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Russian alcohol policy in the making

Marya Levintova
DOI: http://dx.doi.org/10.1093/alcalc/agm040 500-505 First published online: 30 May 2007

Abstract

Aims: This paper examines implementation of the 2005 federal alcohol control law in the Russian Federation.Methods: The documents on the Russian Federation federal legislation on the control of the production and turnover of ethyl alcohol, and ethyl alcohol containing products, news reports, research, and historical documents were gathered and analysed for implementation barriers. Results: Consumption of alcoholic beverages, especially spirits, has been one the most significant public health problems in Russia for many centuries. Prior attempts to control alcohol consumption have been unsuccessful, in part due to the government's reliance on alcohol revenue, and its inability to implement creative and manageable solutions in the light of the high drinking rates. Implementation of this legislation has been a challenge in Russia because of administrative oversight, lack of organizational preparation, and corruption. Conclusions: The law discussed in this paper presented a window of opportunity to ameliorate the deteriorating health status and reverse the impending mortality crisis. However, a number of barriers presnted substantial setbacks toward realization of this legislation.

Introduction

Control of alcohol consumption is a multifaceted issue, complicated by the legal status of alcohol and the danger of its excessive consumption. Most governments have a variety of policies directed at controlling consumer behaviour, administering taxation of alcoholic beverages, and monitoring their quality.

Globally, alcohol control policies have undergone a number of substantial changes since the beginning of the 20th century, ranging from complete prohibition in the early 1900s (i.e. USA, Sweden), to an absolute lack of control following the collapse of the Soviet Union in 1991 (i.e. Russia and other former Soviet States) (Moore and Gerstein, 1981; Partanen, 1993). The latter group of countries, specifically Russia, is the focus of this paper.

Through the centuries, Russia relied on alcohol revenue, with mortality related to alcohol consumption being underestimated or concealed by the government. However, analyses of the underlying causes of the demographic changes in Russia since the early 1990s, in particular, escalating alcohol-related mortality among middle-aged males, suggest that Russia is suffering from an extreme impact of alcohol consumption (Chenet et al., 1998; Bobak and Marmot, 1999).

Following the collapse of the Soviet Union, mortality in Russia increased considerably, in comparison to its sister states, with an overall annual population decrease of about 800 000 people (Nelson, 1996; Notzon et al., 2003). Many of these losses were due to the severe demographic split following ‘shock therapy’ economic reforms that left a majority of the population below poverty level, while the disintegrated public health system was unable to deal with their extensive social, health, and economic needs.

Increasing alcohol consumption was one of the many outcomes of this collapse, with an estimated adult per capita consumption in Russia ranging from 14 to 18 litre of pure alcohol annually, which is roughly 38 litres of 100 proof vodka, or about a 750 ml bottle of vodka every other day (Simpura et al., 1997; Treml, 1997; MacKellar et al., 2003; Nemtsov, 2003).

The increasing alcohol consumption has been viewed as largely responsible for the most significant drop in life expectancy in the history of Russia, with approximately 40 000 deaths annually from alcohol-related poisonings alone, compared to about 400 in the United States (Leon et al., 1997; Men et al., 2003; WHO Global Status Report of Alcohol–Country Profiles, Russian Federation, 2004). For example, in the first quarter of 2005, approximately 13 000 people died from accidental alcohol poisoning in Russia (Russian Federation Federal Statistical Service, 2004; Drinks Produced More often than other Fakes–Survey, 2005). Overall, alcohol-related mortality is estimated at 500 000 to 750 000 people annually (Nemtsov 2002; MacKellar et al., 2003).

Despite the substantial impact of alcohol consumption on the morbidity and mortality in Russia, its contribution to the overall demographic crisis has been overlooked and de-prioritized by the Russian government (Levintova and Novotny, 2004; Osborn, 2004; Nemtsov, 2005). However, since 2004, the Russian government began to rethink alcohol control policies.

This paper focuses on such efforts, specifically analyzing the implementation of the law regulating ethyl alcohol production.

Background

Early 1900s

Historically (with a few exceptions: prohibition in the early 1900s and Gorbachev's anti-alcohol campaign in 1985–87), the Russian government has encouraged drinking, as alcohol provided considerable revenue. It also kept the working class in an inebriated state, pre-empting public dissent against inadequate living and working conditions. However, when government control of alcohol production and sales was introduced, a return to former policies was swift, following widespread public discontent (White, 1996; Herlihy, 2002; Bassik, unpublished work).

While prohibition in the United States in the early 1900s was a long-term venture, the Russian government did not follow the step-wise process of controlling alcohol production and consumption, but rather reacted in a haphazard way, with a partial prohibition directed only at hard liquor introduced in 1913 and lasting 4 years. The need to mobilize the male population for World War I was one of the factors in the Russian prohibition (Vvedensky, 1915). In addition, Tsar Nicolai II strongly supported prohibition, as he saw first-hand the impact of excessive drinking during one of his visits to various villages of Russia, urging drastic changes in the fight against drunkenness. These events resulted in orders to set fiscal priorities aside, with the state Duma passing a law on closure of liquor stores for 3 years, and in the first 6 months overall government revenue declined by 2.5 million rubles, compared to the same period in the previous year (Herlihy, 2002). However, since no data existed on alcohol-related morbidity or mortality, it is difficult to determine the public health effects of this policy. However, data on grain and sugar shortages, substances used in the production of homemade spirits, indicate significant samogon (moonshine) production (Herlihy, 2002). Overall, the unavailability of bread consequent to the shortages of grain and sugar added to the civil disobedience prior to the Bolshevik revolution in 1917 (Herlihy, 2002). Following the revolution, alcohol control ceased to be an important issue, as the Bolsheviks focused on the provision of equal rights to the working class. Taken as a whole, the Bolsheviks de-prioritized domestic policies because of the ongoing World War I, leading to a gradual abandonment of prohibition. Although the public urged continued support of prohibition, fiscal priorities took precedence, and by 1930 government revenue from the sale of alcoholic beverages totaled 360 million rubles, an increase from 17 million rubles 5 years earlier (Bassik, unpublished work).

Gorbachev's Anti-Alcohol Campaign—1985–87

Alcohol control policies remained a low priority for the majority of Soviet leaders. Some (i.e. Nikita Khrushchev) even engaged substantial human and financial resources in order to develop a pure vodka (Petrenko, 2004). However, despite the limited attention on alcohol control from 1930 to 1985, there were brief programs aimed at combating public drunkenness, in 1958 and 1972. These public anti-drunkenness campaigns removed and imprisoned individuals who appeared drunk in public. In 1972 alone, over 7 million people were arrested for public drunkenness, but these rash actions did not lead to a decrease in consumption or related problems, and in 1985, Mikhail Gorbachev (Leader of the Soviet Union from 1985–91) began his ill-fated anti-alcohol campaign (White, 1996; Vroublevsky and Harwin, 1998).

This campaign was the first major change in the government's position toward alcohol consumption in over half a century, a shift from reliance on alcohol revenue to a strict system of rations and controls (Herlihy, 2002; Bassik, unpublished work). The campaign restricted hours of alcohol sales, implemented purchase quotas, closed distilleries and breweries, and destroyed most of the vineyards across a number of Soviet republics (White, 1996). The broader attempts of these campaigns were on changing public attitudes toward drinking, and to acknowledge the harmful impact of alcohol on the lives of Soviet citizens. But despite these efforts, prevention continued to be practically non-existent; treatment under-funded and inadequate to the task (White, 1996).

Gorbachev's anti-alcohol campaign was a puzzle piece in the perestroika process that failed despite public pressure and political will, albeit both short-lived. Although there were measurable gains in lives saved, estimated at 1 million people (Nemtsov, 2005)—much the same as seen following the passage of the U.S. Prohibition Act—the rapid and encompassing restrictions brought to the fore extreme elevations of previously relatively small-scale problems (i.e. home brewing and bootlegging) (Moore and Gerstein, 1981; Nemtsov, 2002; Nemtsov, 2005).

Overall, the anti-alcohol campaign exemplified Soviet centralized policy making of complete control over the production and distribution of alcohol, aiming to radically change social and cultural drinking norms (White, 1996). However, excessive reliance on force and attempting to undo the populace's long-standing relationship with alcohol failed dramatically.

Post-Soviet Union—1990–2006

No other country in the world exhibited such force in policy implementation as the Soviet Union did with Gorbachev's anti-alcohol campaign. Because of its legacy, draconian measures in changing alcohol consumption have not been favoured by the post-Soviet governments in Russia. Furthermore, quite the opposite approach was taken after 1991, with abolition of government alcohol monopoly that led to the fragmentation of the alcohol industry. Although, as with many other aspects of reforms in Russia, the alcohol industry was not completely privatized, the Russian government claimed control of 65% of production under the government controlled RosSpirtProm, a large conglomerate of production facilities. Despite this stronghold, in 2000, 50 to 80% of all alcohol sold in Russia was from illegal sources, with an annual government revenue loss of upto 20 billion rubles (about US$ 700 million) (Voitenkova, 2000).

As the alcohol market was expanding in the early 1990s, the private alcohol industry hurried to divide the market among the various players. Two major developments were the growth of Foreign Direct Investment (FDI) and operation of wholesale and retail facilities, hundreds of which popped up across the country, many unlicensed and unregistered. The quality and the volume of beverages produced was no longer in the purview of the government and, with the economic gains being the prevalent concern for most alcohol entrepreneurs, quality diminished, while alcohol poisonings increased (Tomilin et al., 1999; McKee et al., 2005).

Despite the lack of administrative efficiency, corruption, hostile privatization and tax policies, Russia remains one of the largest alcohol markets in the world (Tvalchrelidze, 2003; Taybakhtina, 2004), with FDI in the Russian beverage industry as a major driving force for market expansion (Aslund, 2001). Although, exact amounts of FDI in the beverage industry in Russia are unknown (limited information is available on FDI in the early years of privatization), two-thirds of the total FDI in the region originated from European Union (EU) countries, with less than 12% of the total FDI invested in the food and beverages sector (Duponcel, 1998). Following the Russian economic crisis in 1998 (i.e. devaluation of domestic currency, default on both domestic and foreign debts, and a collapse of the stock market), the total FDI plummeted from US$ 4 billion in 1997 to US$ 1.7 billion in 1998, but this had little effect on the high alcohol consumption (Eliassov, 2002).

Law on regulation of ethyl alcohol and related products

In an attempt to control the rampant corruption, illegal activity and extremely high rates of alcohol related poisonings, a law on regulation of the production and turnover of ethyl alcohol and alcohol containing products was signed by President Putin on July 21, 2005, effective January 1, 2006 (Law on Regulation of Ethyl Alcohol, 2005). The major focus of this legislation is on the control of the volume and quality of alcohol production and sales, with a special focus on registration of production and wholesale facilities, utilization of raw materials, and distribution and sale locations (Table 1). All the components of this law require substantial financial investment from the producer or seller of alcohol products, including registration fees and equipment costs; new excise stamp procedures, designated sale locations, and extensive reporting guidelines. On the consumer side, higher prices and sale restrictions are expected.

View this table:
Table 1

Excerpts from the Russian Federation Law on the regulation of ethyl alcohol (January 1, 2006)

Aspects of the Law on regulation of ethyl alcohol and products
1Production, distribution, and sales (wholesale and retail) are against the law unless a license is obtained and registered with the government. The cost of a license is dependent on the size of the production facility and annual turnover, and is a significant cost increase from prior licensing costs.
2All of the products must carry an excise stamp designating the destination of sale as the Russian Federation domestic market.
3Retail sale of alcohol containing products without a proper license is against the law and no licenses are given (alcohol sale is prohibited) at the following locations - child centers, educational, sports, athletic, and cultural facilities, and on public transport.
4Sales of alcoholic beverages containing more than 15% ethanol alcohol by volume (ABV) are banned in places of large public gatherings, airports, train and metro stations, wholesale markets, military installations, and locations in close proximity to the above places.
5Products containing 15% pure alcohol and more are not to be sold in kiosks, containers, by individuals, from automobiles, and other places not properly licensed and set up for such sales.
6All production facilities are required to obtain the electronic recording equipment regulated by this federal law, capable of counting the amount of ethyl alcohol used and produced, including volume and concentration.
7Records of the amounts of ethyl alcohol or other alcohol-containing products of used and produced are to be automatically collected and sent to the centralized information system.

Although some have called this legislation an attempt to monopolize the alcohol industry, the reintroduction of stricter controls on alcohol production and sales is not new in post-Soviet politics (Putin and Vodka Monopoly, 2005, Government Monopoly on Alcohol Wholesale, 2005). As early as 1998, Yevgeny Primakov, Russian Prime Minister, suggested that a monopoly on spirits would bring significant government revenue and impose stricter controls on the quality of alcoholic beverages, preventing avoidable deaths from alcohol poisonings (Vodka Monopoly, 1998). However, the critical point in alcohol control policy in Russia occurred when President Putin explicitly acknowledged the urgency of this problem in his 2005 ‘State of the Nation Address’, where he stated, ‘Every year in Russia, about 40 000 people die from alcohol poisonings alone, caused first of all by alcohol substitutes. Mainly they are young men, breadwinners.’ (President Putin State of the Nation Address, 2005).

Nonetheless, the critics of this legislation believed that a decrease in market competition through the elimination of smaller production and distribution facilities and an increase in prices will drive the growth of the illicit market, leading to an increase of already elevated consumption, alcohol related poisonings and mortality (Nicholson, 2006).

Barriers to implementation

Poor organization and preparation prior to the implementation of this law has been a major barrier to its realization. Specifically, as of January 1, 2006, excise stamps for imported products were to be affixed on the territory of the Russian Federation (hitherto, alcohol importers were able to have the stamps affixed before arrival in the country) (Drujinina, 2006; El Amin, 2006). However, in mid-January the Russian government issued a 6-month extension, due to a serious shortage of excise stamps. Even though this extension allowed for printing of additional stamps, most alcohols quickly disappeared from store shelves, with many consumers turning to illicit sources. Consequently, in October/November 2006, almost 200 Russians died and thousands were hospitalized due to alcohol induced poisoning, reportedly from drinking alcohol tainted with industrial spirits (i.e. antifreeze, detergents and window cleaning solutions) (State of Emergency Widens over Russian Alcohol Poisoning, 2006; Nicholson, 2006). Four regional governments announced a state of emergency associated with these poisonings.

The lack of excise stamps was not the only problem affecting implementation of this law. Another serious problem was the utilization of EGAIS or the Unified State Automatic Information System. This computerized system was developed by the Department for State Regulation of Economy and the Ministry of Economic Development and Trade, and designed to gather data on the use of raw materials (i.e. ethyl alcohol and related products), production volumes and left-over raw materials. According to legislation, all producers, wholesalers, and importers are required to register with EGAIS and obtain proper equipment. The cost of registration and equipment was set according to production and sale volumes, which were extremely high for many smaller companies, forcing them out of the market. As of July 2006, 480 out of 500 producers, only 1700 out of 3000 wholesalers, and 80 out of 160 importers were connected to EGAIS.

In the beginning of 2006, major international newspapers reported on the frequent problems with EGAIS (Drujinina, 2006; Netreba, 2006). One of the major issues was the inability of the system to function with more than ten users being online at once. With over 2000 potential users, the system was frequently overloaded and the users were unable to send information to the central depository. This issue has been partially resolved with the Federal Tax Service allowing ‘manual’ entry, a decision that practically reverses the whole idea of using EGAIS. In addition to the industry's inability to send data electronically, EGAIS lacks proper nomenclature to specify producers, supply lists, and most importantly, the type of left-over raw materials.

An additional concern with implementation of this legislation is rampant corruption, given the Russian experience in subverting government policies. Even though government transparency and a stronger rule-of-law are clearly required if any positive changes in alcohol consumption and related social and economic losses are expected, this is unlikely in the near future. One of the reasons is the endemic vertical corruption from the highest levels to the lowest levels of government in Russia. According to a 2005 Transparency International report, parliament, political parties, police, and the legal system are the most corrupt institutions in Russia (Hutchinson et al., 2005). Such data instills serious doubts about the sustainability of this law, when the very structures charged with its execution are breaking it. Overall, Russia is in 128th place on the corruption index, one point below Niger and just above Sierra Leone (Transparency International, 2005).

The implicit nature of corruption in Russia is one of the leading reasons why public distrust of authority is disastrously high. This distrust breeds a general public sense of apathy toward all top-down legislation, the only kind of legislation passed in Russia. Furthermore, the widespread acceptance of corruption, which many Russian citizens relish for its conveniences of queue jumping and preferential treatment, continues to maintain the status quo. It is, therefore, understandable why Russia does not have a strong civil society that is able to rise above the many complexities of state building and help in not only educating the public about the importance of various policies, but also assist in their development and implementation. Although corruption played a part in the myriads of problems encountered during the implementation of this law, major failures in the organization of the underlying structures responsible for oversight and data gathering were encountered, while the industry (at least overtly) tried to comply with the various procedures.

Conclusions

The Russian Federation presents a unique opportunity to see the progression of many policies, with alcohol control being one of them. History shows that prior attempts to control alcohol consumption in Russia and the Soviet Union have failed, ultimately because of short-lived political and public support, in addition to excessive reliance on fiscal matters. Corruption and illicit production have also played their role in the maintenance of alcoholization of the populace, but ultimately, government policies promoted both production and public consumption of alcohol.

Legislation discussed in this paper, if implemented, will increase government revenue, but this will only be possible if the underlying structures of the government follow through with the designed plan. Legacies and in some cases stakes in the alcohol industry will undoubtedly present significant barriers to the government's ability to implement harsher rules, ultimately reducing personal incomes of influential players and giving the money to the government. The government, however, is not a transparent mechanism in Russia; therefore, those who will benefit from this legislation may very well be those important players who appear to be restricted by their own policies. At this point, it appears that extensive government involvement and influence of the private sector including the alcohol industry will continue through the weeding out of unnecessary stakeholders and buying out companies, thereby increasing its overall stake in the alcohol market in Russia.

The most effective alcohol control policies in industrial countries have used price controls, taxation and availability of liquor, in addition to protection of high-risk groups (European Alcohol Action Plan, 2000; Babor et al., 2003). Regulations that promote responsible alcohol advertising, promotion and sponsorship practices have also been used in various countries with varied success (Bruun et al., 1975; Mäkelä et al., 1981; Room, 1981; Trauth and Huffman, 1987; Greenfield et al., 2004). Implementation of these strategies is a delicate process of monitoring and enforcement that must be supported by federal and municipal leadership, the judicial system, and perhaps most vitally, the lay public. Undertaking any policy changes, especially in Russia, must be incremental, aiming to prevent chaos, alienation of various groups and elevating public distrust. Attainment of these goals is only possible through an open and transparent decision-making process that reflects a sincere concern for public health and safety, and is sensitive to business and consumer communities. Although economic interests have historically prevailed in decisions regarding alcohol policies, eventually, recognition among the Russian citizenry that such policies are to protect them from undue harm from alcohol, has a much higher probability of gaining their support and compliance.

While other countries with strong communities have been able to spearhead the efforts to tackle major public health problems (e.g. smoking, driving under the influence of alcohol), Russia lost most of its social fabric following the collapse of the Soviet Union. While the lack of public voice and civil society is prevalent in all spheres of daily life in Russia, it is essential to recognize that this spillover of public apathy is directly tied to the Soviet top-down management system, which tends to discourage public initiative and responsibility and promotes reliance upon the government (Levintova and Novotny, 2004). This persistent lack of public participation in policy development and implementation is a major obstacle in the realization of the law described in this paper.

Although, one of the most significant tasks undertaken since the collapse of the Soviet Union in 1991 has been development of civil society, it has not proven successful with many Non-Governmental Organizations (NGOs) accused of illegal activities and ultimately closed (Kickbusch, 2002). Out of those NGOs that have survived the government conducts extensive assessments of their activities, and few are capable of launching a public campaign focused on alcohol control. This is despite the elevated discourse in the government and the media on the devastating levels of alcohol-related mortality.

If we look beyond administrative failures, corruption, and public disengagement, it is important to note President Putin's discontent with the lack of oversight and responsibility in various spheres of policy implementation. Despite his power, broad sustained efforts will be necessary in order to persist with implementation of alcohol control legislation. Ultimately, the Russian federal government must become engaged and motivated, in order to provide the necessary economic and human resources for the enforcement, monitoring, and evaluation of alcohol control policies. In addition, extensive public outreach campaigns exposing the public to the positive aspects of alcohol control and information about the detrimental effects of alcohol abuse are urgently needed.

Acknowledgments

Special thanks to Drs Lee Kaskutas and Thomas Greenfield for their support and thoughtful comments on earlier versions of this paper. This work has been funded by a grant from the National Institute on Alcohol Abuse and Alcoholism #T32 AA07240 and a Fulbright Scholar Grant funded by the U.S. Department of State.

References

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