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Annihilation of the social state in the Russian Federation



Abstracts of the report by Lev PONOMAREV, 

executive director of the All-Russian public movement “For Human Rights”

1. Revolutionary events in the beginning of the 90-s of the last century led to fast and widespread decrease of the majority of Russia’s population standard of living and to significant social stratification. For 10 years the county lived mostly at the expense of foreign loans. Trying to restrain landslide advance of poverty, on the national and regional levels the reformatory government took such measures as granting citizens the right for gratuitousprivatization of apartments, free use of public transport by pensioners and disabled persons (first of all in Moscow), providing chronically ill people by medicines for free or at discount prices, significant subsidizing of utility bills, subsidizing of some foodstuffs prices, child benefits. Provision of free treatment and education, based in Soviet times, formally remained, but their level sweepingly declined.

2. In autumn 1993 after the violent conflict with anti-liberal opposition leaning on the parliament’s majority, president Yeltsin put to a plebiscite a draft Constitution. In the draft a sharp increase of president’s power and consolidation of private property including land property were balanced by the introduction of a special article number 7 proclaiming the country a “social state”. Socio-economic rights are very declaratively defined in the Constitution’s articles 39 to 43.

3. The 1998 financial crisis was a great blow to the most vulnerable social layers. On the one hand, rapid fall in the exchange rate of the ruble stimulated an upswing in production. But it also made the level of pensions and salaries in the budget sphere – education, healthcare, science, army and state institutions – very low.

4. The coming of Putin to power in 2000 coincided with three processes:

- a significant growth of budget revenues due to growth of income from commodity exports;

- redistribution of wealthand property as a result of raider seizureof property in conditions of corruptionof courts andlaw enforcement;

- complete dismantling of institutional guarantees of social and economic rights.

Social and economic rights were replaced by social pittances and creating exclusive conditions for fast enrichment of businesses affiliated with the authorities.

A number of important juridical innovations seriously complicated the protection of social rights:

- changes inthe CivilProcedure Law liquidated the institute of lay judges and public prosecutor's supervision on respecting the rule of law in civil process (they remain only for cases of eviction, termination of parental rights and dismissals);

- changes in the Housing code deprived unwanted non-owners, most often parents of those who had decided to get rid of them or former spousesof rightsto livein apartments and houses;

-  changes in labor legislation (approval of the Labor code) eliminated the term “labor collective” that appeared in the USSR in 1983 and made workers of a company or an institution a subject of legal relations; and also deprived representatives of minoritary labor unions of the right to establish collective agreements, forcing to orient themselves on “the main  trade union”, usually either connected to the party in power (including straight connection through joining the pro-Putin “Popular front”) or created by oligarchs employers.

  Protests against such measures were paralyzed in 2001-2002 due to all parliament parties’ support of different aspects of Putin’s policies.

5. After Putin’s triumphal re-election in spring 2004 he felt empowered enough to begin a radical change in social policy. The main act was so-called “monetization of benefits”. It was about increasing pensions and aids with cancelling such benefits as free pass (except Moscow where subsidizing comes from the rich city budget), understatedutility rates, free drugs, permits to sanatoriums. Increasing of pensions was seen as compensation of the inflation and the necessity to pay for the use of public transport  shocked pensioners in January 2005. In the two following months hundreds of thousands protesters filled the streets countrywide. As a result the authorities significantly increased pensions and aids which caused a sharp surgein consumer prices in groups withlow incomes.

6. High prices on oil and gas along withfilling the budget led to rapid price increase of fuel in the extremely monopolized domestic market. Consequently in 2006 – 2008 inflation rose, that devalued salaries in the budget sphere and pensions. A new leap insocial stratification happened, a group of very rich people (Euro billionaires) sharply separated, and the social distance between the middle class in big cities and poor layers increased.  As a result the degree of social stratification rose to a 17-fold gap between the 10% of the poorest population and the 10% of the most wealthy, among which stand out the 2% controlling 90%.  According to one of the conclusions of the report “Level and mode of life of Russia’s population in 1989-2009” written by the competent Higher School of Economics (HSE), during the last 20 years of reforms the wealthiest Russians became twice richer, and the poorest -   самыеобеспеченныероссиянесталибогачевдвараза, асамыебедные- one and a half times poorer. The level of inequality in Russia is now higher than in all European Union countries and all members of OECD and compares with that of Turkey and Mexico.

In the beginning of October 2012 Swiss Credit Suisse Bank’s Global Wealth Report was published. The research held from the middle of 2011 until the middle of 2012 showed that  income inequality in Russia is the highest in the world excluding  small nations of the Caribbean. According to the data obtained by the report’s authors, in Russia billionaires (about 100 people) hold nearly 30% of total  welfare of Russians, while worldwide, the proportion of billionaires account for less than 2% of the general welfare.

I could not say I was in any way surprised by those figures: social segregation in Russia has been off the leash since the 1990s. Unfortunately, any hopes of that being a short-term effect have turned out to be in vain. There were hopes during the transition period that Russia would become a country with a high-yield economy and a qualified workforce while retaining the Soviet heritage of a strong social security system. What has happened is almost a parody, Credit Suisse's report says.

 The inequality is made worse by total corruption, which has become Russia's bane.

Credit Suisse's report is by far not the first study of inequality in the distribution of wealth in our country. Analysts from Finekspertiza who conducted a similar study in 2012 have come to similar conclusions. They have found that the so-called “Robin hood index”, that is, to say a share of a society's total wealth that needs to be redistributed for complete equality, for Russia, now equals 30% (with the norm benchmark being placed at 20%).

Given that, the absence of large-scale social disturbances in Russia can only be attributed to the populace's incredible patience. The dominating factor here is that, following the poverty of the 1990s, the relative prosperity of modern Russia is perceived as an achievement. According to Credit Global Wealth Report, the wealth of an average Russian household grew from 1,000 Euros to a little over 10,000 Euros in the period of 2001-2006. It is currently a faction less than 10,000. The average adult Russian currently owns $3,000's worth of financial assets and roughly twice that in real estate. Russia therefore falls into the bracket of 3,000 to 20,000 Euros in wealth per person, next to Turkey, Iran and Egypt.

A significant part of the country, including some provinces situated in western Russia, are constituted of economic depression zones. These areas have, like many third world countries, fallen into the underdevelopment trap. The depression belt surround cities, spanning large areas between regional capitals. Illegal forcible takeovers of farms and other agrarian businesses have led to the sector's quick degradation, the annihilation of social infrastructure in villages and a steady unemployment hike. The forest fires of summer 2010 showed that many Russian villages were isolated, many scarcely populated and some existed only on paper.

7.   Corruption and obedience of the judicial authority are two important factors contributing to the systemic violations of Russians' social rights. Due to this, people who unlawfully cheated out of their houses and forced to live on the streets (for instance, by dishonest mortgage bankers) are unable to defend their rights in court.

Flagrant and direct falsifications at elections, the authorities' control over main opposition parties and insufficient personal authority commanded by parliament members are obstructing citizens from defending their own rights by appealing directly to federal or municipal parliament members. Decisions (including those on important draft laws) are made behind closed doors, without any discussion with expert communities.

These decisions, like the introduction of a new general construction plan for Moscow, the humongous construction projects in Sochi ahead of the 2014 winter Olympics, the recent increase of Moscow's administrative territory by 200% and amendments to laws on education were all, quite surprisingly, unveiled when they were in the stages of operative development. All citizen effort was then focused on halting the authorities' initiative, a battle that the civil society is always doomed to lose.

Slapdash motions on behalf of municipal authorities, specifically those aimed against vendor kiosks and public markets in Moscow have resulted in large numbers of lower-middle class citizens losing their jobs and businesses. The reason for those measures may have been officials' desire to replace an inexpensive street market with a better-yielding shopping mall or simply to get rid of the aesthetically displeasing street market.

Systemic extortion holds a special place in the broad spectrum of economic violations that occur in Russia. Businesses are “asked” to make donations which may go to the local police, or prosecutor's office department, or indeed the United Russia Party. Attempts on behalf of certain officials, or people affiliated with them, to take over businesses by fabricating criminal cases are a frequent and even less lawful practice.

8. Extensive construction of commercial housing is underway. Moscow's projected housing density is 30 thousand square meters of housing per hectare (10,000 people per km. sq.), add the massive number of shopping malls, the figure surpasses the respective indicators for London and other European cities including Paris, Berlin, Rome and Madrid, yet in Moscow, where the number of new apartments becoming available every year is the highest in Russia, a family would have to wait for 20 years to be granted a municipally owned apartment to live in. The rent and real estate prices are extremely high. Mortgage is hardly affordable, even for the middle class. The high rent prices devour a significant part of the incomes of non-natives and young families.

9. The commercialization of medical services has led to the rapid decline of readily available medical services. Vital but low-profit drugs are forced out from the market. Doctors are instructed to prescribe medicines that are not marketed. As the state budget grows drastically, shipments of insulin and other vital medicines, including those intended for sick children, are delayed by months. The average wage of a Russian medical worker, is 500 Euros per month but it is half that in rural areas and 30% of the figure in the Caucasus, despite a multitude of programs designed to counter that effect.

10. The number of budget-sponsored (or free) seats in universities has dropped drastically during Putin's 12 year term in office. The average size of a bribe paid by students to pass exams also grew. The quality of education for city-funded schools has declined drastically. The state's benchmark standard for education has been simplified. As a result, a high-quality and free education, the cornerstone for a socially-oriented state, is hard to come by in Russia.

11. The situation concerning social rights in penitentiaries, eg. access to medicines for inmates and their ability to continue their education of start a new one, is utterly catastrophic. The labor rights of working inmates are not secured, the social reintegration and employment system is purely nominal in its existence.

Hundreds of thousands of forced migrants have found themselves living the lives of slaves, victims to hyper-exploitation by their employers and extreme corruption on behalf of officials. The dismantling of the institutional system that warranted social and economic rights has forced the majority of people to resort to protest and threats to defend their own rights.

12. The only factor that still forces the state to intervene, supporting regular citizens, is the state's need for electoral support and its fear of mass protests. It was fear of mass political protests that forced the authorities to cap unemployment during the 2008-2009 financial crisis, when unemployed people were hired by utilities companies en masse and massive direct and indirect budget subsidies were allocated to maintain jobs at the huge automobile factory in Naberezhnye Chelny (Tatarstan) and Pytalovo (Leningrad region). Massive military orders have been placed by the state in part for the same reasons.

The mass protests of December 2011 have forced the authorities to increase wages and pensions several times. The government has postponed its plans to increase housing taxes. The office of business-ombudsman was introduced in order to counter the persecution of businessmen. According to the current draft bill, the business ombudsman will have more authority than the federal human rights envoy. After Putin's re-election however, another attack against social rights has begun: budget financing of healthcare and education facilities has dropped, considering the inflation level. The utilities sphere, harshly regulated by the authorities and corrupted businesses, remains a huge “auxiliary” tax burden on the populace. The utilities sphere is a monopoly riddles with corruption.

13. As a result of Putin's 12 years of “controlled democracy” or, to be more precise, his enforced police state , Russia now has a system used for the distribution of social guarantees and benefits, but rights are never guaranteed. Healthcare, education or housing is never a guarantee. Social and geographic segregation are on the rise and there are no reliable democratic mechanisms for the protection of social rights.


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