Russia Tristan Yapuncich Period 3 4/20/00 Position Paper Russia Position Paper: The Plan The main problem in Russia is lack of a non-corrupt government. It is impossible to run any country, poor or rich, crime or no crime, healthcare or no healthcare, economy or no economy, without some sort of government. Russia needs assistance in the form of socialist diplomatic support, advice, and very carefully monitored loans. There is no question of producing a Marshall Plan for Russia of the sort that the United States pioneered after World War II, but Russia needs to make that plan, and the U.S. needs to let Russia know that plan will be supported.
Although the conditions in Russia differ significantly from the post-war Europe, this struggling nation needs a similar plan to restore it’s economy, government, and human rights. Russia is in a desperate state of despair, suffering from poverty, crime, and disease, and needs aid from the U.S. It is also in the interest of the U.S. to provide this aid, as long as the aid is targeted at areas that would best boost Russia’s terrible statistics, and turn Russia into a successful trading partner. Poverty is a huge problem facing Russia.
In a country with such long traditions of statistical manipulation and hostility to the inquiries of the state, it is not easy to pin down the true extent of poverty in Russia. But there is little doubt that the picture is looking increasingly bleak. United Nations figures suggest that the purchasing power of average income in the USSR in 1987 was about $6,000 or 32 per cent of the level of the US (Andrew, POVERTY: Bleak future for the poor). By 1996, it was just $4,531 in adjusted terms, or 17 per cent of the US level (Andrew, POVERTY: Bleak future for the poor). Since the collapse of the Soviet Union, there has been both growing inequality and a jump in absolute poverty.
That is up from 11 per cent in 1994 (Andrew, POVERTY: Bleak future for the poor). Faced with such bleak figures, some observers argue that the figures are simply false. There is little doubt that data collection is plagued with difficulties, and there are fierce debates about methodology. There are problems that exaggerate, and others which artificially underplay, the true state of Russia’s population. But as Tatiana Khokhlova of the Russian European Centre for Economic Policy in Moscow argues: It is very difficult to talk about the absolute level of poverty, but you can analyse the trends.
And those trends are distinctly pessimistic. Government figures often show what citizens are entitled to receive rather than what they do receive. In 1997, just 20 per cent of income that Russians were entitled to under federal laws was actually paid (Andrew, POVERTY: Bleak future for the poor). Since then, arrears on the payment of wages and social benefits have increased sharply. Pensions are on average paid with a delay of one month at present, and wages are 2.5 months behind (Andrew, POVERTY: Bleak future for the poor).
Equally, there is little doubt that Russians conceal the true extent of their income from official surveys as part of a broader strategy of tax avoidance. A recent World Bank study found that most people admitted to spending twice what they claimed to earn. Other research suggested that undeclared informal income had rocketed in the past few years to an average of 42 per cent of total household earnings (Andrew, POVERTY: Bleak future for the poor). If poverty is a problem, naturally health care, crime, and other issues become concerns. Russia has a declining life expectancy, increasing birth mortality, and increasing crime rate.
Russia’s population is likely to dip under 146 million by the year 2000 and drop to 141 million by 2010, according to a new government forecast. The report by the State Statistics Committee also projects that Russia’s dismally low life expectancy figures won’t rise in the decade ahead, Interfax news agency said. Based on the most likely of four demographic estimates compiled by the committee, the average life span in 2005 will be 65 years — the same as in 1996 (Andrew, POVERTY: Bleak future for the poor). Russia’s population, which has been in decline since the Soviet Union’s collapse, shrank by 4,75,000 people last year and currently stands at 147.1 million (Andrew, POVERTY: Bleak future for the poor). Demographers blame the soaring mortality rate and low birth rate on a protracted economic crisis, severe stress over the transformation to a market economy and a sharp deterioration in health care.
Among other forecasts, the Statistics Committee also said that the female population will exceed the male population by 10 million to 11 million in 2010, up from the current 9.1 million (Andrew, POVERTY: Bleak future for the poor). The main cause of these problems is Russia’s lack of government. They main power controlling Russia is plutocrats that have taken over the economy and used profits for their individual benefit. They now control most everything with bribery, and force. The people also support these plutocrats, because they are the ones providing for the people, as the government doesn’t have funds to even pay government employees. Average yearly health care per capita is about 20 dollars a year (Andrew, POVERTY: Bleak future for the poor).
Russia needs a government to reform its economy and start programs that focus on the needy, health care, and the environment. Russia has neither a productive market system nor a tradition of democratic politics. Western Europe had both. The Marshall Plan was a government-to-government aid program, but because of Russia’s lack of a productive market system and governmental capital, aid needs to be directed in the form of governmental support toward Russian socialist reform. This aid should be given, not with resource transfers, but by providing diplomatic support, advice, and very carefully monitored loans.
With a stronger government Russia could then start to pay its military, arrest plutocrats, collect taxes, and restore order with force. The plutocrats steal, bribe, and evade taxes because they can, and will continue to unless they are punished, or afraid they will be punished. Bribery and corruption will only stop when it is risky to commit. Morality can not be bought, but it can be instilled with fear. After plutocrats are arrested, and corrupt officials stop supporting them, the oligarchy of Russia will fall. Only then, after the Russian government repossesses its businesses and assets from the plutocrats, the economy begin to rise.
No one will invest now because the plutocrats would just take the investments for personal profit. When Russia returns to a government owned and controlled economy, the U.S. should remove as many tariff and non-tariff barriers as possible, offer the former Soviets a trade treaty, and push the Europeans to do the same. This will facilitate the trade and export of products in which Russia has a comparative advantage, such as mineral and energy sources. And if for reasons of patrimony they do not want to sell assets, then they should enter into long-term leases to get Western management and technology. The other options for Russia have very obvious problems.
If the west simply gives money to Russia, then it will surely disappear into the hands of the plutocrats. We gave, for example, $44 billion in aid to the former Soviet Union, about which Ed Hewitt of the National Security Council said, No one quite knows where it all went (Wolosky 20). Aid programs, such as The U.S. Food Assistance Package for Russia, and Russian Relief, are great, but keep in mind they don’t fix anything permanently. Providing services and programs like these help stop suffering, but will not fix the government, economy, or do any major long term good.
The programs may solve problems for the people, but not for the country. This type of aid should be provided, but must not be a main focus of the U.S. Russia needs to be strong enough to support these programs, and when it is providing for the people, the people will support the government. Although capitalistic democracy has proved to be more successful in the past, a socialist government owned system might be recommended for Russia. This type of economy would help stop the Russian plutocrats who currently run the economy. After Russia has a strong government, it can create its own social programs for the needy.
Maybe after Russia restructures itself and obtains a strong government, then it can begin to slowly strife for capitalism and democracy, but for now Russia has larger problems and should follow Cuba’s model of socialism. Bibliography Jack, Andrew, POVERTY: Bleak future for the poor, http://www.ft.com/ftsurveys/sc3ee6.htm, Internet, 4/28/00 Lynch, Allen, Great Decisions, Report Card on Survival, New York, The Chase Manhattan Corporation, 1999 Powell, David E., The Dismal State of Health Care in Russia, 1999 Wolosky, Lee S., Putin’s Plutocrat Problem, 1999 Government Essays.