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Unfiled July 13, 2007
Still Privatizing After All These Years
The World Bank's Russia office turns 15 By Alexander Zaitchik Browse author Email

Russia-watchers know the horrific stat about Russian men's grotesquely low life expectancy, which in the 1990s reached levels normally associated with Tse Tse fly-infested backwaters in Africa. But over the past few years, things have started to turn around. Russia's male life expectancy has risen from a Congo-like low of 56 to nearly 60, which, coincidentally, is the retirement age for Russian men. Finally, they're about to live long enough to start collecting their pensions.

Or not.

A few weeks ago, a familiar voice suggested that in order to shore up Russia's federal pension fund, the retirement age for men be raised to 65. After all, there's no better way to cut pension expenditures than to make sure recipients die before you have to pay them.

Who could propose something this cruel and keep a straight face? The World Bank. Yes, they're still around town. And though you don't hear much about them anymore, they're still promoting the same "tough-medicine" policies with the same double-speak explanations. Since this June the World Bank celebrated 15 years of a job well done in Russia, we thought now would be a good time to take a fresh look at what they're up to.

There's no better place to start than their "pension reform" plan. The reason it's so shocking is obvious: Raising the retirement age to 65 would consign millions of Russian men, who were just on the verge of reaching pension age, to working themselves literally to death, never reaching the pension check finish-line. But that's not what interests the World Bank. For them, what makes raising the retirement age sexy is that the plan would immediately and drastically reduce the rolls -- or, "increase social welfare efficiency" in Bank-speak. Like Stalin said: no people, no pension; no pension, no problem.

Why is the World Bank weighing in on Russian pension reform in 2007? And who's listening to them? A lot has changed since 1992, when the Bank set up camp in Russia for its biggest endeavor since the reconstruction of Europe after WWII. The notorious years of the IMF/World Bank good cop-bad cop routine -- when the two institutions propped up the ruble and the Yeltsin government, encouraged the rapid-fire sell-off of Russian industry, and co-scripted economic and social catastrophe from offices in Cambridge and Washington -- today seem distant and sepia-toned.

Since the rise in commodities prices began fueling Russia's resurgence over the past seven years, the Bretton Woods twins have gotten most of their money back on the mega-loans of the 90s. The IMF even got its money back ahead of schedule, not that long after the 1998 default left most people assuming Russia would never pay back a dime.

Among the big questions at the Russian Treasury these days is not how to squeeze more money from Western institutions and governments, but whether to raise or lower the proportion of euros in its bulging foreign reserve currency basket, the world's third largest.

"Russia doesn't need the World Bank's money anymore," says Tatiana Piunovskaya, an analyst at the World Bank's Moscow office.

Russia hasn't for years. The last of the famous structural adjustment loans was inked in 1999. Early in this decade, the World Bank upgraded Russia from a "low-income" to a "middle-income" designated country. The latest sign of Russia's arrival as an economic power is its newfound interest in multilateral foreign aid institutions. The World Bank is now counseling the Kremlin in the art of debt-forgiveness; not how its debt can be forgiven, but how it can forgive debts owed to it by less fortunate countries. Russia has discovered the state-level equivalent of new-rich philanthropy.

The World Bank's two main divisions (the International Bank for Reconstruction and Development, and the International Finance Corporation) didn't disappear from the scene as the IMF did, slinking off to find new opportunities in Africa and Asia. The Bank, now located in a gleaming Moscow office complex on a leafy Novy Arbat side street, is still busy in Putin's revitalized Russia, and remains an influential presence in policy debates on everything from pension reform to Russia's place in the global carbon market. The World Bank's influence is maintained and exercised through its working-level relationships with high officials, its press conferences, and its influential reports, which make regular splashes in the media.

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Alexander Zaitchik is an editor at The eXile. Email him at
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