With over 3,000 new cases of COVID-19 added daily for the past one week and parts of the economy locked down, Russia has found itself in the middle of an escalating economic and social crisis. The country has reported 36,800 infections so far and 313 deaths. Unemployment rate is projected to double and GDP to fall by not less than 5%. The coronavirus hit the Russian economy right in the middle of another crisis — the collapse of the oil price.
In his latest address to the nation, President Vladimir Putin announced long-awaited relief measures for businesses this week. He promised a funding of 200 billion rubles (around $2.6 billion) to the regional governments, and said small and medium enterprises would be getting funds from the government to pay off salaries in April and May. The announcement came amidst mounting criticism from the corporate sector that the government’s responses to the crisis were not enough.
The measures announced by Russian government over the past few weeks amount to 2.8% of the GDP, compared to 37% in Germany, 20% in Italy and 12% in the U.S. Many feel Russia, having over $550 billion in reserves and relatively low debt, could be more proactive in supporting businesses.
About 30% of businesses may not survive the compulsory shutdown, Roman Trotsenko, CEO of AEON Corporation, said during an online conference. Alexey Zaharov, founder of online service firm superjob.ru, said up to 80% of small and medium-sized businesses could declare bankruptcy while the unemployment rate will jump from below 5% to 9%.
Mr. Putin’s handling of the crisis suggests that there’s a method in the Kremlin’s response. The President appears to be unwilling to take responsibility for containing the virus. He has stayed away from announcing the unpopular decisions which could affect his approval rating at a time when the government is planning to put constitutional amendments on vote. The amendments, proposed by Mr. Putin earlier this year and already cleared by Parliament and the Constitutional Court, would allow him to contest elections again, and to potentially remain in power till 2036.
Mr. Putin has masterfully transferred the responsibility for containing the outbreak to Prime Minister Mikhail Mishustin and the heads of regional governments, including Moscow Mayor Sergey Sobyanin. It is now up to them to enforce the unpopular restrictions on the public and roll out sophisticated surveillance systems. On the other side, the President comes on TV to announce good news such as economic relief measures. The crisis has also allowed him to get rid of the regional Governors who the Kremlin was not comfortable with. On April 2, immediately after Mr. Putin’s address to the nation in which he spoke about the responsibilities of Governors in Russia’s battle against the pandemic, three Governors resigned. State media reported that they resigned because of their failures in containing the virus, but all of them were at odds with the Kremlin.
Internal troubles
The COVID-19 crisis has also exposed some of the Kremlin’s internal troubles brought by the conflict between old and new political elites. According to media reports, Moscow Mayor Sergey Sobyanin’s views on quarantine and its implementation did not find any support in the Kremlin up until last week, when the daily count of new infections had crossed few thousands. On April 15, when Mr. Putin was delivering his “good news” to the corporate sector, Moscow saw the ugly outcomes of the rapidly-introduced pass system. A pass is now required for the public to travel in the city and it can be obtained via a government website. On the very first day, thousands of Moscovites, who still have to travel to work, found themselves in suffocating queues — without any possibility of physical distancing — at the entrance of metro stations as police officers were manually checking the passes.
None of these incidents highlighting that the shortcomings of the measures put in place by local governments have found a mention in Mr. Putin’s speeches. He leaves it to the regional leaders to answer the public. It can be recalled that Mr. Putin has done exactly the same during 2018 pension reform by making then Prime Minister Dmitry Medvedev to take responsibility for the unpopular decision.
The strategy seems to be working. Despite the crisis and its economic costs, Mr. Putin’s approval ratings are on the rise. According to Russian Public Opinion Research Center, his rating rose by 4% in late March, after many months of decline.
(Ksenia Kondratieva is a journalist based in Moscow)
