Russian Pensions and the Risk of War
By Leon Aron (Wall Street Journal)
Oct. 16, 2018 6:56 p.m. ET
Putin raises the retirement age, inflaming the street. Will he find an external enemy to shore up support?
In the streets of more than 80 Russian cities, thousands of men and women have turned out for antigovernment rallies in the past few months. They aren’t the usual malcontents—the middle class, intelligentsia or students—but rabotyagi, blue-collar working stiffs. Both the cause of the rallies and their political context reveal the impoverishment of Russia and the fragility of Vladimir Putin’s regime, despite its outward appearance of toughness. The West, however, shouldn’t gloat; facing problems at home, Mr. Putin could try to create new problems abroad.
The demonstrators are protesting Mr. Putin’s pension law, introduced in June. The law is meant to save the Russian treasury $15 billion a year by 2024 by gradually increasing the retirement age to 65 from 60 for men, and to 60 from 55 for women. At first glance, the reform doesn’t seem dramatic enough to stir such passions. Russian pensions are skimpy anyway, averaging around $220 a month. That’s barely above the Russian poverty line of $171 and among the lowest rates in Europe.
Yet for millions of Russians, an extra five years of work is a hard blow. At $592 a month, the average Russian salary is puny. That’s why Russia today can have near-full employment, while 14% of the population, or 20 million Russians, are in poverty, as per official statistics. Independent experts from the Higher School of Economics in Moscow estimated last year that 41% of Russians have trouble paying for clothing and food. For many, the choice is between near-poverty while working or near-poverty while staying home.
Life expectancy for Russian men is under 67, not even two full years past the new, higher-than-ever retirement age. Many men fear they’ll literally be worked to death. “With this pension reform, with everything pushed back, I feel like I’ll never get out,” a railway worker said last month.
The protests exposed a fissure in what might be called Mr. Putin’s contract with the Russian people: You stay out of politics and I’ll give you stability. The contract held up in past tough times, most notably in 2008-09, when the Russian economy contracted almost 8% after oil prices fell. Then, difficulties could be blamed on external factors. No such excuses exist today. Incomes have declined for four consecutive years, and the pain is self-inflicted—Russians feel that Mr. Putin’s regime has stabbed them in the back.
Hence Mr. Putin’s unprecedented nationally televised appeal on Aug. 29. In 18 years in power, Mr. Putin had never made a plea for support for a specific policy like this. The speech was heartfelt, animated, cajoling—and not nearly enough. According to Russian polls, 6% were in favor of the pension reform before the speech and 80% opposed it. After Mr. Putin had spoken, the numbers were 11% and 75%.
Mr. Putin’s approval ratings—his regime’s only claim on legitimacy—have been steadily sliding, from 79% in May, before the reform was announced, to 67% in September. These would be astronomically high numbers in a democracy, but they’re bad news in a country where Mr. Putin is effectively the only politician and no critic is ever allowed on television.
Mr. Putin’s headache can quickly become the West’s. At the end of 2013, when his ratings were his lowest in 13 years (and only 6 points below today’s), he boosted them with the outrageous Winter Olympics—doping en masse—followed by the seizure and annexation of Crimea and the war against Ukraine. Since then, militarized patriotism has become the key to Mr. Putin’s popularity. Tens of millions of Russians have been swayed by his narrative: Russia is surrounded by enemies but not only will the president protect the Motherland, he will also restore Russian glory lost in the Soviet collapse.
The Russian people have tolerated a lot: the upkeep and economic development of Crimea to the tune of nearly $3 billion a year; the estimated $100 billion to $150 billion direct and indirect costs of Western sanctions; and two defense modernization programs, together totaling around $650 billion. In addition to these programs, spending on military and police is projected to grow by 33% in the next three years. Yet the protests indicate Russian patience has limits.
Mr. Putin has been riding the tiger of patriotic fervor, but the beast is difficult to dismount and it demands fresh meat, the bloodier the better. Today, as pension reform threatens Mr. Putin’s support, it might be feeding time again. The obvious targets for engineering another Crimea or Ukraine are Narva and Latgale, the heavily Russian-speaking enclaves in Estonia and Latvia, respectively. In addition to unleashing a patriotic flood, Mr. Putin would undoubtedly hope to expose the North Atlantic Treaty Organization as dithering and ineffectual. A risky step to be sure, but in Mr. Putin’s political calculus, foreign adventurism may be less perilous than domestic turmoil.
A candle worth a kopek once set Moscow ablaze, a Russian saying goes. That’s the pension reform: Its $15 billion in alleged annual savings—tiny compared with Russian spending on defense and aggression in Crimea—are a one-kopek candle that may leave the country in flames. Let’s hope the West has its fire engines ready should the conflagration spread.
Mr. Aron is director of Russian studies at the American Enterprise Institute.
Appeared in the October 17, 2018, print edition.