Raising the Retirement Age in Russia

zenit arenaRussia has the money to build stadiums like Zenit Arena, in Petersburg,  the world’s most expensive football stadium, and stage incredibly expensive mega events like the 2018 FIFA World Cup and the 2014 Sochi Winter Olympics, but it cannot afford to pay its workers decent pensions without raising the retirement age beyond the current life expectancy for forty percent of Russian men. Photo by the Russian Reader

Alex Gaskarov
Facebook
June 4, 2018

It is quite likely a draft law on raising the pension age will be tabled in the State Duma in the very near future. The authorities probably want to take advantage of the restrictions on large-scale rallies during the 2018 FIFA World Cup. Raising the retirement age is not entirely an economic issue. The Pension Fund has been running a huge deficit because 40% of wages are paid under the table. This is a colossal amount. Even the most incompetent revenue service could easily reduce this figure.

It appears there is an implicit consensus between the regime and a segment of the business world that the latter agrees not to get involved in politics, while the regime agrees not to try very hard at auditing businesses. It is a commonplace that only suckers pay taxes to the current regime. Admittedly, there are grounds for this.

Nevertheless, wage laborers are the clear losers, and it is also obvious why. If the majority of people are so easily gulled during elections, as we saw recently, what reason does the regime have to keep its campaign promises and bother about reducing poverty?

I really hope liberals will also support the campaign against raising the pension age. There are market-based means of fixing the problem, for example, reducing mandatory pension deductions while simultaneously raising the corporate profits tax. When salary deductions come to 43%, while the corporate profits tax is 20%, it makes financial sense to understate salaries even without resorting to illegal gimmicks.

The trade unions have launched the campaign, but everyone is free to join it.

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KTR Launches Campaign against Raising the Retirement Age
Confederation of Labor of Russia (KTR)

The Executive Committee of the Confederation of Labor of Russia (KTR) has issued a statement concerning plans by the Russian federal government to raise the retirement age. […] To sign the statement and join the grassroots campaign in your city, write to  ktr@ktr.su or call +7 495 737-7250 or +7 903 140-9622.

Statement by the Executive Committee of the Confederation of Labor of Russia (KTR) on Plans by the Russian Federal Government to Raise the Retirement Age 

On May 8, 2018, during a plenary session of the State Duma, Dmitry Medvedev spoke of the need to make a decision about raising the retirement age. Currently, various government proposals for implementing a decision are vigorously being discussed in the media.

The Executive Committee of the Confederation of Labor of Russia (KTR) argues that plans to raise the retirement age are not based on the available official statistics and do not meet the objectives set by the Russian president for the government. The KTR does not support solutions of this sort and announces the kickoff of a broadly based grassroots campaigns to oppose their implementation.

According to the Russia Federal Statistics Service (Rosstat), the average life expectancy in sixty-two regions of the Russian Federation is less than 65 years for men, while in three regions it is less than 60 years. If overall demographic trends in Russia remain generally the same, 40% of men and 20% of women will not live till the age of 65. Enacting proposals to raise the retirement age mean a considerable number of Russians will not live to enjoy retirement.

For many years, the Russian government has pursued an economic policy that has produced a deficit of 40–45 % in the Pension Fund. The KTR believes the deficit emerged primarily because a huge number of employees work without the benefit of an employment contract. Their wages are paid off the books, and mandatory pension contributions are not deducted from their wages. The Pension Fund’s managers estimate that regular deductions are made for only 43.5 million people out of a total working-age populace of 77 million people.

Rosstat has estimated that 10 trillion rubles in wages are paid under the table annually. This means that, annually, at the current rate of 22%, the Pension Fund does not receive 2.2 trillion rubles in deductions.

So, the current rate of deductions could be maintained and the Pension Fund would not show a deficit if all employment were legal and on the books. Moreover, average pension payments could be increased.

Illegal employment is grounded in the disenfranchisement of workers due to ineffective procedures for protecting their right to employment contracts and collective bargaining. The KTR argues that positive outcomes could be generated by increasing the liability of employers who pay employees off the books and fail to make tax and pension deductions. Overcoming powerlessness, however, necessarily involves changing the laws and restoring real rights to organize and join a trade union, bargain collectively and strike, and protect trade union organizers from summary dismissal.

The fight against informal employment must be the primary solution to the Pension Fund’s deficit.

If plans to raise the retirement age are enacted, the absence of government-funded retraining programs, automation of production, and the bleeding of low-skilled jobs from the labor market will generate a millions-strong army of elderly people who have no jobs and no pensions.

As an association of independent trade unions, the KTR appeals to all forces in society, political parties, and social movements to oppose the increase of the retirement age and get involved in the grassroots protest campaign.

We propose organizing an open headquarters for running the national campaign to protect the rights of workers to pensions.

June 1, 2018, Moscow

Boris Kravchenko, president, KTR
Igor Kovalchuk, chair, KTR Executive Committee
Sergei Kovalyov, secretary general, KTR; president, Russian Federal Flight Controllers Union
Oleg Shein, vice-president, KTR

Translated by the Russian Reader

Bite the Bullet in the Back of Your Head

151019.spooks1Where is Harry Pearce when we need him? Photo courtesy of Universum Film and Lite

“While Kiev may have prevented a killing, the next time a Kremlin critic is murdered the first question will be: are they really dead?”

What all the rabid verbiage about Arkady Babchenko’s “stunt” boils down to is that a good number Russians and, surprisingly, non-Russians (e.g., Reporters without Borders, the BBC, etc.) believe that, when you are confronted by a much more powerful or cunning enemy, such as the Putinist state, the noble thing is to roll over and let yourself be killed.

Everyone loves a martyr for a cause, even when an endless series of martyrs jeopardizes any real cause, if only because at some point the people who believe in the cause will eventually surrender if the cause is so needlessly dangerous, and its leading lights forbid its lesser lights from defending themselves when attacked by the enemy, much more from going on the offensive against the same enemy.

That would be unthinkable!

No, it is better to roll over and bite the bullet in the back of the head. Your friends will relish laying flowers on your grave for years to come, and if you are famous they might even hold annual memorial rallies or marches for you. The regime does not find such powwows threatening in the least, because they make the opposition to their rule look weak and pathologically attracted to victimhood.

Besides, even ordinary Russian law enforcement and judicial practice tends to frown on people who defend themselves too vigorously, often prosecuting and punishing them instead of their assailants.

When the assailants are police officers, this is triply true, as we saw during the infamous Bolotnaya Square Case, in which over thirty people were charged with “rioting” and “violence against police officers” for the mildest acts of self-defense or even their entire absence, after a small army of police attacked a peaceable, authorized opposition march in Moscow on May 6, 2012, without provocation.

It is remarkable, then, how many Russians have internalized and made their peace with a quasi-doctrine of passive non-resistance that has been coupled with a total reluctance to come to the defense of others set upon by criminals or the police, whose actions and intentions are often indistinguishable.

What is surprising is that this madness is also endorsed by seemingly respectable foreign organizations like the BBC, who have been pushing the “this discredits Ukraine forever” line for the last forty-eight hours as if their lives depended on it, and Reporters without Borders, who in their statement also came close to suggesting that if Babchenko had been an honorable journalist he would have let himself be iced by the Kremlin’s assassins.

The real back story is that there are considerable forces in western society who find it awfully irritating and inconvenient for their big picture that Ukraine and its defenders have not just given up the ghost, but have continued to put up a fight, however ineffective and puny when matched against the ostensible might of the Putinist empire.

For some reason, the resistance against this murderous empire mounted the other day by Babchenko and his defenders in the SBU has caused more offense and tongue wagging than the actual armed resistance, often quite bloody and indiscriminate and crawling with unsavory characters, we have seen in Eastern Ukraine over the last four years.

Putting it as crudely as possible, Babchenko and his SBU collaborators figured out a way to fight back and win a small victory against the Putinist empire without spilling a single drop of blood, and now lots of high-minded people are hopping mad at them, including John Simpson of the BBC (who this morning attempted, hilariously, to make up for yesterday’s tirade by remarking that if Anna Politkovskaya had pulled off the same escapade, he would have been happy) and the now utterly discredited Reporters without Borders, which has implicitly endorsed the murder of dissident journalists by the Kremlin.

At times like this I wish the fictional Harry Pearce, head of counter-terrorism at MI5 in Spooks, really were a defender of the realm, because, as he himself says at the end of the excellent Spooks movie (Spooks: The Greater Good), only people like him are ruthless enough to get the job done and actually defend the realm. If you have ever seen the show, you will realize defending the realm does not consist of running around running up a high body count, but of  being able to distinguish at the right time between friend and foe, a job that is infinitely harder than it sounds.

How is that a screwed-up but otherwise peaceable country that was invaded unprovoked by its much more powerful neighbor and a dissident journalist who fled to that country are seen as enemies by half the Russian intelligentsia and half the journalistic organizations in Europe?

If Harry Pearce were real, and I were his boss, I would want him delicately probing into why exactly the BBC has mounted such a vicious attack against Babchenko and the Ukrainian authorities in the last two days. I would be especially interested in investigating the motives of the avuncular John Simpson, whose tirade against Babchenko live on the air yesterday on Radio 4 was so unseemly and vehement I felt I must be hallucinating. (After listening to the tirade, I was not surprised to find he had filed this crypto-Putinist copy from occupied Crimea in March 2015.)

The Babchenko affair has nothing to do with fake news. It has to do with whether smaller, less powerful countries and essentially powerless individuals who oppose more powerful countries have the right to defend themselves at all.

The implication is the SBU should have waited in ambush for Babchenko’s killer with a squad of fifty armed men and then lit him up like a Roman candle when he arrived rather than plan and enact the much subtler and more effective counter-attack they claim to have carried out.

We live in extraordinarily strange times. // TRR

Zeitgenossenschaft

almost violence

Judging by virtual and real encounters in recent weeks, Russophonia has been doing its darnedest to descend into a war of all against all.

Thus, at the birthday party of an old family friend, a group of Russian physicians—people who run whole departments of hospitals and even whole hospitals—artlessly segued from running down the birthday boy’s grandson, who was seated only a table’s length away from them, and is one of the sweetest young men I have ever met, to making baldfaced statements such as “Putin is the guarantee of stability,” “There should be more than one currency in the world,” and outright nationalist assaults, prompted partly by the fact I had been introduced to the other guests not by name, but as a “citizen of country X.”

Meanwhile, on the other end of the Russophoniacal political spectrum, which looks a lot like the opposite end, only it is topsy-turvy and striped, a well-known Ukrainian provocateur decided to take a few swipes at me on Facebook by claiming I “defended” Russia.

What he really meant by this, I could not figure out for the life of me, but I gathered that the point of his mostly incoherent remarks was that, since I write about Russia and edit a website about Russia, I was thus inadvertently or even deliberately legitimizing the country.

The problem for professional Russophobes like him is that Russia exists and has existed for a long time. No one can wish it away, just as we cannot wish away climate change, rampant poverty or racism. But we can wish for a world without any of these things or a lot less of these things, and we can make that world a reality.

Russians can also wish for a more democratic, egalitarian Russia and make that a reality, too. If, like me, you are not in a position to engage directly in the country’s democratization by virtue of your nationality, you can at least help people in Russia campaigning for a freer, fairer country by writing about them and, more generally, by providing or seeking a clearer, more detailed picture of what has been going on in Russia, and what the causes of current events in Russia really are, refusing to accept the lazy non-explanations of Russophobes, Russophiles, crypto-Putinists, and bored academics alike.

My Ukrainian detractor was not having any of it, alas. My unwillingness to accept the falsehood that Russians are mostly bad to the bone was more proof I was soft on Russia.

The crux of our disagreement was that I refused to concede that there are inordinately large numbers of bad or stupid people in Russia, as compared with other countries. On the other hand, I do believe, on the basis of long years of in-country observation, conversations with thousands of Russians, and intense and extensive reading of the Russian press and the relevant literature, that Putin’s alleged popularity is an authoritarian construct, not an expression of the popular will.

This is an argument that needs to be made in full, which I have done in bits and bobs over the last few years, often by translating the work of Russian observers who have made similar claims. That is, it is, at least, a rational argument that has a good deal of evidence to support it.

I definitely do not believe in collective guilt, which my Ukrainian interlocutor seemed to think was as natural as the sun rising in the morning.

My detractor believed in lots of noxious things and decided he could dump them down my throat by way of debunking the ten-plus years of hard work I have put in covering Russia from an angle no one else covers it.

Several of my comrades and friends were party to this ridiculous conversation, but instead of defending me or at least pointing out the flaws in the Ukrainian provocateur’s completely blowsy argument, they just let him spit in my face repeatedly, although his only real object was to get my goat and disparage my work.

Here we arrive at an actual—not imaginary—problem in Russia these days: the lack of solidarity among people who should otherwise feel it and exercise it towards each other and, in its absence, the sickening phenomenon of people standing by idly and silently as out-and-out bullies—the police, Putin, NOD, “Cossacks,” Russian physicians, Ukrainian provocateurs, and so forth—beat up other people physically or verbally or both.

In the aftermath of solidarity’s triumph in the Yuri Dmitriev case, a groundswell has been seemingly gathering to support the nine young Penza and Petersburg antifascists abducted and tortured by the FSB, and then accused, absurdly, of being wannabe terrorists supposedly hellbent on causing mayhem during the March presidential election and upcoming World Football Cup.

If the groundswell really does exist, the credit for it should go to an incredibly tiny group of people who decided they had to make a lot of noise about the case at all costs. Most of these people are 100% Russians, whatever that means, and I have rarely been so inspired as I have been by this group of people, most of whom are also fairly young and predominantly female.

In fact, if you read this and its predecessor, Chtodelat News, you will find lots of stories, some of them going ten years back, chockablock with smart, courageous, team-oriented, democratic, egalitarian Russians.

Russia thus has every chance of becoming a democratic, egalitarian country in the foreseeable future. But the same could be said of the United States and a whole host of other countries—the vast majority of countries on earth, I would imagine—that either have strayed too far from the democratic path or never were quite on track in the first place.

Democracy is not an essential feature of some peoples and countries, while despotism is an essential feature of other peoples and countries. If you believe that canard, it will not be long before you are saying the Jews are entirely responsible for the mess we are in, the Palestinians are capable only of terrorism, the Americans are too blame for all the world’s problems (including problems they really did not have a hand in causing) or your own people (fill in the blank) are too corrupt, swinish, and stupid to govern themselves, so a dictator like Putin or Assad has to do the job for them. There is no alternative, in other words.

Democracy is something we do together. We either practice hard and try to make every note bend just right or we don’t practice at all or not often enough, in which case a cynical cacophonist like Putin or Trump gets to call the tune for us. Not because we are inherently racist or authoritarian, but mostly because we are too scared, indifferent, busy, self-absorbed, lazy and sorely tempted not to listen to our better natures and see the good in others.

But we are obviously not essentially good, either. We are the political animals who have the power to make and remake ourselves and our societies in ways that are better and worse. We also have to decide all the time what constitutes better and worse.

If you do not believe this, you do not believe in the power of politics and do not understand the “mystery” of human being. Ultimately, you think that some humans or all humans are too wayward and disorganized to get their act together, and therefore should be policed.

I did not think up this distinction between politics and policing myself. A far wiser and thoughtful man than I am, the French philosopher Jacques Rancière did, but as the years go by, seemingly becoming nastier and darker, I see how his distinction does get to the heart of the matter.

This is simplifying the matter unforgivably, but you are either on the side of politics or the side of the police.

Politics is messy and usually not particularly satisfying, but it is the only way we have to approximate knowing all the things we have to know to make and enact good decisions that affect us all.

Policing, on the other hand, is easy as pie. Entire groups, classes, peoples, and groups are declared out of bounds and thus subject to police action. If you argue with the police about their inclusion of a particular group of people on its list of “not our kind of folks,” they will say what police always say on such occasions—”Oh, so you’re in cahoots with them?”—and rap you over the head with a truncheon.

In the years I have been editing websites and deliberately misusing social media for the same purposes, I have been rapped over the head with heavy verbal truncheons so many times I am now permanently punch drunk.

Most of the policing, unsurprisingly, has been meted out by Russophones, many of whom really do suffer from chauvinism of a kind that, at best, does not brook the possibility that a non-native Russophone could have anything worthwhile to say about Russian politics and society. The Ukrainian provocateur was from this school of opinion

Since there are something like twenty people in the world—seriously!—who genuinely support what I do here, I guess I will keep doing it, but the other day’s round of kangaroo boxing left me seriously wary about people whom I had considered comrades. // TRR

Photo by the Russian Reader

Russia Has No Senate or Senators

800px-Maccari-CiceroCesare Maccari, Cicero Denounces Catiline, 1889. Fresco. Palazzo Madama, Rome. Image courtesy of Wikimedia Commons

“Russia’s Senate wants a visit from Mark Zuckerberg.”
The Real Russia. Today email newsletter, May 30, 2018

I am not a huge fan of Mark Zuckerberg, but he can easily turn down this invitation, if only because Russia does not have a senate.

It does have something called the Federation Council, which is supposedly the upper house of the Russian parliament, a mostly fictitious organization itself, considering how its MPs are essentially appointed to their seats, not elected by popular vote.

The members of the Federation Council are a group of Putinist lackeys. They are handpicked by the Kremlin to represent Russia’s ninety-some regions. In most cases, however, they have nothing whatsoever to do with those regions, unlike during the rough-and-tumble Yeltsin administration, when each region’s two-person Federation Council consisted of its elected head and an elected representative of its own parliament. As I recall, this was the set-up not because Yeltsin decreed it, but because the regions themselves decided to run their own house of parliament this way, meaning the Federation Council was often a rowdy bunch, opposed to Yeltsin’s proposals and policies, just like the parliament’s lower house, the State Duma, which was so notoriously rowdy it often made the news in other countries. That does not happen anymore.

Nowadays, however, most Federation Council members are either natives or longtime residents of Moscow and Petersburg, both called “capitals” for similarly pompous reason. Like their fellows MPs in the State Duma, Federation Councillors engage in neither vigorous debate nor rebellion, but in rubber-stamping the increasingly odious law bills drafted for them by the Kremlin and various government ministries. They do their jobs as executioners of the remnants of Russian democracy and civil liberty so uncomplainingly and speedily that opposition-minded Russians have taken to calling the parliament the “mad printer.”

Naturally, given their real condition as contemptible yes-men, the Federation Councillors decided it would be more dignified if they fancied themselves “senators” and dubbed their rinky-dink collective sinecure a “senate.”

The funny thing is the non-senators have succeeded in hoodwinking nearly all reporters, even foreign reporters, into adopting this utterly groundless, self-aggrandizing, hokey moniker.

This is hardly surprising, since, in my experience, reporters are gullible creatures. I once persuaded a Russian reporter I was an unemployed Finnish shipbuilding engineer from Turku who had turned his life around by making fresh mango and salt lasses from a cart in downtown Helsinki. She duly reported this non-fact about my fictional alter-ego in her article about the latest edition of International Restaurant Day. The article was duly published in a well-known Petersburg daily, which has since gone defunct. I had just been joking to pass the time of day while making lasses outside in less than clement late-spring weather, but the reporter took me seriously. She even snapped my picture or, rather, the picture of the Finnish ex-shipbuilder from Turku, and it, too, was printed, properly captioned, in her overview of Restaurant Day in Petersburg.

The resident of New Haven, Conn., who edits the daily English newsletter for the online Russian-language news website-in-exile Meduza has bought into the “Russia Senate” con hook, line, and sinker, too. Seemingly indifferent to what really happens in our rapidly re-totalitarianizing country, he has endowed us with a senate on several occasions, in fact. You see, it is the done thing nowadays, whether it is actually true or not.

But I don’t have to buy it, nor does Mark Zuckerberg. And neither should you.

Russia has no senate and, hence, no senators. Anyone who says or writes otherwise is indulging in glibness for reasons that should make you question everything else they write or say. Good reporters write something because it it true or reported to be true. They don’t involve themselves in collective hoaxes, especially, as in this case, in an easily disproved imposture that has gone on for years. // TRR

Soaking the Public to Make Russia a Powerhouse

Russian Authorities Could Raise the VAT to 20%
Giving Them Two Trillion Rubles to Execute Putin’s May Decree
Yelizaveta Bazanova and Filipp Sterkin
Vedomosti
May 27, 2018

Prime Minister Dmitry Medvedev has promised to find the eight trillion rubles [approx. €110 billion] the government lacks to carry out Putin’s new May decree. We have learned the government and the Kremlin will go looking for a considerable portion of this sum in the public’s pockets. Approximately two trillion rubles could be collected over six years by raising the VAT from 18% to 20%. Our sources, three federal officials, said this option had been discussed and was one of the most likely options, although a final decision had not been made. However, one of our sources said the Finance Ministry had proposed abolishing the 10% preferential VAT rate and replacing it with an allowance.

Another two trillion rubles or so would be supplied by an increase in the retirement age, which Medvedev had announced, said two of our sources, without specifying how quickly it would be increased and by how much.

The final four trillion rubles would be provided by measures that have already been made public. The state would raise three trillion rubles for infrastructure projects by floating fixed and variable federal bonds, and establishing a temporary fund within the budget. The remaining one trillion rubles would be supplied by reforming taxation of the oil industry, nullifying export duties and raising the severance tax to offset them.

However, some of the decisions could still be revised, our sources said. As one of them noted, everything was in a state of rapid, constant flux.

Who Will Pay the VAT Increase?
Officials have long discussed an increase in the VAT, but as part of an overall taxation maneuver, as proposed by the Finance Ministry, that would have involved reducing pension deductions while raising the VAT to a flat rate of 22%. The Finance Ministry’s idea was to sanitize the economy and pump an additional 500 billion rubles into the budget. The idea was rejected, but several officials said it had proven impossible to find the money to carry out the May decree without raising taxes. Increasing the VAT without reducing pension deductions was a common trick, said a member of the board of the Russian Union of Industrialists and Entrepreneurs (RSPP).

The VAT was pegged at 20% until 2004, when it dropped to 18%. Returning it to 20% would be a less painful solution than the other options on the table—increasing the personal income tax rate and introducing a sales tax—argued two officials. Although, as one of them noted, if the state wanted to stimulate economic growth, it should not rob it of resources.

By increasing the VAT, the state would be primarily confiscating resources from the general public, which has experienced a four-year-long slide in incomes, while businesses would be able to compensate a considerable portion of their costs by embedding them in prices and thus passing them on to consumers.

As research by the UK’s statistical service has shown, companies raise prices ahead of time when an increase in the VAT is expected. Natalia Orlova, chief economist at Alfa Bank, has calculated that a two-percent increase in the VAT would accelerate a rise in prices of 0.8% to 1%, which would not be terrible during a period of low inflation. (In April, inflation was 2.4% in annual terms.) But along with abolishing the preferential rate, raising the VAT could deal a serious blow to the general public and have a knock-on effect on consumption, warned Alexandra Suslina at the Economic Expert Group. The preferential rate is currently valid for food products (except luxury items), children’s goods, books, textbooks, and medicines. In 2017, the preferential rate deprived the federal budget of an additional 550 billion rubles or about 0.6% of GDP.

According to a study by Alexander Isakov, chief economist at VTB Capital, when prices suddenly rise, people are less inclined to skimp on food, alcohol, and transportation. A one-percent increase in prices leads, most of all, to decreased spending on communications and medical care.

Business would pass on costs to domestic consumers, but the VAT for exports is zero percent, said the RSPP board member. There would also be victims, however. A tax increase would hit sectors where competition is intense the hardest, warned Vladimir Salnikov, deputy director of the Center for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP). This was borne out by an IMF study performed in the wake of an increase in the VAT in Germany in 2007.  When competition is intense, companies find it harder to retain their market share after price rises. Retailers, who have already slashed their profit margin amid weak consumer demand, would suffer, said a tax consultant at a major retailer. Salnikov warned the structural effect would be bad, increasing the burden on manufacturing industries, not on raw materials exporters.

Most of all, it would increase the burden on the machine-building and transportation sectors (by 6.8% and 6.6%, respectively), the electricity sector (by 6.8%), construction (by 5.6%), the information sector (by 5.4%), and the hotel business (by 4.4%), according to Salnikov’s calculations. On the other hand, it would decrease the burden on chemicals manufacturing, wood processing, and agriculture.

Officials have little time to decide who will pay for Putin’s May decree. The cabinet has drafted proposals for the tax system, and final decisions would have to be made during the State Duma’s spring session, Anton Siluanov, appointed first deputy prime minister and finance minister, said earlier. Currently, no decisions had been made, his adviser Andrei Lavrov confirmed, but in the near future the government would be deciding on measures for adjusting the tax system. Natalya Timakova, the prime minister’s spokesperson, would not comment on the subject, while Dmitry Peskov, the president’s press secretary, was unavailable for comment on Sunday.

fullscreen-1tqbPerformance of actual pensions and wages vis-à-vis the same period during the previous year. Red line=actual amount of allocated pensions; blue line=actual paid wages; *=lump-sum payments taken into account. Source: Rosstat. Courtesy of Vedomosti

Working for the Decree
Saving two trillion rubles over six years would mean raising the retirement age by at least one year annually for both women and men, noted Yuri Gorlin, deputy director of RANEPA’s Institute for Social Analysis and Forecasting. This would make it possible decrease transfers from the federal budget by two trillion rubles, agreed Tatyana Omelchuk, senior researcher at the Finance Ministry’s Financial Research Institute (NIFI). This option for increasing the pension age was tabled by the Center for Strategic Research when it was headed by Alexei Kudrin, who has now been tapped to chair the Accounting Chamber. Annually, around 40% of the Pension Fund’s income is provided by the federal budget. In 2018, 3.34 trillion rubles will be transferred from the budget to the Pension Fund.

The pension age should be raised not only to save two trillion rubles for executing Putin’s decree but also to generate resources for increasing pensions at the same rate as salary increases, said an official. There was the danger the government would try to minimize the transfer as much as possible, and then there could not be enough money to step up the indexing of pensions, Gorlin noted.

Options for raising the pension age were discussed even before Tatyana Golikova was appointed deputy prime minister for social issues. In an interview with RBC, she said the government had only discussed the decision. The final parameters had not been agreed. Her spokesperson declined to comment.

Gorlin said the main goal of raising the retirement age was to ensure a more acceptable increase in pensions. An excessively radical approach to the problem would significantly increase the danger of unemployment’s rising, while also spurring the demand for disability pensions, he argued. Referring to the findings of a sociological survey, experts at the Higher School of Economics have claimed the most acceptable option for raising the retirement age would be sixty years for women and up to sixty-three years for men. Gorlin argued the most rational option would be between sixty-two and sixty-three years for men, and between fifty-nineand sixty-one years for women.

Translated by the Russian Reader

Vladimir Balukh: Rough Justice in Russian-Occupied Crimea

The Balukh Trial: Testimony of Prosecution’s Witnesses Diverges
Grani.Ru
May 15, 2018

The testimony of the prosecution’s witnesses diverged during the latest hearing in the third trial of the Crimean Ukrainian political activist Vladimir Balukh, who allegedly assaulted Valery Tkachenko, warden of the Interior Ministry’s Temporary Detention Facility in the Razdolnoye District, reports the news website Krym.Realii.

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Duty officer Mikhail Shubin claimed Balukh wanted to attack Tkachenko, but the guards holding the political prisoner stopped him from doing it. At the same time, Shubin claimed Balukh had “taunted” the warden.

Meanwhile, the facility’s deputy warden, Dmitry Karpunov, testified he did not see the conflict itself. He could only report Tkachenko had entered Balukh’s cell, whence an “intense conversation” was audible, and then the warden exited the cell stained with some kind of liquid.

Karpunov said there had been no attack. Balukh had not committted any violations of prison regulations, not counting his refusal to put his hands behind his back.

The Crimean Human Rights Group reports a total of five witnesses were questioned during Tuesday’s hearing. Aside from Shubin and Karpunov, they included temporary detention facility staffers Seyran Mambetov, duty officer Sergei Tishin, and technician Alexander Konovalov, who extracted the recordings from the CCTV cameras. The Crimean Solidarity Facebook page identifies Konovalov as Balukh’s aquaintance.

Our correspondent reports that, during his testimony, Major Mambetov said, “We are not the Gestapo. We don’t assault people. We police officers do not offend anyone, and we treat all convicts the same.”

The next hearing was scheduled for Wednesday, March 16.

Balukh went on hunger strike on March 19, 2018. May 15 was thus the fifty-eighth day of his protest against the unjust verdict in his previous trial, in which he was convicted of illegally possessing ammunition. On Tuesday, the Crimean Human Rights Group published a letter from Baluch, in which the political prisoner wrote that, on the twenty-fifth day of his hunger strike, his social defender, Archbishop Kliment of the Simferopol and Crimean Ukrainian Orthodox Church of the Kyiv Patriarchate, urged him to moderate his hunger strike. Whereas earlier Balukh had consumed only water and tea, after his conversation with Kliment he drank two glasses of oatmeal kissel and ate fifty to seventy grams of dried breadcrumbs everyday, and added honey to his tea.

Balukh made the decision, he wrote, “in order to rule out the possibility of forced feeding and the use of medical means of life support I have not authorized, and also to avoid causing irreparable grief to my loved ones.”

Earlier, Balukh’s common-law wife Natalya had pointed out her husband suffered from liver disease, and it was unacceptable for him to go on hunger strike.

93614.jpgVladimir Balukh and his attorneys Olga Dinze and Taras Omelchenko, May 15, 2018. Photo by Alexandra Yefimenko. Courtesy of Grani.Ru

The hearing on the merits of Baluch’s third trial began April 2. Tatyana Pyrkalo, chair of the Razdolnoye District Court, which is controlled by Russia, has presided over the trial. Aside from Archbishop Kliment, Balukh is defended by three professional lawyers, Dmitry Dinze, Olga Dinze, and Taras Omelchenko. Ms. Dinze and Mr. Omelchenko were present at Tuesday’s hearing.

The 47-year-old Balukh, a farmer from the village of Serebryanka in the Razdolnoye District, has beeen charged under Article 321 Part 2 of the Russian Criminal Code (non-threatening violence against a penitentiary officer during performance of his duties), which is punishable by a maximum of five years in a penal colony. According to the prosecution, on August 11, 2017, during morning rounds of the cells at the Razdolnoye Temporary Detention Facility, where Balukh had been transferred from a remand prison while he attended his second trial, Balukh struck Warden Tkachenko in the stomach with his elbow while they were in the hallway, after which he went into his cell, grabbed a bottle of detergent, and struck the policeman on the arm.

Actually, Tkachenko himself assaulted Balukh, insulted his ethnicity, and swore at him. Moreover, these actions were captured by CCTV cameras. We also know the warden had verbally assaulted Balukh prior to the incident. Balukh was framed on the new charges after his defense lawyers filed a complaint against Warden Tkachenko with the police.

During the pretrial investigation, conducted by N. Bondarenko, an official with the Razdolnoye Interregional Department of the Russian Investigative Committee, Warden Tkachenko refused to report to a face-to-face confrontation with Balukh, although Russian law does not provide this right to victims.

Until today, only two hearings had been held in the case. Warden Tkachenko took the witness stand at the second hearing, on April 11.

As defense lawyer Dmitry Dinze noted after the hearing, “The funniest thing about the whole case is that the so-called victim has not evinced any get-up-and-go. The criminal charges did not interest him at all. He was ordered to file a report and draw up all the papers in order to get the case opened. Personally, he has no material and emotional gripes against my client. It transpires the Razdolnoye District Police Department had a stake in cooking up more criminal charges against Balukh.”

In December 2013, during the early weeks of the Revolution of Dignity, Balukh hung the red and black flag of the Ukrainian Insurgent Army (UPA) above his home in the village of Serebryanka. After awhile, the flag was surreptitiously torn down at night, and the farmer replaced it with the Ukrainian national flag. After Crimea was occupied, Balukh did not apply for Russian citizenship.

Balukh was convicted for the first time in 2016 and sentenced to 320 hours of community service for, allegedly, offending a government official, as stipulated by Article 319 of the Russian Criminal Code. The “victim” in this case was Lieutenant Yevgeny Baranov, a field officer with the Center for Extremism Prevention (Center “E”), who was involved in searching Balukh’s home in November 2015.

Balukh faced trumped-up charges for the second time after he attached a sign inscribed “Heaven’s Hundred Heroes Street, 18″ on his house. He was jailed in a remand prison, where he was imprisoned for nearly a year before he was transferred to house arrest. He was returned to the remand prison after his conviction on the second set of charges. Balukh was charged under Article 222 Part 1 (illegal trafficking of ammunitition) and Article 222.1 Part 1 (illegal trafficking of explosives) after police planted gunshells and TNT blocks in his home during a routine search. Earlier this year, Balukh was sentenced to three years and five months in an open penal colony.

Translated by the Russian Reader

The Annals of PreCrime: “An Absolute Nightmare”

precriminals.jpegUnder legislation currently tabled in the Russian parliament, these up-and-coming Russian businesswomen could do hard time in a penal colony for the wholly fanciful crime of “complying” with western sanctions against target businesses and individuals. Image courtesy of Credit Bank of Moscow

Sanctions Victims Refuse the Russian State’s Protection
Big Business Categorically Rejects Adopting Law on Anti-Sanctions
Yelizaveta Bazanova, Anna Kholyavko and Yekaterina Burlakova
Vedomosti
May 16, 2018

“An absolute nightmare”: that was the phrase used by the majority of lawyers and executives of Russian and foreign companies whom we asked to comment on plans to imprison people who “implemented” foreign sanctions. On Monday, a law bill to this effect, tabled by State Duma Speaker Vyacheslav Volodin, Federation Council Speaker Valentina Matviyenko, and leaders of all four parliamentary factions was passed in its first reading. The second reading has been scheduled for Thursday.

Under the law bill, if a company refuses to sign a public contract with an entity on the sanctions list, the company and its executives would be threatened with a maximum fine of ₽600,000 [approx. €8,200] and a maximum prison term of four years.

The board of the Russian Union of Industrialists and Entrepreneurs (RSPP) has decided passage of the law would be completely unacceptable. Companies would find themselves between the frying pan and the fire: violations of sanctions would threaten them with secondary sanctions, while complying with sanctions would make them criminally prosecutable in Russia.

The RSPP’s resolution was supported even by board members who had themselves been sanctioned.

“We believe it would cause further damage to the Russian economy, including business with foreign and Russian companies, and both Comrade Vekselberg [Renova Group Chair Viktor Vekselberg] and I voted for the resolution,” Interfax has quoted VTB Bank president Andrei Kostin as saying.

A spokesperson for Vekselberg did not respond to our questions. We were also unable to contact a spokesperson for Oleg Deripaska, another target of western sanctions, yesterday evening.

If passed, the law would be unlikely to have a considerable impact on how businesses operate, but it could be a means of threatening and pressuring them, the entrepreneurs we surveyed said unanimously. The wording of the law bill is harsh. Nearly anyone could be prosecuted on the flimsiest of pretexts, complained an executive at a transnational food producer.

The key risk is the absence of clear criteria for defining what would constitute a violation of the proposed law, our sources all agreed. Even the Russian Finance Ministry could be prosecuted. In its Eurobonds prospectus, it pledged not to use the funds raised to support entities targeted by western sanctions. In January, Alfa Bank warned Russian defense companies it would not handle their accounts due to sanctions. Spokespeople for the Finance Ministry and Alfa Bank did not respond to our inquiries.

The Kremlin has also been unhappy with the law bill, said a federal official close to the presidential administration.

The law bill, if passed, would also generate risks for those companies who refuse to do business in Crimea due to sanctions, said Alexei Panich, a partner at Herbert Smith Freehills. These include the state banks Sberbank and VTB, as well as mobile telecom operators. Andrei Isayev, deputy head of the State Duma’s United Russia faction, claimed  companies who do not open branches in Crimea would not be affected by the law. What was at stake, he said, were the ordinary deals and transactions companies perform almost automatically. However, refusal to do business with counterparts in Crimea could be considered a criminal offense under the terms of the law, said an attorney at a major international law firm. The law could complicate public offerings, the issuing of loans, and contracts and transactions, he specified.

An employee at a major international firm explained it would be hard to determine whether a company refused a deal with a counterpart due to their bad reputation or the threat of sanctions. An auto dealer agreed the threat of criminal prosecution would be powerful leverage. To encourage its partners to agree to a deal, a business could threaten to report them to law enforcement agencies, argued Panich.

The proposed measures were excessive, agreed a spokesperson for an agricultural commodities trader. Some companies have in-house rules restricting such deals. Our source said the law bill appeared to be means of coercing such companies. Theoretically, it could be used as leverage. A company or person on the Specially Designated Nationals And Blocked Persons List (SDN) could show up and demand another company do business with them, agreed the head of major private bank. It was difficult to imagine how banks would solve such dilemmas, he said.

“There are many ambiguities in how the law would be interpreted, and what specific actions or inactions would be punishable,” he concluded.

Foreign businesses could interpret the law bill as a signal it was time to wrap up their operations in Russia, said the vice-president of a major foreign company that produces popular consumer products. No one has any intention of sacrificing their top executives to the Russian law enforcement and judicial system.

All issuers of bonds include in their covenants the refusal to do business with entities targeted by sanctions. Perhaps expatriates who do not want to take risks would leave the country, argued an employee at a large foreign company.

Passing the bill into law would be a mistake, said political scientist Yevgeny Minchenko. The law would have to be seriously amended over time.

“Knowing how this could affect both Russian companies and foreign business operating in Russia, this is very risky decision in my opinion,” Minchenko told us.

Spokespeople for Sberbank and Credit Bank of Moscow declined to comment.

With additional reporting by Vladimir Shtanov, Darya Borisyak, Alexandra Astapenko, and Svetlana Bocharova

Translated by the Russian Reader