Today in Russia: Putin unveils new economic support measures; Russia becomes world’s third most COVID-19 infected nation, but restrictions eased; Amnesty report accuses Russia of targeting civilians in Syria; Russia’s “amazing levitating ruble”; 20 percent drop in income for Russians projected; A silent Victory Day, and how we remember the war
COVID-19 cases surpassed 221,000, making Russia the world’s third-most infected nation. Nevertheless, President Vladimir Putin announced today that the universal non-working period would end tomorrow, May 12. He remarked, “As of May 12, the unified non-working period will end for the entire economy, but the fight against the epidemic is not over. [We] cannot allow a breakdown, [or] backsliding. We must tread lightly.” Putin’s announcement will herald a regional approach to the crisis, with different parts of the country adding or reducing stringent stay-at-home measures depending on the situation on the ground. Putin emphasized that such measures would be gradual and that “we must be patient!”
President Putin announced today [in Russian] that a new series of economic support measures would be unveiled. He proclaimed that [in Russian] “There can only be one condition now: everyone who needs it should receive help.” Among the measures unveiled include subsidized loans at 2 percent to businesses, which will be forgiven entirely if 90 percent of staff are retained throughout the course of the loan which comes due in April 2021. Interest and repayment do not need to be paid monthly. Taxes (other than VAT and insurance premiums) for individual entrepreneurs, SMEs and socially-oriented NGOs will be fully written off. Self-employed individuals will receive a full refund on their 2019 taxes, and will be offered a “tax capital” equivalent to the minimum wage on taxes owed in 2020.
For households, the childcare allowance for parents out of work is to be doubled from 3375 to 6751 rubles per month. From June 1, every child aged 3-15 will be paid 10,000 rubles. Russian familes will be able to apply for such a payment starting May 12. President Putin said some 27 million children will be eligible for this benefit. Putin also chastised regional leaders for not distributing the extra benefits for health care front-line workers announced last month.
Amnesty International released a report accusing Russia of deliberately targeting civilians in Syria. The report “details 18 cases – the majority in January and February 2020 – where Syrian and/or Russian government forces targeted medical facilities and schools in Idlib, western Aleppo and north-western Hama governorates.”
Russia’s economy is heavily dependent on oil exports. Yet while oil has fallen by 56 percent in 2020, the ruble only fell by 19 percent this year. BNE Intellinews writes that “[o]ne of the reasons why Russia is expected to weather this crisis a lot better than many of its emerging markets (EM) peers is Central Bank of Russia (CBR) governor Elvira Nabiullina allowed the ruble to float freely as part of her response to the 2014 oil shock, when oil prices collapsed the last time.” Nabiullina has long refused to use Russia’s foreign currency reserves to defend the ruble against external shocks and it is legally prohibited from using National Wealth Fund (NWF) assets to do so. She has even moved to cut interest rates to help the economy weather the external shocks of a collapse in oil prices and the effects of COVID-19, which have the side-effect of putting pressure on the ruble and threatening inflation.
However, BNE Intellinews further notes that there was a backdoor solution to this problem, writing that,
On April 11 the CBR [Central Bank of Russia] rushed through a deal to sell its 50%+1 stake in the state-owned retail banking giant Sberbank to the Ministry of Finance for RUB2.14 trillion ($29.1bn).
The change of ownership solves several problems in one go. First is that the central bank was in the uncomfortable position of both being the banking sector regulator and owning by far the largest bank in the sector. Now that bank is owned by the Ministry of Finance, which is how it should be.
This “in effect provides a back door route for the CBR to tap the NWF and gives it cash to spend in the money markets to defend the ruble. The Ministry of Finance paid for the deal using NWF money, which has now dropped to about RUB9 trillion.” The money from the Sberbank sale is estimated to be enough to stabilize the ruble through September. As it turns out, Russia’s “amazing levitating ruble” may not be so surprising, after all.
Experts at the Higher School of Economics in Moscow have predicted a fall of 20 percent in average incomes in Russia in the second quarter, and warned that without government assistance the standard of living of the population at large will suffer a large drop, Vedomosti reported [in Russian].
In what is usually a nationwide celebration featuring a military parade on Moscow’s Red Square and the attendance of foreign leaders from across the world, this year the 9th of May Victory Day was celebrated in a much-muted fashion. President Putin, while laying flowers at the Eternal Flame memorial near the Kremlin said, “Our veterans fought for life and against death, and we will always try to live up to their spirit of unanimity and resilience.” The Moscow Times wrote, “Russia marked muted Victory Day celebrations with only military plane flyovers and a fireworks display as authorities urged Russians to stay home amid the coronavirus lockdown. President Vladimir Putin, in his first public appearance since April 1, told Russians they are “invincible” when they stand together as he presided over the slimmed-down ceremony.” Neighboring Belarus, for its part, defied coronavirus warnings and held a military parade anyway.
Foreign Policy, in time for the 9th of May, published a piece titled “We Remember World War II Wrong: In the middle of the biggest international crisis ever since, it’s time to admit what the war was—and wasn’t” by Colombia University professor Adam Tooze. References to the war during COVID-19 have come back with a vengeance in the US and in Britain, and “[i]n the scramble for ventilators and personal protective equipment, countries have invoked the model of the war economy. The U.S. debt-to-GDP ratio is now expected to exceed levels reached during World War II.” While Russia (and China) may “instrumentalize the war for the purposes of revived nationalism, the weird thing in the West is the peculiarly bloodless quality of people’s collective memory.” Tooze concludes,
Of course, invoking the war in political speech can serve many purposes. In the version preferred in the English-speaking world, it combines connotations of solidarity with a low-key patriotism that can be bent to many different ends. But it also encourages a kind of escapism, the progressive political equivalent of children playing at GI Joe. That is not the spirit that the anniversary of the Third Reich’s annihilating defeat should evoke. It should remind us of the giant political and material forces that were mobilized to achieve that victory—the violence that was involved and the price that was paid. It should remind us, for better and for worse, of how far removed we are from that reality, both from its dangers and its possibilities.
PHOTO: Russia’s President Vladimir Putin lays flowers at the Tomb of the Unknown Soldier in Alexander Garden on the 75th anniversary of the victory over Nazi Germany in World War II. May 9, 2020. (Alexei Druzhinin/Russian Presidential Press and Information Office/TASS)