Privatization and Informalization in Post-Soviet Welfare States: The Politics of Reform

By
Mary Elizabeth Malinkin

"Why did post-Communist welfare states produce such divergent trajectories of change?" asked Linda J. Cook, professor, Department of Political Science, Brown University, and former Title VIII-supported short-term scholar, Kennan Institute. Speaking at a 22 October 2007 Kennan Institute lecture, Cook presented case studies of welfare reform in Russia, Belarus, and Kazakhstan and demonstrated how domestic politics in each country significantly affected the resulting policies. The talk drew on her recent book Post-Communist Welfare States: Reform Politics in Russia and Eastern Europe.

Cook discussed the broader literature on welfare reform and the possibilities for adapting it to post-Soviet states, as the majority of such literature has focused mainly on advanced industrial nations. She pointed out that one specific feature of post-Soviet politics is that the major defenders of the welfare state are often not the citizens, but rather state bureaucrats. The other major distinction from studies of Western welfare states concerns the role that corruption and informalization have played in the post-Soviet social sectors. These two aspects are generally not included in welfare studies, she asserted, but are critical to understanding post-Soviet transitions.

Cook characterized the politics that shaped Russia's welfare reform as being negotiated mainly with elite stakeholders rather than being guided by the public interest. While the initial welfare reforms undertaken prior to 1993 were radical and liberalizing, by the mid-1990s, the Communist and other left-wing political parties had formed a coalition in the Duma strong enough to block the executive branch's welfare reform program, even as welfare expenditures continued to fall. However, after 1999, according to Cook, a new period of executive dominance ended the gridlock between the legislative and executive branches, and a liberalization program was passed that represented mostly executive and state interests. The program's main tenets were keeping welfare effort low and establishing a new and limited state commitment for public provision, noted Cook. The policy gridlock and expenditure cuts of the 1990s, Cook found, led to "informalization" (or "spontaneous privatization") and corruption of the social sector as welfare structures emerged that were independent of both the state and the market.

Another significant result of Putin's welfare reform policies was the rare public protests, Cook noted. Such protests erupted in 2004–05 when the Duma passed legislation to "monetize" social benefits, replacing subsidies on housing, transport, and medicine with cash payments. Cook explained that the protests were substantial enough to cause the Russian government to modify its initial program and instead implement subsidy cuts more gradually. Thus, segments of the Russian public did play a role in defending the welfare system, although their attention was largely directed at subsidies.

Kazakhstan and Belarus, Cook continued, each experienced brief periods of political liberalization after the collapse of the Soviet Union, but their executive branches quickly consolidated power without significant social resistance. Despite their similar authoritarian political structures, they had quite different welfare reform trajectories: Kazakhstan quickly implemented radical reforms whereas Belarus made few changes to its welfare system. Cook emphasized this difference by pointing out that Kazakhstan was the first post-Soviet state to pass legislation to almost completely privatize its pension system for new retirees, and was more attuned than Belarus to advice from international financial institutions to "streamline" the government. Kazakhstan's executive cut and re-organized welfare ministries. Overall, Cook explained, the Kazakh government weakened both state and societal welfare constituencies in the 1990s and responded to pressure from the international actors whereas in Belarus, Communist-era welfare structures were deliberately preserved and outside advice was not welcomed.

Cook concluded by emphasizing the importance of understanding post-Soviet particularities when studying the role of politics in welfare reform. In the former Soviet republics, she added, there is a "strong bureaucratic welfare inheritance," which results in much in-fighting among government officials, competing for their own interests, and a comparable lack of consideration of the consequences for society. Nevertheless, there are significant differences among the former republics, and Cook urged scholars not to overlook the growth of informal sectors in the welfare reform process, especially when analyzing more authoritarian regimes. Finally, Cook asserted that nations with parliamentary systems have been more effective at bringing about reforms while still providing benefits for their constituents.

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