Out of Russia: Free to enjoy their poverty

MOSCOW - Andrei and Marina jetted off to southern Spain this Christmas while their Moscow flat was redecorated. When Andrei, who works in finance, and his wife returned to the freezing Russian capital with tales of sherry-tasting parties on balmy beaches, they were pleased to see work on the flat progressing nicely.

The couple have a horror of being thought vulgar like other rich Russians and so they are having their home done out in tasteful grey with touches of gold. To the discerning, however, it will be clear they have spent thousands of dollars.

Olga and Igor were at home for new year as usual. Times are hard for Olga, who is a low- paid teacher, and Igor, who is unemployed, and the festive supper was meagre. The spread consisted of cabbage pie, cheese-on-toast, a lemon jelly and a box of chocolate biscuits, with just one bottle of sweet Russian champagne to wash it down.

Andrei and Marina are by no means the wealthiest people in Moscow these days. There are businessmen who have three-storey 'cottages' in the country with double garages and swimming pools, not mere flats in town. There are wheeler-dealers who own property in London, the Canary Islands and the Caribbean. There are those with money to waste in the casinos of both Moscow and the West.

Likewise, Olga and Igor are by no means the poorest people in Moscow. There are old women who root through garbage for crusts. There are children who beg on the streets, and are often the family breadwinners. There are homeless people whose only shelter is a railway station.

Andrei and Marina, and Olga and Igor illustrate the very different states of Russian people who, until the collapse of Communism, had shared a common standard of living, basic but at least guaranteed.

Olga feels no nostalgia for Communism and does not resent the success of those who are making money, providing they are doing it honestly. Indeed she believes a certain gap between people is necessary to reward the enterprising and stimulate the lazy.

But the problem is that the social contrasts are now so obscene and the ways of valuing different work so irrational that the very stability of society is threatened. We have known for some time that the rich were getting richer and the poor were getting poorer but it took the startling success of the ultra-nationalist Vladimir Zhirinovsky in December's elections to bring home how frightening the consequences of this could be.

Suddenly everyone is talking about the urgent need to throw a 'social safety net' under Russia to make sure it does not fall into the jaws of the lion during the performance of its high-wire reformist feat. The installation of the net, however, is not imminent.

The World Bank has already promised to lend Russia dollars 70m ( pounds 47m) to help create an employment programme and G7, the group of wealthiest industrialised countries, has offered credits worth half a billion dollars for other social welfare schemes, but it is waiting to see how Russia proposes to use the money before handing it over.

Proud Russia, for its part, cannot decide whether it wants to take on new debts for projects which will not generate money it can pay back to the West.

In Soviet times, factories provided many social welfare facilities and the government has not yet worked out how to replace this. Much will depend on whether reformists committed to fighting inflation or reformists prepared to tolerate a budget deficit for the sake of better welfare get the upper hand in the new cabinet.

Taxation, of course, is one of the keys. The rich and enterprising are heavily taxed but in practice they get away with not paying. Economists believe it would be better if they were taxed less to give them more incentive to pay, but hit mercilessly for any evasion. Tax breaks should also be given to those who sponsor the arts.

But more than that, a philanthropic atmosphere must be created to replace the greed which has consumed post- Communist Russia. 'Who is this Good King Wenceslas?' asked a Russian friend after attending an expatriate carol service. His footsteps are as yet faint in the Russian snow.