Putin’s Pension Push: Political Hiccup, Policy

by Gordon M. Hahn

The Kremlin’s clumsy handling of the optics surrounding the decision-making and the fall in Russian President Vladimir Putin’s and the government’s approval ratings surrounding the proposal to raise the pension age notwithstanding, the policy is more ore less the right one and its political implications will be short-term, a political hiccup. The policy decision to raise the pension age has been put off for years and is overdue. Although it may reflect deeper financial shortfalls, the latter are unlikely to destabilize the regime.

The Kremlin clearly went too far in claiming that President Putin was playing no role in the policy discussions of the pension age raise. Russians may still believe in the ‘good tsar, bad boyar’ myth — the idea that Russian top leaders are basically good but the people around him are not — but the idea that such a politically sensitive policy initiative was undertaken without his agreement is absurd, and Russians instinctively smelled a rat. This feau pax probably added to the 9-point fall in Putin’s presidential approval rating in just one week last week driven by the reform proposal. Perhaps some in the Kremlin thought that grandmas and grandpas cannot make a revolution, so the political risk of riling them was limited. More likely they were well aware that every family has one or more grandparent, that pension payments do not provide a living minimum income, and that this burden falls on to all Russian families. Therefore, raising the pension age will hit most Russian family budgets.

This might have been why they chose to announce the policy as the World Cup games began proving popular, providing a cushion to protect the presidential and governmental approval rating. Nevertheless, the basic political instinct is right – you cannot build a color revolution on cadres consisting of grandparents and Russian families; that is historically the purview of urban youth, who are little interested in pensions. This might explain the Kremlin’s apparent lack of nervousness, reflected in the quick official approval of requests from opposition elements in cities across the country to hold demonstrations. The political effect will ultimately be no greater than the brief spurt of demonstrations that accompanied the Kremlin’s decision a decade and a half ago to ‘monetize’ social benefits such as free access to public transportation and prescription, housing, telephone and other subsidies with a small cash payment of some $7 per month. With Putin’s popularity having been near their all-time high in the wake of the presidential election, now is the time to make difficult reforms. They can be undertaken without risking a prohibitively low rating to emerge. This is especially true, since pensioners are traditionally a pro-Putin constituency.