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Friday June 20, 2008

Programs in former Soviet Union suffer from weak dollar

by grant slater
jta

moscow | From its perch above a shelf packed with crystal dishes, a photograph of Alexey Zheleznyak’s late wife keeps watch over a spotless apartment.

The ripple effect of a sluggish American economy has forced Zheleznyak, 81, a former metallurgist of Soviet monuments into what he calls the “woman’s business” of dusting and cooking.

“I spend almost all my time and all my energy on these things now,” he said.

Three years ago, Zheleznyak’s wife was bedridden and dying, but a home-care worker funded by the American Jewish Joint Distribution Committee dropped by twice a week to wash her, care for her bedsores, clean and cook.

After his wife died, the worker still came but less often until global economic pressure forced the organization to scale back operations for the “least needy” in the former Soviet Union. Six months ago, Zheleznyak began having to fend for himself.

Of all the Joint’s operations abroad, the former Soviet Union has been hit hardest, according to officials, due to the sliding value of the dollar coupled with inflation in a resurgent Russian economy. Only Israel receives more American funds than the former Soviet Union from the organization.

As a result, about 32,000 elderly Russians have been shaved from the group’s rolls in the past few years. In 2006, the recipients of Joint services peaked at 220,000.

Organizations such as the Joint and the Jewish Agency for Israel, which are the overseas partners of the North American federation system, rely on donations and money from reparations that is distributed, budgeted and doled out in American dollars. Most of that money is sent abroad, where it is spent in local currency under local market conditions.

In the former Soviet Union, the Joint’s purchasing power has decreased by 13 percent to 20 percent, depending on the country.

At the same time, Russia’s economy is soaring on the back of oil prices that provide a base for increased wealth, higher commodity prices and inflation.

Russia experienced nearly 12 percent inflation in 2007. Despite price controls on food that lasted through March’s presidential election, the International Monetary Fund is predicting that inflation might top 14 percent in 2008.

In sum, that means the Joint’s $100 million budget for the former Soviet Union set in 2007 now buys only $80 million worth of home care workers, hot meals and the staff to administer it all.

That has “forced us to rethink how we do business,” said Steve Schwager, the group’s executive vice president.

On June 16, the Joint announced it will lay off more than 60 staff members worldwide in an effort to grapple with the budget shortfalls.

It isn’t the only organization suffering from the declining dollar.

When the Jewish Agency for Israel convenes in Jerusalem next week, a top agenda item will be the economic impact on its operations worldwide. Agency officials say they will know more after the meeting about how likely budget cuts will affect the organization’s large operation in the former Soviet Union.

The Chabad-run Federation of Jewish Communities, which runs an extensive network of programs in the former Soviet Union, relies on a mixed donor base that does not always come across in dollars. A spokesman for the umbrella group, Baruch Gorin, downplayed the impact of the falling dollar on its efforts in Russia. The group is often tight-lipped about its funding sources and success.

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