THE HINDU

Friday, July 04, 2003
SECTION: International

Rich-poor gap widening in Russia

By Vladimir Radyuhin

MOSCOW JULY 3. The gap between the rich and the poor in Russia is widening despite economic revival.

The richest 10 per cent of Russians earn 15 times more than the poorest 10 per cent, according to government statistics for the first three months of this year. The Russian Academy of Sciences estimates that the difference in incomes has already reached 20 times over and keeps growing. During the past three years the country's GDP grew by 20 per cent and per capita incomes by 32 per cent. Economic growth has helped reduce the number of the poorest, but has also made their misery look more crying.

What was an egalitarian socialist society 10 years ago is a capitalist nation of glaring social contrasts today. In per capita GDP Russia ranks somewhere in the fifth dozen, next to Mexico and Lebanon, but its head count of billionaires is the fourth highest in the world, according to Forbes magazine. The list of the country's super rich last year included 17 billionaires, which put Russia behind the U.S., Germany and Japan, but ahead of Canada. The number of Russian billionaires would be still higher if all companies felt the need to open their books to attract foreign investment. Almost all of Russia's billionaires are involved in the oil and other commodity industries privatized during a chaotic transition from socialism to "wild capitalism'' in the 1990s.

Their wealth has grown thanks to high world prices, while the country's economy shrank by over a half and the vast majority of the population sank in abject poverty.

A dozen mega tycoons today control 70 per cent of the Russian economy, while thirty million Russians, or one in five in a country of 145 million, survive on less than $2 dollars a day, below the official subsistence line. Moscow, the moneybag and showcase of Russia's new capitalism, is bursting with conspicuous consumption. The shopping area in the city has tripled in a single year, as Europe's leading chains, such as the French Auchan, German Metro Cash&Carry and Swedish IKEA rush in to meet the booming demand. Moscow sells more top-priced Western cars than any other city in Europe. The newly opened Bently showroom sold out Russia's 2003 quota (biggest in Europe) of 25 Continental GTs costing upwards of 230,000 euros a piece during the first two months of the year. Daimler Chrysler AG has temporarily stopped accepting orders for its $400,000 Maibach model after the Moscow waiting list crossed 100. For the third year running Moscow has been awarded the dubious honour of being the most expensive city in Europe and the second most expensive city in the world after Tokyo.

The Russian capital is an island of wealth in an ocean of poverty. Average per capita incomes in Moscow are 4 to 16 times higher than in most other regions of Russia. Teachers, scientists and doctors across the county survive on a salary that is just enough to pay for a meal in many Moscow restaurants.

The Deputy Prime Minister, Galina Karelova, last week revealed that 70 per cent of Russian families with children live below the poverty line.

Millions of Russians feed on what they grow on their vegetable gardens: the President, Vladimir Putin, at a recent press conference cited what he called `incredible' statistics, according to which tiny household gardens account for 80 to 90 per cent of vegetables grown in Russia.

Asked what he felt ashamed of Mr. Putin replied without hesitation: "The poverty of Russians, poor standards of living, low incomes. All Russians have the right to live better.'' In this year's state of the nation address last month Mr. Putin set the task of doubling the country's GDP over the next 10 years.


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