Russia: Divided Economy in Election Runup

Amid Russia's boom, homelessness and poverty are widespread, but inflation worries will prevent politicians from helping the needy

by Nadezhda Pitulova

In the weeks before the State Duma elections on 2 December, Russia appears to have split in half.

One Russia is stable: inflation is under control, people's incomes are up, and taxes are down. The government is getting to work on the crucial issues of Russian life, such as health, education, and poverty.

But that country, portrayed by television stations friendly to the government from St. Petersburg to Vladivostok, is not the one where many Russians live.

Elena, a Muscovite who asked that her last name not be used, knows a different Russia. A former kindergarten instructor, she has been without a home of her own for 16 years. She begs during the day, giving her takings to a woman who provides her with a bed to sleep in. Elena is hunched over from the effects of osteoporosis and her eyesight is going. She said no one in contemporary Russian politics can help people like her.

"Things are only going to get worse," she said. "Just look around -- the streets are crowded with homeless people, drug addicts, alcoholics. Prices keep going up. When they raise the pensions, it doesn't help us much. We still have to count every kopek."

Elena's case is extreme, but while politicians busily try to convince people that life is getting better, many in Russia continue to live without the most basic necessities, such as food, shelter, health care, and heat.

The government estimates that as many as 5 million Russians are homeless. And according to the National Center for Living Standards, about 23 million people, or 16 percent of the population, live below the poverty line.

A recent independent poll showed that inflation and poverty were the problems most on people's minds in the run-up to the elections. That could be bad news for the poor because Russia's oil wealth and spiraling food prices have officials predicting that inflation will surge past the projection of 8 percent this year. Instead, inflation will likely climb to 10 percent, officials said recently. Faced with growing public anger, the government has been reluctant to further fuel inflation by pouring more money into health care and other social programs.

"The poor are not on the agenda in the upcoming elections to the State Duma. It's a remote issue. Today talk is all about raising the incomes of the economically active part of the country's population," said Mikhail Vinogradov, director of the Center for Current Politics in Russia, an independent think tank in Moscow.

Many of the country's poorest are elderly. In recent months the government has increased their basic pension to 1,260 rubles ($51) and plans another increase, to 1,560 rubles, in December. But that doesn't come close to the country's estimated minimum living wage of 4,414 rubles ($179) per month.

"I haven't been to a shop for years," Elena said. "My landlady said the prices are outrageous. Cheese went up to 500 rubles. Meat and milk, which I haven't eaten for months, are also expensive. We're going through hard times, but what else can we do? We have to live with God's help."

The government plans to cut the poverty rate to 10 percent by 2010, but in the meantime, many do not get their daily bread. Steep price increases in the fall surpassed even the most dire predictions. The cost of a market basket of groceries, used by economists to gauge inflation in food prices, rose by nearly 4 percent, to 1,824 rubles ($74). The price of dairy products has gone up by 9.6 percent, which the government attributes to a decision by the European Union, the world's largest producer of dairy products, to end export subsidies, which in turn spurred EU farmers to hike prices.

The Russian government has stepped in, forcing key market players to trim their margins on a few products, such as bread, sunflower-seed oil, eggs and yogurt.

A WORLD AWAY

Many of those who cannot afford the basics live in the country's rural areas.

In Lyubuchany, a village 45 kilometers north of Moscow, Larisa, who also asked to remain anonymous, said the concerns of people like her don't factor into the political debate, though she still plans to vote in the 2 December election.

"I don't think [voting] can change anything,"