The Guardian 16 February, 2005

Russians take to the streets over pensioner payments

The so-called "monetisation of benefits" in Russia has created a big headache for the Putin government. Mass protests are continuing but there is, so far, no indication that the government is about to abandon its "reform initiatives".

The government is providing some extra funds in an attempt to silence the protesting pensioners and other recipients of social benefits.

Some specialists estimate that the government will have to spend 600 billion roubles to compensate for the consequences of the new reforms. Perversely, the protests have forced the government to spend more money than it had planned to save by the pension cuts. The stated claim that the new reforms were not only "fair" but would save a lot of money for the government are proving to be false.

Pensioners are up in arms because of their plummeting living standards which are now added to by the loss of welfare benefits, many of which date to socialist times before the break-up of the Soviet Union.

The Minister responsible for social welfare and health, Mr Zurabov has got until February 22 to calm the restless pensioners. The date is of significance because February 23 is what used to be called Soviet Army Day (it has been renamed and is now clumsily called the Day of the Defenders of the Motherland). The authorities do not want to see former service men and women, who comprise the majority of pensioners, marking the occasion with banners and placards accusing the government of neglect in their old age.

The monetisation of benefits is but the first attack on the population. The second instalment is announced to be cuts to health services followed by education and housing. In former Soviet times, health services and education were free and most houses were publicly owned. Tenants paid exceedingly small charges for rent, water, power and central heating. With the victory of counter-revolution and the re-establishment of a form of crude capitalism, public housing has been privatised and payments for services increased.


The most hated person at the moment is Zurabov, the Minister responsible for both social security and health but there is no indication that he is about to resign or be sacked from the government. Given the mess that has been created with pensioners, many ask why he is still holding his position.

Zurabov is the ideologue and main proponent of the "reforms". So what are his qualifications for the job?

He was trained in Soviet times as an engineer but in 1992 he became general manager of the medical insurance company, MAKS. Six years later he was appointed first deputy of the then Health Minister of the Russian Federation. In 1998 Mr Zurabov became President Yeltsin's advisor on social questions. In 1999 the President's administration was reorganised and out of six advisors only two remained in office. One was Yeltsin's daughter; the other was Mr Zurabov.

A family affair

Mr Zurabov's wife is the founder and head of a firm called Octopus which imports medical equipment and medicines into Russia. His brother is involved in an investment bank which set up MAKS. He later became president of another bank Menatep.

Zurabov's family enjoys a lavish lifestyle and has several properties worth millions.

Moscovites have become well aware of the fact that MAKS is also a housing insurance company. Combine this with the compulsory medical insurance company MAKS-M and it becomes clear that the family has medical insurance, housing insurance and medical supplies all well covered by the family. Like capitalist entrepreneurs everywhere they are out to squeeze the population for every cent and benefit from Zubarov's policies.


Recent pensioner protests have rattled the government and its embarrassment increased when the Mayor of Moscow, Luzhkov, joined the fight. He sent off an angry letter to Prime Minister Fradkov in which he pointed out that the federal funds to cover free medication are structured by Zurabov's insurance company in a way that is not 'prescribed by law'. He pointed out that the Federal Government is being ripped off and pays more for medicines than is being charged by chemists. Up to 1.5 million roubles has been siphoned off in Moscow alone.

The rip-off by corporations of taxpayers' money is not limited to criminal capitalism in Russia. It is all too familiar in Australia where the "captains of industry" regularly put the fists into the people's money jar.

The anti-Zurabov campaign is continuing to mount with demonstrations taking place in many Russian cities. Whether Zurabov survives and goes on to wreck health care as well remains to be seen. President Putin could put a stop to this robbery of the Russian people but considering the fact that he appointed the government he will not be forced to sack his Ministers unless the protests continue and grow further.

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