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Russia pushes ahead with controversial benefits reform
Updated: 2004-08-04 10:41

Dozens of red-flag waving demonstrators protested outside Russia's parliament as the chamber approved a controversial and profound shake-up of the country's Soviet-designed benefits system.

After 10 hours of debate, thee lawmakers passed a vital second of three required readings in the State Duma, or lower house of parliament, a raft of laws likely to impact at least 40 million Russians who live in poverty.

"The amendments introduced in the second reading are of a cosmetic character that make little fundamental difference," fumed independent deputy Gennady Seleznyov.

A member of Yabloko party wrapped with bandages holds a poster that reads 'No abolition of privileges' during a protest against the government's social policies, including a plan to substitute cash payments for free transport, medical treatment and other privileges pensioners, invalids and others have received since Soviet times, outside the State Duma in Moscow's downtown. [AFP]

Sergei Glazyev, who represents the nationalist party Rodina, slammed the legislation as "a creeping anti-constitutional state coup" and a "criminal process."

Glazyev, a former Communist Party member, told reporters Tuesday he was planning to organize a national referendum next year on the reforms.

The measure was supported only by the pro-Kremlin United Russia grouping which won a constitutional majority in December although their only clear stated policy was unbowing loyalty to Russian President Vladimir Putin.

At the heart of the legislation is the introduction of cash payments ranging from 25 to 120 dollars in place of tangible benefits such as free electricity and free use of public transport for the sick, pensioners, war veterans, and those who cleaned up the Chernobyl nuclear plant that exploded in 1986.

Pensioners, who account for 35 percent of Russians living in poverty, were particularly riled by the reform.

While opponents fear that the cash payments system will be whittled away by inflation and bureaucratic fiddles, supporters of the bill argue the reforms will enable social assistance to be directed to where it is most needed and relieve an overwhelming burden on the state.

The head of Russia's pension fund, Gennady Batanov, said the cash payment system was "profitable both for the economy and for the people who are entitled to it."

While predicting that the controversy sparked by pension reforms would last another few years, he said the benefits system had no future in Russia.

"We would have reached a deadlock with these benefits. This first stage is very painful, and it is understandable why. It will last another two or three years, and when the legislation establishes different benefits and formulates them in concrete monetary terms, things will go back to normal," he told reporters.

The legislation is likely to sail through in a third, largely ceremonial reading this summer and take effect after being adopted by the Federation Council upper house -- viewed as a rubber stamp body -- and signed into law by Putin.

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