Despite the official assurances, by mid-March our only topic was coronavirus. Should we be worried or not? Some were cavalier. “It’s a bunch of nonsense,” said Masha, the owner of a big friendly mutt. Others were worried, especially if they had health problems or, like one neighbor, a newborn grandchild at home. And we were all worried about the dozen or so small businesses that had appeared on our block in the past couple years — especially because some of the owners were our neighbors.
Alexander, the owner of a big white boxer, has a nail salon in the building next to us. He was worried. The ruble had already tumbled against the dollar and euro. To be on the safe side, he had borrowed some money from a friend and bought a large stockpile of imported materials. And then he waited. But not for long. Just about a week later, Sobyanin, the Moscow mayor, ordered all nonessential stores and services to close, including Alexander’s nail salon.
In other countries, salons might have closed immediately. But Alexander was worried about his staff. He called them in to discuss their options, and they decided to take the opposite approach, to keep the salon open late every night until the cutoff date, March 28, so that they could earn enough money to hold them over for a week or so. That was almost two months ago. The salon has been closed since.
Alexander and his wife have other jobs that provide basic income. He thinks some of his staff are earning money doing house calls, and others are just waiting it out. Even when he can reopen, he doesn’t really know how to reopen. “It’s a question of safety for the staff and customers. I can figure out how to keep two meters between customers, but when will people feel safe and confident enough to come in?” He thinks it may be a year or more before he can recoup losses and pay off the debt in rent he is running up.
Another neighbor and dog owner Sergei runs a specialty shop. He used to get 35 to 50 orders a day; now it’s two or three. “My landlord lowered the rent by 40 percent, but that doesn’t help much when income has fallen by 90 percent,” he told me.
I asked Nikolai Petrov, a senior research fellow on the Russia and Eurasia Program at Chatham House in London and professor in the political science department at the Higher School of Economics in Moscow, why he thought Putin was willing to risk alienating voters like Alexander and Sergei.
Petrov said Putin didn’t need their support. “Authoritarian regimes rely on important people who are key to stability and staying in power,” he said. “Putin’s political base is the big companies, banks and state companies. He doesn’t depend on citizens, so he doesn’t see or hear those 10 or 15 or 20 percent of the population who are really suffering today from the measures to fight Covid.”
On May 11, Putin announced that the “national vacation” that had begun in March would end the next day, but that each regional leader would determine how and when to open up businesses. In Moscow, Sobyanin announced that the lockdown would continue until at least the end of the month and now include mandatory gloves and masks in public places, but that several categories of business could open. People shook their heads: Is the situation more dangerous or safer?
And there was a new joke making the rounds: “When we had 1,000 new infections every day, we were put on lockdown. Now that we have over 10,000 new infections every day, they’re sending us back to work.”
The problem is that not everyone is going back to work or working at home on salary. Small shops, businesses and services are still closed. In our neighborhood, one beauty salon — a branch of a citywide chain — closed and moved out within the first week of the lockdown. Three other shops have closed and might not reopen.
With the economic pressure mounting, Putin announced in his May address that he would increase aid to the population, mostly through direct payments to families with children, but including tax and insurance write-offs for sole proprietors and even reimbursement of income taxes paid in 2019. I asked my friends if this would help; they laughed. The first round of aid consisted mostly of benefits such as partial debt forgiveness, salary reimbursements if companies continued to pay their staff, and some tax deferments — none of which they qualified for or needed — and the current aid package wasn’t enough to make up for their catastrophic loss of income and continued rent payments.
But neither Alexander nor Sergei had expected state aid. “We never thought we’d get any support,” Sergei said. “But that’s the deal. Either you’re free and are totally on your own, or you work for the state and get a salary and aid, but you also have to do what they say, go to political rallies, whatever. Better to be free.”
Looking ahead, it’s clear that millions of small-business people, gig economy workers, waiters, salespeople, actors, dancers, musicians, museum curators, nannies, cleaners, fitness instructors and all those Russians working off the books — a large portion of the population — could come out of this with nothing. If they hold on to their businesses, they will probably have a huge debt to pay off. Many thousands, if not millions, of them could lose everything.
To some extent, given the nature of the crisis, economic pain is inevitable. Sonin says, “The crisis is unprecedented, and because the government didn’t move quickly and the measures aren’t, to my mind, sufficient, the downturn will be greater. But getting out of this crisis would have been difficult regardless of what Russia did.”
The government’s approach isn’t going to improve its popularity ratings, Sonin says, but adds, “I don’t think there is a risk of great discontent. In 2008 and 2009, the GDP fell by 9 percent, and the majority of households were cutting back on basic necessities. But the public didn’t rebel then, and I think it will be about the same this time.”
Nor does he think this crisis, however difficult, will spur Russian leadership to change: “There is no discussion of reconsidering priorities, like cutting back on defense spending, security, or propaganda, or repealing the countersanctions, which in my view would have been the first thing to do. There is no discussion of any of that. That’s not being done because they think the way things are is the way the things ought to be.”
Source: politico.com
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