Russia Update: Putin Extends His Salary Cut Though Said To Be Worth Billions; Reduces Government Pay

December 2, 2015
President Vladimir Putin. Photo by Reuters

President Vladimir Putin has demonstratively extended his pay cut this year — but that’s after he doubled his pay last year, and with persistent reports that he’s in fact worth billions.

Welcome to our column, Russia Update, where we will be closely following day-to-day developments in Russia, including the Russian government’s foreign and domestic policies.

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Putin Extends His Salary Cut Though Said To Be Worth Billions – and Reduces Government Pay 10%

President Vladimir Putin is famous for having said “Frankly, I don’t even know my own salary — they just give it to me, and I put it away in my account.”

Now he has demonstratively extended his salary cut another year amid Russia’s economic crisis, reports, citing the Russian government website.

He also extended the reductions for Prime Minister Dmitry Medvedkov, Prosecutor General Yury Chaika and Vladimir Bastrykin, head of the Investigative Committee.
Employees of the presidential administration and government will also take a 10% cut.
Putin had increased his salary and that of Medvedev by 265% in 2014. The lowest-paid government employee — the commissioner for human rights, was 341,000 rubles (worth about $5000 today) and the highest paid defense minister was 786,000 (nearly $12,000); the raises were explained as necessary after a long period when they had not received any raises at all.
Putin’s salary in 2014, declared in April 2015, was officially 7.6 million rubles, according to the Moscow Times.  (At that time his salary was worth $150,000; it would be $113,633 at today’s rate of 67 rubles to the dollar). It was about half that in 2013 at 3.6 million rubles. The next month he announced a pay cut of 10% after the annexation of Crimea and the launch of undeclared war in the Donbass.

These measures may have worked to convince those who Putin his 88% approval rate dependent on state television for news, but will be viewed as irrelevant and cheap populism by those who have read of allegations of Putin’s billions. The Russian president is widely believed to have stashed away personal wealth with the help of a network of corrupt cronies, but researching and proving these claims has been difficult not only due to state secrecy but the frequent high penalty — from long jail terms to assassination — of some of Putin’s high-profile critics.

Scholar Karen Dawisha, author of Putin’s Kleptocracy: Who Owns Russia? published last year by Simon & Schuster, has undertaken an authoritative effort to tabulate Putin’s wealth — and had to release her book in the US after her original publisher, Cambridge University Press, decided not to print the book on the advice of libel lawyers in the UK, where laws are more strict than in the US.

The book was reviewed favorably by the New York Times:

Now in his third (nonconsecutive) presidential term, Vladimir Putin presents himself as the strong and virtuous leader who rescued Russia from the chaos, corruption, penury and weakness of the 1990s.
State-controlled news media and Kremlin spin doctors disseminate this message diligently — and to good effect, judging from Putin’s 80 percent approval rating.

But with “Putin’s Kleptocracy,” Karen Dawisha, a respected scholar of Soviet and Russian politics at Miami University in Ohio, seeks to shred this carefully constructed narrative.

Her verdict is not merely that Putin’s boast of having built a potent, efficient state that fights for the little guy and against the venality of the powerful is bunk. Her bedrock claims are that the essential character of Putin’s system is colossal corruption and that he is a prime beneficiary. The thievery, she says, has made him fabulously rich, along with a coterie of trusted friends dating back to his days as a K.G.B. officer in Communist East Germany, then as first deputy mayor in 1990s St. Petersburg, then as head of the Federal Security Service.

Dawisha estimated Putin’s personal wealth at $40 billion,  including yachts, planes, palaces and wristwatch collections among his properties, and estimated that “more than half of the $50 billion spent on the Sochi Olympics simply disappeared into the pockets of Putin’s cronies,” notably the Rotenberg brothers.
In fact, her estimate is modest; asking Google what Putin’s net worth is produces an answer from the top link of “around $70 billion” — more than Microsoft founder Bill Gates — from the Inquisitr, which also notes that prominent Putin critic Stanislav Belkovsky thinks the figure may be as much as $200 billion.
Journalists and historians are likely to argue about this figure for years to come — but not inside Russia. Slain opposition leader Boris Nemtsov published a report, “The Life of a Galley Slave,” in which he claimed that Putin owned 20 homes, 58 aircraft, numerous cars and so on and could be compared “with the monarchs of the Persian Gulf or the most outrageous oligarchs,” The Telegraph reported.
But officially, Putin only claims two apartments, two cars and one garage.

The State Duma ruled to raise the minimum wage for 2016 to 6,204 rubles a month ($92.35), reported. Last year, the minimum wage was 5,965 rubles ($88.89) which means the indexation of the minimum wage for inflation is 4% — even as the wage is now worth less, and the government forecasts inflation as 6.4% in the coming year.

Catherine A. Fitzpatrick