon Rossiiskoi Federatsii, 'O vnesenii izmenenii v stat'iu 8 Zakona RSFSR o gosudarstvennykh pensiiakh v RSFSR,' Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsii i Verkhovnogo Soveta Rossiiskoi Federatsii, no. 16 (22 April 1993): 927-8. 31 Presidential ukaz no. 1435, 23 September 1993 (s izmeneniem na 29 October 1996), 'O sotsial'nykh garantiiakh dlia Narodnykh Deputatov Rossiiskoi Federatsii sozyva 1990-95 godov,' Pensionnoe zakonodatel'stvo Rossiiskoi Federatsii. Ukazy Prezidenta i postanovleniia Pravitel'stva (Moscow: 'Sotsial'naia zashchita,'1996), 11-14. 32 Postanovlenie Sovetov Ministrov-Pravitel'stva Rossiiskoi Federatsii no. 954, 22 September 1993, 'O neotlozhnykh merakh po obespecheniiu finansovoi stabil'nosti,' Sobranie Aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39 (27 September 1993): 4016-17. 33 Presidential ukaz, No. 1445, 24 September 1993, Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39 (27 September 1993): 4032. 34 Nikolay Podlipskiy, 'New Appointment in the Government: Door to Old

Notes to pages 68-73 197

35

36

37 38

39

40 41

42

43 44 45

Square Open to Parliamentary Specialists,' Kommersant, 25 September 1993, 2, translated in Foreign Broadcast Information Service, Central Eurasia, FBIS-USR-93-133, 14 October 1993): 34-6. Tatyana Khudyakova, 'Pension Fund did not have to resort to OMON,' Izvestiia, 12 October 1993, 2, translated in Foreign Broadcast Information Service, Central Eurasia, FBIS-SOV-93-197,14 October 1993, 49. Yuri Voronin, head of the Pension Service in the Ministry of Social Protection, 'Once more about the Indexation of Pensions,' Izvestiia, 10 November 1993, 7, translated in Foreign Broadcast Information Service, Central Eurasia, FBIS-USR-93-150, 25 November 1993, pp. 73-4. Federation Council, Stenograficheskii otchet, 9th session, 28 July 1994, 178-9. John T. Ishiyama, 'The Sickle or the Rose: Previous Regime Types and the Evolution of Ex-Communist Parties in Post-Communist Politics.' Comparative Political Studies SO, no. 3 (1997): 299-300. Ministerstvo Truda i Sotsial'nogo Razvitiia Rossiiskoi Federatsii, Departament Kompleksnogo Analiza i Prognozirovaniia Sotsial nogo Razvitiia, Pensionnoe obespechenie i sotsial'naia zashchita naseleniia Rossiiskoi Federatsii v 1996 g.: statisticheskii sbornik (Moscow, 1997), 13. Constitution of the Russian Federation, 1993. Roger Charlton, Roddy McKinnon, and Lukasz Konopielko, 'Pensions Reform, Privatization and Restructuring in the Transition: Unfinished Business or Inappropriate Agendas?' Europe-Asia Studies 50, no. 8 (1998): 1413-46. Reshaiushchiigod reform: materialy zasedaniia Soveta Ministrov Pravitel'stva Rossiiskoi Federatsii, 11 February 1993 (Moscow: Izdatel'stvo 'Respublika,' 1993), 13-25. See for example Janine Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe (New York: St Martin's Press, 1998). Supreme Soviet of the Russian Federation, Stenograficheskii otchet, 4th session, biulleten' no. 59, 22 May 1992, 18. Aleksey Kirpichnikov, 'Pensions Will Be Increased Nearly 50 percent,' Segodnia, 15 July 1994, 2, translated in Foreign Broadcast Information Service, Central Eurasia, FBIS-SOV-94-136, 15July 1994, 36-7.

5. Institutional Structure of the Russian Pension Systems, 1992-2001 1 Cynthia Buckley, 'Obligations and Expectations: Renegotiating Pensions in the Russian Federation,' Continuity and Changed, no. 3 (1998): 317. 2 Ibid., 317-38. 3 For example, Natalia Rimashevskaia and Valentina Bochkareva,

198 Notes to pages 73-5

4

5

6 7 8 9

10 11

12

13

14 15 16

Tensionnaia sistema: problemy i strategiia reform,' Svobodnaia mysl', no. 5 (May 1997): 37-50; M.L. Zakharov and E.G. Tuchkova, Tensionnaia reforma v Rossii 1990 g.: khoroshee nachalo i pechal'nye rezul'taty,' Gosudarstvo ipravo, no. 3 (1998): 20-7. 'Polozhenie o Pensionnom Fonde Rossiiskoi Federatsii,' Vedomosti S'ezda Narodnykh Deputatov HSFSR i Verkhovnogo Soveta RSFSR, no. 5 (30 January 1992): 236-8. Eugene Huskey, Presidential Power in Russia (Armonk, NY: M.E. Sharpe, 1999), 29-34; Thomas F. Remington, Steven S. Smith, D. Roderick Kiewiet, and Moshe Haspel, 'Transitional Institutions and Parliamentary Alignments in Russia 1990-1993,' in Remington, ed., Parliaments in Transition: The New Legislative Politics in the Former USSR and Eastern Europe (Boulder, CO: Westview, 1994): 159-80. Verkhovnyi Sovet Rossiiskoi Federatsii, Sovmestnoe zasedanie, 4th session, Stenograficheskii otchet, biulleten' no. 59 (22 May 1992): 18. Interview of Mikhail L. Zakharov by Nadezhda Nadezhdina, Trud, 12 February 1993, 2, translated in FBIS-USR-93-021, 26 February 1993: 31-5. Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, Sovmestnoe zasedanie, 4June 1993,10. Ukaz prezidenta Rossiiskoi Federatsii no. 787, 29 May 1993, 'Ob upravlenii pensionnym obespecheniem v Rossiiskoi Federatsii,' Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 22 (31 May 1993): 2264-5. Verkhovnyi Sovet Rossiiskoi Federatsii, Sovmestnoe zasedanie, 7th (Extraordinary) Session, biulleten'no. 8, 10 September 1993, 21-2. Postanovlenie Soveta Ministrov-Pravitel'stva Rossiiskoi Federatsii, no. 954, 22 September 1993, 'O neotlozhnykh merakh po obespecheniiu finansovoi stabil'nosti.' Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39 (27 September 1993): 4016-17. Nikolai Podlipskiy, 'New Appointments in the Government: Door to Old Square Open to Parliamentary Specialists,' Kommersant, 25 September 1993, 2, translated in FBIS-USR-93-133,14 October 1993, 34-6. Article 8 of 'Polozhenie o Pensionnom Fonde Rossiiskoi Federatsii,' 27 December 1991, Vedomosti S'ezda NarodnykhDeputatov RSFSR i Verkhovnogo Soveta RSFSR, 30 January 1992, 237. Remarks by V.V. Barchuk, Federal'noe Sobranie Rossiiskoi Federatsii, Sovet Federatsii, 9th session, Stenograficheskii otchet, 26-8 July 1994,175. Federal'noe Sobranie Rossiiskoi Federatsii, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 48,14July 1994, 22. Federal'noe Sobranie Rossiiskoi Federatsii, Sovet Federatsii, 9th session, 28 July 1994,179.

Notes to pages 76-9

199

17 'On Pension Indexation and Compensation,' Rossiiskie vesti, 15 April 1994, 1, translated in FBIS-SOV-94-073, 15 April 1994, 26. 18 Svetlana Bakulina, 'Intrigues and Pensions,' Rossiya, no. 18, 11-17 May 1994, 3, translated in FBIS-USR-94-056, 26 May 1994, 34-6. 19 Tostanovlenie Konstitutsionnogo Suda Rossiiskoi Federatsii po delu o proverke Konstitutsionnosti ukaza Prezidenta of 27 sentiabriia 2000 g. no. 1709 "o merakh po sovershenstvovaniiu upravleniia gosudarstvennym pensionnom obespecheniem v Rossiiskoi Federatsii v sviazi s zaprosam gruppy deputatov Gosudarstvennoi Dumy,"' 25 June 2001. Vestnik Konstitutsionnogo Suda Rossiiskoi Federatsii, no. 6 (2001): 3-14. On the consequences of the division of responsibilities for pension revenues and expenditures, see also V. Tselykh, 'Pochemu zaderzhivaiutsiapensii,' Prezidentskii kontrol': Informatsionnyi biulleten', no. 1 (1966): 19-32. 20 Author's interview No. 15, official of the Pension Fund of the Russian Federation, Moscow, 2 November 1999. 21 Verkhovnyi Sovet Rossiiskoi Federatsii, Sovmestnoe zasedanie, 5th session, biulleten'no. 9, 21 October 1992: 21-4. 22 Ibid., 45. 23 Sergei Chugaev, 'Pension Fund Has Become a Feeding Trough for Bureaucrats,' Izvestiia, 1 September 1995, 1-2, translated in FBIS-SOV-95-172, 6 September 1995, 47-9. 24 V. Tselykh, 'Pochemu zaderzhivaiutsia pensii,' Prezidentskii kontrol': informatsionnyi biulleten', no. 1 (1996): 21-2. 25 Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, Sovmestnoe zasedanie, 7th (Extraordinary) Session, biulleten' no. 8, 10 September 1993, 21-2. 26 Federal'noe Sobranie Rossiiskoi Federatsii, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 48, 14 July 1994, 22. 27 Federal'noe Sobranie Rossiiskoi Federatsii, Sovet Federatsii, 9th session, 28 July 1994, 176, 184. 28 V.V. Barchuk, remarks to Federation Council, Sovet Federatsii, 25th zasedanie, Stenograficheskii otchet, Biulleten'no. 2 (79), 28July 1995, 21. 29 Sovet Federatsii, 11th session, Stenograficheskii otchet, 25 October 1994, 217-18. 30 n.a. 'Pensii ne iz vozdukha berutsia,' Rossiiskaia gazeta, 8 May 1996, 1. 31 N. luzhnyi, 'Pensioneram pridetsia poterpet',' Znamiia, 20 February 1997, 2. 32 Radio Rossii, 8 October 1998, translated in FBIS-SOV-98-281, 8 October 1998. 33 Liubov' Volkova, 'Difficult but Necessary to Pay Debts,' Rossiiskaia gazeta, 29 October 1998, 1, translated in FBIS-SOV-98-303, 30 October 1998.

200

Notes to pages 79-81

34 Vladimir Mikhalev, 'Social Security in Russia under Economic Transformation,' Europe-Asia Studies^, no. 1 (1995): 9. 35 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 127, 24 October 1997, 38. 36 V. Tselykh, 'Pochemu zaderzhivaetsia pensii," Prezidentskii kontrol': informatsionnyi biulleten', no. 1 (1996): 19-20. 37 n.a. 'V Genprokurature vzialis' za Pensionnyi Fond,' Rossiiskaia gazeta, 22 July 1999,2. 38 Zakon Rossiiskoi Federatsii, 'O vnesenii izmenenii v stat'iu 8 Zakona RSFSR 'o gosudarstvennykh pensiiakh v RSFSR',' Vedomosti S'ezda Narodnykh Deputatov Rossiiskoi Federatsiii Verkhovnogo Soveta Rossiiskoi Federatsii, no. 16 (22 April 1993): 927-8. 39 Verkhovnyi Sovet RSFSR, Stenograficheskii otchet, Sovmestnoe zasedanie, 6th session, biulleten' no. 2,15 January 1993, part I, pp. 42-4. 40 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 225, 23 December 1998, 53-4. 41 Federal'noe Sobranie Rossiiskoi Federatsii, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 48,14July 1994,19-21. 42 Valerii Vbrontsov, advisor to deputy prime minister of the Russian government, quoted in Rossiiskie vesti, 21 November 1995, 2, translated in Current Digest of the Post-Soviet Press 47, no. 47 (1995): 10-12. 43 V.V. Barchuk, Sovet Federatsii, Stenograficheskii otchet, 4th zasedanie, biulleten' no. 2 (100), 20 March 1996, 30. 44 V. Chernomyrdin, remarks to Federation Council, Sovet Federatsii, Slenograficheskii otchet, 14th zasedanie, biulleten' no. 1 (116) 10 December 1996,12. 45 Remarks of V.V. Barchuk to Sovet Federatsii, Stenograficheskii otchet, 11th session, 25 October 1994, 221. 46 Remarks of V.G. Artiukhov, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 108, 7June 1995, 46. 47 Remarks to Federation Council of L.A. Grigoreva and V.V. Barchuk, Sovet Federatsii, Stenograficheskii otchet, 25th zasedanie, biulleten' no. 2 (79), 28 July 1995, 22. 48 S.Iu. Mochnova, LA. Ovchinnikova, S.A. Ptitsyna, E.G. Semenova, and K.S. Smolkin, Pensionnaia reforma (Moscow: Ministry of Social Protection of the Population, 1996), 21-2. 49 V.V. Barchuk, remarks in Federation Council, Sovet Federatsii, 4th zasedanie, biulleten' no. 2 (100), 20 March 1996, 33-4. 50 Nezavisimaia gazeta, 10June 1997,4. 51 n.a. 'V Genprokurature vzialis' za Pensionnyi Fond,' Rossiiskaia gazeta, 22 July 1999, 2.

Notes to pages 81-3 201 52 Remarks of A.V. Kurtin and V.R. Pashuto, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 13, 29 March 2000, 31-2. 53 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 45, 20 September 2000, 54-5. 54 Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, Sovmestnoe zasedanie, 4th session, biulleten' no. 59, 22 May 1992,17. 55 Verkhovnyi Sovet Rossiiskoi Federatsii, Stenograficheskii otchet, Sovmestnoe zasedanie, 5th session, biulleten' no. 9, 21 October 1992, part 1, p. 21. 56 Remarks of V.V. Barchuk to Sovet Federatsii, llth session, Stenograficheskii otchet, 25 October 1994, 224. 57 Remarks of V.V. Barchuk to Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 80, ISJanuary 1995, 33. 58 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 80, 18 January 1995, 29. 59 Ibid., 33. 60 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 137, 22 November 1995, p. 19. 61 Elena Vasil'kova, interview with Pension Fund head Vasilii Barchuk, 'Sotsial'naia zashchita: Na iskhode avgust, a pensii eshche platiat za iul'.' Rossiiskie vesti, 28 August 1996, 1-2. 62 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 3, part 2, 24 June 1997, 16-17. 63 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 174,13 May 1998,17-19. 64 Zakon, 'O poriadke finansirovaniia gosudarstvennykh pensii, vyplata kotorykh po zakonodatel'stvu Rossiiskoi Federatsii osushchestvliaetsiia za schet sredstv federal'nogo biudzheta,' Veteran, no. 42, (November 1998): 2. 65 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 203,18 September 1998, 15. 66 ITAR-TASS, 3 November 1998, translated in FBIS-SOV-98-307, 3 November 1998. 67 Interfax Daily Report, vol. Ill, no. 47, March 12, 1999, translated in FBISSOV-1999-0315,15 March 1999. 68 N. Markova and A. Bedenkov, 'Sotsial'no-ekonomicheskoe polozhenie regionov Rossii (obzor),' Voprosy ekonomiki, no. 3, (1995): 121-3. 69 Alastair McAuley, 'The Determinants of Russian Federal-Regional Fiscal Relations: Equity or Political Influence?' Europe-Asia Studies49, no. 3 (1997): 431-9. 70 Peter Kirkow, 'Distributional Coalitions, Budgetary Problems and Fiscal

202

71 72 73 74 75

76 77 78 79 80 81

Notes to pages 83-8

Federalism in Russia,' Communist Economies and Economic Transformation 8, no. 3 (1996): 277-98. Daniel Treisman, 'The Politics of Intergovernmental Transfers in Post-Soviet Russia,' British Journal ofPolitical Science 26, no. 3 (July 1996): 299-335. Verkhovnyi Sovet Rossiiskoi Federatsii, Sovmestnoe zasedanie, 7th (Extraordinary) Session, biulleten'no. 8,10 September 1993, 21-2. Peter Kirkow, 'Local Self-Government in Russia: Awakening from Slumber,' Europe-Asia Studies 49, no. 1 (1997): 50. Goskomstat Rossii, Regiony Rossii: ofitsial'noe izdanie, vol. 2 (Moscow: Goskomstat, 1998), 36-7. Remarks by P.L. Kaminskii, Deputy Minister of Social Protection of the Population, to Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 57, 19 October 1994, 28. Interfax, 'Pensionnyi fond budet izymat' produktsiia predpriatii dolzhnikov,' Respublika Sakha, I7january 1997, 2. n.a. 'Vznosy na budushchuiu pensiiu,' Dagestanskaiapravda, 3 April 1997, 3. 'O sostoianii finansirovaniia pensii,' Prizyv (Vladimir) 11 April 1997, 1. V.V. Barchuk, Sovet Federatsii, 25th zasedanie, Stenograficheskii otchet, biulleten' no. 2 (79), 28 July 1995, 25. V. Chernomyrdin, remarks to Federation Council, Sovet Federatsii, 14th zasedanie, biulleten' no. 1 (116), 10 December 1996,13. Remarks of T.M. Gudima, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 67, 25 December 1996, 41.

6. The Politics of Pensions and the Evolution of Russian Parliamentarianism, 1994-1999 1 Robert B. Ahdieh, Russia '$ Constitutional Revolution: Legal Consciousness and the Transition to Democracy, 1985-1996 (University Park, PA: Penn State University Press, 1997). 2 Maxwell A. Cameron, 'Self-Coups: Peru, Guatemala and Russia, 'Journal of Democracy 9, no. 1 (1998): 125-39. 3 See for example Michael McFaul, 'Lessons from Russia's Protracted Transition from Communist Rule,' Political Science Quarterly 114, no. 1 (1999): 104. 4 A.A. Kotenkov (former representative of the president to the State Duma), 'Aktual'nye problemy vzaimootnoshenii Prezidenta Rossiiskoi Federatsii i Gosudarstvennoi Dumy Federal'nogo Sobraniia Rossiiskoi Federatsii v zakonodatel'nom protsesse,' Gosudarstvoipravo,no. 10 (1998): 15-17. 5 Joel M. Ostrow, 'Procedural Breakdown and Deadlock in the Russian State Duma: The Problems of an Unlinked Dual-Channel Institutional Design,' Europe-Asia Studies 50, no. 5 (1998): 793-816.

Notes to pages 88-9 203 6 For example, Ostrow, 1998; Moshe Haspel, 'Should Party in Parliament Be Weak or Strong? The Rules Debate in the Russian State Duma.,' Journal of Communist Studies and Transition Politics 14, nos. 1-2 (1998): 178-200; V.M. Sergeev, A.V. Beliaev, N.I. Biriukov, and L. lu. Gusev, 'Stanovlenie parlamentskikh partii v Rossii: Gosudarstvennaia Duma v 1994-1997 godakh,' Polls 1 (1999): 50-71. 7 For example, 'A Reddish Duma,' Economist, 3 February 1996, 42. 8 Eugene Huskey, Presidential Power in Russia (Armonk, NY: M.E. Sharpe, 1999). See also Steven S. Smith and Thomas F. Remington, The Politics of Institutional Choice: The Formation of the Russian State Duma. (Princeton, NJ: Princeton University Press, 2001). 9 William E. Butler, Russian Law (Oxford: Oxford University Press, 1999), 307. 10 Robert Sharlet, 'Russian Constitutional Crisis: Law and Politics under Yeltsin,' Post-Soviet Affairs 9, no. 4 (1993): 314-36. 11 Judith S. Kullberg, The Ideological Roots of Elite Political Conflict in PostSoviet Russia,' Europe-Asia Studies 46, no. 6 (1994): 929-53. 12 Stephen Holmes, 'Superpresidentialism and Its Problems,' East European Constitutional Review 2, no. 4 / 3 . no. 1 (1993/4): 123-6. 13 Scott Parrish, 'Presidential Decree Authority in Russia 1991-1995,' in John M. Carey and Matthew Soberg Shugart, eds., Executive Decree Authority (New York: Cambridge University Press, 1998), 62-103; Thomas F. Remington, Steven S. Smith, and Moshe Haspel, 'Decrees, Laws and Inter-Branch Relations in the Russian Federation,' Post-Smnet Affairs 14, no. 4 (1998): 287-322. 14 Aleksei Avtonomov, 'Aktual'nye problemy zakonodatel'nogo protsessa v Rossiiskoi Federatsii,' Problemy parlamentskogoprava Rossii (Moscow: Tsentr konstitutsionnykh issledovanii Moskovskogo nauchnogo fonda, 1996), 10, 12. 15 Gabriella Ilonszki, 'Representation Deficit in a New Democracy: Theoretical Considerations and the Hungarian Case,' Communist and Post-Communist Studies 31, no. 2 (1998): 157-70. 16 Velio Pettai, 'Party Politics in the Baltic States: Social Bases and Institutional Context,' East European Politics and Societies 13, no. 1 (1999): 148-89. 17 Alfred Stepan and Cindy Skach, 'Constitutional Frameworks and Democratic Consolidation: Parliamentarism vs. Presidentialism,' World Politics 46 (October 1993): 1-22; Matthew Soberg Shugart and John M. Carey, Presidents and Assemblies: Constitutional Design and Electoral Dynamics (Cambridge: Cambridge University Press, 1992). 18 William B. Heller, 'Bicameralism and Budget Deficits: The Effect of Parliamentary Structure on Government Spending,' Legislative Studies Quarterly 22, no. 4 (1997): 485-516; Thomas H. Hammond, 'Formal Theory and the Institutions of Governance,' Governance^, no. 2 (1996): 107-85.

204

Notes to pages 89-96

19 Leonard Binder, 'The Crises of Political Development,' in Binder et al., Crises and Sequences in Political Development. (Princeton, NJ: Princeton University Press, 1971), 56-8. 20 Lucian W. Pye, 'The Legitimacy Crisis,' in Binder et al., Crises and Sequences in Political Development, 141. 21 Robert A. Dahl, introduction to R.A. Dahl, ed., Regimes and Oppositions (New Haven, CT: Yale University Press, 1973), 1-27. 22 Jon Elster and Rune Slagstad, eds., Constitutionalism and Democracy (Cambridge: Cambridge University Press, 1988). 23 See Archie Brown, 'The October Crisis of 1993: Context and Implications,' Post-Soviet Affairs 9, no. 3 (1993): 183-95. 24 Darrell Slider, Vladimir Gimpelson, and Sergei Chugrov, 'Political Tendencies in Russia's Regions: Evidence from the 1993 Elections,' Slavic Review 53, no. 3 (1994): 711-32; M. Steven Fish, 'The Advent of Multipartism in Russia, 1993-5,' Post-Soviet Affairs 11, no. 4 (1995): 340-83. 25 Robert W. Orttung and Scott Parrish, 'Duma Votes Reflect North-South Divide,' Transition 12, no. 4 (1996): 13-15; Matthew Wyman, 'The Russian Elections of 1995 and 1996,' Electoral Studies 16 no. 1 (1997): 79-125. 26 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 28, 22 April 1994, 15. 27 V.A. Marychev, remarks to Duma, in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 120, 19July 1995, 53. 28 V.B. Isakov, remarks to Duma, in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 89, 24 February 1996, 23. 29 Liudmila Bezlepkina, Minister of Social Protection of the Population, remarks to the Federation Council, Soviet Federatsii, Stenograficheskii otchet, 25 October 1994, 230-1. 30 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 92, 17 March 1995, 22. 31 For example, remarks of S.G. Kiselev, Deputy Minister of Social Protection, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 121, 20 July 1995, 29. 32 For example, M.L. Zakharov and E.G. Tuchkova, Zakon RossiiskoiFederatsii o gosudarstvennykh pensiiah v RossiiskoiFederatsii (Moscow: BEK, 1997,1, 3; M.E. Dmitrievand D. la. Travina, Pensionnaia reforma v Rossii: prichiny, soderzhanie, perspektivy (St Petersburg: Norma, 1998), 202-3. 33 For example, see remarks of presidential representative A.A. Kotenkov in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 67, 25 December 1996, 40. 34 According to Pension Fund head Vasilii Barchuk's remarks to the Federa-

Notes to pages 96-102 205

35 36 37

38

39 40 41 42

43 44

45

46

47 48

tion Council, Pension Fund revenues were 10.665 trillion rubles (exceeding anticipated revenues of 10 trillion) and expenditures were 10.386 trillion. Soviet Federatsii, Stenograficheskii otchet, 28 July 1994, 175. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 56, 14 October 1994, 24. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 87, 17 February 1995, 41. See M. Stephen Weatherford, 'Responsiveness and Deliberation in Divided Government: Presidential Leadership in Tax Policy Making,' British Journal of Political Science 24, no. 1 (1994): 1-31. Thomas F. Remington, Steven S. Smith, D. Roderick Kiewiet, and Moshe Haspel, 'Transitional Institutions and Parliamentary Alignments in Russia, 1990-1993,' in Remington, ed., Parliaments in Transition: The New Legislative Politics in the Former USSR and Eastern Europe (Boulder, CO: Westview, 1994), 159-80. William E. Butler, Russian Law (Oxford: Clarendon Press, 1991), 299. Butler, Russian Law (Oxford: Oxford University Press, 1999), 295. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 92, 17 March 1995, 25. See John T. Ishiyama, 'The Sickle or the Rose: Previous Regime Types and the Evolution of Ex-Communist Parties in Post-Communist Politics,' Comparative Political Studies 30, no. 3 (1997): 299-330; Sergey Chernykhovsky, 'The Communist Party of the Russian Federation,' in Michael McFaul, Nikolai Petrov and Andrei Ryabov, with Elizabeth Reisch, eds., Primer on Russia's 1999Duma Elections (Washington, DC: Carnegie Endowment for International Peace, 1999), 81. Tsentral'naia izbiratel'naia komissiiia, Vybory deputatov Gosudarstvennoi Dumy 1995: Elektoral'naia statistika (Moscow: Izdatel'stvo Ves' Mir, 1996), 235. V.M. Sergeev, A.V. Beliaev, N.I. Biriukov, and L. lu. Gusev, 'Stanovlenie parlamentskikh partii v Rossii: Gosudarstvennaia Duma v 1994—1997 godakh,' Polisl (1999): 56-7. Steven S. Smith and Thomas F. Remington, The Politics of Institutional Choice: The Formation of the Russian State Duma (Princeton, NJ: Princeton University Press, 2001). Oksana Dmitrieva, chair of subcommittee of the Committee on budget, taxes, banks and Finance, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 51, 21 July 1994, 52-3. 'Kontseptsiia reformy sistemy pensionnogo obespechenii v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 23 August 1995, 5-6. 'Duma Committee Criticizes Government Pension System Reform Concept,'

206

49 50 51

52 53 54 55 56 57

58 59 60 61

62 63

Notes to pages 102-7

Segodnya, 23 August 1995, 2, translated in FBIS-SOV-95-164, 24 August 1995, 31. 'Ob osnovakh napravleniiakh reformy pensionnogo obespecheniia v Rossiiskoi Federals!!,' Dumskii vestnik, no. 2 (27) Moscow, 1997, 76-97. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 80, ISJanuary 1995,31. Ivan Kuchmin, 'Personifitsirovannyi uchet: pervye shagi,' Sotsial'noe obespechenie, no. 6 (1997): 32-41; A. Solov'ev, 'Individuarnyi koeffitsient pensionera: kliuchevoi element pensionnoi reformy,' Sotsial'noe obespechenie, no. 1 (1998): 34-9. Law, 'O negosudarstvennykh pensionnykh fondakh,' Rossiiskaia gazeta, 13 May 1998, 5. 'Programmy pensionnoi reformy v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 26 May 1998): 5-6. M.E. Dmitriev and D. la. Travina, Pensionnaia reforma v Rossiiprichiny, soderzhenie, perspektivy (St Petersburg: Norma, 1998). An example of this Soviet perspective is K.S. Batygin, Sotsial'noe strakhovanie v SSSR (Moscow: Profizdat, 1973), 14. Viktor Chernomyrdin; Sergei Kiriyenko; Evgenii Primakov; and Sergei Stepashin, who was replaced by Vladimir Putin in August 1999. V.D. Filimonov, chair of Duma Special Commission on Evaluation of Procedural Rules and Factual Basis for Accusations against the Russian Federation President, remarks to Duma, Stenogramma zasedanii, biulleten' 259, part 1,13 May 1999, 13-24. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 259, part 1,13 May 1999, 26. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 261, 15 May 1999, 48. Leonard Binder, 'Crises of Political Development,' 56-8. Ukazno. 1445, 24 September 1993. Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39, 27 September 1993, 4032. (Presidential decree, dismissing Pension Fund head Aleksandr Kurtin and replacing him with Vasilii Barchuk). Resolution no. 954 of the Council of Ministers- Government of the Russian Federation, 22 September 1993, 'O neotlozhnykh merakh po obespecheniiu finansovoi stabil'nosti,' Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 39, 27 September 1993: 4016-7 (government resolution 'On urgent measures for ensuring financial stability'). See Appendices for examples. For example: Presidential veto of Implementation of the Pension Fund Budget for 1996 (Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 21, 25 May 1998, 4249-50), veto overturned by State Duma, law passed May 1998,

Notes to pages 107-10

207

Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 22,1 June 1998, 4450-2. The law included extensive discussion of the federal budget's debt to the Pension Fund in 1996 and measures for paying it off for 1997; presidential vetoes of Pension Fund budget for 1997, 29 March 1998, veto overturned in Duma, 13 May 1998; the objection was to the amount of money the federal budget would be required to pay to reimburse the Fund. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 174, 13 May 1998, 17-21. Law came into effect 27 May. Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 22, 4452-7; Duma overturns presidential veto of 1997 Pension Fund budget, which would require federal budget to supplement Fund revenues. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 174, 13 May 1998, 21; Duma rejects at first reading government initiative law to lower payroll pension tax and increase individual pension contributions, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 194, 17 July 1998, 26. 64 Government initiative, draft law 'O vremennoi moratorii na priniatie normativnykh pravovykh aktov po gosudarstvennomu pensionnomu obespechenii.' Rejected in Duma, first reading. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 97, 14 May 1997, 23-7. Duma failed to overturn Yeltsin veto of law 'O moratorii na provedenie eksperimentovv gosudarstvennoi sisteme sotsial'nogo strakhovaniia.' Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 297, 19 November 1999, 18-19, and biulleten' 299, 24 November 1999, 18-20. 65 Government resolution, 'O merakh po obespecheniiu svoevremennoi vyplaty gosudarstvennoi pensii,' Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 30, 27 July 1998, 6894-5; Resolution of the State Duma, 'Ob obrashchenii v Konstitutsionnyi Sud Rossiiskoi Federatsii,' Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 30, 27 July 1998, 6894-5; Resolution of the State Duma, 'Ob obrashchenii v Konstitutsionnyi Sud Rossiiskoi Federatsii,' Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 35, 31 August 1998, 8160-1. 66 Resolution of State Duma, 'O deistviiakh pravitel'sta Rossiiskoi Federatsii po normativnomu pravovomu regulirovanii realizatsii zakona ot 21 iuliia 1997 ischisleniia gosudarstvennykh pensii,' Veteran, no. 8 (February 1998): 6; Sergei Kalashnikov, Minister of Labour and Social Development, remarks to Duma, Stenogramma zasedanii, biulleten' 244,12 March 1999, 40. 7. Russian Laws on Old-Age Pensions and Veterans' Rights: Contending Understandings of Social Justice 1 Federal'nyi zakon, 'O poriadke ischisleniia i uvelicheniia gosudarstvennykh pensii,' Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 30, 28 July 1997, 5845-7.

208 Notes to pages 111-14 2 Article 7 of 'Zakon o gosudarstvennykh pensiiakh v RSFSR,' Vedomosti S'ezda NarodnykhDeputatov RSFSR i Verkhovnogo Soveta RSFSR, no. 27, 6 December 1990, 455-83. 3 Gosudarstvennaia Duma, Stenogramma zasedaniia, biulleten' 120,19July 1995, 52-4. 4 Ibid., biulleten' 121, 20 July 1995, 43-4. 5 Ibid., biulleten' 130,18 October 1995 and 10 November 1995, 21-2. 6 Sovet Federatsii Federal'nogo Sobraniia Rossiiskoi Federatsii, Zasedanie 30oe (vneocherednoe), biulleten'I, 28 November 1995, 51-8. 7 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 110, 23 June 1997,8. 8 M.L. Zakharov and E.G. Tuchkova, 'Pensionnaia reforma v Rossii 1990 g. khoroshee nachalo i pechal'nye rezul'taty,' Gosudarstvo ipravo, no. 3 (1998): 20-7; M.L. Zakharov and E.G. Tuchkova, Prakticheskii i nauchnyi komentarii k zakonu Rossiiskoi Federatsii 'o gosudarstvennykh pensiiakh v Rossiiskoi Federatsii (Moscow: Izdatel'stvo Vek, 1997); Natalia Rimashevskaia and Valentina Bochkareva, 'Pensionnaia sistema: problemy i strategiia reform,' Svobodnaia mysl', no. 5 (May 1997): 37-40; Rimashevskaia and Bochkareva, 'V interesakh bol'shinstva Rossiian?' Nezavisimaia gazeta, 25 May 2001,12; A.S. Nazarov, 'Verkhovnyi Sud Rossiiskoi Federatsii podtverdil zakonnost' ischisleniia pensii s IKP pri ogranichenii 0.7 sootnosheniia zarabotkov, a ne IKP.' Pensiia, no. 6 (June 2000): 43-50. 9 Federal'nyi zakon, 'O poriadke i uvelicheniia gosudarstvennykh pensii,' Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 30, 28 July 1997, 5845-47. 10 See remarks of Deputy Minister of Labour and Social Development, lu. Z. Liublin, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 172, 22 April 1998, 50. 11 Arkadii Solov'iev, 'Pochemu pensionery nedovol'nye?' Profsoyuz, no. 9, (1998): 38-9. 12 A.S. Nazarov, 'Verkhovnyi Sud Rossiiskoi Federatsii podtverdil zakonnost' ischisleniia pensii s IKP pri ogranichenii 0.7 sootnosheniia zarabotkov, a ne IKP.' Pensiia no. 6 (June 2000): 43-50. 13 Arkadii Solov'iev, 'Pochemu pensionery nedovol'nye?' Profsoyuz, no. 9 (1998): 38-9. 14 M.L. Zakharov and E.G. Tuchkova, 'Pensionnaia reforma v Rossii 1990 g.: khoroshee nachalo i pechal'nye rezul'taty,' Gosudarstvo ipravo, no. 3 (1998): 25. 15 V.N. Baskakov and M.E. Baskakova, O pensiiakh dlia muzhchin i zhenshchin: sotsial'nye aspektypensionnoi reformy (Moscow: Aktuarnyi informatsionnoanaliticheskii tsentr Nil PMM im. N.E. Baumana, 1998), 25.

Notes to pages 114-17 209 16 Mania Bondarenko, 'Na Donu pensioner vynuzhden rabotat',' Nezavisimaia gazeta, 20 March 2001,12. 17 A.S. Nazarov, 'Ischislenie pensii v sootvetsvii s deistvuiushchim zakonodatel'stvom,' in V.A. Fronin et al., Vashapensiia segodnia i v perspective (Moscow: Bibliotechka 'Rossiiskaia gazeta,' no. 10, 2001), no. 10, pp. 111-39. 18 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 147, 16January 1998,49-51. 19 Federal law, 'O povyshenii minimarnogo razmera pensii, poriadke indeksatsii i pererascheta gosudarstvennykh pensii v Rossiiskoi Federatsii v. 1997 g.,' Sobranie zakonodatel'stva Rossiiskoi Federatsii, no. 40, 6 October 1997, 7946. 20 Vitaly Golovachov, 'Juggling the Figures,' Trud, 16January 1998, 2, translated in Current Digest ofthe Post-Soviet Press 50, no. 3 (1998): 15-16. 21 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 172, 22 April, 39-51; biulleten' 197, 2 September 1998, 36-46; biulleten' 205, 2 October 1998,10-11. 22 Ibid., biulleten' no. 244, 12 March 1999, 40 (remarks of Minister of Labour and Social Development, S.V. Kalashnikov). 23 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 244, 12 March 1999,42. 24 Ibid., biulleten' no. 268, 9June 1999, 45-7. 25 Ibid., biulleten' no. 269,10 June 1999, 36-8. 26 Ibid., biulleten' no. 291, 26 October 1999, 24-5. 27 Ibid., biulleten' no. 298, 23 November 1999, 29-30. 28 lurii Trigubovich, 'Pensionnyi kollaps,' Nezavisimaia gazeta, 8 April 1999, 4. 29 Irina Nevinnaia, '0.7: pensionnyi raschet plus ili minus?' Rossiiskaia gazeta, 25 February 2000,5. 30 A.S. Nazarov, 'Verkhovnyi Sud Rossiiskoi Federatsii podtverdil zakonnost' ischisleniia pensii s IKP pri ogranichenii 0.7 sootnosheniia zarabotkov, a ne IKP; Pensiia, no. 6 (June 2000): 43-50. 31 Arkadii Solov'iev, 'Pochemu pensionery nedovol'nye?' Profsoyuz, no. 9 (1998): 38-9. 32 Government of Russia website, Federal Assembly, State Duma, 'Ob obrashchenii grazhdan, rassmotrennykh Priemnoi Gosudarstvennoi Dumy v period vesennei sessii 1998 g.,' Informatstionno-analiticheskii biulleten' 1998g. veseniaia sessiia, www.duma.gov.ru/infgd/98_06/9806_071.htm; 'Ob obrashchenii grazhdan, rassmotrennykh Priemnoi Gosudarstvennoi Dumy v period osennei sessii 1998 g.,' Informatstionno-analiticheskii biulleten' 1998g. oseniaia sessiia, www.duma.ru/infgd/98_l2/9812_072.htm; 'Obzor obrashchenii grazhdan v Gosudarstvennoi Dumy,' Informatstionno-analiticheskii biulleten',

210 Notes to pages 118-19 no. 2, 23 February-27 March 2000, www.wbase.duma.gov.ru:8080/law?d&nd= 981600215 All sites accessed 21 April 2003. 33 A. Perepilkin et al., head of raion Council of Veterans, Viazma, Smolensk oblast, 'Opiat' obmanuli,' Veteran, no. 8 (February 1998): 6. 34 A.S. Nazarov, 'Verkhovnyi Sud Rossiiskoi Federatsii podtverdil zakonnost' ischisleniia pensii s IKP pri ogranichenii 0.7 sootnosheniia zarabotkov, a ne IKP,' Pensiia, no. 6 (June 2000): 43-50. 35 'Raz'iasnenie o primenenii ogranichenii, ustanovlennykh federal'nym zakonom "o poriadke ischisleniia i uvelicheniia gosudarstvennykh pensii,"' 29 December 1999, in V.A. Fronin et al., 90-1. 36 'Reshenie Verkhovnogo Suda Rossiiskoi Federatsii ot 24 aprelia 2000 g.,' Pensiia, no. 6 (June 2000): 43-8. 37 A.S. Nazarov, Trezidium Verkhovnogo Suda Rossiiskoi Federatsii podtverdil sootvetstvie zakonodatel'stvu Rossii raz'iasneniia Mintruda Rossii o koeffitsiente 0.7,' Pensiia, no. 8 (August 2000): 31. 38 Andrei Bondarenko, 'Nakopitel'naia sistema - ob'ektivnaia neobkhodimost',' Nezavisimaiagazeta, 30 March 2001,113. 39 ITAR-Tass, 'Pensii vesnoi podrastut,' Rossiiskaia gazeta, 14 March 2000, and presidential ukaz 'Ob otnoshenii srednemesiachnogo zarabotka pensionera k srednemesiachnoi zarabotnoi platy v strane, primeniaemom pri opredelenii individual'nogo koeffitsienta pensionera,' Rossiiskaia gazeta, 18 April 2000, 3; ukaz 10 July 2000, 'Ob otnoshenii srednemesiachnogo zarabotka pensionera k srednemesiachnoi zarabotnoi plate v strane primeniamemom pri opredelenii individual'nogo koeffitsienta pensionera.' Rossiiskaia gazeta, 18 April 2000, 3. 40 A.S. Nazarov, 'Verkhovnyi Sud Rossiiskoi Federatsii podtverdil zakonnost' ischisleniia pensii s IKP pri ogranichenii 0.7 sootnosheniia zarabotkov, a ne IKP,' Pensiia, no. 6 (June 2000): 43-50. 41 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 82, 15 March 2001. O.N. Smolin remarks, 26; lu. Z. Liublin remarks, 32. 42 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 107, 4July 2001, 17. 43 T.V. Pletneva, remarks in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 82,13 March 2001, 29. 44 V.R. Pashuto, Gosudarstvennaia Duma, Stenogramma zasedanii, Biulleten' 89, 18 April 2001, 9.1 cannot verify the accuracy of this statement, having not seen or read any such letter. But it is beside the point, since the content of the law itself, not any time-specific government letter, determines the IKP, and since Russia's main legislative body, the Duma, bears partial responsibility for the content.

Notes to pages 119-22

211

45 lu. Z. Liublin, First Deputy Minister of Labour and Social Development, remarks to Duma, in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 82, 13 March 2001, 32. 46 Federal'nyi zakon 'O veteranakh,' 12January 1995 (Moscow: Act Izdatel'stvo, 2000). 47 D. Egorov, 'Zashchitim interesy pensionerov,' Astrakhanskaiapravda, 5 February 1997, 1. 48 Sergei G. Kiselev, remarks in Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 121, 20July 1995, 29. 49 V.V. Barchuk, remarks to Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 137, 22 November 1995, 19. 50 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 259, part 1, 13 May 1999, 29. 51 A.V. Markov, 'Novoe v zakone o veteranakh,' Pensiia, no. 2 (February 2000): 44. 52 See Marsha A. Weigle, Russia's Liberal Project: State-Society Relations in the Transition from Communism (University Park, PA: Pennsylvania State University Press, 2000), 177. 53 Jon Elster, Glaus Offe, and Ulrich K. Preuss, Institutional Design in Postcommunist Societies: Rebuilding the Ship at Sea (New York: Cambridge University Press, 1998), ch. 1. 54 For example, sec 'Russia'sJustice System: The Path to Reform - or Another Dead End?' Economist, 2 June 2001, 49. 55 Gordon M. Harm, 'Putin's "Federal Revolution": The Administrative and Judicial Reform of Russian Federalism,' EastEuropean Constitutional Review 10, no. 1 (2001): 60-7. 56 Chrystia Freeland, Sale of the Century: Russia's Wild Ride from Communism to Capitalism (Toronto: Doubleday Ganada, 2000), 19-21. 57 Louise Shelley, 'Corruption in the Post-Yeltsin Era,' EastEuropean Constitutional Review9, nos. 1-2 (2000): 70-4. 58 Alfred Stepan, 'Russian Federalism in Comparative Perspective,' Post-Soviet Affairs \&, no. 2 (2000): 133-76. 59 Robert Sharlet, 'Constitutional Implementation and State-Building: Progress and Problems of Law Reform in Russia,' in Gordon B. Smith, ed., State Building in Russia: The Yeltsin Legacy and the Challenge of the Future (Armonk, NY: M.E. Sharpe, 1999), 81-100; Peter H. Solomon,Jr., and Todd Foglesong, 'The Procuracy and the Courts in Russia,' EastEuropean Constitutional Review9, no. 4 (2000): 105-8. 60 See for example Kathryn Hendley, 'Rewriting the Rules of the Game in Russia: The Neglected Issue of the Demand for Law,' EastEuropean Constitu-

212

Notes to pages 122-8

tionalReview 18, no. 4 (1999): 89-95; Ellen Carnaghan, 'Thinking about Democracy: Interviews with Russian Citizens,' Slavic Review GO, no. 2 (2001): 359-60; Gordon B. Smith, 'The Disjuncture between Legal Reform and Law Enforcement: The Challenge Facing the Post-Yeltsin Leadership,' in Smith, ed., State Building in Russia, 118-19. 61 Relative optimism can be observed in the works of Hendley, Sharlet, and Solomon and Foglesong cited above; see also Marsha A. Weigle, Russia's Liberal Project. 62 Ilian Cashu and Mitchell A. Orenstein, 'The Pensioners' Court Campaign: Making Law Matter in Russia,' East European Constitutional Review 10, no. 4 (2001): 67-71. 63 Kathryn Hendley, 'Demand for Law in Russia: A Mixed Picture,' East European Constitutional Review 10, no. 4 (2001): 72-7. 8. The Evolution of Pension Reform in Russia, 1995-2001 1 Linda J. Cook, 'The Russian Welfare State: Obstacles to Restructuring,' PostSoviet Affairs 16, no. 4 (2000): 355-78. 2 Samuel P. Huntington, Political Order in Changing Societies (New Haven, CT: Yale University Press, 1968), 344. 3 Cynthia Buckley and Dennis Donahue, 'Promises to Keep: Pension Provision in the Russian Federation,' in Mark G. Field and Judyth L. Twigg, eds. Russia's Torn Safety Nets: Health and Social Welfare During the Transition (New York: St Martin's Press, 2000), 254-7. 4 Cook, 'The Russian Welfare State,' 374. 5 'Kontseptiia reformy sistemy pensionnogo obespechenii v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 23 August 1995, 5-6. 6 V.A. Torlopov, head of Federation Council Committee on Questions of Social Policy, remarks to Federation Council, biulleten' no. 1,15 May 1996, 21, and V.V. Barchuk, in same, 24-5. 7 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 194,17 July 1998, 20-6. 8 Ibid., biulleten' no. 209,16 October 1998, 38-9. 9 Sovet Federatsii, llth session, Stenograficheskii otchet, 25 October 1994, 222. 10 6 July 1992, ukaz no. 3209-1, 'O sozdanii v poriadke eksperimenta edinoi pensionnoi sluzhby v Moskovskoi oblasti,' Sobranie aktov Prezidenta i Pravitel'stva Rossiiskoi Federatsii, no. 22, 31 May 1993, 2265. 11 World Bank, Human Development Unit, Europe and Central Asia Region, Report T-7157-RU, Technical Annex, Russian Federation, Social Protection Implementation Loan, 10 September 1997, 2-3.

Notes to pages 128-32

213

12 Ibid., 129-30. 13 Ibid., 25, 129-30. 14 World Bank. Estelle James et al., Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth (Washington, D.C., New York: World Bank and Oxford University Press, 1994), 15. 15 Elena Kriazheva, 'Tri urovniia pensionnoi reformy,' Nezavisimaia gazeta, 14 October 1997, 7. 16 Vladislav Kuz'michev, 'Nachalo pensionnoi reformy otkladyvaetsiia,' Nezavisimaia gazeta, 31 October 1997, 1. 17 'Programma pensionnoi reformy v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 26 May 1998, 5-6. 18 M.E. Dmitriev and D. la. Travina, Pensionnaia reforma v Rossii: prichiny, soderzhanie, perspektivy (St Petersburg: Izdatel'stvo Norma, 1998), 163-4, 176-7. 19 Cook, The Russian Welfare State,' 372-3. 20 Svetlana Babayeva, 'Reform of the Pension System May Need to Be Postponed Indefinitely,' Izvestiia, 20 June 1998, 2, translated in Current Digest of the Post-Soviet Press 50, no. 25 (1998), 16. 21 World Bank, Russian Federation Country Assistance Strategy, Progress Report, December 1998, www.worldbank.org/html/pic/cas/casrus.htm. Accessed 21 April 2003. 22 For example, M. Maliutina, 'Imperativy reformy Rossiiskoi sistemy pensionnogo obespecheniia,' Voprosy ekonomiki, no. 10 (1998): 123-5. 23 V.N. Baskakov and M.E. Baskakova, Opensiiakh dlia muzhchin izhenshchin (Moscow: Moskovskii filosovskii fond, 1998), 36-7. 24 Natalia Rimashevskaia and Valentina Bochkareva, 'Pensionnaia sistema: problemy i strategiia reform,' Svobodnaia mysl', no. 5 (May 1997): 37-50. 25 'Ob osnovykh napravleniiakh reformy pensionnogo obespechenii v Rossiiskoi Federatsii' (excerpts from hearings of the Duma Committee on Labour and Social Policy), Dumskii vestnik, no. 2 (Moscow, 1997). 26 Vitalii Linnik, 'Kontseptsii sotsial'noi politiki Rossii vse net i net,' Nezavisimaia gazeta, 19 May 1998, 3. 27 'O chem pisali grazhdane Rossii Prezidenta Rossiiskoi Federatsii v 1994 g.' Rossiiskie vesti, 24January 1995, 2. 28 Thomas F. Remington, Politics in Russia, 2nd ed. (New York: Longman, 2002), 163-4, 180. 29 John T. Ishiyama, 'The Sickle or the Rose: Previous Regime Types and the Evolution of the Ex-Communist Parties in Post-Communist Politics,' Comparative Political Studies 30, no 3 (1997): 307; see also Laura Belin and Robert W. Orttung with Ralph S. Clem and Peter R. Craumer, The Russian Parliamentary Elections of 1995: The Battle for the Duma (Armonk, NY: M.E. Sharpe, 1997), 138.

214

Notes to pages 132-4

30 N.I. Rimashevskaia et al., Rossiia 1995: Sotsial'no-demograficheskaia situatsiia (Moscow: Institute Sotsial'no-ekonomicheskikh problem narodonaseleniia, 1996), 174. 31 Jerry F. Hough, Evelyn Davidheiser, and Susan Goodrich Lehmann, The 1996 Russian Presidential Election (Washington, DC: Brookings Institution Press, 1996), 56, 91. 32 Ralph S. Clem and Peter R. Craumer, 'Roadmap to Victory: Boris Yel'tsin and the Russian Presidential Elections of 1996,' Post-Soviet Geography and Economics 37, no. 6 (1996): 351-2. 33 Public opinion survey conducted by VTsIOM on 23 December 1999, data cited in Yitzhak M. Brudny, 'Continuity or Change in Russian Electoral Patterns? The December 1999-March 2000 Election Cycle,' in Archie Brown, ed. Contemporary Russian Politics: A Reader (Oxford: Oxford University Press, 2001), 166-7. 34 Andrew Konitzer-Smirnov, 'Incumbent Electoral Fortunes and Regional Economic Performance during Russia's 2000-2001 Regional Executive Election Cycle,' Post-Soviet Affairs 19, no. 1 (2003): 46-79. 35 Bryon J. Moraski and William M. Reisinger, 'Explaining Electoral Competition across Russia's Regions,' Slavic Review 62, no. 2 (2003): 278-301. 36 Zakhar Vinogradov, 'Bedstvuiushchie regiony,' Nezavisimaia gazeta, 13 December 1997, 2. 37 Yevgeny Krasnikov,'Day of Anger Delayed until Fall,' Moscow News, no. 13, 10-16 April 1997. 38 Globe and Mail (Toronto), 21 May 1998, A9. 39 lurii Trigubovich, 'Pensionnyi kollaps,' Nezavisimaia gazeta, 8 April 1999, 4. 40 Ukaz Prezidenta Rossiiskoi Federatsii, 'O dopol'nitel'nykh merakh po ukrepleniia platezhnoi distsipliny po raschetam s Pensionnym Fondom Rossiiskoi Federatsii,' Rossiiskaia gazeta, 28 November 1995, 3. 41 Presidential ukaz, 'On Urgent Measures to Improve Pension Provision for Russian Federation Citizens,' translated in FBIS-SOV-96-077, 19 April 1996, 31. 42 Ukaz prezidenta Rossiiskoi Federatsii, 8 April 1996, 'O merakh po obespechenii svoevremennoi vyplaty pensii,' Rossiiskaia gazeta, 10 April 1996,1. 43 TASS, 5 September 1996, translated in FBIS-SOV-96-173, 5 September 1996, 27-8. 44 B. Timofeev, 'Net zarplaty-plati shtraf,' Uralskii rabochii, 22 March 1997,1. 45 V. Tselykh, 'Pochemu zaderzhivaiutsiia pensii,' Preiidentskii kontrol': Informatsionnyi biulleten', 23. 46 Valentin Pavlov, ITAR-TASS, 2 November 1998, translated in FBIS-SOV-98306, 2 November 1998.

Notes to pages 134-6

215

47 Interfax, 8 December 1998, translated in FBIS-SOV-98-342, 8 December 1998. 48 A. Klevtsova, 'Zabota - eto rabota,' Belgorodskaiapravda, 6 August 1999,1. 49 Denis Babich, 'Oleg Sysuev nalazhivaet sviaz' s narodom,' Nezavisimaia gazeta, ljuly 1997, 2. 50 ITAR-TASS, 31 October 1998, translated in FBIS-SOV-98-306, 2 November 1998. 51 Associated Press, 'Helped Russia on Pensions, U.S. Financier Soros Says,' Globe and Mail, 5 March 1998, A12. 52 Interfax, 'Srednii razmer pensii i zarplat prodolzhaet snizhat'sia,' Nezavisimaia gazeta, 6 October 1999, 4. 53 Richard Rose, 'How Floating Parties Frustrate Democratic Accountability: A Supply-Side View of Russia's Elections,' in Archie Brown, ed. Contemporary Russian Politics, 220. 54 Interfax Financial Report, 29 December 1998, no. 249, translated in FBISSOV-98-363, 29 December 1998. 55 Irina Rozenberg, 'Prodovol'stvie dlia udovol'stviia,' Itogi, 30 March 1999, 26-8. 56 Radio Free Europe-Radio Liberty Newsline. 3/122, part 1, 23June 1999. 57 Natalia Varnavskaia, 'Pensionnyi fond uvelichil shtrafy v 36 raz,' Nezavisimaia gazeta, 9 April 1999, 4. 58 Milana Davydova, 'Barchuk otpravlen v otstavku,' Nezavisimaia gazeta, 13 April 1999, 2. 59 Radio Free Europe-Radio Liberty Newsline, vol. 3, no. 104, part 1, 28 May 1999. 60 'Zashchita ot bednosti,' Rossiiskaia gazeta, 9 July 1999, 5. 61 Interfax report, Nezavisimaia gazeta, 4 September 1999, 1. 62 n.a. 'Pravitel'stvo pogasilo zadolzhennost- po pensiiam,' Nezavisimaia gazeta, 22 September 1999, 4. 63 Gosudarstvennaia Duma, Stenogramma zasedanii, Biulleten' no. 31, 7June 2000, 61. 64 'Ob osnovykh napraveleniiakh ...,' 1997. Remarks by N.I. Semenets, 78; Mikhail Zakharov, 84; A.V. Klepikov, All-Russian Society of Invalids, p. 89. 65 Boris Dolotin, 'Pensii novogo pokolenii,' Rossiiskaia gazeta, 30 July 1999, 5. 66 Author's interview no. 2, Duma deputy, Moscow, 28 September 1999. 67 Author's interview no. 5, Duma deputy, Moscow, 6 October 1999. 68 For example, one World Bank official stressed that the general goal in East European countries was to assist countries with their own self-defined pension reform goals. Author's interview No. 26, World Bank official, Washington, DC, 7 June 2000. Another view from an individual at the bank was that Russia has generally tended to adopt its own approach to pensions,

216 Notes to pages 137-9

69

70 71 72 73 74 75

76

77

78 79 80 81 82 83 84

85

instead of studying the lessons of other countries' reforms. Author's interview No. 27, World Bank team member, Washington, DC, 8 June 2000. For example, author's interviews nos. 8 and 9, with experts involved on a TACIS project on Governance of Social Security, Moscow, 19 October 1999. The subjects emphasized the continuing role of TACIS in providing advice, training, and conference support related to pension reform. Author's interview no. 15, Pension Fund official, 2 November 1999, Moscow. Fraktsiia KPRFv Gosudarstvennoi Dume 1995-98 (Moscow: Letopis', 1999), 34. Partiia pensionerov v voprosakh i otvetakh (Moscow: Party of Pensioners, n.d. [likely 1999]), 32. Golospokoleniia, no. 28,18 October-24 October 1999, 5. Partiia pensionerov v voprosakh i otvetakh, 52. Ralph S. Clem and Peter R. Craumer, 'Regional Patterns of Political Preference in Russia: the December 1999 Duma Elections,' Post-Soviet Geography and Economics 41, no. 1 (2000): 25-6. Unity gained 21 per cent of the vote of people in their sixties, compared to 12 per cent for Our Home Is Russia four years earlier. Timothy J. Col ton and Michael McFaul, 'Reinventing Russia's Party of Power: Unity and the 1999 Duma Election,' Post-Soviet Affairs 16, no. 3 (1), (July-September 2000), 214. VTsIOM (All-Russian Centre for the Study of Public Opinion). A. Golov, A. Grazhdankin, L. Gudkov, B. Dubin, L. Kosova, M. Krasil'nikova, lu. Levada, O. Savel'ev, I. Perova, and L. Kakhulina, Obshchestvennoe mnenie- 2000 (Moscow: VTsIOM, 2000), 53. Elena Evstigneeva, 'S pensionerami rasplatilis',' Nezavisimaia gazeta, 23 September 1999, 1. 'Zashchita ot bednosti,' Rossiiskaia gazeta, 9 July 1999, 5. 'S 1 noiabriia povyshaetsia minimal'naia pensiia,' Nezavisimaia gazeta, 16 October 1999, 1. Elena Lashkina, 'Zurabov obosnoval vozmozhnost' uvelicheniia pensii,' Nezavisimaia gazeta, 13 January 2001, 2. V.A. Matvienko, remarks to State Duma, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 57,17 November 2000, 20. 'Pravitel'stvo pogasilo zadolzhennost' po pensiiam,' Nezavisimaia gazeta, 22 September 1999, 4. 'Ezhegodnoe poslanie prezidenta Rossiiskoi Federatsii Federal'nomu Sobraniiu Rossiiskoi Federatsii,' 4 April 2001, document.kremlin.ru/ doc.asp?ID=6610. Accessed 21 April 2003. Vladimir Putin, 'Address to the Federal Assembly,' 8 July 2000, in J.L. Black, ed., Russia and Eurasia Documents Annual, 2000, vol. 1; The Russian Federation (Gulf Breeze, FL: Academic International Press, 2001), 22-32.

Notes to pages 139-40

217

86 Sarah E. Mendelson, 'The Putin Path: Civil Liberties and Human Rights in Retreat,' Problems of Post-Communism 47', no. 5 (2000): 3-12; Stephen Kotkin, 'Putin and Other Parasites,' New Republic, 5 June, 2000, 27-34; Elena Bonner, 'The Remains of Totalitarianism,' New York Review of Books 48, no. 4 (2001): 4-5. 87 Sergei Kovalev, 'The Putin Put-on,' New York Review of Books 48, no. 13 (2000): 29-32. 88 Steven S. Smith and Thomas F. Remington, The Politics of Institutional Choice: the Formation of the Russian State Duma (Princeton, NJ: Princeton University Press, 2001), 152-3. 89 Interfax, '100 millionov dollarov na reformirovanie pensionnoi sistemy,' Nezavisimaia gazeta, 2 September 1999, 4. 90 World Bank. Project Information Document 7089, Russian Federation Pension Reform Implementation Project, 15 October 1998 (approved 4 May 1999), www-wds.worldbank.org/cgi-bin/cqcgi/@production.env?CQ^_ SESSION_K. Accessed 28 September 2001. 91 Project Details, Pension Reform Support, 17 September 2001. www4.worldbank.org/sprojects/Project.asp?pid=P0504/5. Accessed 24 September 2001. The document does not give a reason for the World Bank's decision. 92 Vladimir Kucherenko, 'Sotsial'nye fondy: popolnenie po planu i sverkh togo,' Rossiiskaia gazeta, 19 May 2000, 2. 93 Federal'nyi zakon, 'O vnesenii izmenenii i dopolnenii v poriadok vyplaty strakhovykh vznosov rabotodateliami i grazhdanami v Pensionnyi Fond Rossiiskoi Federatsii,' 2 January 2000, in Sobraniezakonodatel'stva Rossiiskoi Federatsii, no. 3 (2000): 20-5. 94 Yevgenia Pismennaya, 'Off-budget Funds: Uncertain Prospects,' Moscow News, no. 20, 24-30 May 2000, 7. 95 Sergei D. Shatalov, first deputy finance minister, remarks to State Duma, Gosudarstvennaia Duma, Stenogramma zasedanii, no. 32, 9 June 2000, 18. 96 Remarks of S.D. Shatalov, first finance deputy minister, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 32, 9 June 2000, 18-20. 97 M. Shmakov, chair, Federation of Independent Trade Unions of Russia, remarks to State Duma, Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 32, 9 June 2000, 18; Valentina Bochkareva and Natalia Rimashevskaia, 'Zachem nuzhen' sotsial'nyi nalog?' Nezavisimaia gazeta, 20 June 2000, 15. 98 Bochkareva and Rimashevskaia, 'Zachem nuzhen sotsial'nyi nalog?' 15. 99 5 August 2000, 'Nalogovoi kodeks Rossiiskoi Federatsii, glava 24. Edinyi sotsial'nyi nalog,' in V.A. Fronin, ed., Vashapensiia segodniia i vperspektive (Moscow: Bibliotechka Rossiiskoi gazety), 144-56.

218 Notes to pages 140-2 100 Gosudarstvennaia Duma, Stenogramma zasedanii, no. 32, 9 June 2000, 44. 101 Ukaz, 'O merakh po sovershenvstvovaniiu upravleniia gosudarstva pensionnym obespecheniem v Rossiiskoi Federals!!,' Rossiiskaia gazeta, 30 September 2000, 3. 102 Tostanovlenie Konstitutsionnogo Suda Rossiiskoi Federatsii po delu o proverke konstitutsionnosti Ukaza Prezidenta ot 27 sentiabriia 2000 g. no. 1709 "o merakh po sovershenstvovaniiu upravleniia gosudarstvennom obespecheniem v Rossiiskoi Federatsii" v sviazi s zaprosom gruppy deputatov Gosudarstvennoi Dumy,' 25 June 2001, Vestnik Konstitutsionnogo Suda Rossiiskoi Federatsii, no. 6 (2001): 3-14. 103 Jose Pinera, 'A Chilean Model for Russia,' Foreign Affairs 79, no. 5 (September-October 2000), 62-7. 104 World Bank, et al., Averting the Old Age Crisis, 267-8. 105 Hugo Fazio and Manuel Risco, 'The Chilean Pension Fund Associations,' New Left Review, no. 223 (May-June 1997): 90-3. 106 Ibid., 93-6; Susanne S. Paul and James A. Paul, 'The World Bank, Pensions and Income Insecurity in the Global South,' International Journal of Health Sciences?.*), no. 4 (1995): 708-9. 107 Roger Charlton, Roddy McKinnon, and Lukasz Konopielko, 'Pensions Reform, Privatization and Restructuring in the Transition: Unfinished Business or Inappropriate Agendas?' Europe-Asia Studies 50, no. 8 (1998): 1435. 108 World Bank, et al., Averting the Old Age Crisis, 267-8. 109 Pinera, 'Chilean Model,' 67. 110 Charlton, McKinnon, and Konopielko, 1413-46; Stephan Haggard, Robert Kaufman, and Matthew S. Shugart, 'Politics, Institutions and Macroeconomic Adjustment: Hungarian Fiscal Policy Making in Comparative Perspective,' and Joan M. Nelson, 'The Politics of Pension and Health Care Reforms in Hungary and Poland,' both in Janos Kornai, Stephan Haggard, and Robert R. Kaufman, eds., Reforming the State: Fiscal and Welfare Reform in Post-Socialist Countries (New York: Cambridge University Press, 2001), 75110 and 235-66; Michal Rutkowski, 'A New Generation of Pension Reform Conquers the East - a Taxonomy in Transition Economies,' Transition (World Bank), August 1998. On-line at www.worldbank.org/html/prddr/trans/ julaug98/rutkowsk.htm. Accessed 21 April 2003. 111 Centre for Strategic Projects of German Gref, 'Prioritetnye zadachi pravitel'stva Rossiiskoi Federatsii na 2000-2001 gody po realizatsii 'osnovnykh napravlenii sotsial'no-ekonomicheskoi politiki pravitel'stva Rossiiskoi Federatsii na dolgosrochnuiu perspektivu,' 26 June 2000,

Notes to pages 142-7 219

112 113

114

115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133

www.kommersant.ru/documentx/high-priority-task.htm. Accessed 22 April 2003. Nikolai Semenov, Tensionery budet poluchat' dokhod s kapitala,' Rossiiskaia gazf.ta, 14 February 2001, 5. See for example 'Kak zastrakhovat'sia ot starosti?' Rossiiskaia gazeta, 13 July 2001, 5; Mikhail Zurabov, 'Kakuiu pensiiu vybirael molodoe pokolenie?' Rossiiskaia gazeta, 17 April 2001, 3. Ukaz Prezidenta Rossiiskoi Federatsii ot 8 fevraliia 2001 goda, no. 137, 'O Natsional'nom Sovete pri Prezidenle Rossiiskoi Federatsii po pensionnoi reforme,' Pensiia, no. 3 (March 2001): 6-8. 'Kem gotovitsia reforma?' Rossiiskaia gazeta, 29 March 2001, 3. Irina Nevinnaia, 'Starosli nikomu ne minovat',' Rossiiskaia gazeta, 23 March 2001,4. V.K. Bochkareva, 'Kruglyi stol: Problemy reformirovaniia pensionnoi sistemy,' Narodonaselenie, no. 1 (January-March 2001): 85-6. Ibid., 84-5. Ibid.,86. Ibid.,86-8. M.V. Shinakov, 'O pensionnoi reforme v Rossiiskoi Federatsii,' Sotsial'nyi mir, no. 5 (May 2001): 22-3. S.A. Afanas'ev, 'Formiruietsiia pravovaia baza pensionnoi reformy,' Pensiia, no. 5 (May 2001): 39-43. Tatiana Smoliakova, 'Pensionnyi schet smolodu,' Rossiiskaia gazeta, 11 May 2001,4. Ekaterina Vasil'chenko and Tatiana Smol'iakova, 'Pensionnuiu reformu sobrali v paket zakonoproektov,' Rossiiskaia gazeta, 12 May 2001, 1. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 82,15 March 2001,22-7. Ibid., biulleten' 89, 10-11. Ibid., biulleten' 97, 6June 2001, 28, and biulleten' 107, 4July 2001, 15-16. Irina Nevinnaia, 'I pensiia, i zarabotok?' Rossiiskaia gazeta, 16 March 2001, 2. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 84, 22 March 2001,26-7. Irina Nevinnaia, 'Pensionnoe zadanie na osen',' Rossiiskaia gazeta, 17 July 2001,2. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 112, part 2, 13 July 2001, 9. Ibid.,2-7. Ibid.,14-29.

220

Notes to pages 147-51

134 Ibid., 10. 135 For example, on 4 July the Duma was still pursuing the matter of amendments to features of FZ-113, which had been vetoed by Putin in June. Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 107,4July 2001,17. 136 Elena Korop, 'S Dumoi o blizhnem,' hvestiia, 10 July 2001, 2. 137 Ivan Rodin, 'KPRF vzyvaet k Schetnoi Palate,' Nezavisimaia gazeta, 28 November 2001, 3. 138 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 132, 28 November 2001,17-19. 139 Law, 'O trudovykh pensiiakh v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 20 December 2001,4, 6,11; Law, 'O gosudarstvennom pensionnom obespechenii v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 20 December 2001, 4,6. 140 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 120,11 October 2001,19. 141 'Putin boitsia pensionnykh piramid,' Nezavisimaia gazeta, 13 July 2001,1. 142 Discussion of versions of draft law, 'Ob investirovanii sredstv dlia finansirovaniia nakopitel'noi chasti trudovoi pensii v Rossiiskoi Federatsii,' Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' 139, 21 December 2001, 49. 143 Irina Nevinnaia, 'I chest' sobliusti, i kapital priobesti,' Rossiiskaia gazeta, 18 September 2001, 2. 144 Tat'iana Smol'iakova, 'Komu doveriat' pensionnye den'gi?' Rossiiskaia gazeta, 9 October 2001,1. 145 Maksim Leie, quoting Duma deputy Valentina Pivnenko, 'Investitsii v zakone,' Izvestiia, 19 October 2001, 7. 146 Gosudarstvennaia Duma, Stenogramma zasedanii, biulleten' no. 134, 30 November 2001,15-16. 147 Law, 'O trudovykh pensiiakh v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 20 December 2001, 4, 6,11. 148 'O gosudarstvennom pensionnom obespechenii v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 20 December 2001, 4, 6. 149 'Ob ob'iazetel'nom pensionnom strakhovanii v Rossiiskoi Federatsii,' Rossiiskaia gazeta, 20 December 2001, 4-5. 150 For example, interview of Minister of Labour and Social Affairs Aleksandr Pochinok by lurii Riazhskii, 'Poslednyi otchet,' Moskovskii komsomolets, 26 May 2001, 2. 151 Federal law, 'Ob investirovanii sredstv dlia finansirovaniia nakopitel'noi chasti trudovoi pensii v Rossiiskoi Federatsii' (24 July 2002), Pensiia, no. 8 (August 2002) :2-23.

Notes to pages 151-5 221 152 Elena Lashkina, Tensionnaia reforma beret taim-aut,' Rossiiskaia gazeta, 8 September 2003, 2. 153 Tat'yana Panina, 'Vyberi sebe pensiiu,' Rossiiskaia gazeta, 10 September 2003, 1. 154 Irina Nevinnaia, 'Pensionnyi schet dlia rabotaiushchego cheloveka,' Rossiiskaia gazeta, 21 June 2002, 11-12. 155 Nikolai Kireev, 'Dogodalis' do pensii,' Rossiiskaia gazeta, 2 March 2002, 1. 156 'Predsedatel' Pravleniia Pensionnogo Fonda Rossiiskoi Federatsii M.Iu. Zurabova ob aktual'nykh voprosakh pensionnogo obespecheniia,' Pensiia, no. 4 (April 2003): 24-8. 157 Vladimir Mytarev, 'Chtob my zhili na svoiu pensiiu,' Rossiiskaia gazeta, 9 July 2003, 1. 158 Irina Nevinnaia, Trezident otvetil pensioneram na pis'ma s 30 rubliami,' Rossiiskaia gazeta, 15 March 2003, 2. 159 'Vam paket! Novogodnyi podarok nashim chitatel'iam: novye zakony po pensionnoi i sudebnoi reformy,' Rossiiskaia gazeta, 20 December 2001, 1. 160 Irina Nevinnaia, Tribavka k pensii: komu i skol'ko?' Rossiiskaia gazeta, 5 December 2001, 1. 161 Irina Nevinnaia, 'Pensii pribavitsia u vsekh,' Rossiiskaia gazeta, 2 August 2001,1. 162 Irina Nevinnaia, Tribavka k pensii: komu i skol'ko,' Rossiiskaia gazeta, 5 December 2001, 1. 163 For example, 'Kak zastrakhovat'sia ot starosti,' Rossiiskaia gazeta, 13 July 2001,5. 9. Conclusion

1 Paul Pierson, Dismantling the Welfare State? Reagan, Thatcher and the Politics of Retrenchment (Cambridge: Cambridge University Press, 1994), esp. 70-3. 2 World Bank, Estelle James et al., Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth (Washington, DC, and New York: World Bank and Oxford University Press, 1994). 3 Robert Holzmann and Joseph E. Stiglitz, eds., New Ideas about Old Age Security: Toward Sustainable Pension Systems in the 21st Century (Washington, DC: World Bank, 2001). 4 Estelle James and Sarah Brooks, 'The Political Economy of Structural Pension Reform,' in Holzmann and E. Stiglitz, eds., New Ideas about Old Age Security, 154. 5 Michael J. Prince, 'Lowering the Boom on the Boomers: Replacing Old Age Security with the New Seniors Benefit and Reforming the Canada

222

Notes to pages 155-8

Pension Plan,' in Gene Swimmer, ed., Seeing Red: How Ottawa Spends, 199798 (Ottawa: Carleton University Press, 1997), 229-30. 6 Johan Jeroen de Deken, 'Pensions and the Reduction of Non-Wage Labour Costs: Modelling a Decade of Reforms in Germany, 'Journal of European Social Policy 12, no. 4 (2002): 283. 7 B. Guy Peters, The Politics of Taxation: A Comparative Perspective (Cambridge, MA: Basil Blackwell, 1991), 1. 8 Robert Sharlet, 'Putin and the Politics of Law in Russia,' Post-Soviet Affairs 17', no. 3 (2001): 226. 9 'Lula's Great Pension Battle,' Economist, 3 April 2003, www.economist.com/ background/displaystory.cfm?story_id=1682949, accessed 12 August 2003. 10 Andrea Chandler, 'Globalization, Social Welfare Reform and Democratic Identity in Russia and other Post-Communist Countries,' Global Social Policy 1, no. 3 (2001): 321-2. 11 James J. Rice and Michael J. Prince, Changing Politics of Canadian Social Policy (Toronto: University of Toronto Press, 2000), 177-80. 12 Tom Gibb, 'Brazil Strikers Claim Success,' BBC News, 9 July 2003, http:// news.bbc.co.uk/l/hi/business/3051667.stm, accessed 12 August 2003. 13 Chandler,'Globalization,'321-22. 14 World Bank, Averting the Old Age Crisis, 1994. 15 Louise Fox and Edward Palmer, 'New Approaches to Multipillar Pension Systems: What in the World Is Going On?' in Holzmann and Stiglitz, eds., New Ideas about Old Age Security, 90-132; Michal Rutkowski, 'A New Generation of Pension Reform Conquers the East: A Taxonomy in Transition Countries,' Transition (World Bank) August 1998. http://www.worldbank .org/html/prddr/trans/julaug98/rutkowsk.htm 16 Joan M. Nelson, 'The Politics of Pension and Health-Care Reform in Hungary and Poland,' in Janos Kornai, Stephan Haggard, and Robert R. Kaufman, eds., Reforming the State: Fiscal and Welfare Reform in Post-Socialist Countries (Cambridge: Cambridge University Press, 2001), 246. 17 Marcus Taylor, The Reformulation of Social Policy in Chile, 1973-2001: Questioning a Neoliberal Model,' Global Social Policy 3, no. 1 (2003): 29. 18 Katharina Muller, 'Beyond Privatization: Pension Reform in the Czech Republic and Slovenia, 'Journal of European SocialPolicy 12, no. 4 (2002): 293-306. 19 James and Brooks, 'The Political Economy of Structural Pension Reform,' in Holzmann and Stiglitz, eds., New Ideas about Old Age Security, 163. 20 Joan M. Nelson, The Politics of Pension and Health-Care Reforms,' in Kornai, Haggard, and Kaufman, eds., Reforming the State, 235-66. 21 A few examples: On the first theme, Thomas F. Remington, The Evolution

Notes to pages 151-61

22 23

24 25 26

223

of Executive-Legislative Relations in Russia since 1993,' Slavic Review 59, no. 3 (2000), 499-520; Thomas F. Remington, Steven S. Smith, and Moshe Haspel, 'Decrees, Laws and Inter-Branch Relations in the Russian Federation,' Post-Soviet Affairs 14, no. 4 (1998): 287-322; and Eugene Huskey, Presidential Power in Russia (Armonk, NY: M.E. Sharpe, 1999), 163-82. On the second theme, Chrystia Freeland, Sale of the Century: Russia's Wild Ride from Communism to Capitalism (Toronto: Doubleday Canada, 2000); and TimothyJ. Colton and Robert C. Tucker, eds., Patterns in Post-Soviet Leadership (Boulder, CO: Westview, 1995). On the third theme, Gordon M. Hahn, 'Putin's 'Federal Revolution': The Administrative and Judicial Reform of Russian Federalism,' EastEuropean Constitutional Review 10, no. 1 (2001): 60-7; Alfred Stepan, 'Russian Federalism in Comparative Perspective,' PostSoviet Affairs 16, no. 2 (2000): 133-76; and Daniel Treisman, The Politics of Intergovernmental Transfers in Post-Soviet Russia,' British Journal of Political Science 26, no. 3 (1996): 299-335. See, for example, 'Putin's Way,' Economist, 13 December 2003, 24-8. Gosta Esping-Anderson, Welfare States in Transition: National Adaptations in Global Economies (London: Sage, 1996), 2. Similarly, Theda Skocpol notes that the notion of the 'welfare state' in the United States began with the provision of pensions to war veterans and their widows. Theda Skocpol, Protecting Soldiers and Mothers: the Political Origins of Social Policy in the United States (Cambridge, MA: Belknap Press, 1992). T.H. Marshall, The Right to Welfare,' in The Right to Welfare and Other Essays (New York: Free Press, 1981), 83-99. See Janice Gross Stein, The Cult of Efficiency (Toronto: Canadian Broadcasting Corporation and Anansi Press, 2001). Catherine Merridale, Night of Stone: Death and Memory in Russia (London: Granta, 2000) ,504.

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Index of Names

Andropov, Yurii, 44 Arutiunian, L.A., 54 Avtonomov, Aleksei, 88 Barchuk, Vasilii, 66, 68, 70, 74-5, 77-8,80,82, 135 Beissinger, Marc, 7 Bezlepkina, Liudmilla, 90 Binder, Leonard, 106 Bochkareva, Valentina, 112, 131 Brezhnev, Leonid, 44 Buckley, Cynthia, 10, 12, 72, 126 Bukharin, Nikolai, 34 Bulganin, N.A., 16,41 Bunce, Valerie, 6 Butler, William, 88 Cameron, Maxwell A., 87 Cashu, Ilean, 11, 122-3 Chapman, Janet, 61 Chernenko, Konstantin, 44 Chernomyrdin, Viktor, 68, 80, 85, 105-6, 127, 129, 133, 134 Chretien,Jean, 155 Chubais, Anatoly, 128 Clinton, Bill, 89 Cook, LindaJ., 13, 26, 124, 126, 130

Dahl, Robert, 89 Davies, R.W., 32 Deacon, Bob, 12 Dmitriev, Mikhail, 105, 130, 142, 144, 149 Donahue, Dennis, 12, 126 Dmitrieva, Oksana, 92 Dunham, Vera, 26 Ermakova, El'vira L., 147, 148 Fainsod, Merle, 33 Federov, N.V., 56 Fitzpatrick, Sheila, 35 Freeland, Khrystia, 122 Frye, Timothy, 68 Fujimori, Alberto, 87 Gaidar, Egor, 65 Garbuzov,V.F.,48 Gedeon, Peter, 14 Gorbachev, Mikhail S., 44, 48-9, 52, 58,61,87 Gref, Germann, 142-3 Hammond, Thomas, 14 Hauslohner, Peter, 13, 26

240 Index of Names Hellman, Joel, 6 Hendley,Kathryn,123 Huntington, Samuel P., 125 Huskey, Eugene, 7, 88

O'Donnell, Guillermo, 8 Offe, Glaus, 4,12 Orenstein, Mitchell, 11,122-3 Ostrow, Joel, 7

Iliukhin, Viktor, 106 Inglot, Tomasz, 13 Ishiyama,John, 13 Isakov, V. B., 91

Pamfilova, Ella, 56 Pashuto.V.R., 81 Pavlov, VS., 53 Peris, Daniel, 27 Pierson, Paul, 154 Pinera.Jose, 141 Primakov, Evgenii, 134-5 Przeworski, Adam, 4 Putin, Vladimir, 4, 22, 72, 118-19, 122,124,135-6,137-9,140,142, 143,146-7,149,152,157

Johnson, Juliet, 7, 8 Kaganovich, Lazar, 40 Kalashnikov, S.V., 80, 82,90,92, 95, 96, 98,102 Kaminskii, P.L., 111 Kasyanov, Mikhail, 22,118,124,137, 139,140,143 Khasbulatov, Ruslan, 64, 67 Khrushchev, Nikita, 41, 48 Kiriyenko, Sergei, 105-6,129,131,135 Konecny, Peter, 36 Kotenkov, Alexander, 100 Kurtin, Aleksandr, 68, 74-5, 77, 79, 135 Lenin, Vladimir Ilyich, 21, 26 Linnik, Vitalii, 132 Liublin,Iu. Z., 119, 136 Luzhkov, Yurii, 134,135,143 Madison, Bernice, 16, 25, 53 Marshall, T.H., 161 Matvienko, Valentina, 138, 143 McAuley, Alastair, 83 Merridale, Catherine, 18,161 Nazarov,A. S., 112 Nelson, Joan, 156,157 Nemtsov, Boris, 128,143,147

Remington, Thomas E, 7,100 Rimmashevskaia, Natalia, 112,131 Roeder, Philip, 6 Ryzhkov, Nikolai, 53 Savost'ianova, V.B., 145 Sergeev, V.M., 100 Shcherbakov, V.I., 45 Shelley, Louise, 122 Shmakov, M.V., 145 Shumeiko, V.E, 69 Shvernik, N.M., 39 Smith, Steven, 100 Sobchak, Anatoly, 56 Solnick, Steven, 6 Solzhenitsyn, Alexander, 3 Soros, George, 134 Stalin, Joseph, 11, 25, 33-40 Stepan, Alfred, 122 Stepashin, Sergei, 134 Tomskii, Mikhail, 34 Treisman, Daniel, 83

Index of Names Tuchkova, El'vira, 112 Urban, Michael, 7 Viola, Lynne, 27 Vlasova, Anna, 107, 111 White, Anne, 47 Worobec, Christine, 27 Yarov, lu.R, 111 Yavlinskii, Grigorii, 143

241

Yeltsin, Boris, 3-4, 6-7, 11, 14, 26, 40, 59, 60, 65, 67-8, 72, 82-3, 87-8, 105-7, 112, 115-16, 119, 121, 125, 133, 136, 138-9, 142, 158 Zadornov, Mikhail, 134 Zakharov, M.L., 62-3, 67, 74, 77,112 Zhirinovsky, Vladimir, 98 Ziuganov, Gennadii, 132, 138 Zurabov, Mikhail, 135-6, 139, 143-4, 147-9, 151-2

Index of Subjects

August 1998 crisis, 105, 131, 134-5 Baltic republics, 39, 40, 64. See also Latvia Bashkortostan, 85 Belarus, 54 Bolshevik party. See political parties Brazil, 155 Canada Pension Plan, 154—5 Chechnia, 84 Chile, 12,141-2, 156 collective farmers. See kolkhozniki Commonwealth of Independent States (CIS), 64 Communist Party of the Russian Federation (CPRF). See political parties Communist Party of the Soviet Union (CPSU). See political parties communism, 18 compensation payments, 65, 77, 95 Congress of People's Deputies: Russian Federation, 67; Soviet Union, 52-3 Constitution of the Russian Federation (1993), 7,13, 30, 69

Constitution of the Soviet Union (1936), 38-9 Constitutional Court. See government, Russian Federation: Constitutional Court decrees (ukazy), 67, 74, 128, 139,140, 142,163-4,166-7 disabled people, 30-1, 40, 46-7, 68 donor regions, 83-6 dotatsii, 83-6 Duma. See Federal Assembly, Russian Federation: State Duma Eastern Europe, 5-6, 8-9 economic reform: Russian Federation, 3-4, 6-7, 60, 62, 65; Soviet Union, 50, 58-9. See also 'shock therapy' elderly people, 25-7, 37-9, 40, 47-8, 51-2, 68, 70, 84,130, 132. See also pensioners elections, Russian Federation: 1993 parliamentary, 69-70; 1995 parliamentary, 134—5; 1999 parliamentary, 135, 137-8; 2003 parliamentary, 159; 1996 presiden-

Index of Subjects 243 tial, 134-5; 2000 presidential, 138; regional (gubernatorial), 133. See also voting behaviour elections, Russian Soviet Federated Soviet Republic, 1991 presidential, 159 elections, Soviet Union, 1989 parliamentary, 52 enterprises, 78-81, 127, 134-6, 139-40 European Union, 135, 137 executive powers, 14 executive-legislative relations, 88-9; Russian Federation, 60—1, 66—70, 74, 77, 87-109, 115-16, 120-1, 156-8 Federal Assembly, Russian Federation, 7,19, 72, 83, 87, 90-1,138-9,143; State Duma (Lower House), 7, 19, 68, 70, 80, 81, 83, 87-108,111-12, 115-16, 117-21,124,127,131-2, 135-40, 145-53, 155, 158-9; Federation Council (Upper House), 19,68,75,81,111,116,119 federal budget, Russian Federation, 82-3,86,96-7, 107, 149-50 federalism, 83, 116, 122, 126, 158 Federation Council. See Federal Assembly, Russian Federation: Federation Council funded pension system, 15, 18, 129-30, 137, 142-53, 156 Germany, 155 glasnost, 44-6, 50-1 government, Russian Federation: Audit Chamber, 81, 150-1; Central Bank, 68, 133; Constitutional Court, 76, 107, 140-1; Ministry of

Economic Development and Trade, 142, 146, 149-50; Ministry of Finance, 66, 74-5, 151-2; Ministry of Labour and Social Development, 75-6, 80, 118, 131, 136; Ministry of Social Protection, 63,66,73,75-6,81,85,90; Pension Fund of the Russian Federation, 62-70, 73-86, 96-7, 102,107,112,120,127-8,131, 134-6, 139-40, 145-52, 173-5; Procuracy, 81, 118; Supreme Court, 107, 118. See also executivelegislative relations; federal budget; Chernomyrdin, Victor; Chubais, Anatoly; Kasyanov, Mikhail; Kiriyenko, Sergei; Putin, Vladimir; Yeltsin, Boris government, Soviet Union: Central Administration of Social Insurance, 31-3; Committee of Labour of the Council of Ministers, 40, 52, 55; Council of Ministers, 40, 47, 55; Council of People's Commissars, (Sovnarkom), 31; Ministry of Finance, 40; People's Commissariat of Labour (Narkomtrud), 31-3; People's Commissariat of Finance, 32; State Committee on Statistics (Goskomstat), 56 Great Britain, 39 Hungary, 13, 14, 90, 142, 156 impeachment, 106, 108, 120 inflation, 58, 64-5, 70, 77, 153 International Labour Organization (ILO), 137 International Monetary Fund (IMF), 13, 105, 143, I78n23, 181-2n60

244 Index of Subjects kolkhozniki (collective farmers), 36, 41, 47, 49, 54 Komsomol (Communist Youth League), 54 I'goty (special pension benefits), 55, 57, 92,95-6,130,155,169-72 Latvia, 12, 64, 90,142,155 'levelling,' 34, 49-50, 65,113 lishentsy, 33, 36 local governments, 29, 62, 76-7,120 Marxism—Leninism, 7, 25 Mensheviks. See political parties methodology, 19-20 Nakopitel'naia system. See funded pension system National Council on Pension Reform, 143,145,149 nomenklatura, 30 oblasts. See regions parliament: See Congress of People's Deputies, RSFSR; Congress of People's Deputies, USSR; Federal Assembly; Supreme Soviet, RSFSR and Russian Federation; Supreme Soviet, USSR Pay-as-you-go (PAYGO) system, 15, 105 payroll taxes, 79-80 pension age, 30, 47, 131,136,143, 148 pension arrears, 29, 63, 77-82,132, 135-6,138 pension contributions (vznosy), 73, 78-81, 82, 96,127,130,131,134, 136,140,144

Pension Fund of the Russian Federation. See Russian Federation, government: Pension Fund pension funds, private (non-state), 62, 67, 71,104-5,130-2,143-9, 151 pension indexation, 65-7, 80, 90-4, 96,109-19,122-3,124,128,132, 150,163-8 pension law, Russia: law on indexation, FZ-113 (1997), 22,104-5, 109-19,122-3,131,142,145,153, 167; law on state pensions (1990), 57-8, 62-4,110-12,119,163; law on veterans (1995), 80, 82, 95, 119-21,170; pension reform (2001), 145-53; polozhenie (1991), 64-5, 73-4 pension law, Soviet Union: 1956 law, 11, 21, 25, 39-43; 1964 law, 41, 53; 1989 law, 54; 1990 law, 53-8, 62-4, 110-12,119,163 pension policy, Soviet Union, 1980s, 46-8, 53 pension reform, 154—6 pension reform, Russia, 124—53, 157-67; 1990-2,11,16, 21; 1992-4, 21-2; 1995-9,17, 22, 72, 90-1, 101-8,126-37; 2000-2,17-18, 22, 124-6, 139-53, 160-1 pension reform, Soviet Union, 1986-90,16, 21, 48-59 pension registration, 104,130,132, 142 pension spending: Russian Federation, 17, 73-4, 85,113; Soviet Union, 47-8, 54, 57, 61, 80, 189-90 n!9 pension system, Soviet Union, 15-16, 20-21, 25-39, 158; 1920s, 26-37,

Index of Subjects 158; 1930s, 25, 35-9; 1950s, 15, 39-43; 1960s-1980s, 44-9. See also pension law, Soviet Union pensions, disability, 16, 28-9, 35, 46; labour, 62, 149-50; old-age, 45, 148-50; personal, 30, 55-6, 62, 66; social, 62 pensioners, Russian Federation, 4, 10-11, 13, 16, 65-6, 69, 72, 102-3, 113-19, 120, 126, 132-4, 138, 1434, 147, 151-2, 160. See also elderly people pensioners, Soviet Union, 33, 50-1, 58. See also elderly people pensioners, working, 47, 131-2 perestroika, 45, 49-59, 61. See also Gorbachev, Mikhail personal pensions. See pensions, personal Poland, 12, 14, 142, 156 political parties, 132-3, 98-104, 157; Agrarian Party, 90, 98-104; Bolshevik party, 24, 26, 30; Communist Party of the Russian Federation (CPRF), 7, 13, 41, 44-5, 87-8, 90, 98-104, 132-3, 137-8, 148; Communist Party of the Soviet Union (CPSU), 39-40, 47, 51, 54-6, 97; Fatherland-All Russia (OVR), 135; Liberal Democratic Party of Russia (LDPR), 90, 98-104; Menshevik Party, 34; Narodovlastie, 102-4; Our Home is Russia (NDR), 90, 98-100, 102-4; Party of Unity and Concord (PRES), 98-101; Pensioners' Party, 137; Russia's Choice, 90, 98-101; Unified Russia, 159; Union of Rightist Forces (SPS), 133; Unity, 137,

245

139; Yabloko, 90, 92, 98-104. See also elections; voting behaviour; Federal Assembly, State Duma privatization, 48, 69 public opinion surveys, 14, 16, 50, 132-3, 138 regions, 29, 32, 40, 76-79, 83-6, 116-17,134-5,143,153 revenue, collection and distribution, 28, 63, 65, 57, 70-1, 73-4, 76, 78-81, 85, 96-7, 127-8, 143,149. See also government, Russian Federation: Pension Fund Russian Soviet Federated Socialist Republic (RSFSR), 7, 57-8 Russian (Bolshevik) Revolution, 1917,26,41 Russian Federation: government. See government, Russian Federation; executive-legislative relations; parliament. See decrees (ukasy); Federal Assembly; Putin, Vladimir; Yeltsin, Boris Russian Orthodox Church, 29 Second World War, 18, 39, 41, 53, 57, 161 September-October 1993 crisis, Russian Federation, 61, 68-9, 89-90, 96 'shock therapy,' 3, 11, 59, 60, 67, 69-70, 71. See also economic reform, Russia social insurance, 14-15, 28, 34, 113, 132, 140, 142, 144, 147, 149-50 'social justice,' 49-50, 52, 125-6 social welfare, 10, 15, 38-9, 69-70, 161

246 Index of Subjects social welfare reform, 4-5,10-12, 14, 23 social welfare system, Russian Federation, 63 social welfare system, Soviet Union, 25-39, 42-3, 47, 49 Soviet Union. See government, Soviet Union; Gorbachev, Mikhail; Lenin, Vladimir Ilyich; political parties, Communist Party of the Soviet Union; social welfare system, Soviet Union; Stalin, Joseph State budget: Soviet Union, 53-8; Russian Federation. See federal budget Supreme Soviet: RSFSR and Russian Federation, 57, 60, 62-8, 73, 82; Soviet Union, 53-8 taxation, 8, 13, 63,130, 140,144, 155 trade unions, 30-1, 34, 54, 55, 151; All-Union Central Council of Trade Unions (VTsSPS), 57; Federation of Independent Trade Unions (FNPR), 140, 143-5 transition, postcommunist, 6-11, 88-9, 109-10 Trilateral Commission on Labour Relations, 145

Twenty-Seventh Party Congress of the CPSU, 48-9 udarniki ('shockworkers'), 38 ukazy. See decrees Ukraine, 74 unified pension service, 128,140 United States, 67, 88-9,135 universality, 42-3, 63 Union of Soviet Socialist Republics (USSR). See Soviet Union veterans, 41, 45, 49, 53, 56-8, 68, 119-21,143,146-7,150,155 veto, presidential, 66, 80, 91, 93-4, 98,107,112,119,146,171,173-4, 206n64 voting behaviour, Russian Federation, 13,133,137 VTsIOM (All-Russian Centre for the Study of Public Opinion), 137-8 women, 27, 30, 114, 131, 145-6, 148 working pensioners. See pensioners, working World Bank, 14, 81, 105, 128-9, 131,136-7,139,141,143,154, 181-2n60, 215-6n68 Yakutia (Sakha), 85