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COVID-19 Crisis In Russia: Economic Turbulence And Digital Authoritarianism

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COVID-19 Crisis In Russia: Economic Turbulence And Digital Authoritarianism

IMAGE: Reuters

The Russian economic is suffering under a pressure of a large-scale lockdown imposed by the government to contain the COVID-19 outbreak and turbulence on the global energy market.

On April 13. Head of Russia’s Accounts Chamber Alexei Kudrin said that the number of unemployed in Russia due to coronavirus could triple in 2020 temporarily increasing from 2.5 mln to 8 mln people.

“According to the forecast for this crisis, which has now started in Russia, the number of unemployed for a certain period will increase from 2.5 to about 8 million, possibly by the end of the year,” he said in an interview with the RBC TV channel. “Then there will be a restart [of the economy], growth in demand and consumption, the number of unemployed will become less, small and medium-sized businesses will resume work.”

Kudrin noted that now the demand for some types of services has completely disappeared (restaurant services, entertainment, sport etc) adding that about 30% of employees of such companies are now sent on unpaid leave. However, if the situation continues, he said, they can be fired.

Earlier in April, the head of the Accounts Chamber warned that under a pessimistic scenario, Russia’s GDP could fall by 8% in the same way as in 2009.

Now  he says that the government’s decision to reserve 1.4 trillion rubles, or about 1.3% of the GDP, to fight the crisis is not enough. Kudrin noted that the reserved amount should be up to 7% of the GDP.

“The Federal authorities estimate missed revenue from oil and non-oil sources at about 3 to 4 trillion rubles depending on the scenario,” Kudrin told RBC broadcaster, adding that the average oil price of $20 per barrel would mean the loss of 4 trillion rubles for the budget, while $25 per barrel would lead to a loss of 3 trillion rubles.

“We need to have 4 trillion [rubles] in reserve to replace the loss of revenue and fulfill budgetary obligations in full on the federal level, in pension fund and across the Russian regions,” Kudrin said, adding that 2 or 3 trillion rubles would be needed to support business.

The financial support program for citizens and businesses is also facing apparent difficulties. On April 10, Central Bank Governor Elvira Nabiullina said that banks are failing to approve the majority of appeals for financial support, including cheap loans and repayment holidays. She called on banks to increase approval rates for those applying under government-backed initiatives.

According to the Central Bank, 900 companies have applied for a total of 6 billion rubles ($81 million) in interest-free loans to cover staff salaries. As of April 10, only 76 million rubles ($1 million) were approved – this is slightly more than 1% of the amount applied for. Moreover, Russia’s largest banks have rejected 85% of applications for an emergency loan restructure.

Earlier, the government ordered banks to offer a 6-month break in repayments to borrowers who see their income fall by 30% or more. However, lenders rejected 65,000 of the 76,000 requests they received, even as the number of appeals more than doubled.

Individuals that lost their work due to the COVID-19 lockdown also face difficulties with receiving proposed social compensations. For example, residents of Moscow, the most developed city in Russia, face troubles with registering and requesting a regional social compensation of up to 19,500 rubles (~265 USD – this is the maximum possible compensation) via a special website: https://czn.mos.ru/. In fact, the website does not work because of an increase of visitors and requests.

Moreover, a good part of Moscow residents that is in need of such a compensation cannot get it because they don’t fit the formal requirements. The compensation is proposed only for persons who have a permanent registration in Moscow and officially worked 60 days in 2019. A large part of people living in Moscow does have only a temporary registration or even does not have a registration in the city.

The situation in Russia as of April 13 demonstrates that there is no ‘explosive growth’ of COVID-19 cases or COVID-19-related deaths. Despite this, the entire country remains in the state of lockdown:

COVID-19 Crisis In Russia: Economic Turbulence And Digital Authoritarianism

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COVID-19 Crisis In Russia: Economic Turbulence And Digital Authoritarianism

Click to see the full-size image

The mandatory lockdown (ironically called the ‘self-isolation regime’) introduced in Moscow, Tatarstan, Crimea and several other Russian regions was imposed in the violation of the Russian Constitution, without the introduction of the state of emergency. This situation allowed regional authorities to limit the citizens’ freedom of movement and, in some cases, put their in conditions similar to the home arrest.

A digital pass system with QR codes, personal data collection and further restrictions of residents’ freedom of movement (for example, it allows only 2 personal trips per week only) was introduced in Moscow on April 13. By today, this move has no legal ground in the system of the federal legislation. It violates the federal law about personal data and several articles of the Constitution. De-facto actions of local authorities are a non-motivated intervention into the personal data protection law.

If the restriction of the right to movement got its legal basis via the introduction of changes into the existing federal legislative system by the Parliament on April 1, 2020, the current interference into the personal data of citizens has no legislative basis. 

Surely, quarantine measures are needed and effective to contain the COVID-19 outbreak, but they do not require the intervention into the personal life and personal data of citizens. An interesting example is France, where citizens should produce a form (document) justifying their reason to be outside. If a citizen violates the quarantine regime, he bears a serious administrative liability.

No country around the world, even China, that introduced same system, did this step without compliance with the existing legislative system. Usually, states introduce the Emergency situation regime in separate regions as In China (Wuhan) and Germany (Bavaria) or in the entire country. Russia has not made it yet.

This behavior is not something new for the team of Moscow mayor Sergey Sobyanin. Earlier, regional authorities repeatedly made comments on the situation across the city and the scale of violations of the regime of self-isolation based on mobile operators’ billing. Under the Russian law, only law enforcement agencies have a right to get and use such data during their search activities.

The last but not least, the digital pass system introduced in Moscow was not working as of April 13 morning. The Sobyanin team, which is proud by this ‘security innovation’, blamed DDOS and bot attacks for this. For example, authorities are blaiming some ‘criminals’ operating through the Russian-language meme website ‘Joyreactor’.

Another side of the story is that the lockdown measures and pass systems could led to the growth of street criminal. Thousands of gastarbeiters that have no savings, registration in Moscow, and cannot officially get digital passes, work and move across the city remain on the streets. Even the Russian President’s spokesman, Dmitry Peskov, confirmed this fact. However, Peskov said, there is no need to ‘dramatize’ the situation.

When the Sobyanin team started introducing strict lockdown measures in Moscow under the pretext of the COVID-19 threat, many thought that the city’s mayor was seeking to solidify his political power and strengthen positions in the never-ending political struggle for power. However, now it becomes clear that Sobyanin was wrong if he thought that he would be able to increase his political popularity as the ‘savior’ of the nation from the COVID-19 pandemic. The recent actions of Moscow authorities already significantly undermined the popularity of Sobyanin among the city’s residents. An overview of Russian social media, including Facebook and other platforms, demonstrates a low level of support to Moscow authorities in Moscow, the Moscow region and across the entire country.

The main issue is that approaches employed in Moscow intentionally or unintentionally undermine the position of Russia as a center of power on the international scene. In own turn, the weakening of Russia undermines the international stability and destroys the chances of the young and weak multipolar international system to born and become the dominating model of the international relations.

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  • Harry Smith

    Don’t understand how all these undermine Russia positions, but it’s quite logic if someone who has no official work and didn’t paid taxes and worked illegally even being Russian citizen (in Russia it is possible) is not getting government support.

    • Jens Holm

      They are many. They have no food. They cant pay rent, so they cost a lot of money.

      We cant let them starve in the streets til they die – cant we.

      In Denmark we have that group too being legal as well as illigal guests. Many has been here for Years.

      We have to do something, so we makes big tents. We also have given several hotels to them, because we have no tourists.

      We also has to feed our own and the state has taken big loans.We also have or had many danes aruind the world. They mainly are not in the bottomof the system even they are a kind of foreigners for us too. But we do send them some money and name it “loan”. We also “loan the money to come home to Denmark, where they can get help. But later they ave to pay for tickets, food and like that.

      Its very complicated. A long line of things are not as they used to be and we do have to handle all, but we also are many to do it.

      Right now the debate here is about hospitals, which has delayed as many treatments as they could because they take care avbout the Covids. We think and hope we have some kind of damage control for Covid, so more doctors and nurses should be able to take care of the normal patients.

      But is also said many nurses and doctors has been working so many hours, that some of them need days for extra sleep and restitusion.

      There is no sign for for, we will create a lot of jobs for danes as well as foreigners, so we have to thik in long term according jobs.

      It might be a good idea for Russia to educate a lot a little or much better. We have done that in times of unimplyments and it seemes to pay off. People has something to do and when bettters times comes back, we can use them.

  • Dick Von Dast’Ard

    Really we are looking at a global vaccination scheme… So who gets the patent spoils?

    • Jens Holm

      Look it up. Dont You have internet.

      If You sponsor SF with 10 dollars I will make a free consultation about it.

  • Garga

    Dear SF team.
    SouthFront is already registered as a “disinformation agent of Kremlin”. It doesn’t matter how many articles critical of Russia you publish, as long as you publish ONE article critical of the collective west, the empire, whatever its name is, it’s enough for their censor to continue the current beat.
    You know the real reason? As long as they don’t pay your budget or pay your managers/editors handsomely they won’t count you “unbiased”.

    If you want your social media channels returned and uncensored and not branded as a disinformation agent, being a media based in Russia (China/Iran/Syria/Venezuela/etc.) you have to receive money from at least one foreign ministry of the NATO members or one of their cronies (KSA,UAE, etc) with their blessing and also the package that comes with the money.

    • Jens Holm

      Other medias says exact same thing and has more or less seen it for weeks and parts of it for years.

      Thats what You try to cover by everlasting lies instead of propose some damage control.

      Russia also has attacks around Vladivostok, which seemes to have arrived from Moscow by many airplanes with bad control …

      I dont see anything missing in the medias from the west at all as well as the copen critisisme for, whats going on in Italy, Spain, France, GB and USA by Trump and several others.

      The real propaganda stunts are Russia and China sending help. Fine they do, but now we might help them a lot. Most Westerns countries are not doing very well and some not well at all. O dont know how much SF has written about it, but they have.

      I like this article even it might be biased or it might be true. So far I have seen us being totally uninformed or underinformed and here get something, which is real.

      The lack of realisme is Yours. Ypu lie all the time and cover any kind of direty laundry as well as being not responsible for anything Yourself.

      Thats low but also seemes to be some redefined version of how honor and respect should be forced into the value of zero. Herte I will admit, Ypu are quite succesfull.

    • Zarathustra
  • hvaiallverden

    Garga and uh…. others, your critics of SF is as far I know, plain stupid and why now, when SF have an angle witch is Russian, I cant see whats the problem when 90% of everything else is pure UssA assliking idiot propaganda, and this complaining is just silly nonsense, of course, I never expect them to go full retard, but as for now I dont find anything critical either, but the main thing SF do alow, is idiots crawling in the comentary fields, even I can coment on “everything”, and I holds nothing back, but I dont bother to indulg into issues witch about Russia or its past, I just give from time to time something that I hope gives the Russians in here something else, because everybody have agendas, but to come up with Moronikan paranoia is just for me, just riddicilous.

    Disinfo, give me a break.
    I like them and have no issues with them, since I am alowed to coment when I find it nessesery.
    If you dont like em, crawl back to ZeroH, or where ever you have your congregation of yapping idiots.

    peace

  • Rhodium 10

    Look at USA and EU countries and their problems with Covid ( Economics, number of deaths and infected)…and compare them with Russia!…Who is doing it wrong?..

    • Jens Holm

      That not comparable at all. None knows how bad it is in Russia and You have to select countries in EU as well as parts of USA as acting late, good, well or bad.

      What You also see is, how infections also are spread out in the open world economics. So You see a delay for the isolated Russia too.

      So I think You should wait some months to conclude anything as You do.

      • Rhodium 10

        Russia has less infected than a small province of Spain/Italy or just an small neighbornhood of NY…

        • Jens Holm

          Thats not comparable at all. None knows how bad it is in Russia and You have to select countries in EU as well as parts of USA as acting late, good, well or bad.

          What You also see is, how infections also are spread out in the open world economics. So You see a delay for the isolated Russia too.

          So I think You should wait some months to conclude anything as You do.

  • JIMI JAMES

    Russias major wprld powerfouse infastructures prevail,this is not just about speculated stocks and unconstituate wishfull thinking on behalf of a few western biased disinformant rants,seens russia adheres to ultimum security protocols,including non gorbachev style fearmonging to say the least,
    we will see in time what comes of this,remmember russia is far stronger than it were back in 08!
    Now about these oil prices,russia remains firm and stable,it’s the others whom are in severe panick,
    but the good old cia/double agent trick won’t fool putin nor his henchmen(period) Any if nation on planet earth is resistant to enconomic turbulence this century it is russia,their education beats wests!

  • cechas vodobenikov

    to date Russia is less impacted than either the US or Western Europe…of course, only a fool trusts USA, Western European government disinformation—perhaps in 6 months intelligent conclusions can be made

  • Icarus Tanović

    What kind of joke is this article…give me a break.
    Russia is by far best country who fights outbreak or whatever else comes the way…

  • RichardD

    The coronavirus is a massive scam and is far down the list of leading causes of death. It’s less than 1% of the people who die. And that’s with wildly inflated death statistics of counting those who die with the virus, rather than those who die of it. Which according to the Italians is only about 10% of those who die with it. And even then it’s rarely the only cause of death. And with up to 99% of all virus deaths having a preexisting comorbidity, is almost always at the most a comorbidity in conjunction with another condition that the deceased was already dying of.

    Further study needs to be done to verify if the Italian reevaluated death certificates showing only 12% of those who died with the virus as dying of it as a comorbidity. But if that turns out to be the norm. Most of the 100,000 virus deaths worldwide would have to be reduced to about 20,000. Which would mean that even with no mitigation. The virus would likely be no different or less severe than the seasonal flu.